Intellectual Property Protection – Key considerations for your business

In this first of the series, we discusses what Intellectual Property is and highlights some critical considerations for you and your business.

1. What is Intellectual Property?

Intellectual Property (IP) refers to the intangible assets you or your company (you) may own which can increase your competitiveness and add to your overall commercial success. Broadly speaking IP can be split into four key areas, each one operating differently to protect a different asset. These areas are;

Trade marks – these usually protect branding, company logos and trading names but can also include sounds, shapes and colours. Trade marks usually allow consumers to recognise your product or service;

Copyright – these rights come into existence automatically upon the expression of an original idea, for example the drawing of a picture or the writing of an article or passage of text. For this reason, your expression must be different from what has come before to be afforded copyright protection;

Design – these rights protect the appearance and components comprising a product. Protection extends to aspects such as the shape, colour and materials used; and

Patents – these protect inventions. Due to the high level of protection offered, your invention must be unique and may require specialist advice depending upon the nature of the invention.

To understand how IP works in practice, it is often helpful to think about it in terms of physical property, for example a house.

In the same way that a house is made up of many component parts, for example bricks, windows and a roof, different IP rights can exist together to create your IP portfolio. You would take steps to protect your house, for example via an alarm system or by having a dog, and it is just as important to actively look after your IP rights in a similar way via protective documentation and/or registrations.

2. What Intellectual Property could I own?

You may already own a wide portfolio of IP which can be overlooked despite such rights being one of your most valuable assets. Your portfolio may include:-

• the name of your business and any products, including logos;
• anything you write or produce, such as marketing materials and website content;
• the design and look of your products.

The type and extent of your IP portfolio will depend largely on the nature and type of business you operate. Whilst ownership of IP is obvious where you have created it, issues can arise where you instruct third parties to create IP on your behalf.

For example, we frequently come across clients who believe they own the IP rights in a specific aspect of their business, e.g. a website or app built by a third party. A common misconception is that payment of the third party’s invoice means you own the IP, which is in fact rarely the case. The legal position is that the third party will retain ownership of IP they create on your behalf unless a specific assignment document is entered into.

3. How can I protect my IP?

In the case of trade marks, patents and design rights, there are specific registration processes in place in the UK, EU and further afield whereby you can apply to register those IP rights. It is important to seek advice and take steps to register your IP wherever possible and to renew such registrations in the proper way as having a specific IP registration makes defending or pursuing any infringement action easier.

As copyright is an unregistrable IP right, you should take steps such as using the well-known copyright symbol with the date and name of the creator or owner next to or at the bottom of the relevant works and also gather some form of evidence as to when the works were created and proof as to the author of those works.

In addition, documents such as non-disclosure or confidentiality agreements are imperative where you are discussing ideas incorporating your IP rights with third parties. Where employees, subcontractors or other third parties are creating IP on your behalf, you should ensure that the documentation you have in place with those parties contains a clause acknowledging and assigning any IP created in the course of their engagement to you.

4. At what point should I consider protecting my IP?

This is one of the most difficult questions we get asked by clients, especially those where cash flow is tight. Putting the necessary protective documentation in place and obtaining IP registrations are often, in the eyes of business owners, expensive exercises that can wait until a later date. Unfortunately, delaying taking such steps can put your IP rights in jeopardy and you should be thinking about registrations and protective documentation from day one.

Where you believe you have a registrable patent and/or design right, it is important to seek advice and look to register these as quickly as possible. With these types of IP, there is usually a race amongst competitors to be the first to register such a right. Whilst taking steps to register patents and/or design rights may cost a significant amount of money in the short term, the protection and advantage gained by having these registrations can be invaluable.

In the case of trade marks, there is no right or wrong answer as to when you should seek to register a word or figurative mark. It is important that the scope of any application made is sufficiently broad to cover all of the operating activities of your business, but not so broad as to invite invalidity or other challenges from third parties. No amendments can be made to registered trade marks other than to reduce their scope and therefore it is essential to ensure that the classes of goods and services covered, and the mark actually being protected, are correct and final in order to obtain the most benefit from your registration.

5. Can I use my IP as a revenue stream?

Like with any business assets, IP can, at the choice of the owner, be exploited for the commercial gain of a business. This is usually achieved by entering into a document under which, in exchange for a fee, you grant a third party the right to use your IP on terms that you have agreed with them known as a licence.

Not all businesses will choose to utilise their IP in this way. In the case of a trading name or logo, it is unlikely you would license the right to use this to a third party unless you were creating a franchise. However, in the case of products containing IP, such as software and Apps, you may seek to create revenue by granting licences to third parties for its use.

There are many different ways in which IP licences can be drafted and you would need to decide which revenue model would work best for your business. For example, will the licence be an annual recurring subscription, or will it be perpetual requiring payment of a single fee only. It is essential to obtain legal advice on the structure and content of any IP licences that you are looking to grant to ensure that both the IP and the related revenue stream are protected in the best way possible.

6. What should I do if someone infringes my Intellectual Property rights?

Infringement occurs when a third party uses someone else’s IP without a licence or outside of the scope of a licence. Any infringement of IP rights can negatively affect a business’ reputation and profits. As a result enforcing such rights is of paramount importance.

There are a number of ways a business can protect its IP rights. Proactive steps include applying for additional protection through registration and regularly monitoring for potential infringement.

If an infringement is suspected, you should obtain evidence quickly and take swift action. It is often possible to deal with infringements quickly and cost effectively through a cease and desist letter or by granting an appropriate licence. In more serious situations, it may be necessary to bring an infringement action against the offender and to seek an order for an injunction (requiring the offender to cease the infringement) and an order for damages and/or an account of profits to cover any losses the business has suffered as a result of the infringement.

Contact our Intellectual Property Solicitors

Steele Raymond is one of few firms in the south coast that has a team dedicated to Intellectual Property Rights. If you would like to discuss your legal options with our intellectual property rights solicitors, please contact Peter Rolph on 01202 294 566 or email [email protected].