IP 101 - protecting core business assets

Posted: 20/05/2015

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All businesses rely on their own and others’ intellectual property rights (IP). For many it is what gives them their competitive edge, but few have a clear idea of what they own and what they use and fewer still protect their rights as well as they should. Partner Jon Bartley gives a birds-eye view of some key IP issues. 

As a start-up, you should always have a weather eye on future potential investment. One of the biggest 'turn offs' for an investor is when a business is unable to provide evidence that it has all the necessary IP to operate or to protect its position. 

Here is a quick canter through some of the main areas of IP to consider: 

Copyrights

This is an automatic right arising from the moment of creation of any work in which copyright is capable of subsisting, including literary and artistic works and computer source code. Copyright owners have the right to prevent unauthorised copying or use of their works. Code that you develop is automatically protected by copyright, as long as it is original. No need to register it, no fees to pay. However, it is vital to ensure that any freelance programmers transfer the copyright in the code to your company. Paying them to do the work will not mean you own the rights to it. A freelancer or consultant will own the copyright in what he or she creates, unless you have a written agreement transferring it to you. It need not be complicated, but investors will want to know that it is sorted out. 

In most cases, you will automatically own IP created by employees, although you should still ensure that ownership is properly addressed in their employment contracts.

If your main asset is content then, again, there will automatically be copyright in artwork, text and music that you create but make sure you own it, not your freelancers. There may also be third party copyright, such as in 'off the shelf' images from Shutterstock or Getty Images or in third party software, and you should ensure that you identify all third party IP and understand the terms on which it is licensed to you.  

Investors will also be keen to understand the extent to which you make use of open-source code; it is important to keep records of any code used and understand the licence terms that apply to that code.  

Bear in mind that copyright protects the work itself rather than the ideas underlying the work, so you cannot use copyright to prevent someone writing new code that produces the same or similar outcomes. 

Confidentiality

Although not strictly IP, this would apply to information not already known to the public which is disclosed to others under an obligation of confidence, express or implied. If someone discloses or misuses confidential information, in breach of their obligations to you, you may have a right to sue, either for damages or for an injunction to stop disclosure. It is never a good idea to rely on an implied duty of confidence, so ensure that you use robust NDAs when sharing sensitive business information. 

Patents

These are rights granted in respect of certain inventions. Patents provide their owner with a time-limited monopoly on their invention (20 years in the UK), but will only be granted where the invention is novel, does not form part of the 'state of the art', and is not an obvious improvement on the state of the art. Inventors need to be careful not to disclose too much detail about their invention in public, otherwise it could end up being state of the art – NDAs are valuable here. Computer software can be difficult to patent in Europe unless it can demonstrate a 'technical effect'. 

Trade marks

These are signs used to distinguish a trader’s goods and services from those of its competitors. They may comprise words, logos or more abstract marks such as colours or store layouts. Registered trade marks give their owners a right to prevent others from using them in relation to the same goods and services. They are cheap to obtain and initially last for 10 years, but can be renewed indefinitely. Infringement of an unregistered trade mark can form the basis of an action in passing off. Before committing to your brand, consider whether it can be registered as a trade mark (it may fail if it is too descriptive) and check whether anyone else has already registered a similar trade mark. 

Domain name

Finally, don’t forget to register your domain name, and in the name of the company, not one of your staff!

This article was published in Disrupts magazine in May 2015.

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