“You know, sometimes I don’t understand what’s wrong with us. This is just about the most creative and imaginative country on earth—and yet sometimes we just don’t seem to have the gumption to exploit our intellectual property.”
― Boris Johnson
Intellectual Property and Entrepreneurs
Intellectual property (IP) is referred to as the ‘property of the mind’ and a ‘creation of the mind’. Unlike physical property, it is intangible, meaning it may not be something that you can hold or touch. IP usually begins with a new and original idea. That idea is your intellectual property which you have created with your mind. While the idea itself is not something you can necessarily protect on its own, once the idea is turned into an inventive step, brand name, logo, artwork, design, computer software, a written piece of work or music, it generally belongs to you and becomes something which you can protect under law. There are different legal and commercial relationships which can impact who owns IP which is important for creators of IP to understand.
Ownership of IP provides you with power. As an IP owner, depending on the type of intellectual property right, you have a number of exclusive rights relating to its commercialisation. You also have the right to take legal action against third parties who infringe your intellectual property.
Conversely not securing the ownership of intellectual property rights in your business assets or products may mean others obtain those exclusive rights before you. This can hamper the growth of your business and potentially expose you to legal action. As an entrepreneur, it is imperative to identify valuable IP in its early stages and seek to ensure that ownership of your IP is secured and property protected.
Types of Intellectual Property Rights
In most jurisdictions, the most common IP rights are:
Patents – protects inventions such as devices, substances, methods and new processes.
Trade marks – protects logos, symbols, words and other branding, including sounds or scents.
Copyright – protects (amongst other works) art, writing, music, film, and computer programs.
Registered designs – protects the visual design of a product, the way it looks.
Circuit layout rights – protect layout designs or plans of integrated circuits and computer chips used in computer-generated designs, such as those found in watches, electrical appliances and medical equipment.
Plant breeders rights – protect the commercial rights of new plant varieties.
Confidential Information – provides the right to have your trade secrets and other confidential information, kept confidential.
Some IP rights arise automatically upon creation of the IP, such as copyright, while certain other IP rights listed above require registration to ensure you have the exclusive right to use the IP and to commercialise it. How this applies can vary by jurisdiction.
Each jurisdiction has its own laws relating to ownership, registration and enforcement of intellectual property rights. Ownership of IP in one jurisdiction does not guarantee ownership in another. It is therefore important to ensure that you obtain advice in your own jurisdiction, and in each other jurisdiction in which you market or sell services or products, on the ownership and use of your IP, or the IP of others.
Interlectual property lawyer Darren Sommers, “IP rights are a valuable asset which you need to protect from people using it without your permission.”
Who owns Intellectual Property?
The general rule is that IP is owned by the person who created it, but different legal and commercial relationships may alter this.
If you have employees who have created the IP in the course of their employment, then you, as the business owner, will usually own the IP, unless the employment contract with that employee provides otherwise.
If you have engaged a contractor to undertake some work for your business, for example, designing a logo or providing software development, then the contractor will likely own the IP in what has been created, again unless agreed otherwise. It is therefore important to set out in the agreement with the contractor who will own the IP. If you wish to retain the IP, then the agreement will need to expressly provide that the IP created by the contractor is transferred and assigned to your business.
Ownership of IP will also be impacted if there has been a sale or transfer of the IP from the owner to another party or to you from the owner.
Another issue to consider is moral rights. In the context of copyrightable works (such as literary works, artwork, films, sound recordings, computer software and more), in most jurisdictions the author of the work will retain a range of rights, irrespective of whether they transferred that copyright to another person. These include a right of “attribution” (to be known as the author of the work), a right against “false attribution” (that is someone else claiming to be the author) and a right of “integrity” (that is stopping others making changes to the work). As an entrepreneur you should ensure that your employees/contractors provide consent to you undertaking various acts which might infringe their moral rights. These consents can be obtained as part of their employment/contractor agreements.
How to protect Intellectual Property?
IP rights are a valuable asset which you need to protect from people using it without your permission.
An important way to protect your IP, especially when you are having discussions with others in the early stages of development of your business, is to ensure such discussions and the subject matter of those discussions is treated confidentially by each party to the discussions, as well as any employees and advisers who may be given access to the information coming out of the discussions. This can be done through a confidentiality agreement or non-disclosure agreement.
For patents, trademarks, designs and plant breeders rights, you may need to apply to your local intellectual property authority to have those rights registered (and in some jurisdictions you may also need to consider registering any copyright). If you need to discuss anything before you file an application with the intellectual property authority, you should make sure you have a confidentiality agreement in place. Registration will generally provide you with the exclusive right to use and commercialise the IP and will give you comfort that you are not infringing any existing IP rights. Generally, in order to be able to register your IP, you will need to show that you have created the IP and that it is original.
Every country (and in some cases, territories, such as the EU) has its own registration system for the registration of patents, trade marks and designs. This means you may need to register your IP wherever you intend to use it. Registering in one country alone will not protect you if you will be operating your business overseas. As each country has specific requirements for registration, you should seek out professionals with the right expertise in each country in which you sell your products, or use the IP of others, to ensure you adequately protect your rights.
How to commercialise Intellectual Property?
IP is generally only valuable if you know how to make money from it. You can make money from your IP rights by selling them to someone else to use, licensing them either exclusively or to many people to use, or you can use your IP yourself to sell services or products.
You would generally only sell your rights in IP when you sell your business or when you are not in a position to commercialise the IP yourself. This would be done through a sale of business agreement or an IP assignment agreement which, if drafted correctly, will transfer the rights in the IP from the owner to the purchaser, who is then generally able to use it, as they please.
Another way to commercialise your IP rights is to licence other parties to use it on conditions you determine. The licence could be exclusive or non-exclusive, it could be perpetual or for a certain period of time, it could limit the number of users, it could limit the geographical area where the IP can be used or it could allow the licensee to only do certain things with the IP. All the conditions should be documented in an IP licence agreement.
Other ways to commercialise and exploit your IP can include entering into distribution arrangements for other parties to market, promote and sell your product or service or engaging with resellers to sell your product or service to customers. While these arrangements may be similar, they both have their advantages and disadvantages and whether you chose one over the other will depend on your commercialisation strategy.
Who can help you protect and commercialise your Intellectual Property?
To understand whether you have rights in any IP you or your business have created, and to ensure your IP rights are adequately protected, you should seek the advice and counsel of a lawyer with the right expertise.
Experts dealing in IP rights usually specialise in different areas of IP. For example, patent attorneys have expertise in dealing with patents which are generally very technical.
Trade mark lawyers handle trade mark applications and disputes while other IP and commercial lawyers can assist with other IP matters, as well as advising on confidentiality agreements and other commercial arrangements.
What to do if you think someone is infringing your IP or you are accused of infringing someone else’s IP?
It is important for you to be on the look out for any misuse of your IP – this happens when someone uses or copies your IP without your permission. Any unauthorised use of your IP will diminish the value of your IP and may also damage your reputation and any goodwill which may exist in the IP.
Further in some jurisdictions, policing the misuse of your IP is a condition to maintaining its registration.
In order to take steps against the infringing party, you will need to show that you own the IP and that the infringing party has actually copied the whole or part of your work without your consent. You should speak to a lawyer who can assist you with understanding your rights and how to go about enforcing those rights.
At the same time as you are protecting your own IP rights, you need to ensure you don’t infringe another person’s IP rights. If you have been accused of breaching someone else’s IP rights, your first point of call should be an experienced IP or commercial lawyer.
By Stephanie Chin, Special Counsel and Darren Sommers, Principal
Adventum Legal – www.adventumlegal.com.au
Disclaimer: This material is produced by Adventum Legal Pty Ltd. It is intended to provide general information in summary form on the legal topics discussed above, current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. You should always seek formal legal advice from lawyers qualified in your relevant jurisdiction. Our liability is limited by a scheme approved under Professional Standards Legislation in Victoria, Australia.