Intellectual property (“IP”) refers to creations of the mind – these include inventions, literary and artistic work and/or symbols, names and images used in commerce.
Yet, IP can mean so much more than just that to businesses.
To some business owners, the idea of IP may represent a terrific idea to monetise one’s ideas, and may form a crucial part of a business’ revenue streams. A business may seek to reap financial benefits by licensing its IP rights ("IPR”) to third parties.
To other business owners, IP forms the bedrock of the business model, and they need to secure exclusive rights in their IP in order to retain a competitive advantage over rivals.
In any case, effective management of its IP can mean the difference between success and failure of the business.
This article aims to provide you with a basic understanding of IP. In doing so, we will cover the following matters:
● the common classes of IPR; and
● various steps that businesses can take to protect their IP.
Common Classes of IPR
It is essential to have a clear understanding of the different classes of IPR, in order to effectively manage the IP of your business. Each class of IPR is intended to cover different types of creations of the mind, and the levels of protection accorded by law to each class of IPR may differ.
A patent is an exclusive right granted for an invention. An invention is a product or process that provides a new way of doing something, or that offers a new technical solution to a problem.
A patent owner has the exclusive right to make, use or distribute his/her patented invention. Third parties cannot commercially make, use or distribute such patented inventions, unless the patent owner’s consent is obtained.
In order for an invention to be patentable, it is generally required to fulfil to following requirements:
● it must have some new characteristic that is not part of the body of existing knowledge in its particular technical field;
● it must be of practical use;
● it must be disclosed and described by the applicant in such a way as to enable others to make and use the invention;
● it must represent a non-trivial extension of what was known by a person with average knowledge of the technical field; and
● its subject matter must be considered “patentable” under applicable law.
A patent generally lasts for up to 20 years from the date of registration.
A trademark is a distinctive mark that identifies goods or services that are provided by business entities in the course of business.
A trademark owner has the exclusive right to use the relevant distinctive mark to identify its goods or services.
Trademarks have traditionally encompassed visual distinctive marks (e.g. logos). It should be noted however, that non-traditional marks such as sound or smell can also attract trademark protection (e.g. the Intel Inside chime).
Trademark protection typically lasts for 10 years, but may be extended for further periods of time upon the payment of the relevant fees.
3. Registered designs
A registered design refers to the ornamental or aesthetic aspects of an article. The owner of a registered design has the exclusive right to use that design. This right generally lasts between 10 to 25 years, depending on the territory where the design is registered in.
One example of a registered design is the Coca Cola bottle, without any text or branding.
Copyrights protect literary and artistic works – these include songs, novels, paintings and films. A creator of a literary or artistic work that fulfils various criteria (including originality) owns a copyright in such work.
The owner of a copyright in his/her literary or artistic work has the exclusive right to use such work, as well as the exclusive right to authorise others to use such work on agreed terms.
There is no requirement for a person or corporation to obtain a registration in relation to a copyright.
The copyright subsists throughout the lifetime of the creator and for a period of time after his/her death (typically around 70 years).
5. Trade secret
Trade secrets are confidential business information that provides a business with a competitive advantage. These could include manufacturing or industrial secrets and commercial secrets.
Generally, there are 3 requirements for information to be fulfilled in order to be considered a trade secret:
● The information is not generally known among, or readily accessible to, circles that normally deal with the kind of information in question.
● It must have commercial value due to its secrecy.
● It must have been subject to reasonable steps by the rightful holder of the information to keep it secret.
Unlike other IPRs, trade secrets are protected without registration. As such, they can be protected immediately and for an unlimited period of time.
The unauthorised use of such information by persons other than the holder is regarded as a violation of the trade secret.
6. Domain names
Domain names refer to website addresses. A domain name is registered by an organisation to enable internet users to locate the organisation’s site on the web.
Domain names are registered and protected at the entire global level by 1 organisation – ICANN.
Registered domain names serve as protection against unauthorised uses of website addresses by another person or entity, and have become increasingly important given the proliferation of e-commerce.
Steps to protect IP
As a starting point, it must be noted that IPRs are generally territorial in nature. This means that IP protection generally does not extend beyond the particular country in which it was created/granted.
There are, however, certain international treaties or regimes that facilitate the registration and enforcement of IPR on a multilateral level.
Accordingly, if you are looking to expand your business overseas and/or conduct online cross-border business, you will have to consider your IPR and enforceability in more than one jurisdiction.
We set out below some suggested measures that you can adopt to best protect your IP.
Step 1. Conducting an IP audit
An IP audit serves to help businesses:
● identify where IP is used in the organisation;
● identify the ownership of the business’ IPR;
● ascertain if any claims have been made in relation to the business’ IP; and
● assess the value of the business’ IP.
An IP audit serves as an important first step in devising your IP management strategy, as it allows you to collate key information with respect to the business’ IP. Such information will form the basis of your next steps.
Step 2. Ascertain the type of IP protection that your IP requires
After collating a list of IP through the IP audit, an organisation should decide how it would like to protect its IP. This would entail categorising the IP into the relevant classes of IPR.
While the choice of IPR is probably obvious in most cases, this is not always the case. In certain circumstances, there might be two applicable IPRs that could be obtained. Under such circumstances, it is important to consider which protection is best suited for the needs of the business.
One common dilemma that business face is whether to protect its inventions by a patent or by a trade secret.
On one hand, trade secret protection might be preferred because:
● Patent protection lasts for a limited time, while trade secret protection has no time limit.
● Patents must be registered, whereas trade secrets do not have to be registered – this means that trade secret protection would not incur any registration costs.
● Patent protection requires compliance with procedural formalities, and this could increase compliance costs.
● Patent applications would take some time, whereas trade secrets have immediate effect.
On the other hand, patent protection might be preferred because:
● A trade secret is more difficult to enforce than a patent.
● Trade secret protection of an invention does not, in fact, provide the exclusive right to exclude third parties from making commercial use of it. Only patents and utility models can provide this type of protection.
● Once a trade secret is made public, anyone may have access to it and use it at will.
● A trade secret may be patented by someone else who has developed the relevant information by legitimate means.
Step 3. Registration
Certain IPRs need to be registered in order for the law to afford protection over them.
In this regard, the registration of registrable IPR such as patents and trademarks is critical to ensure that the business holds the exclusive rights to use, licence or sell such IP. Such exclusive rights may allow businesses to secure a competitive advantage over rivals.
It must also be noted that the registrations for certain IPR may last only for a limited time period. Accordingly, it would be prudent for businesses to ascertain when the end dates of their registered IPRs are, and make applications for renewal if necessary.
Step 4. Commercial contracting
Organisations wishing to rely on their IP to generate revenue or to maintain a competitive advantage in the industry should also ensure that their rights and obligations in relation to their IP are enforceable.
One way to do so is to enter into contracts with individuals or entities, where the engagement contemplates the transfer or use of IPR. When doing so, it is important to clearly delineate the rights and obligations in relation to such use or transfer of IPR under the terms of these contracts.
Commercial contracts where provisions relating to IPR may be important include:
● Employment contract: Since employees may require the right to use a company’s IPR in order to carry out his/her duties, the employment agreement should specify the terms upon which such rights are granted to the employee.
● Joint venture agreement: Organisations should ensure that the ownership of IPR that is generated during the course of the joint venture is clearly delineated between the parties.
● License Agreement: A company may enter into a license agreement with third parties, to set out the terms upon which it grants such third parties the license to use its IPR (including sums being paid in consideration of the license).
We hope that this article has been helpful to you as a start-up trying to make headway in the business world.
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*The above content does not constitute, nor is it offered as, legal advice of any kind. GLS Solutions Pte Ltd is not a law firm and any support provided pursuant to this entity is not regulated legal advice or legal opinion.