At the core of every technical and knowledge based business is intellectual property (IP). One of a business’s most important business assets is your IP. But you need to know how to recognise and protect your IP to make the most of the business opportunities and advantages it gives you. So let’s go back to the basics.
What is intellectual property?
IP is an umbrella term that describes 'the innovative idea behind new technology, products, processes, designs or plant varieties, a brand, trade secret, or the goodwill associated with a business, product or service'.
Underpinning the term 'intellectual property' are distinct rights. Some of these rights are created by applying and registering to own the rights, and others exist automatically and remain unregistered. Each right protects distinct aspects of a new product or innovation and each has different terms.
The main kinds of IP rights
- Patents - a patent protects the ideas embodied in new technologies, products and processes. Patents cover a principle or idea and not just a single physical form of an invention. A patent can last 20 years.
- Designs - a design protects the appearance of an article, such as its shape, configuration, pattern or ornamentation. A design registration lasts 15 years.
- Trade marks - trade marks protect names, logos, signs, symbols, tastes, smells, slogans, colours and shapes that identify the goods or services of one business and distinguish them from competitors' goods and services. A trade mark registration is an enduring right; it can last forever. Trade marks are often called brands.
- Copyright - copyright protects the particular way in which an idea is expressed. Copyright is a property right which automatically exists in some original works including literary works like articles, website content, promotional material and artistic works like logos and advertisements. Copyright also exists in technical drawings, plans and prototypes. Copyright has different terms depending on the nature of the work but generally lasts for 50 years following the death of the author or 50 years from the end of the calendar year in which the work is created.
A single product or innovation is capable of holding more than one of these different IP rights.
Other IP rights include trade secrets, confidential information, domain names, business methods and plant variety rights.
An IP strategy is important
A starting point for making sure you protect your IP properly is an IP strategy. An IP strategy aligned with a business strategy will allow you to take advantage of the IP you create and alert you to any problems with using IP owned by others.
Informed decisions about IP protection can only be made once the potential of the IP has been assessed. While protecting IP affords important advantages, the decision on whether to protect or not, should still be guided by other commercial considerations relevant to your business.
An IP strategy should match your current business strategy. IP is a tool to help businesses achieve their commercial objectives. You need to be clear about what your commercial objectives are to ensure that you do not collect a portfolio of IP rights that do not add value to the business.
Make sure you own the IP
You should not assume your business automatically owns all IP created by employees, third-party contractors or consultants. Your agreement with employees, consultants and contractors should be clear on who owns the IP created by them and provide for transfers as needed. Separating your business's confidential know-how from employees' general skill and knowledge can be difficult. IP ownership should be clarified at the beginning of any relationship rather than at the end.
Identify what IP you have
Carrying out an IP audit will tell you what IP you own. You may be surprised at what IP assets your business has.
An audit will look for trade marks, patents, design, trade secrets, copyright, domain names, contracts (including licences) and business information (such as customer and marketing lists and financial information).
When you know what IP you own, you will then be able to record it and review its continuing relevance to your business. It may not be too late to protect what you have created even if you have been using it for some time.
Identifying future IP
Seeking professional advice early in creating IP will help maximise the value it will add to your business.
Patent and design protection need to be applied for before there is any disclosure. Unintentional disclosure of your product or innovation could mean that you lose the opportunity to protect it with a patent or registered design.
Most IP rights require you to file an application at the Intellectual Property Office of New Zealand. The exception is copyright. Copyright exists automatically once a work is created in which copyright exists. Therefore, it is necessary to keep copies of all dated and signed copyright works to enforce copyright against infringers.
Before investing money in protecting IP, you can search databases of registered IP rights in New Zealand and overseas. You need to make sure that no-one else has better rights to the IP you intend to protect in each of the countries where you intend to use it. Clearance searches are essential because you don't want to spend money on developing and marketing your product and then having to change track. Worse still, you don't want to find yourself facing a lawsuit because prudent checks weren't made.
You may also consider possible commercialisation pathways and conducting market research as part of a broader IP strategy.
What are your competitors up to?
Undertaking a regular review of IP databases can provide valuable insights about whom your competitors are and what they are doing. It will also give you ideas about product development and how to lessen infringement risk. You may be able to identify potential business partners or takeover targets by reviewing their registered IP rights.
The last word
The value of IP for a modern business is undisputed. IP rights need to be treated in line with the overall business strategy and vision.
IP law is complex but an important tool to add value to your business.
An edited version of this article first appeared in the September 2012 edition of NZ Entrepreneur.