Protecting your Intellectual Property

Ever wondered what do the terms Trademark, Patent, Copyright mean?

We encounter all of these terms in our day-to-day business lives.

If you are a startup, entrepreneur or small business it is good to have an understanding of Intellectual Property (IP).

Because every business stems from an idea… and intellectual property is all about protecting ideas.

It is everywhere – you can find it in your branding, your creations, your innovations and your products.

The purpose behind it is to encourage commerce and innovation by offering a method of protecting your identity and anything you create.

It is fair to say however it is an asset that is often overlooked or forgotten about.

As your business grows and expands over time, so will the value of your intellectual property, especially if you have managed to build an excellent reputation for great ideas or for providing top notch products and services.

In this Guide we have set out some of the basics around intellectual property for your business so that you have a greater understanding of what it is all about.

What is Intellectual Property?

Intellectual Property (IP) is something you create.

It is imagination made real.

It’s a thing you own that isn’t a physical thing.

Not so helpful, huh? I know.

So, here’s a philosophical question for you: When you “own” a physical thing, like a piece of land or a computer, what does that actually mean?

It means that you can control who can do what with it, and the law will back you up.

If someone goes onto land you own without permission, that’s a crime: trespassing.

If someone takes a computer you own without your permission, that’s theft.

That’s the fundamental right of ownership.

The same is true for non-physical property, where the important issue isn’t the physical thing, but the thought or concept.

Such as the idea and design of a product you invented, or the content of a book or song you wrote, or the logo of your company.

Not coincidentally, I just listed the three major forms of intellectual property: patents (invention), copyright (content of book) and trademark (logo).

So, this is the upshot:

If you have a patent or copyright or trademark, then you can control, within limits, what people do with your idea or content or logo.

Why Do Intellectual Property Rights Exist?

IP rights have a complicated history – there are lots of debates about why they exist, and many scholars end up tracing it back to a guild monopoly in England.

The purpose of intellectual property rights – patents and copyright at least – is the promotion of the progress of science and the arts.

This is the economic rationale: in order to encourage more people to create, creators are allowed to make profit from their creations.

Trademarks are a little different, because the general rationale for trademarks is to protect and help consumers.

Trademarks are a statement of quality.

What Are The Rights?

There are many rights that are covered under the generic IP term.

Intellectual Property rights include:

• Trademarks
• Copyrights
• Patents
• Designs
• Author’s rights
• Rights in performances
• Recording rights
• Know-how

Though each of these rights has a role to play I want to focus on what I consider to be the three most important rights for small business owners – patents, copyrights and trademarks.

Patents, copyrights and trademarks each have a different scope of protection, a different length of time where the protection applies and different limits and conditions.

Patents

A patent is the right to control the manufacture, sale, import and use of an invention.

The scope here is “inventions”.

We’ll broadly define these as “products or ways of doing things”.

New machines, new formulas for drugs, new ways of manufacturing computer chips.

These inventions have to be fully described in the process of getting the patent, so that it’s clear exactly what you’ve invented, and to make sure you haven’t just “invented” something that isn’t really an invention, but just some obvious minor change to an existing thing (like painting a blue chair red and calling it a new chair).

The protections on patents are the broadest.

You have near-complete control over who can make or use the invention.

Even if someone comes up with the same invention without knowing about yours, you can stop them from making or using it.

If somebody wants to license your invention, meaning they pay you for the right to make or use it, you can set whatever terms you want (within the bounds of reason to all contracts).

By contrast, the time period is pretty short: ten years for a short-term patent and twenty years for a full-term, both running from the patent filing date.

After that, the invention is available to all – and because, as I said, getting a patent involves explaining how to build and use it, you can’t really hide details and get to be the only one who can successfully make it even after the patent expires.

Copyright

A copyright is the right to control the reproduction, sale, distribution, performance and derivatives of an original work of authorship.

This time, the scope is “an original work of authorship,” sometimes called “a creative work.”

Books, articles, songs, paintings, sculptures, plays, movies, building blueprints, detailed character designs and more are all examples of creative works.

Very importantly though, copyright protects the specific works and not the ideas behind them.

I’m going to say that again, because it’s very important, and tends to be misunderstood a lot: You cannot copyright an idea.

The best you can do is copyright your specific work based on an idea (this is called the idea/expression distinction in copyright law).

So, for example, you may not be able to copyright the idea of “a story where two people from different competing families or communities fall in love”… but you can (well, the writers can) copyright the words and music to West Side Story or The Fastasticks.

Note that these are both generally considered to be based on Shakespeare’s Romeo and Juliet, which itself had earlier incarnations, like the Greek myth of Pyramus and Thisbe – which Shakespeare used again in a Midsummer Night’s Dream.

That’s my point: those are all very different expressions of the same basic “two households/star-crossed lovers” idea, and all of them could be separately copyrighted.

The time period for copyright is the life of the author plus seventy years.

After that, the work enters the “public domain,” and is free to be used by anybody, for any purpose.

Check out our guide on how to prove copyright ownership

Trademarks

A trademark is the right to control the use of a mark in association with a good or service.

The scope here is a “mark.”

This is a word, phrase, symbol, picture or even sound – Netflix has its sound trademarked – that is used with a good or service to identify the source of origin.

The protection is “use in association with a good or service”.

When you get a trademark, you get it for the specific thing you make, or job you do.

If people put your mark on the same or similar stuff they’re selling, you can stop them.

Trademark law protects against falsely claiming where stuff comes from, or damaging people’s brand recognition of your mark.

This has the most varied limitations and factors.

How much you can stop people from using or diluting your mark can depend on a few factors: one is the “strength” of your mark, which is whether it means something apart from your trademark.

“Kodak” is considered very strong, because it doesn’t mean anything except the trademark.

“Apple” has meaning outside of the trademark (a fruit), but only a few trademarks, one of which is very recognisable, so that’s considered something strong.

Mark strength can change too.

If trademarks become sufficiently weak, they can end up not being trademarks anymore.

“Kleenex” and “Hoover” are technically still trademarks for tissues and vacuum cleaners, but they’re in danger of becoming just generic terms, which you use whether your talking about Hoover Brand Vacuum Cleaners or Kleenex Brand Facial Tissues.

Another factor is the fame of your mark.

The McDonald’s “Golden Arches” are probably one of the strongest trademarks in the world, because they’re so recognisable.

Even if McDonald’s doesn’t sell a given product, if anyone else uses the Golden Arches, people will think it’s from the “real” McDonalds.

Given that it’s the weakest form of protection – because you can only stop some things under some circumstances – trademarks have the longest term: as long as you continue to renew your trademark every ten years, continue to use it and defend it.

Check out our guide trademarks 101 for a more detailed overview of trademarks.

Essential Criteria for IP Rights

Like everything in life there is always a ‘but…’.

And IP is no different.

Rules still apply.

So, if you want IP protection for your product, invention or written work it still needs to meet certain tests to pass muster.

If your proposed patent, trademark or copyright falls foul of any of the tests, it will be refused outright, case closed.

Below are key examples of the criteria for each type of intellectual property.

Trademarks

• The chosen trademark must have some distinctive character which establishes the sign as unique in some way;
• The chosen trademark must not exclusively describe a characteristic or feature of the goods or services in relation to which protection is sought;
• The chosen trademark must be sufficiently different from previously existing trademarks in the same commercial sector to avoid confusion

Patents

• The invention must be novel compared to anything else already in the public domain. It is therefore essential that any conversations surrounding your invention are conducted under cover of a Non-Disclosure Agreement (NDA) as prior disclosure would be fatal to an application
• The invention must have some technical effect and not just a visual or aesthetic effect
• The invention must not be an obvious modification of something already in existence.

Copyright

• The work must be original and have been independently created
• Copyright protection only exists in the physical manifestation of the work, and not in the idea of the work before it is fixed – for example, written down
• The work does not have to be visually appealing to attract copyright protection,

It is important to obtain professional advice from an IP specialist before making any IP application to ensure that your IP request meets all the necessary criteria.

Intellectual Property – who owns what?

Once your IP has been identified, it is important to identify who owns the IP and whether the business is entitled to use that IP.

The rule of thumb is that if you develop something whilst you are employed, that is, as an employee, the IP belongs to the company you’re working for – your employer.

In the earlier stages of your startup, you may have developed the business without having a formal business structure in place.

As a result of this, you may personally own the IP.

To avoid future issues, for example, when you leave, the ownership of the IP should be assigned to the business.

This is generally done through a written assignment agreement between the founder(s) and the company.

You can access our IP Assignment template here

Why Protect Your IP

There is no monopoly on good ideas.

People discover new things every day.

As you develop your idea into something tangible – whether that means building your business or designing and creating a product to manufacture or sell – someone else might be doing the same thing.

Protecting your creation helps protect your ability to reap the benefits of your hard work.

As well as protecting your IP against infringement, protecting your IP can add financial value to your business, particularly if you are selling at a later stage.

Also, protected intellectual property rights can be used to generate licensing revenue, as security for borrowing and for marketing purposes.

What does the future look like?

What if you could look 5 or 10 years into the future?

What will your creation look like?

Will your company be a household name?

Will you have a product in everyone’s kitchen?

Will you be making money from licensing?

Whatever your goals are, use your IP rights to help you achieve them.

And don’t be afraid to think big.

Benefits for Business

If managed correctly, IP may benefit your business in the following ways:

• Preventing competitors from copying or closely imitating new products, processes and innovations;
• Creating a distinct brand identity;
• Increasing the value of your business as IP can be a valuable asset of your business;
• Gaining a distinct competitive advantage in the marketplace;
• Benefiting from profitable licensing agreements;
• Raising capital from investors;
• Avoiding conflicts over breach of rights

It is important that your business recognises, protects, manages and exploits the value of your IP assets in the same way that you protect your physical assets.

Legal Documents That Can Protect Your IP

When using IP within your business you may take advantage of different legal agreements such as a non-disclosure agreement and a non-compete agreement.

Non-disclosure Agreement

Quite simply, a non-disclosure agreement (NDA) is a legal contract that protects your sensitive and confidential information from being made available to competitors or the public at large. It is also often referred to as a Confidentiality Agreement.

It keeps the lid on such sensitive information.

It is not unusual that you need to discuss proprietary or sensitive information with outside individuals.

Sometimes sharing information is crucial when seeking investment, finding potential business partners or obtaining new clients.

Having confidentiality in writing and signed by all parties can lend trust to these sorts of negotiations and deter theft of your intellectual property.

Take a look at our suite of non-disclosure agreement templates

Non-disclosure agreement – one way

Non-disclosure agreement – mutual

Non-disclosure agreement – Consultant/Contractor

Non-Compete Agreement

Generally, a non-compete agreement relates to a contract between an employee and employer.

It prohibits an employee from working for or becoming a competitor for a certain period of time.

They do not relate specifically to employees though.

Consultants and independent contractors are often subject to non-compete clauses in order to protect your position.

So, how can it be utilised to protect your IP?

Well, you can seek non-compete agreements to protect yourself against former employees revealing secrets or sensitive information about your operation.

For example, you might be a software company that doesn’t want your developers going to the competition where they can share detailed knowledge about products you are developing, which in turn you may want to patent.

Just a word of caution.

There sometimes are challenges as to whether non-compete agreements are legally binding.

There isn’t a simple answer to this; it varies from case to case.

Non-compete are usually considered legally binding as long as they have reasonable limitations, such as clear, realistic regions where employees or others may or may not work, or an exact amount of time that must pass before they can commence work in the field again.

Are you better protected having a non-compete agreement?

Yes.

Does it provide absolute protection to you?

No.

Only registration of your IP can do that.

To find out more about non-compete clauses in employment contracts check out our guide on restrictive covenants