The importance of Intellectual Property for start-ups


Philip Barnes
Investment Executive
Published:
intellectual property

Large mature corporations often have vast property portfolios and huge capital equipment inventories. Their value may also be embodied in extensive order/debtor books and a dominant market position.

A start-up, by contrast, will often work from rented premises and may only have a few laptops and desks to its name.  Consequently, its most valuable assets are likely to be its staff and its Intellectual Property.

As a start-up, it’s therefore important that you’re mindful of creating and protecting IP when you develop your first products.

Intellectual Property Rights (IPRs) such as patents, trademarks, designs and copyright exist to enable you to assert and protect your ownership of that property. They also provide the legal basis from which to take action against someone who infringes your IPRs by stealing or misusing them.

This blog post gives an overview of these four main classes of IP rights, and key things to consider.  

 

Copyright

Copyright protects the expression of original literary or artistic work, such as novels, songs and newsprint. Originality is a difficult concept to define in statute so, in the case of disputes, originality will ultimately be decided by the courts.

  • Copyright protection arises automatically, giving the holder exclusive rights to control both the reproduction and the adaptation of the work.
  • The term of protection in the UK for an original written work lasts for the life of the creator, plus 70 years from the end of the year in which they died.
  • In the case of written works, the author or creator of the work is usually the first owner of any copyright in it.
  • Where a written work is made by an employee in the course of their employment however, the employer will be the first owner of any copyright.

 

Because of the ownership principles above, software companies using contract developers should ensure that copyright in any code is explicitly assigned to the company. Companies should also carefully consider the type of licence assigned to a copyrighted work before uploading to the internet. You can’t make licence conditions stricter once it has been released into the public domain.

 

Trade Marks

A Trade Mark is a sign that distinguishes your goods and services from those of your competitors. This sign can be in the form of words, logos or a combination. If you have a registered Trade Mark you can put the ® symbol next to it to warn others against using it. Using this symbol for an unregistered mark could be an offence.

  • Trade Marks must be distinctive for the goods / services you provide
  • Trade Marks are registered according to classes, corresponding to categories of commercial use (e.g. pharmaceuticals, vehicles, footwear)
  • Before you commit to paying for an official Trade Mark search, it is well worth doing some web searching yourself. This will quickly identify if a mark is in use in a similar field to your own. However, if you don’t find it in use, that doesn’t necessarily mean that it’s available.
  • You can search Trade Marks by class using the free TMclass search tool.
  • Trade Marks can remain in force forever but must be renewed every 10 years

 

A registered Trade Mark may put people off using your Mark without your permission and makes it easier to take legal action against anyone who does.

 

Registered Designs

Registered Designs protect the overall visual appearance of a product. For its registration to be valid, a design must be new and have individual character. As with Copyright, the presence or absence of individual character will be judged by the courts in the case of infringement disputes.

  • Designs that are dictated solely by the product’s function are excluded from protection, as are “offensive designs” and certain protected emblems and national flags.
  • Design drawings are a crucial part of the application. These must present an accurate and complete picture of your design. Depending on the complexity of your product, it may be necessary to employ a professional draftsman, as there are specific rules on allowable formats. Lack of attention to detail here can lead to a failed application or difficulty in enforcing your rights.
  • To keep your registered design in force, you must renew it on the 5th anniversary of registration and every 5 years after that up to a total of 25 years.

 

If you do not apply for a registered design, your product may still receive some protection through Unregistered Design Rights, but these only last for 15 years and your means of legal redress will be more limited.

 

Patents

A patent is a deal between government and inventor. In return for publicly disclosing the nature and workings of an invention, the government grants a trade monopoly to the inventor (normally 20 years).

An invention must pass three tests to be patentable:

  • It must be novel.
  • It must be capable of industrial application.
  • It must involve an inventive step that is not obvious.

 

Patents are all about technology ownership; it is important for start-ups to be clear about what they have created and what they own.

It’s also important to remember that a patent is exclusively a negative right. Whilst it may give you the legal right to stop someone else working your invention, it does not necessarily give you the right to work your invention if you infringe someone else’s IP in doing so.

The costs of maintaining an IP portfolio can be significant, so only inventions with innate commercial potential or strategic value should be patented.

As mentioned above, the most valuable assets for a technology start-up are often its staff and IP. In addition to protecting a company’s competitive advantage, patents can also provide revenue directly by licensing.  A strong patent position is also viewed positively by investors.

 

Conclusion

It is vital for start-ups to be aware of the potential for creating IP that has commercial value, and to recognise it and act on it when the situation arises. To some extent, acting on it will normally mean knowing when you need to take advice from an IP attorney.