UK companies entering the US market have not sufficiently prepared for threats to their intellectual property
UK companies entering the US market often do so without putting in place basic protections of their brand and other IP such as patents, shows new research by Allentra USA, the management consultancy firm and Mathys & Squire the intellectual property law firm.
76% of the UK companies covered by the research, that were in the process of expanding into the US*, had not registered their core brand names or product marks with the United States Patent and Trademark Office (USPTO).
Among those companies that were already trading within the US 78% had not yet registered brand names or product marks in the US.
Unfortunately, one of the companies that was part of the research had already run into legal difficulties over their IP in the US and were actively involved in a trademark dispute with a US entity with a similar name. Mathys & Squire point out that this dispute could have been avoided by conducting availability searches and filing a trade mark application with the USPTO prior to launch. The associated cost is low when compared to a US based legal dispute.
Rebecca Tew, trademark attorney at Mathys & Squire, comments: “It is a concern that UK companies, that are already investing money to build their brand in the US, have not implemented basic IP protection nor assessed their freedom to operate. This is an important step before any business expansion but particularly in the US which is known to be litigious and where the costs of defending an action are high.”
“Failing to protect your IP properly could jeopardise your entire investment in a new market.”
Ian Collins, founder of Allentra USA, which advises businesses on US market entry adds: “For most ambitious UK companies, the US represents the single largest commercial opportunity available. However, it also operates by entirely different rules from the UK and Europe.”
“Protection of IP in the US is essential. Our research has identified intellectual property exposure as one of the most consistent and most underestimated risks facing UK companies entering the American market.”
“In ten years of working with over 3,500 companies on international expansion, the pattern is consistent. The companies that avoid the expensive mistakes are not the ones with the biggest budgets. They are the ones that asked the right questions early enough to act on the answers. On IP specifically, the gap between what UK IP registrations provide and what US market entry actually requires is one of the most consequential things a founder should understand before they commit.”
What the research found
Across the cohort, the most common IP situation was not deliberate negligence but a straightforward assumption: that UK patent and trademark registrations provide meaningful protection in the US. They do not. Patents are territorial and a separate US patent filing needs to be made (within a limited time frame) if an invention is to be protected in the US. For trade marks, the US operates on a “first to use” basis rather than the “first to file” principle familiar to UK businesses, which means a company can arrive in the American market having spent years building a brand in the UK, only to discover that someone else has prior rights to that name in the US simply by virtue of having used it there first.
The commercial consequences of discovering this at the wrong moment are significant. USPTO trade mark opposition or cancellation proceedings typically cost between £15,000 and £40,000 in legal fees. Full litigation is a multiple of that. The more pragmatic resolution, a negotiated coexistence agreement or a differentiated US brand identity, is almost always more economical, but it requires identifying the risk before it becomes a conflict rather than after. In terms of patent protection, if a US patent application for an invention is not filed within 12 months of a first public disclosure or sale by the inventor, or within 12 months of an earlier UK patent filing for the invention, it may no longer be possible to protect an invention in the US (or anywhere).
The research also identified a cluster of secondary IP issues that recur consistently across different business types. For technology companies, there is often a misconception that software cannot be patented. It can and, indeed, software inventions represent a significant proportion of the patent filings made in the UK, EU and US. Further, the landscape for software-implemented patent protection in the US is materially different from the UK and EU, and can often be more favourable in the US. In other cases, trade secret protection combined with robust confidentiality provisions can be the more practical defensive strategy.
For companies licensing IP from a UK parent entity to a US subsidiary, the documentation supporting that licence and the fee structure it embeds needs to satisfy both HMRC and the IRS, a requirement that is routinely overlooked until it creates a problem. For businesses planning significant US marketing investment, the freedom-to-operate question, whether existing US trademark holders or patent owners have prior claims that could disrupt that investment, is a search that should happen before the spend, not after.
Perhaps the most urgent practical finding is one of timing. USPTO trademark registrations take nine to twelve months and often longer from application to grant. Companies that delay that filing until they are ready to launch in the US will find themselves operating without the certainty of protection for the entire critical period when they are building brand recognition and attracting customer attention. The cost of conflict clearance searches and of filing a trade mark application is modest relative to the cost of the problem it prevents.