In the rush to drive forward the development of your business, it is important not to ignore the importance of protecting your valuable IP.
Intellectual property rights are very often central to the development, growth and even the survival of a new business in a competitive market place. Businesses seeking investment, particularly start-ups, will find their intellectual property subject to scrutiny and the investment decision may hang on the efforts made to preserve the business’s distinct IP. Competitors may look to exploit and profit from gaps in a rival’s IP protection. Taking steps to protect and enhance its IP should form a key part of any business’s strategic objectives. Some easy steps to help implement an effective IP protection strategy are considered below.
Make sure your business owns the IP generated for the benefit of its business.
On the formation of start-ups, founders usually need to consider assigning any IP they have created pre-incorporation, and therefore are likely to own in their own right, to the business.
In the UK (and other EU countries), rights to copyright works, designs and inventions created by employees in the course of their employment will generally be owned by the employer unless there is any agreement to the contrary, but that may not be the case if your employee is located elsewhere; different rules may apply in different countries. It is worth ensuring your employment contracts spell out both that your business is the owner of IP produced in the course of employment and that the employee actively discloses and assigns to your business any IP produced in the course of his/her employment.
Confidential business information, whether it concerns the highly technical specifications of proprietary technology or more straightforward, but nevertheless valuable, data such as information gleaned on matters such as customers, targets, contacts, pricing, and their requirements all needs protection.
It is worth ensuring that employees with access to confidential information agree to clear confidentiality obligations in their employment contracts aimed at preventing them from taking or using confidential business information otherwise than for the benefit of your business.
Effective IT security can help minimise the risk of unauthorised access to or use of your IP, and to identify and manage security breaches. IT security involves the deployment of technical means, such as encryption and suitable firewall protection, and ensuring employees receive clear guidance on what is and what is not acceptable, through the implementation of effective polices on matters such as use of appropriate passwords, use of storage media and document retention.
Care needs to be taken when commissioning works from third parties. In the UK (and other EU countries), copyright works and designs, for example, commissioned from a third party are owned by the author/designer, not the commissioner, unless agreed otherwise. Ensure it is clear in your dealings with third parties who will own the IP in works they create for your business and secure a legally effective assignment from the authors/designers of all IP they create.
Third party use of your business’s IP
Your business may permit some third party use of your IP, whether through licences granted to customers or in your business’s downstream supply arrangements. It is important that you spell out in writing the extent of any permission to use your IP, what is and what is not permitted (e.g. making it clear a distributor is not permitted to register a trade mark or a domain name in your trading name in their territory) and what happens in relation to the use of IP when those agreements come to an end.
When dealing with third parties, for example in investment negotiations or when approaching a manufacturer, ensure that you obtain non-disclosure agreements to protect any IP to which the third party is permitted access. An effectively drafted confidentiality agreement can be relatively short so it need not delay or interfere with the progress of third party dealings.
Obtaining, maintaining and growing your portfolio of IP registrations at home and overseas is an essential part of your IP protection strategy. In reality, budgets and the desire to commence business quickly with new partners or in new territories can mean that registrations take a back seat.
Planning the strategic development of your IP portfolio should involve early consideration for start-ups, and regular review for all businesses, to ensure it accords with your strategic objectives.
Established businesses without any formal IP management plan may benefit from an IP ‘health check’ to assess the relative strengths and weaknesses of their IP portfolio and to help determine and prioritise a registrations strategy which matches business objectives.
All businesses should ensure they are familiar with their competitors’ offerings and foster a culture in which employees understand the need to act as the eyes and ears of the business and to report any instances of possible infringement they may discover so that early action can be taken to protect your business’s interests. Well established businesses may well engage specialist agents to monitor potential infringement of their IP.
The nature and extent of infringement will require careful and early risk assessment, in line with your strategic objectives, before committing resources to action.
Action may range from a cease and desist letter to fully contested court proceedings. Whilst some businesses may adopt a ‘zero tolerance’ approach to infringement, perhaps to send an aggressive message to competitors and would be infringers, others will only be prepared to commit resources to the most serious and compelling instances of infringement. Litigation is usually a last resort, but can be a necessary step to protect against dilution and damage to your business’s IP.