Start-up series part 5
Your ideas, your brand identity and designs are likely to be at the heart of your business and its value. Continuing our start-up series, we turn now to your Intellectual Property Rights (IPRs), and how best to protect and commercially exploit these.
IPRs are intangible rights that, in a start-up context, help to protect against potential competitors similar products, designs, branding or brand names. IPRs can take various forms (as detailed below) and it is important to establish ownership of these rights from the outset.
As a first step, you need to be clear that no-one else is already using or has created the IP you are relying on for your business. Some web based searching and research into your area can give you an initial indication as to whether someone is already using something similar to yours.
If your business does not own or have an appropriate license to make, use, sell, distribute or license its products or processes, it may be infringing another person's IPRs. This can result in expensive disputes and may require you to pay damages, to alter your products or processes, or to obtain an appropriate licence, which could prove costly.
Once you overcome this first potential hurdle, you need to check that you actually own your IP. It feels counter-intuitive but your business may not own IP created by someone working for it. Unless agreed otherwise, IP created by an employee in the course of their employment by the business will belong to the company. This is not, however, the case where the IP is created by a consultant. Where consultants are involved in the early stages of a business' evolution, they will retain the IP they create unless they have expressly contracted otherwise. So it's important to think about whether founders started work before the company was set up or if you have engaged anyone on an informal or consultancy basis.
Once you have successfully navigated your way through the above, think about the following key IPRs and how they may be relevant to your business.
The identity of your business and the name with which all your hard earned goodwill is associated is of fundamental importance to your relationship with all your customers.
As a first step, clearance to use your brand or mark should be conducted so that you don’t invest in a brand that you are later forced to change. A "mark" can include a word or phrase, logo, picture, shape or even a sound (such as a jingle).
While there is some protection through unregistered rights, your "trade" marks are better protected by registrations of the brand names, logos, and other identifying markers. Registrations should be obtained in each country where the marks are used, or where you plan to use them. Particularly where you plan to trade internationally, there are a number of opportunities to plan your portfolio so that you obtain maximum protection for minimum cost.
Without a trade mark, there is a risk that a competitor will copy your branding, and therefore damage the distinctiveness of your business, without consequence.
This is an unregistered right that crops up in all businesses protecting anything from code to instructions manuals, photographs to fabric prints. The purpose of copyright is to protect your original work, and to stop others from copying it. This can be important, for example, where you feel that a competitor is replicating your work and you don't have any registered rights in relation it. Ownership issues are very common where a contractor creates the work, for example, code, and so it is extremely important to ensure that ownership is formally managed in order to prevent uncertainty and disputes later down the line.
From the mechanical to the aesthetic, design rights subsist in original designs. Unregistered rights will protect against copycat infringers whereas registered protection provides a monopoly right. These are very useful rights often providing protection in unexpected places.
These protect those 'light bulb' moments but also a good deal of more incremental product or process improvements. The key to a patent is that the invention protected must be both new and not obvious. A patent can be the foundation of business, the reason investment is made and also, as with other rights, provides security for lenders. A key point to remember is that early disclosure (except under an obligation of confidence) can be fatal to a patent application and so new products and processes should be kept confidential until the patent application is filed.
Your business may benefit from a patent where competitors can reverse engineer your IP and utilise or market the same design to your business' detriment. Patent protection can be expensive, but the benefit of having a universal right to sell or license the invention is often worthwhile.
An alternative to a patent is to keep your IP a secret. This is suitable for inventions that cannot be reverse engineered by people who may want to copy your idea. For example, Coca Cola’s recipe is a trade secret.
A good deal of information is disclosed in the course of seeking funding, searching for business partners and suppliers or manufacturers. Not all of this information should be made available except under an obligation of confidence – otherwise you may find that you have disclosed the key to your business without having anyway of preventing others from using and benefitting from that information. Steps should be taken to identify what information is key and should be kept confidential so that its disclosure can be sensibly managed. Entering into a Non-Disclosure Agreement is recommended where you need to disclose confidential information about your business, product or brand.
Our IP team advises on a wide range of IP rights and works with start-ups to develop a clear IP strategy for long term growth and future investment. The team also has significant experience in advising on IP disputes in the High Court, Intellectual Property Enterprise Court, and arbitration. Please do get in touch if you would like to chat through any of the above.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2019. Specific advice should be sought for specific cases. For more information see our terms and conditions.