What is Intellectual Property? A Guide for Start Ups (part 1 of 2)
To mark global entrepreneurship week, we are dedicating two blog posts to start-ups that are thinking big. This first one will cover patents and trade secrets and the second will be on trademarks and copyright.
A start-up’s intellectual property strategy needs to take account of their budget (usually limited) and business objectives.
The single most important piece of advice I would give to a start-up is that they need to find out about intellectual property (IP) and how it affects their business. Lack of funding for IP protection is not a reason to bury your head in the sand and could prove costly as the business grows.
What is Intellectual Property?
IP is an umbrella term for a range of separate legal rights, which protect a business and increase its value. These rights relate to the business name and logo, unique software that sets it apart from competitors, clever inventions, creative designs, or secret recipes and know how.
IP Rights
The main IP rights are patents, designs, trademarks, copyright and trade secrets or know how.
Patents protect inventions of products or processes, and relate to the way things work, what they do, how they do it, what they are made of or how they are made. Patents are not concerned with the visual appearance of products – that is the domain of registered designs.
Trademark is the legal term covering brand names and other signs.
Copyright protects a diverse range of materials including websites, software, logos, the written word, music, art and more. There are some surprising rules within copyright law, so ownership will not always be with the person you expect.
Know how or trade secrets are two of the most important and valuable types of IP. To retain their value they must be kept secret and their disclosure tightly controlled. Once the secret is out in the public domain it can no longer be protected.
The terminology around IP is often confused in the media, leading people to think a name can be copyrighted or a book patented, and so on. So, it’s worth taking the time to understand the difference between IP rights if you have big plans for your business.
In this first blog post I will discuss patents, and trade secrets, while the second instalment will cover the other IP rights.
An ambitious business that takes the time to understand IP can do a lot to protect its position. Often, there are alternative (less expensive) strategies for protecting yourself.
Trade secrets v Patents
If a patent is not essential for your business model you could simply guard your innovation as a trade secret until you have the resources to patent it. The software industry is an example of a business model where patents are rarely critical to the business model. Copyright is the IP to focus on when software is a significant element of your business model.
Where it is possible to use an invention without its inner workings being on display you can use the innovation while keeping its details a secret. This preserves the possibility of patenting it later once resources allow, unless someone else files a patent first.
Indeed in some cases, you may decide never to apply for a patent. As patenting involves revealing the details of how you achieve something you may prefer to keep that information private. For example, the Coca Cola recipe has been kept a tightly controlled secret for 100 years. Had they patented it, the recipe would have been protected for 20 years and would then have been available to others to use freely. As it is, Coca Cola has preserved the life of its innovation by not patenting it.
Whether this approach is suitable for your innovation depends on its nature. The question you need to ask is how likely are others to stumble across the same thing?
Every business is unique
Every business is different and will need to develop an IP strategy that reflects its plans; one size does not fit all. There is nothing that says you must always protect your inventions, or that you can ignore patents just because you’re a start up. The business model and what you are selling determines the IP steps you should take.
How does intellectual property affect your business model? It may be best not to pursue some ideas if there is no budget for an essential patent, or an essential trademark registration. On the other hand, for many businesses such IP issues may not be critical.
So, the first step is to find out whether your IP risks and opportunities can be managed with minimal expenditure in the business’s early days. Full IP protection can then follow once the business has sufficient resources.
Business ideas that require a patent
The experience of Mandy Haberman, inventor of the Anywayup Cup, illustrates the type of business that it may be best to avoid if you cannot afford to protect essential IP rights such as patents and trademarks. Otherwise, if you succeed, a better-resourced entity may copy you.
In Mandy’s case, as soon as other manufacturers realised there was consumer interest in her product, they copied it and produced similar cups. As this Guardian article explains, she took them to court to protect her business.
“Because I had patents,” said Mandy, “I was able to go to court, defend my idea, enforce my patent rights and that meant that I kept my monopoly in the market. This made me a lot of money; if I had not had the patents, I would not have made anything.”
So, if you want to make it big avoid embarking on projects where patent protection is essential from the start. These are the sorts of business in which the dragons in Dragons’ Den lose interest when they discover there is no IP protection, or that the patent protection is too weak.
Owning IP puts you in a strong position. Don’t let thoughts of the difficulty of enforcing your rights stop you getting the legal protection you need in the first place. Often, simply owning IP rights is enough to avoid disputes arising.
Business name
In the next blog post I will discuss the importance of names. For example, “Anywayup Cup” is the name by which leak-proof children’s cups are known. Long after their patent expires, the brand will live on. Consider the many other inventions that have become synonymous with their names – Asprin, Hoover, Kleenex to name a few – and you will agree that names are one of the most important form of IP.
I will also discuss copyright in my next post. It is one of the most universally applicable rights but it often catches people out due to the nature of the copyright rules.
In the meantime, if this article has prompted some questions about what IP means to your business, why not book a free consultation with our intellectual property team.
