Where does the true value of a business lie? Is it in the building that it owns, is it in the staff that it employs or is it the stock that it holds?
While all of these factors play a role, what is easy to underestimate is the importance of intellectual property (IP).
Microsoft would arguably be worth nothing if its software and branding could be used freely by another business and the same is true for all companies.
Tech and IT are industries that are particularly reliant on innovation and many businesses operate without tangible assets, such as goods and raw materials.
In reality, the key assets for many companies in these sectors are the services, software and solutions that they develop and market. Unlike a manufacturer, these assets cannot be locked away in a warehouse to protect them, which is where IP rights come in.
To help businesses get a better understanding of the ways that they can protect their business, our team of intellectual property specialists have put together 10 helpful tips:
1. Copyright is automatic, but not flawless
All literary, dramatic, musical and artistic works that you create, from illustrations to source code, are automatically covered by copyright at the point of creation, as long as they are original.
However, copyright does not allow for the monopolisation of an idea. It prevents others from copying your work, but it does not offer you the exclusive right to it.
If someone else can prove that they have created a similar or identical work independently then this will not be an infringement of your rights.
Infringement can only be said to have taken place if copying of the whole, or a substantial part, of your work has taken place.
2. Establish ownership
Having established that copyright confers automatic protection to your works it is worth noting that it will typically only last until 70 years after the death of the author (although for some categories of work this period is shorter).
Where the author of a work created it in the course of their employment it is likely that the employer will own the copyright.
However, where work is commissioned, then the commissioner may own the copyright. This should be considered if you are bringing in an outside consultant who is not employed directly by the company. Contracts should deal with ownership of IP in works created under a commission.
3. The Limitations of Design Rights
Like copyright, design rights apply automatically without registration in the UK. However, their suitability for the tech and IT sector can be somewhat limited as they only protect three-dimensional designs, applying to the shape or configuration of an item. This isn’t that useful for images or ideas that are on a flat plane, such as the design of a website.
It is important to also remember that a design will only be protected for the shorter of either 15 years from creation or 10 years from the date it was first made available for sale or hire.
4. A more effective approach to design
A registered design confers a completely separate IP right, with a much broader scope than an unregistered design.
The key difference is that a registered design can protect two-dimensional features. Protection also applies across all sectors, so the registration can protect a range of products featuring the same design.
Not all designs can be protected. The design must be new and it must have individual character. It must not have been published anywhere else in the world, although the designer will have the benefit of a 12-month grace period to register after their first disclosure of the design.
Features of a design which are dictated by a technical function, or which ‘must fit’ to another article, cannot be protected.
The great attraction of registering design rights is that the process is quick and relatively cheap.
Registration will last for five years and provide an exclusive right to make articles to the design in question. Registration can be renewed in blocks of five years for up to a total of 25 years.
5. Leave your mark
A trade mark is a sign or symbol used by a trader to distinguish its products or services from those of other traders. The majority of businesses will already operate their business under a trade mark, and sometimes under several trade marks.
However, there remains some confusion over trade marks, with some smaller businesses assuming that their incorporation via Companies House offers them protection.
The reality is that a UK trade mark must be registered with the UK Intellectual Property Office (and registrations in other territories with the appropriate territorial office). If it isn’t then things get more complicated.
Through your trade under a particular mark, you generate goodwill. You are entitled to prevent the unauthorised use of that goodwill by third parties – otherwise known as passing off – where someone seeks to take advantage of the reputation you have built in your mark.
The difficulty with passing off is that it is hard to prove and expensive to pursue. To establish a claim, you need to show:
Unregistered trade marks are therefore of limited use to a start up with no trading history, as it will struggle to show goodwill or reputation.
The solution is to register your trade mark. Doing so confers a monopoly right to use the mark in relation to particular classes of goods and services within the territory of the registration. The owner of a registered trade mark can prevent a third party from using an identical or similar mark in relation to similar goods and services, without the need to show any reputation or goodwill or any risk of confusion on the part of the public.
6. The various marks available
The use of trade marks isn’t just limited to your logo or brand name. Toblerone, for example, has a trade mark for the shape of its chocolate, while ASDA has a trade mark for the double tap of a back pocket.
Following changes in January 2019 and the introduction of a new trade mark directive it is now easier to register these alternative trade marks, in particular a business can submit multimedia files to protect sounds, particular motions and holograms.
It is even possible to trade mark a particular smell in some cases. With so many different types of trade mark on offer, it is not uncommon for companies to have a large portfolio of trade marks.
7. Trade mark challenges
The registration process is more expensive and takes longer than for registered designs, and a registration can be challenged if it is not used within a certain period.
A trade mark registration must also be original, and cannot be the same or similar to prior registrations in the same class.
Before applying you will need to consider which classes of goods or services will cover your business. This is where professional assistance can be really useful.
A trade mark attorney can assist you in creating a submission which protects the specific types of goods and services that you want it to cover.
This will avoid a situation down the line where your mark is either registered too narrowly and does not provide adequate protection, or too widely, leaving it vulnerable to challenge for non-use.
8. Innovate, Innovate, Innovate
The tech sector is fast-moving. Ideas and approaches are constantly changing and as soon as the latest idea lands there will be companies out there who want to plagiarise your work and monetise it.
Having a relentless innovation cycle keeps others constantly having to catch up. If possible, keep coming up with original ideas to ensure you have a wide portfolio of IP instead of just relying on a single trade mark, registered design or copyrighted work.
9. Confidence, non-disclosure agreements and restrictive covenants
An important but often overlooked aspect of IP protection is that of confidence, non-disclosure agreements and restrictive covenants.
It is not uncommon for people to switch jobs every three to five years. During their employment, they are likely to be privy to many developments and ideas, which may not yet be publicly available.
You may be able to rely on copyright or registered designs to prevent your former employee taking and developing your particular works, but it is often correctly said there is no property in an idea.
Information may be treated as confidential where it 1) has a necessary quality of confidence (for example, internal price lists) and 2) was shared in circumstances importing an obligation of confidence (such as the relationship between an employer and employee).
If there is later unauthorised use to the detriment of the owner of that information, they may have a claim against the disclosing party, but they will need to prove that the requirements above have been met.
Through the careful use of non-disclosure agreements and restrictive covenants, an employer can put it beyond doubt and prevent an employee from leaking sensitive information to a new employer.
10. Act Swiftly
If you believe that your IP has been infringed in some way you must act quickly. Delay could mean that your brand and reputation is devalued, and may prevent you from being able to obtain an injunction to prevent ongoing infringement. Seeking urgent legal advice should be your first step.
Things may need to progress to court, so make sure you have your registrations in order and, where possible, document everything related to your IP so that you can demonstrate that it belongs to your business.
Whether you are just starting out or an established business it never hurts to have a second pair of eyes evaluate your IP portfolio. If you would like the team at iLaw to provide advice on your IP, please contact us.