Intellectual Property: What is it? Does it hurt?

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Intellectual Property: What is it? Does it hurt?

Intellectual Property (IP) is a hugely important topic for any company, even more so for startups that have limited funds available. IP should be considered a key strategic asset class and its management needs to be carefully thought through as decisions involving IP are usually irreversible and thus can make the difference between a successful and a failing company. But before we dive into more strategic issues, which shall be the subject of another blog post, let’s have a brief look at the basics. For today, we’ll got through the principal classes of Intellectual Property. These are patents, registered design, copyright, trademark, and trade secret.

Patents

Patents offer a 20 year monopoly for commercial exploitation in return for full disclosure of an invention. To be eligible for patent protection an invention must be of patentable subject matter, novel, inventive, and capable of an industrial application. The general timeline of a patent looks like this:

 

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As the figure indicates, it can sometimes take a long time from conceiving an idea to obtaining a granted patent. First, the idea needs to be conceived and reduced to practice; what follows is a patentability assessment according to the criteria mentioned above. Also, it is advisable to think about how you will actually police infringement – will it be possible at all? If the answer is no, you may wish to reconsider whether paying a lot of money for patent protection that you cannot really enforce makes sense after all. If, on the other hand, your assessment gives positive results then the next step is to find a suitable patent attorney with field specific expertise and experience. There are many patent attorneys out there, and as in any trade there are better and worse ones; thus it is important that you find the right person to draft the patent for you. Don’t be afraid to ask several people for their opinion until you find someone where the Chemistry between you and the technology fits. You may consider writing a patent yourself but I would strongly advise against such an exercise. The costs you save initially will almost certainly come and bite you at a later time, so: think twice!

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However, after about 12 months, the patent enters into PCT phase, which is essentially a worldwide patent application, following which the application enters national phase. National phase is where you decide on the various territories in which you seek patent protection. This is where patent protection gets expensive, and you should carefully consider which territories make sense for you, i.e. what are (realistically) your (biggest) markets, where are your biggest competitors, etc.

During patent prosecution, the claims of a patent will be challenged by the various patent offices. This is expected and should not alarm you. There will be requests for the claims to be e.g. amended or deleted, and different territories may require different amendments; work with your patent attorney to minimize the concessions; a competent attorney will be able to devise a suitable strategy but your in depth knowledge of the particular field are equally important to succeed. Further, because different patent offices will often have different views, some may grant a patent, others will reject it. This is one of the reasons why only the final, granted patent will give you full protection of your invention; and it is only then when you can realistically go after any infringers. Indeed, obtaining patent protection is process that requires a lot of patience.

Registered Design

A registered design protects the shape and appearance of a product. The design must be new (less than one year old), must not be a naturally occurring shape, and protection may last up to 25 years from filing.

Trademarks

Trademarks are another hugely important asset. They usually last for 10 years but can be renewed indefinitely on payment of additional fees. Trademarks protect trade names, logos, jingles – essentially: all your brand! It is crucial that you make sure your brand is protected. Just imagine you spent all your money on marketing, building your brand and what not, and then someone else benefits from all your efforts and the reputation you built. This is a scenario that you really do not want to get into, so it is advisable you register your trademarks as soon as possible. However, be aware that the same name may be registered for different uses (classes), hence it is important you give enough thought to which classes your business will be operating in, and make sure you tick all relevant areas.

Copyright

Copyright applies to original works of literary (written work such as software, manuals, etc), musical, dramatic or artistic nature (e.g. images, graphs, videos, etc). Work must be original (i.e. new and not copied from someone else’s work) and recorded in some way (e.g. writing). Similarly to patents, the ultimate decision on the originality of work can only be decided in court. Copyright is an automatic right and does not require any registration; but well documented version control in a public-domain system can be highly valuable in litigation. It is an automatic right, which means you do not need to register for it, it automatically exists from the time such work is created.

Literary work is protected for the lifetime of the author plus 70 years, artistic work is protected for life plus 50 (films) or 70 years (e.g. sound recordings) after the death of the copyright holder; copying or sharing of such work requires the permission of the copyright owner.

In general, the author of such material is the copyright owner. Where there is more than one author, and where all authors contributed equally to the work, all these people constitute joint copyright owners. In such cases the permission from all authors is required if work from several authors is wanted to be used or shared. If their contribution is separate, e.g. contributions to different sections of a book or report, or if each author created a distinct part of software code, then these authors are copyright owners of the individual sections; hence only the author of such specific section needs to grant permission.

Trade secrets

Trade secrets, such as know-how, are as the name suggests secrets. They can potentially last indefinitely if never disclosed. A prominent example is the formula of the Coca Cola beverage. There is no registration for this class of Intellectual Property and you have to be very cautious how you manage these assets. Signing NDAs (non-disclosure agreements) is an absolute must, and it might be useful to spread the information between several employees rather than giving everyone the full picture.

So, does IP hurt?

Well, the wrong strategy could indeed hurt you badly – the media is full of reports on various patent litigation cases. However, a sound and well executed IP strategy can accomplish a range of management goals, including accessing new markets, improving existing products, and generating new revenue streams.

What’s coming up next?

In one of our next blog posts, we’ll talk about Software and the question “To patent or not to patent?” 🙂

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