What is IP?
Intellectual property (IP) is simply the products of your creativity that can be legally protected. This includes patents for inventions, trade marks for brands, designs to protect the visual appearance of a product or its packaging, and copyright which protects artistic and literary works.
IP is an ‘intangible asset’ – like tangible assets (e.g. real estate), IP can be bought, sold, rented by you, or rented to someone. It can be an organisations’ most valuable asset. If your business gains traction, you can leverage your IP to derive value by attracting investment, establishing market position, deterring competitors, building reputation, and driving product development.
But understanding IP is not just about ‘value’, it’s also about securing your ability to do business, without infringing third party IP.
Did you know that an Australian business name (ABN), Australian company name ACN) and domain names per se are not considered intellectual property just because they are registered? For your business’ intellectual property to be protected, you first need to know what IP you have.
A trade mark is a word, phrase, letter, number, sound, smell, shape, logo, picture or aspect of packaging used to distinguish your goods or services from those of other traders. Trade mark registrations remain valid for 10 years from the filing date and may be renewed every 10 years upon payment of applicable fees.
The owner of a registered trade mark has the exclusive right to use the trade mark for the goods and/ or services for which it is registered. A registered trade mark owner is also entitled to take legal action to prevent unauthorised use of the trade mark.
Trade mark registration is not compulsory in Australia but strongly recommended because a registered trade mark is much simpler and more economical to enforce than unregistered trade mark rights. In Australia, trade mark rights accrue from the date of first use.
A patent is one way to protect an invention such as an improved product or process, or how something works.
In Australia, a Standard Patent gives a 20-year monopoly right to exclude others from the patented invention.
The usual first step towards patent protection is to prepare and file a “provisional” patent application. This has one main purpose: to establish a “priority date” (i.e. the date by which patentability is assessed).
A provisional patent application lasts for 12 months during which you are free to disclose your invention publicly, making it easier to attract investment or commercial partners without risking loss of rights to your invention.
Typically, before the 12 month period ends, a further “complete” patent application is filed, which can be an Australian Standard or Innovation Patent application. There are also options at this point for seeking patent protection overseas.
Registered designs protect the visual appearance of a product or its packaging. This is different from artistic works that are generally protected by copyright, or functional features covered by patents. Designs are registered in Australia for 10 years.
Both 2D designs – such as a printed pattern applied to cloth or wallpaper – and the 3D shape of products can be protected by way of design registration.
Products can be functional as well as aesthetic. Examples of products suitable for design registration are the shape of a medical device, furniture, embossing on flatware, and patterns printed on fabric.
Registration of a design application will occur soon after the application is filed provided all of the formal registration requirements are met. There is no automatic examination, but examination of an Australian design is essential before the rights to the design can be enforced.
Copyright protects original literary, artistic, dramatic and musical works, which includes computer software code and trade mark logos.
Content is protected by copyright automatically upon creation. The duration of copyright protection can last as long as the life of the author plus up to 70 years – but depends on the copyright work. Some countries provide a registration system for copyright (e.g. China, US and Canada).
Copyright protects against someone actually copying your work – but does not protect against someone who independently creates a very similar work.
Intellectual asset management
Intellectual assets encompass traditional IP rights (such as patents, trade marks, designs and copyright) as well as trade secrets, contracts with clients, suppliers and staff, customer lists, licenses, databases and the goodwill in a business and its brand.
Human capital is also an important part of your businesses intellectual asset portfolio – namely peoples experience, knowledge, skills, creativity, ideas and innovation.
The best way to keep track of your intellectual assets and IP is through Intellectual Asset Management (IAM). This includes a full inventory of all intellectual assets of value to your business, as well as an understanding of the competitive landscape within which your business sits.
When your employees create anything for your business as part of their employment, that creation is an intellectual asset. To ensure it’s your asset, make sure you cover intellectual asset / property ownership in your employment contract. And if you ever consider selling your business, a potential buyer will value it more knowing your intellectual assets are documented and protected.
Contracts and IP
It is a common mistake to rely on a handshake rather than getting a properly drafted contract or agreement. Having dealings properly documented helps to prevent disputes by avoiding misunderstandings, which can arise even where all parties have the best of intentions. It also brings to light issues not previously considered that are relevant to the project/deal.
Typical contracts include employment contracts, development agreements, licences, commercialisation and research agreements and non-disclosure/confidentiality agreements.
IP contracts need not be time consuming or expensive to prepare. A good lawyer with experience in your industry can identify and help resolve issues efficiently, and tailor the scope of the legal documentation to the scale of the transaction.
Trade secrets / confidential information
Any confidential information which provides your business with a competitive edge may be considered a trade secret. Think of KFC’s original recipe, Google’s search algorithm or McDonald’s Big Mac special sauce.
Whereas a patent or design involves the disclosure of information in exchange for a finite monopoly period, there is no expiration period for a trade secret provided you can keep the information confidential.
Competitive business intelligence
Before filing a trade mark, design or patenting an invention, it’s useful to conduct a search to determine what has gone before. Why waste time and money ‘reinventing the wheel?’ Are you infringing third party IP?
Product recalls, relabelling, and brand and reputational damage can be significant costs that could ruin your business. So, understanding other people’s registered IP rights will help minimise your risk of infringement and enable you to determine your businesses freedom to operate (‘FTO’).
With regard to driving innovation in your business, analysis of published patent data can provide numerous advantages including providing market insights, identifying competitors, and guiding research and development in new directions.