A start-up's guide to IP ownership

When assessing your business assets, IP might not be at the front of your mind, but it could be one of your most valuable assets as it’s at the heart of your business. This article provides a whistlestop tour of the IP assets that are important to consider.

When assessing the assets of your business, intellectual property (“IP”) might not be at the front of your mind, but IP could actually be one of your most valuable assets - it’s at the heart of your business and what it does.

Your IP could be registered or unregistered, and it will likely take a number of forms. We’ve set out below a whistlestop tour of the key IP assets that are important to consider.

Trade marks

Trade marks are a key representation of your brand. They typically include trading names and logos, as well as product names and marketing taglines. They extend further than this too, in some cases encompassing colours, sounds and scents.

The use of your trade marks can generate goodwill, a valuable asset in itself. Goodwill arises from the reputation that is carried by your trade marks and is dependant on public recognition of them, bringing in customers and regular business.

While unregistered trade marks also enjoy some protection, generally in the form of copyright or based on the accrual of goodwill, registering your trade marks means that you can enforce your rights more easily. Registration of a trade mark can also be a deterrent to other new businesses to know that it’s already taken. Trade marks registered in the UK appear on the register of the Intellectual Property Office, which anyone can access.

As your business grows, you may want to consider international trade mark registration for future protection, should you decide to expand the business into other countries.

When you have chosen a new trade mark, and before you commence its use, it is advisable to use a trade mark professional to conduct searches in the country or countries in which you intend to use it. This reduces the risk that the use of your trade mark could infringe a trade mark owned by a third party.

Designs

IP rights can exist in designs which, like trade marks, can be registered or unregistered. If your business designs and sells products based on their appearance, you might have unregistered design rights which could be very valuable. In the UK, designs can enjoy certain automatic protections upon creation but, unlike registered designs, they do not provide monopoly rights and, if looking to enforce them against a third party, you would need to prove that your design was copied.

Registering the designs is therefore a good idea, as a registered design will be protected against other companies making products of similar shape or surface design, even if they have done so independently. To register a design, it must be new and not exist anywhere in the world already. There is a 12 month ‘grace period’ once it has been disclosed by the designer (for example, by going on sale) in which to file an application for registration. Once registered, the design will enjoy greater protection for 25 years, if renewed every 5 years.

Copyright

Copyright is a type of IP that occurs automatically with no need for registration and protects original works of authorship. Copyright protects the form of an idea, covering artistic works, sound and film recordings, and the layout or arrangement of published editions of literary, dramatic or musical works.

Generally speaking, the author or creator of the work is the first owner of the copyright, and this is important to note if you contract the development out to third parties.

The period of copyright protection usually expires following 70 years after the death of the author of the works, after which the copyright protection ceases and the works can be considered to be ‘in the public domain’.

Copyright is an important IP right even if you won’t be creating artistic, musical or literary works; the source code to software is a work that attracts copyright.

If another company uses, copies or distributes your work, this may constitute an infringement of copyright. You would be entitled to enforce your rights, but that can become very expensive very quickly so it’s preferable to prevent infringement in the first place.

Patents

Patents are a form of right that protects inventions, processes and devices. To be patentable, something must be new (i.e. not previously disclosed to the public), it must involve an inventive step and it must be capable of industrial application. There are some things that are specifically excluded from patent protection; aesthetic creations (which can be protected as designs), scientific discoveries and theories, mathematical methods, and other creations that it might be deemed immoral to exploit commercially.

A patent can be applied for in separate specific countries, but the European Patent Convention (EPC) and Patent Co-operation Treaty (PCT) offer routes to file in a number of countries at the same time, which can be helpful if your business is likely to grow into other territories.

A UK patent is valid for 20 years from the date of grant, though the process of obtaining the patent can itself take several years. Having a patent can deter competitors from copying, or it can mean that they request a licence to use the invention. Patents are treated as a form of property and can be mortgaged as security. As with any other mortgageable property, any legal interest in a patent must be registered.

For a patent to be granted, the innovation must have been kept confidential, so if you’re thinking of applying for a patent it’s crucial to consider how it will be protected before publication.

While it can never be guaranteed that nobody in the business will share things that they’re not supposed to, putting in place appropriate non-disclosure agreements (“NDAs”) and confidentiality agreements as early as possible is always recommended.