In a world where knowledge is power, Intellectual Property (IP) is one of the most powerful weapons in your business armoury. Described by the World Intellectual Property Organization (WIPO) as, “creations of the mind: inventions, literary and artistic works; and symbols, names and images used in commerce”, every business has IP, but many SMEs consider protecting it far too late.
What are intellectual property rights?
Every business has intellectual property rights: trade marks, designs, patents, and copyright in written materials, software, website designs, or even databases. Yet in TLD’s 2022 Small Business Legal Survey, 100% of respondents in the £0-5m turnover category did not think Intellectual Property applied to their business. They were wrong!
At its most basic level, your business logo and name could and should be protected. At it’s most powerful, IP turns your ideas into commercial assets that could change your business beyond all recognition.
Businesses who leverage their intellectual property assets from the outset increase their opportunities for growth, and their ability to license technology, establish partnership agreements and attract investment.
But it is not uncommon for businesses to think they own the copyright for material, when in fact they don’t. These mistakes can be costly, both financially and reputationally.
Why is IP important for SMEs?
Often small businesses, startups and solopreneurs are on the front line: investing heavily in research and development (R&D), trialling new products and taking innovative solutions to market.
Protecting this investment means your efforts can be rewarded and creates competitive advantage over organisations that follow your lead. Consider your IP as a brand asset – taking IP seriously sends a strong signal to the market thar you value innovation, enhances your reputation and ultimately builds trust in your business from staff, customers and investors. It’s an important tool in future negotiations too – so if your business plan involves attracting investment, a potential sale (and exit) for your founders, or you are considering building a franchise model – there is a strong case for calling in an IP lawyer from day one.
The five types of IP protection
There are five key types of Intellectual Property
Copyright
Copyright protects your work and prevents someone else from copying your original working, adapting it, or using it in a performance. It can apply to paintings, books, songs and sculptures but also to software, website designs and developments, or even databases.
To be protected under copyright, the work must be original – the author’s “own intellectual creation”. In the UK, this is an automatic right which generally lasts for 70 years after the death of the owner, though different types of copyright carry different time limits.
Not only does copyright prevent someone from copying your work, it also restricts the distribution – whether this is free of charge, for sale, rent or lending. Your work cannot be performed, shown or played in public without your permission.
A number of licensing agencies exist to manage this process on behalf of the originator – including the composers collecting society, PRS for Music, and PPL – the UK’s music licensing company for over performers and recording rightsholders. In print, the NLA looks after national and regional newspapers while the CLA covers books, journals, magazines and websites. You can find a full list of licencing bodies on GOV.UK.
Trade marks
According to the WIPO, a trade mark is “a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises.”
It can be protected at a national or regional level through registration with a local trade mark office, or for the EU – application via the European Union Intellectual Property Office grants trade mark rights in all member states through a single registation for 10 years.
Globally, businesses can either register trade marks in individual countries, or by using the WIPO Madrid System – which covers 130 countries in one registration. Bear in mind the process still means the application needs to be processed and examined by each individual country, so this process may not be smooth.
What can be trade marked?
It’s not only your logo that can be trade marked. In fact, words, sounds, logos, colours, shapes or a combination of these can be trade marked, providing they are unique. The important thing is that a trade mark cannot be offensive or misleading, be common, look too similar to a state symbol such as a country flag, or be a literal description of the product or service it relates to.
Your in-house counsel will be able to advise on the best route for your brand and whether a trade mark lawyer needs to be instructed.
Patents
An invention can be protected by patent and gives the inventor the exclusive right to make, use, sell, or import their product or process for a limited period of time, and typically for 20 years.
Anyone can submit an application for patent: in 2022, the IPO received 19,486 patent applications (an increase of 3.4% from 2021). Civil Engineering, Computer Technology and Transport businesses head the list. The UK is seen as a a good ‘first filing’ location before filing with the European Patent Office (EPO), and as a result, is heavily used by the USA and China who submit the highest number of non-UK trade mark and design applications each year.
A patent enables the rights holder to take legal action against anyone who makes, uses, sells or imports the invention without their permission. But for an application to be successful, the invention must be unique, not obvious and useful. On expiry, the invention will enter the public domain. In deciding what can be patented, the IPO must strike a careful balance between protecting ideas and encouraging discovery, and enabling their dissemination for the wider benefit of society.
Trade secrets
Ever wondered what the secret ingredient was in Pimms No.1? Or was Irn Bru always your favourite tipple? These are trade secrets, and in fact, it’s rumoured that only three people in the world know the recipe for Irn Bru – the secret is so closely guarded.
Trade secrets have commercial value, can only be known to a very limited group of people and their confidentiality can be protected through the use of NDAs or confidentiality agreements. The rights for this confidential information can be sold or licensed. Other famous examples include the recipe for Coca Cola, the original recipe for KFC and Google’s Algorithm.
In June 2016, the The EU Trade Secrets Directive harmonised laws across EU nations on the protection of know-how and trade secrets with the aim of supporting SMEs, protecting the knowledge econmy and removing IP barriers to cross-border collaboration.
Known as the TRIPS Agreement (Trade-related Aspects of Intellectual Property Rights), the directive is backed by legislation in each nation state, and UK regulations came into force in 2018. Post-Brexit, these regulations still apply.
Design
A design registration protects how a product looks – its look (decoration, colour or pattern) and shape. Each registration lasts five years and a product can be re-registered every five years up to a maximum of 25 years in total. After this point, the design falls into the public domain and can be reproduced by anyone.
Current registered designs are available to search online, and include everything from wrist straps to bicycle frames. Registration helps protect your investment as a business, and has the potential to deliver a stronger return.
Intellectual property rights examples
With ‘All I want for Christmas’ on every festive playlist, it’s no wonder Mariah Carey’s perennial hit has faced more copyright challenges than most. Only last month, The Guardian reported a second challenge by songwriter Andy Stone sueing for copyright infringement of his 1988 work of the same name, and a melody which he argues, is more than 50% cloned in the Carey version. If succesful, the payout is likely to be worth £16million.
For Rebekah Vardy, trademarking the title “Wagatha Christie” presented an opportunity to recoup some of the losses from her failed libel case against Coleen Rooney. The BBC reports the now registered trademark covers everything from fashion, food and drink and media rights.
The pharmaceutical industry relies on patenting to protect the huge investment required for research and development. This proved problematic in the pandemic as politicians pressured businesses to waive patents in order to maximise the dstribution of vaccines. But The Association of the British Pharmaceutical Industry (ABPI) argues that a strong intellectual property (IP) framework is actually an enabler in the development of cutting edge medicine.
“Industry is working to research, develop and manufacture COVID-19 treatments and vaccines for patients around the world. IP is not a barrier to this. In fact IP has fostered innovation in recent years – including for COVID-19.
Dr Bryan Deane, Director of New Medicines and Data policy, ABPI – March 2021)
This framework has resulted in the submission of over 2,000 UK patent applications for pharmaceutical and medicinal products in the past 10 years. (Source: ABPI)
Should you have an IP strategy?
An IP strategy is a plan of action for how you or your business manages your IP assets from a legal perspective, and requires the input and guidance of an experienced legal counsel or IP lawyer.
For startups and innovators in the embryonic stage of growth, it’s sensible to start with an IP checklist: identifing what products or services your business offers or plans to develop; how ‘novel’ these products or services might be and, as you take them from concept, through research and development, to prototype and production, what level of protection they require.
Keep a clear paper trail throughout as it might one day, be important to have evidence of when your product was ‘conceived,’ and who came up with the idea. Remember, challenges can come when employees leave the business or a founder departs when who owns the IP, becomes unclear.
It’s advisable to keep a close eye on the competition too – not only to ensure no-one is copying your work, or worse – has beaten you to it – making it difficult not only to protect your design, but to recoup your investment.
SMEs wth products already in the market, should consider undertaking a regular IP Audit.
Think big: consider whether your brand needs protection in other jurisdictions, how you might manage licensing and selling your products via third parties in new territories, and plan for the future. Protecting your business with robust Shareholder Agreements could prevent difficult conversations later on down the line, when the value of the business has grown.
For more information, read Nick Blackbourn on “Big Lessons for Small Businesses: Getting the Fundamentals of Intellectual Property Right”
What types of IP should I protect?
The name of your product or brand, your inventions, the design, shape and materiality of your product, or what you write, make or produce can all be protected. The key is to identify your IP early to avoid costly mistakes.
Charlie Strickland’s blog on Copyright considerations highlights the importance of establishing ownership early, if using a third party to design your logo or website. Good record keeping will help in the event of a challenge later down the line.
NDAs can be used to protect trade secrets, know how, and in relation to artistic work, are frequently used in the audition process to protect the confidentiality of work not yet publicly released. Sophie Freeman offers some best practice tips and tricks for both sides.
How to protect your intellectual property
There are a number of ways you can protect your busiiness from intellectual property theft.
- Ensure staff understand what’s at risk
Take time to communicate with staff the importance of IP and what can / cannot be shared outside of your organisation. Explain the risks of IP infringement and the steps you need to take to prevent this from occuring.
- Use Confidentiality Agreements and Non Disclosure Agreements (NDAs)
If you need to share your ideas with a potential employee, investor or shareholder, ask them to sign an NDA. Follow our best practice guidance, and ensure the NDA is fit for purpose. Practise what you preach, and ensure you comply with the level of protection you expect from others.
- Keep your IP information secure
Patents, trademarks and ‘know how’ are all important assets in your business, and as such, they need to be handled with care. Ensure this information is securely stored. For physical assets, consider where paper copies are stored and if they can be accessed and reproduced (printers/document scanners). Are digital assets password protected, accessible only via 2FA? What file sharing systems are used within the business and how regularly are security updates applied? Factor in third-party systems as well as internal file management, and put processes in place to swifty respond to incidents such as cyber crime and data breaches.
- Commit to regular IP audits
Pay particular attention to when trademarks or design registrations are due for renewal. Keep a watchful eye on your competitors to ensure your IPR isn’t being infringed. Be prepared to take action if necessary.
Do I need an IP lawyer?
Intellectual Property is a complex subject and it is important to get advice from a legal director with experience of IP law or a specialist IP lawyer. They can advise whether specialists need to be brought in to support your application for a trademark or patent for example. A general counsel will be able to think broadly about the commercial aspects of your product, service or idea and advise on any further proection needed. This is important if you are considering licensing your product/service, franchising, or preparing for the sale and exit of your business.
If you’re interested in our support to audit the Intellectual Property in your business, and identify and protect your assets including know-how, contact us on 020 3056 8538 or info@thelegaldirector.co.uk.
