In a new series, we explore the legal implications of growth. This follows the launch earlier this year of our in-depth report, Ambition 2025, which looks at the drivers for growth of North West businesses – their strategic objectives for the year, the challenges that lie ahead and the opportunities that exist in their quest for success. The report dives into a number of core areas that feature prominently in the growth ambitions of regional businesses. These include finance, people, innovation and sustainability.

In the third of four blogs, we focus on the key topic of innovation, speaking to partner, Sarah Bazaraa, and associate partner, Danielle Amor, about its importance and what businesses need to consider from a legal perspective when scaling up.

The importance of innovation

When it comes to technology and innovation, the North West is rapidly making a name for itself, particularly in Manchester where the digital economy is worth over £5 billion, employs more than 88,000 and is home to over 10,000 businesses. This has resulted in the thriving digital ecosystem being ranked as the UK’s ‘top digital tech city’ and Europe’s fastest-growing tech hubs.

But the impact of technology is not only being felt by those that create it. Its impact is being felt across a multitude of industries and professions. In fact, nearly a quarter of respondents (22%) of the Ambition 2025 survey ranked ‘innovation within their sector’ as one of the top three business priorities in 2025, with 24% of businesses looking at how AI can be adopted across their business – more than a third (38%) of North West businesses said the biggest impact of this was improving efficiencies.

The survey clearly shows the importance of innovation in helping businesses to achieve their growth ambitions.

“The world doesn’t stand still and things change all the time,” explains Sarah. “As such, businesses need to evolve and innovate in order to stay in the race, particularly in highly competitive markets and in an economic environment where business leaders are constantly being kept on their feet.”

The need to adapt and innovate is driven in part by a desire to create efficiencies and achieve more with less, while at the same time pushing boundaries through products and services that break new ground.

But, as a scaling business how do you know when the time in right to embrace innovation?

“Innovation and implementing change is something that businesses need to consider on a regular basis,” says Sarah. “But timing can also hugely depend on what’s happening in the wider world. The Covid pandemic is a prime example. It forced people to stop and reassess their position in the market.”

While that may have been an extreme event, it’s essential that businesses remain agile and adapt to what’s going on around them. However, it has to be for the right reasons, Danielle cautions.

“It’s about striking a balance,” she explains. “You don’t need to reinvent the wheel, just for the sake of it. If someone is doing something really well, take advantage of it. You need to play to your strengths and work out where your business can innovate and make a real impact. If you’re just replicating what other people are doing, but in a slightly different way, there’s a risk it may add significant cost to your business without the benefits.”

Cost clearly plays a big part in innovation, particularly for start-ups.

“Companies at an early stage in their growth journey simply don’t have the budgets to create bespoke solutions, particularly when there is so much out there that you can get off the shelf that will serve your business in the same way,” explains Danielle.

“Innovation can also be daunting to a lot of companies that feel they have to come up with a totally new idea in order to meet the brief,” adds Sarah. “The reality is you can still innovate by adapting what already exists to serve your business, your audience and your sector.”

The ability and open-mindedness to pivot is also a key component of innovation. “There are so many examples of brands that failed to adjust quickly enough to changing market conditions and consumer sentiment,” explains Sarah.

“Timing is everything,” Danielle comments. “Choosing the right time, as well accepting that the world is changing, is crucial.”

Key legal considerations

From an innovation and IP perspective, there are several key legal factors to consider when vying for growth. These include:

• IP ownership – Businesses need to think about where IP ownership sits, especially if you’re working with a third-party consultant, a design agency, or a software engineer who’s not employed by you. “A lot of businesses don’t realise that the IP will sit with that third party, so you need to make sure that your contracts make clear that any kind of content, creations, or inventions that are produced by a third party on your behalf are assigned to you so that you own that IP in the first place,” explains Sarah. “This is particularly important if you intend to seek investment in the future, or you want to sell your business, as prospective investors/buyers will want to see that you own what you say you own.”
• IP registrations – Once you own the IP, you may want to consider securing intellectual property registrations for any key products, designs, or inventions. “Businesses will own unregistered rights in certain innovations,” says Sarah. “But for some of your key lines, depending on what it is, you may want to think about securing a patent, or a registered design right, to add another layer of protection.”
• Confidentiality – By not keeping certain information confidential, you run the risk of losing your IP rights and, for example, your ability to safeguard the innovation in a trade secret or to secure a patent. “It’s also important to consider whether you need non-disclosure agreements, particularly if you’re going to be speaking to third party suppliers, potential investors, or you don’t understand the process of how to put an idea into the world,” explains Danielle. “An NDA makes sure that you’re not giving away your best ideas for somebody else to quickly launch it before you have the opportunity.”
• Data – this is a big consideration if you’re creating new technology that is using personal data. You must ensure this complies with GDPR and that you take appropriate steps to mitigate any risks. “Fines from the Information Commissioner’s Office can be significant and, as we know, data breaches can cause huge reputational damage, with M&S, the Co-op and JLR, three high-profile examples,” says Danielle. “It’s about making sure your systems are secure, your personal data is as secure as it can be, while recognising that the protection of personal data is actually critical in many cases to the entire operation of the business.”

Support and guidance

Given the complexities surrounding innovation, seeking professional and early advice is key. There are also a number of other resources available to guide you through the process, including the Intellectual Property Office. “The IPO has a really good website, with lots of information for early start-ups,” explains Danielle. “The ICO also has lots of information from a data perspective on compliance.”

“Innovate UK is another useful resource for start-ups to tap into and a good starting point for businesses looking to innovate.” Sarah concludes.

If you would like to speak to Sarah or Danielle in more detail about the role innovation plays in your growth strategy, you can contact them on sarah.bazaraa@pannonecorporate.com and danielle.amor@pannonecorporate.com