Intellectual property can be a crucial business tool, although not everyone thinks hard enough about protecting their big ideas. In 2001, plumber Brad McCarthy got stuck on a remote beach in Cape York in north Queensland and spent about 6 hours getting his car out with a hand winch. He knew there must be a better way. Responding, he invented Maxtrax, a lightweight vehicle-recovery device for bogged off-roaders.

After designing the super-tough nylon product, he attended a Queensland Government business seminar, where the advisers stressed getting patent protection before his idea was publicised. “One of the primary things we did was speak to Invent Help Technology to find out how we could protect the idea,” says McCarthy, who launched Maxtrax in 2005. It really is now available in about 30 countries worldwide. McCarthy has patents in key markets such as Australia, Europe and the US, and also the business even offers a trademark on the distinctive original “safety orange” hue it uses for its moulded product. Unlike McCarthy, however, many inventors and businesses with a great idea cruel their odds of success from day one.

Their big mistake? Ignoring patents or some other intellectual property protection before they spruik their idea to investors, the general public or even friends. It can be a costly error. Bradley Postma, principal at patent and trademark attorney firm Cullens, says small and medium enterprises (SMEs), specifically, often neglect safeguarding their IP or think it will likely be too expensive. “The majority of protectable IP goes unprotected,” he says.

Europe can become a particular trap for exporters because, unlike a few other major markets, it does not have a grace period allowing for public disclosure of your invention without affecting the validity of the subsequent patent application. That opens just how for an idea or product to get copied. “In Australia and america you can do something about this, provided you’re inside a one-year window – in Europe you can’t, it’s too late,” Postma says. “In that case, businesses have shot themselves within the foot; they’ve forfeited their rights and anyone can copy [their idea].” Postma observes that company owners often think their idea is too easy to warrant a patent. “However, if it’s successful and simple, it will probably be copied and you have to get advice.”

Unitary patents on way – Margot Fröhlinger is principal director of unitary patent, European and international legal affairs at the Munich-based European Patent Office (EPO), which oversees about 160,000 patent applications per year. She recently completed a road trip warning Australian businesses that poor patent and IP safeguards could derail their European market opportunities. Companies need to innovate – and protect their inventions. “You require the protection of your IP and, particularly, Patent Idea in order to obtain a good return on the investment,” she says.

Many international businesses have baulked at exporting to Europe as a result of complex patent processes across multiple jurisdictions that can end in potentially high costs and marginal protection. However, the EPO is promoting a new unitary patent system that promises to become a game changer. This makes it possible to get protection in up to 26 participating European Union member states with the submission of any single request towards the EPO.

A November 2017 EPO study, Patents, Trade and FDI in the European Union, suggests better harmonisation of Europe’s patent system has got the possible ways to increase trade and foreign direct investment in high-tech sectors, delivering annual gains of €14.6 billion ($A22.8 billion) in trade and €1.8 billion (A$2.81 billion) in foreign direct investment.

Fröhlinger believes Australian businesses across all sectors have possibilities to expand into the European market, which boasts more than 500 million people, high gross domestic product and powerful consumer demand. “It’s extremely important for Australian businesses to know that you will find a big change ahead in Europe. I’m not talking only about patents,” Fröhlinger says. “It’s very important with an integrated IP portfolio considering patents and trademarks and (covering) design. If they don’t have (IP) individuals-house they should make an effort to get strategic business advice.”

The price of intangible assets – This call to action for Australian businesses may come as the Global Innovation Index 2017 reports on countries’ IP receipts being a percentage of total trade. In essence, the measure indicates the way a country has been doing on the IP front. While Australia scores well with regards to inputs into research and development, the usa (5.1 per cent), Japan (4.7 per cent) and Finland (2.9 %) easily outperform Australia (.3 percent) on IP royalties.

The message? As a general rule, Australian companies are not proficient at converting research into value and treat IP almost as an administrative function. The exceptions are health tech leaders, such as medical device company Cochlear and sleep-disorder business ResMed, which understand the significance of intangible assets like logo and data use, and build their briaac around it.

In a knowledge-based economy, IP has developed into a crucial business tool and governing it is no longer just a matter of organising trademarks and Inventhelp Patent Information. Intangible assets are rapidly becoming more important than tangible assets and require appropriate consideration.

Overview of Australia’s top listed companies, released by Glasshouse Advisory in September 2017, endorses such a sentiment. It reveals that 38 per cent of the companies’ value (regarding a$550 billion) is not included on the balance sheets; this indicates that investors are operating without insights right into a significant proportion of the corporate asset base.