While it may not be the first thing that grabs your attention when starting a new business venture, every start-up needs to consider intellectual property (IP) protection at an early stage. Start-ups can often focus their initial efforts on raising finance, which can result in shortcomings in other areas. One of these shortcomings can be a failure to seek advice on how to protect the IP of the business. Decisions made at this stage often have long term implications, both for the future of the company and its tax liabilities.
What are the types of IP rights?
IP falls into four categories – trade marks, patents, copyright and designs. Except for copyright (which arises automatically), all IP rights can be registered in Ireland and abroad.
Trade marks are the most obvious example of IP. A trade mark or ‘brand name’ is any sign that can act as a badge of origin for goods or services and includes company names and product names (which are often the same). It is the guarantee to the customer of the origin and indicates the quality of a product or service. A registered trade mark lasts for ten years but can be renewed indefinitely.
Patents are inventions which are new, inventive and which are capable of industrial application, and have been successfully registered with the Patents Office. They grant a monopoly over the claims set out in the patent. It is crucial that an invention is kept confidential and ideally not disclosed prior to speaking with a patent attorney. Otherwise, the opportunity to register the invention as a patent may be lost. In Ireland, protection can be granted for a short term period of ten years or twenty years for full term protection.
Copyright is the primary protection for software (although patent protection should also be considered). Copyright also protects literary, musical and artistic works.
Designs are very useful for protecting logos, packaging, GUIs (graphical user interfaces) and the like. Designs can be both registered and unregistered.
Registering IP rights
Patents, registered trade marks and designs are all territorial, which means they only protect the IP for the country in which registration is made. Therefore, it is important that all key markets are identified at an early stage so that a cost effective plan can be implemented. This can often be structured on a staggered basis so that the costs can be absorbed over a period of time rather than in one significant upfront payment.
Community Trade Marks in Europe, European Patents and similar systems around the world provide the ability to register IP across a number of jurisdictions.
Further advantages of IP rights
Another advantage to registering a patent or trade mark is that a tax deduction should be available for the costs of obtaining protection. There are additional tax incentives available for research and development and scientific research.
Where does IP fit in?
IP protection is not necessarily the first item that start-ups need to address. Usually, incorporating the company and, if necessary, entering into a shareholders agreement and raising capital are the first steps for any new business. However, IP should be considered early on in the process. For some start-ups, particularly in the technology sector, the main asset on which capital may be raised is the IP of the company. For these companies, IP protection should be considered from the very start. Often, investors expect (or demand) that critical IP is adequately protected before they will invest.
It can sometimes be even more important to check that you are not inadvertently infringing third party IP rights, which could spell an early end to a new enterprise.
Consider work created by others
Businesses should be aware that they may not own the work created for them by contractors. While there is some protection at law, written agreements dealing with IP ownership should be signed with all contractors to avoid a shock and expensive legal fees at a later stage. The general rule is that any work created by an employee in the course of their employment is the property of the employer. It is advisable, however, to clarify this by including appropriate terms in the contract of employment.
Remember to register your company name!
Lastly, it is important to register your mark (either your business name or product name) as a trade mark as neither the incorporation of a company with a particular name nor the registration of a business name grants any rights to that name. To obtain enforceable rights, a trade mark registration should be sought.