At Brennans Solicitors, we pride ourselves on delivering sound, practical advice with an understanding of every client’s personal needs. Call +61 7 5438 8199 today!
Although the Financial Times reports that intellectual property (IP) is “today’s competitive weapon…one of the key drivers of business competitiveness in the 21st century", many business owners and others are a little hazy on what exactly their IP Rights (IPR) are. However, in most commercial matters consideration of how to identify and protect IP Rights (“IPR”) is increasingly important.
There are basically three general areas of IP law which business owners should be aware of- copyright, trade marks and trade secrets. Other areas such as designs, and patents can be relevant in certain businesses.
Here are some examples of the practical application of IP in business:
Start-ups
You need a sensible approach to the business structure and IP documents. It can be costly to rush into forming a holding company, an operating company and creating the licences, the services agreements, terms and conditions and other documents that can be required to protect IP assets. Successful start-ups may need all these documents. However, this may not be the start-up where you find your success. It may be a lemon. Therefore, it is best to be steered through this process by being given appropriate IP legal advice so you can decide on the risk and what expense to incur so you manage your cashflow. If your family members are putting up the money, they will appreciate a more conservative approach.
Buying and selling businesses
In the past, business owners basically sold the business on a “what you see is what you get” basis. The buyer made sure that a list of the plant and equipment was attached to the contract, received a list of the customers on completion and gave little or no thought to the IPR which only became relevant if a dispute arose. This approach is no longer enough.
Now the buyer is likely to be more demanding for good reason. Here are three issues that may arise:
- The seller may have no right to transfer important software licences used by the business. If the buyer discovers this after completion, the software company may insist on a new licence being purchased by the buyer. This is so common that in the software industry it is called “stiffing”.
- The online content. For instance, the content of websites and social media may not be owned by the seller and cannot be transferred to the buyer without the written permission of the copyright owner. The copyright owner is usually the creator of the copyright work for instance a contractor or a consultant. If may be difficult for the seller to obtain a licence or assignment of the copyright work from a contractor or consultant if they have been paid or no longer work for the company. A copyright owner may have put a lot of their time and creative efforts into the online content and can be reluctant to give up his or her IPR if the contract for their services did not specify the IP was assigned or properly licenced.
- There will be important content such as logos, articles, newsletters which should be owned by the business but isn’t. Usually, content created by employees in the course of their employment is owned by the business.
All these matters should be considered and can be covered by special conditions in the contract. It may be necessary to obtain an assignment or a licence from the copyright owner. The seller could think ahead and provide for IP assignments or licences for consultants, contractors and even employees to avoid any disputes or uncertainty.
Contracts and agreements
IP is increasingly an important factor to consider in the contracts and agreements of your business to protect your interests and can be an even more important consideration when signing agreements produced by other parties. In important documents, the terms relating to IP should be carefully reviewed to avoid unnecessary risks.
Here are five types of common legal documents used in business in which IP increasingly plays an important role:
- IP licences and assignments.
- Terms and conditions of service.
- Consultancy and contractors’ agreements.
- Confidentiality Agreements to stop others being told of your ideas and shown your materials.
- Distribution Agreements and/or agency agreements.
What can go wrong?
- You can inadvertently give away your IP by signing a contract without considering the small print. It only needs one line to assign your IP and you will lose it forever.
- You fail to protect the IP of your business. For instance, you have not inserted standard IP terms on your website and in your documents.
- You fail to secure ownership of the IP of a consultant or contractor, which is important for your business.
- You risk court proceedings if you use IP you do not own without the appropriate licence/permission.
Often it is not difficult or expensive to protect your IP. It just requires some thought.
Trade marks
It is not enough to have a business name or register your company with a particular name. You do not own that name or word unless you have a trade mark. Choosing a trade mark is challenging. Not only do you need to check that someone else has not registered a trade mark already but you must identify the class (area) in which your trade mark is to be registered. If you get this wrong your trade mark application can be challenged or even worse you could register your trade mark in the wrong class but only find out it is useless when your successful brand is under attack and you most need protection.
Finally, if you are using a trade mark belonging to another to promote your products you can be sued by the lawful trade mark owner for infringement.
Trade secrets
You have secrets in your business. For instance, your client list or other useful information that you have collated over the years which helps to make your business profitable. It is the sort of information that you would not like your competitors to obtain. The law can protect this information automatically, especially if it is obvious such as a client list. However, it is best that you define and mark what is important to you, so that there is no doubt.
Joint Ventures
A successful business has joint ventures or less formal arrangements with other businesses where they use your IP. You may charge a fee for the use of your IP or you could just be helping a friend. For instance, they use your training materials and other content that you have developed. In this situation it is best that you give permission i.e. a licence to use your IP. If you do not do so if could be an implied licence and they can use your IP as much as they want. Sometimes other companies will take advantage of you and take your IP and say it is their IP.
Your IP licence should among other things:
- List the products, training manuals, modules, trade marks (registered and unregistered) that you own.
- Specify the licence given. For instance, a “non-exclusive” licence means they can use the material, but so can anyone else with your permission. The more generous the licence, the more you should consider charging.
Shareholders and Partnership agreements
When entering into business with another the parties enthusiastically contribute to make it a success. If the venture fails, there can be much argument as to who owns what. For instance, the training material, logos, domain names and other IP. If the IP was created within the business the business should have the beneficial right to it and it may be a matter of negotiation if one party wants to continue to use that IP. If the IP was created prior to the business by one of the parties on the face of it that party should own the IP and the rights should remain with that party if the business closes unless the parties have agreed otherwise. Such agreements in the absence of writing can be implied. It is better to have written agreements concerning such matters to avoid argument where a particular work is important to you.
For intellectual property matters and advice, call Brennans Solicitors on +61 7 5438 8199 today!
Advice on IP is usually essential in online business matters and in respect of social media where many issues now arise.
Click here to see Paul Brennan on Channel 7's "Sunrise" program discussing Instagram photographs.
Listen to the “Law” Podcast by clicking this link http://podcast.lawanddisorder.com.au/ to learn about Intellectual Property law in short weekly extracts. It is an easy way to build your knowledge about IP.