For the vast majority of knowledge-based start-ups, intellectual property (“IP”) is the business’s most important asset. Start-ups must take into account IP protection from the beginning in order to protect their ideas from theft or replication. Investors will not invest in a company until they are sure the critical IP upon which the business is grounded is protected under IP law.
Intellectual Property is intangible property that is the result of creativity such as inventions, literary and artistic works, symbols, names and images. IP rights allow creators, or owners, to benefit for their own work or investment in a creation.
IP generally falls into four categories – copyright, trademarks, patents and designs.
Copyright is the principal protection for software but also covers literary, musical and artistic works. It is the only unregistered IP right which arises automatically - all others must be registered. The owners of a copyright have certain basic rights under copyright law, most importantly the exclusive right to use the protected work or to authorise others to use it under licence.
Copyright protection automatically occurs when new work is fixed in a tangible medium of expression. Although not required, it is worthwhile to have a copyright notice attached to the work (hyperlink copyright notice form).
Trademarks are distinctive rights which are used to identify certain goods or services produced by an individual or company. Trademark protection ensures that the mark owner has the exclusive right to use it, or license another to use it, in order to identify goods or services. Business names and logos and product names and logos should be registered as trademarks as neither the incorporation of a company under the name nor the registering of a business name confers enforceable rights.
Trademarks are filed in regional / territorial trademark offices. The mark must be distinctive, so that consumers can distinguish it from trademarks identifying other products and it must neither mislead customers nor violate public order or morality before it will be registered.
A patent is an exclusive right granted for an invention – a product or process that provides a new way of doing something or offers a new technical solution to a problem. The patent owner has the exclusive right to use the invention or can license its use to someone else.
Patents are secured through filing an application which gives the background and description of the invention. The invention must be of practical use and show a new characteristic which is not part of the body of existing knowledge in its existing technical field. It must show an inventive step which could not be deduced by a person with average knowledge of the technical field.
Industrial design rights protect the ornamental or aesthetic aspects of articles. The industrial design must be primarily of an aesthetic nature rather than a utilitarian or technical nature – which can be protected separately by patent. The owner of the design has the exclusive right to use the design which protects them from unauthorised copying or imitation from third parties.
In order to be registrable, the industrial design must be original to the extent that no identical or similar design is known to have previously existed.
Trademarks, patents and industrial designs must be registered in order to be effective. IP rights are territorially limited to the countries where a registration is made. As the cost of registering IP in multiple locations can be a significant financial burden on developing companies, it may be necessary to initially limit registration to key markets.
The costs of obtaining patent and trademark protection can be tax deductible.
To avoid any later ambiguity or disputes, start-ups must ensure that founders, employees, consultants and contractors assign any IP created during the course of the business relationship to the start-up entity itself. This is critical and will prejudice or at least delay future investment in the company if it is not attended to from the outset.
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