The success of many businesses relies less and less on their physical assets such as buildings, machines and vehicles and more and more on intangible assets, such as their trademarks and patents, known as intellectual property.
But many small and medium businesses are failing both to protect their intellectual property (IP) and also to ensure they don't inadvertently use another business' IP, with all the expenses that can involve.
Intellectual property is defined as an intangible asset, that is, one with no physical form. According to the World Intellectual Property Organisation, IP refers to creations of the mind: inventions, literary and artistic works, as well as symbols, names, images, and designs used in commerce.
DON'T INFRINGE OTHERS' IP
Businesses often know that they need to protect their own IP by taking out patents on inventions and the like and by registering trademarks such as business names and logos. Philip Heuzenroeder, principal at Spruson & Ferguson Lawyers, says many businesses fail to check that they're not infringing on another business' IP.
“If you launch a product or a business or a brand without having done some searching and some clearance, and having thought about who else might already have used that brand, the whole thing could fall in a heap on day two when somebody becomes aware of your use if they have their own protection,” he says.
Heuzenroeder gives the unnamed but real life example of a group of experienced businesspeople in the professional services sphere who launched a new company, having made a business plan, got funding and market tested the brand and logo. The received a lot of publicity in the press but six weeks after they launched they received a legal letter telling them their brand name was too similar to another business' registered trademark.
They had no choice but to rebrand their business only weeks after the launch, incurring significant expenses and losing the benefit of all the publicity they'd won. So they were forced to focus on the relaunch rather than growing the business.
“It could have been avoided if they'd done a search,” says Heuzenroeder.
Federal government agency IP Australia administers the country's registered intellectual property, including patents, trademarks, designs and plant breeders' rights.
Patents can be complicated, says Heuzenroeder, so it can be wise to get professional help when searching for them.
Trademarks are a little more straightforward, and a good place to start can be a quick internet search before checking the more formal registry.
MOVE EARLY TO PROTECT YOUR OWN IP
Checking that others don't already own the IP should be part of any planning for a new product or brand and is a step along the path to a company securing the IP for itself, if it's not already owned by someone else.
IP Australia says IP rights are an incentive to encourage and reward innovation. “They provide a competitive advantage and can also form an important asset on the balance sheet of a business,” the agency notes.
Indeed, they are a form of property right, and can be sold or licensed or shared. They can also help a business' sale price because they're an asset.
“Intellectual property rights in a broad loose sense ultimately are all about a form of monopoly,” says David Kennedy, a partner at law firm CBP. “And whether they're good or bad, monopolies are valuable.”
Kennedy divides IP into two categories.
The first is those rights which are registered with an agency, such as IP Australia. They include trademarks, patents, registered designs, and domain names and alpha phone numbers.
The second category is self-administered rights, that is, those which are not registered with an agency. These include copyright, confidential information and so-called “get up rights”, which are the colours, designs, logos and so on that contribute to the overall look or “get up” of a product.
Kennedy says moving early to protect IP is key. “You'll either damage your position or irretrievably lose your position if you don't move early,” he says.
This means registering the IP for the first category. “It's about making sure you get an application [for the IP] on before anybody else sees,” he says. “Usually you're either at the risk of losing it or often having it totally disqualified if you don't have an application on before you tell anyone else but your closest friends and confidantes. That's why moving early is so important.”
Protecting unregistered IP is a bit more involved. A company should assert its right to the IP by policing to ensure that it is not being infringed by other companies or people. Companies need to keep records showing how they developed the IP as part of the process of showing they have the rights to it.
“Broadly speaking, it's about housekeeping and records,” Kennedy says.
The Windsurfer is an example of a company which lost its trademark because it passed into generic usage for this type of product.