Intellectual property (“IP”) rights are at the heart of every business. They are often a business’s most valuable assets, particularly in an increasingly digital economy, as they protect intangible property such as inventions, brands and creative works.
The UK recognises the key role that IP rights have in entrepreneurship and innovation, and has a well-established regime for protecting and incentivising the development of IP rights. Investors in and purchasers of companies in the UK will want to ensure that their target companies have appropriate protection of their IP rights, and there are numerous tax credits and grants available for the research, development and initial exploitation of IP rights in the UK. As such, it is of paramount importance to make sure that you have a clear IP strategy for any business operating in the UK.
This note sets out some of the key things to consider in defining your IP strategy:
1. Check that you are clear to operate
Before launching in the UK it is important to make sure that you have the right to do so, and that your business isn’t going to infringe the IP rights of any third party.
Depending on the nature of your business, it might be appropriate to conduct “freedom to operate” searches, to ensure that you don’t infringe any local patents, or “trade mark clearance searches” to ensure that you don’t infringe any third party trade mark rights. Basic ‘desktop’ searching can go a long way to identify any third party rights that might conflict with your business plans, but in many cases it’s worth investing in more comprehensive professional searches to ensure that you have as clear a picture of the local IP landscape as you can before launch – as it’s almost always cheaper to work around issues before launch than it is to deal with any later claims from the holders of prior rights.
2. Secure your local IP rights and domain names
IP rights are territorial, so it’s important to make sure that you have appropriate protection in place in all the countries in which you operate.
In the UK, trade marks, design rights and patents can all be registered with the UK IPO, so you should check to see whether: (i) you have any registered rights which already cover the UK (such as an EU Trade Mark or European Registered Design); (ii) your rights are registrable (bearing in mind that patents aren’t registrable once the invention has been disclosed to the public, even if you have patent rights elsewhere); and (iii) it is worth applying to file any further applications to strengthen your position.
Copyright, unregistered design rights, and the right to sue for passing off (sometimes known as “unregistered trade mark rights”) subsist automatically, so it’s important to make sure that you have appropriate contracts in place dealing with these (see point 4 below). Trade secrets also subsist automatically, but you need to prove that you have identified any trade secrets are taking reasonable measures to keep them secret, so it’s important to have a Trade Secrets Policy dealing with this (see point 5 below).
While not strictly IP rights, it’s also important to secure local domain names. While .com is still the most commonly used top level domain name, .co.uk, .org.uk and .uk domain names are widely used in the UK, and give a much more “local” feel to your business. Securing .co.uk, .org.uk and .uk domain names can also help to prevent third parties from registering them and potentially diverting customers away from you.
3. Check to see whether any grants, tax credits or other incentives are available
There are numerous tax credits and grants available for businesses looking to start business in the UK, so it’s always worth checking to see whether there are any available for your business.
For example: the UKIPO offers “IP Audit Grants” for SMEs which can be used to help finance the searches referred to in point 1 above, and the development of IP strategies in the UK; “R&D Tax Credits” are available from HMRC for companies that work on innovative projects in science and technology (provided that the aim of the project is an advancement in the overall field, not just for the business); and HMRC’s “Patent Box” can be used to obtain a discounted Corporation Tax rate for profits earned from patented inventions which are owned by or exclusively licensed to the company (even if the invention is only a part of the product that generates the profit).
4. Put proper contracts in place
If the business is engaging anyone to create any IP, if it is using anyone else’s IP, or if it is allowing anyone else to use its IP, then it is vitally important to ensure that there are appropriate contracts in place, clearly dealing with the IP rights.
Creation of IP rights: The general rule for the creation of IP is that anything generated by an employee in the course of their employment will belong to the employer, unless there is an agreement in place to the contrary. But, if the person creating the IP is not an employee (e.g. if they are a consultant, contractor, or an individual who created the IP before the business was properly set up) they will own the IP unless there is a written agreement in place to the contrary. As such, it’s important to identify the capacity of the person creating the IP, and to have an agreement with them dealing with ownership of the IP.
Licensing in IP rights: If the business is using third party IP, it’s important to ensure that the terms of that use are set out clearly in writing. Not only will this help the business to prove to investors or potential purchasers that it has the right to use the third party IP, but it will also be invaluable in the event that there is a dispute relating to businesses use of the IP.
Licensing out IP rights: One way of monetising IP rights is to grant third parties licenses to use the IP, in return for a fee. Having a written contract in place will help to ensure that it is clear that the business still owns the IP it is licensing out, and to set out precisely how the IP can be used by each party.
5. Set up appropriate policies
As well as having proper contracts in place dealing with the generation, licensing in and licensing out of IP, it is also important to have clear policies in place dealing with how the IP can be used.
Brand use policies can be used internally (within the business) and externally (by licensees) to ensure that trade marks are used consistently and in an appropriate manner – as using differently to how they are registered can weaken the protection they are afforded, and using them in an inappropriate context could damage the reputation of the business.
Trade secret policies are vital for the protection of trade secrets, as they evidence the fact that the business has identified and is taking reasonable steps to protect its trade secrets.
Licensing policies are also helpful to ensure that the business has a consistent approach to who can use the businesses IP, and on what terms – and can help to avoid the wrong type of licenses being granted.