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Entrepreneurs Panel

Steve Purdham
Jeremy Roberts
Tony Caldeira
Jennie Johnson
Charlie Mullins
Julie Meyer
Michael Oliver
Brian Hay
Richard O'Sullivan
David Pollock
Debbie Pierce
Laura Tenison

To buy or not to buy?

Steve Purdham

Has worked in the software industry for more than 25 years. Founded Surfcontrol in the early 80s and built it into a global provider of internet filtering software before it was sold to California-based Websense in 2007 for £201 million. Moved straight onto the launch of We7, an advertising-funded music download company supported by rock legend Peter Gabriel. We7 was relaunched in 2008 as an internet jukebox with 3.5 million songs which users can listen to for free. Purdham is hoping for user figures of two million in 2009.

Question: 

I’ve been offered the chance to buy a small manufacturing outlet with a great product that I think will
succeed if marketed properly but as far as I can see they haven’t got their patents in order. The opportunity for a good deal isn’t going to hang around forever – and it does seem like a good price – so should I just go for it or is it a definite no-no messing with a firm that hasn’t got its patents sorted?

Answer: 

This has to be a clear risk assessment as to whether to proceed or not. You need to ask, if they had no patent at all, what is the “real” risk to the business? Will it still hit its sales numbers, will competitors close you out of the market, or are you under threat from competitive patents that could restrict your trading?

Most businesses are very successful and never own patents. In many operations patents tend to be used for marketing purposes and don’t have the same value as can often be attributed to them, whereas clearly the existence of some patents to certain businesses is their core value.

So if the patent is critical to your ability to market properly and extract value don’t touch it without this being sorted. If it’s a “nice to have” then don’t worry, just use the situation to negotiate an even better deal.

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