What is intellectual property?
When it comes to Intellectual property (IP) in Australia, myths and misunderstanding abound amongst business owners (in fact, you can read about the 7 most common myths about IP). We’re here to set the record straight. Read on for our no-nonsense summary with everything you need to know right now about intellectual property.
You can think of IP as rights relating to things you create in your mind. The guiding principle on IP is that it’s a new or original idea you create. You might hear the phrase “bundle of rights” used in relation to IP, as there’s often more than one way to skin a cat and you might have several IP rights in one creation.
Case Study: Showpo
This well-known online fashion brand was formerly known as Show Pony. A quick success, they missed an essential step: trade marking. Showpo founder and owner, Jane Lu later said, “We didn’t bother trademarking, as I wanted to prove the business model first before getting bogged down by admin.”
The issue flew below the radar until Show Pony tried to expand into international markets and found out that their name was already trade marked internationally. Talk about a backfire! Jane was faced with a choice: fight an international intellectual property battle OR rebrand. Ultimately, Jane decided that the legal costs far outweighed the rebranding cost, and so Showpo was born. Check out this video on how they announced the change to their fans at the time.
Case Study: Bumble
Who can resist a good Bold and the Beautiful-esque love/hate saga in the public eye? Not me! So, here’s the run down: you know Tinder? The swipe left-or-right dating app? Well, one of their co-founders, Whitney Wolfe Herd left and co-founded Bumble, a swipe left-or-right dating app where women make the first move. Sounds similar?
Yeah, Tinder thought so too. In their ongoing legal stoush, Tinder’s parent company, Match, alleged patent infringement by Bumble, who, by the way, had rejected a $450M offer to buy them out the year before. Juicy! The case is ongoing. Can’t wait to see how the battle of the dating apps turns out! You can read more about their ongoing legal saga HERE.
What are the types of intellectual property?
Copyright in Australia is an automatic protection that applies to original literary, dramatic, artistic and musical works, as well as sound recordings and other works (to a lesser extent).
Copyright owners have exclusive rights to reproduce, publish and communicate their work to the public. Despite what many people think, there’s no need to register to get protection (another myth)– it applies as soon as you create the work.
Keep in mind, there is no copyright in ideas per se (yet another myth!)- works must be not only original but in material form to receive copyright protection.
In most cases, the original author of the work gets the copyright. There are certain exceptions for employees, commissioned works (think photographers and ghostwriters and government contractors).
Copyright is one of the most important areas of intellectual property law – you need to get intimately familiar with it, or at least fairly familiar depending on your business. Misunderstandings can go from innocent to full blown disaster very quickly. For example, business owners often make the mistake of using images they find on the internet to brighten up blog posts and website pages.
Make sure you only use images if you own the copyright or have the permission of the copyright owner to use it for that purpose. If you don’t, you could end up facing an enormous bill, angry letter and threats of court action a la Getty Images.
Copyright you might own: the content of your website, your blog posts, photographs you’ve taken, illustrations you’ve drawn, e-books you’ve written, your ad copy, brochures you’ve designed and Facebook posts you’ve uploaded.
Trademarks are the unique identifying marks, words or symbols you use to identify your product or service. Business owners commonly register their business names, product names, logos, design elements and catchphrases. You can also trademark more obscure things (for example, Cadbury’s purple, Chanel’s No. 5 scent or the roar of the Harley Davidson engine – check out our article on the world’s most obscure trademarks).
Most business owners have at least one trademark they want to protect. You can use the IP Australia website to apply to register a trademark online. If it’s your first time, you’ll want to use the TM Headstart service – a pre-application service where a trademarks examiner will check your application before you officially lodge it and alert you to any issues with the application.
This will save you time and money by giving you the opportunity to correct any errors with your application before filing (whereas an incorrect application officially filed may be rejected and filing fees forfeited). An application is by no means a guarantee of registration, so if you have any doubt it’s best to see a trademarks specialist to help you.
How do you know when it’s the right time to invest in a trademark? Easy. If you’ve got the capital up front and you’re confident in your idea, do it now. Otherwise, if you need to get some sales traction going before you’ve got the money to invest, find the point at which your customers stop identifying your business as “you” and start associating your business with the name, logo or tagline.
That’s when you’ll know it’s got some goodwill behind it and it’s worth protecting. Another way of looking at is to think about at what point it would cost you (in terms of lost customers, goodwill, money spent re-branding, money wasted on used marketing collateral) more to change your name/logo/tagline than it would be to register your trademark.
Whatever you do, make sure you’re not infringing someone else’s IP before you start to use a mark. Read more on how to check this here.
Trade marks you might own: your business name, your logo, your tagline, custom design elements.
A “Design” essentially means the look or appearance of an object (for example, the design of a particular type of shoe, ring, fork, or packaging). Designs have a specific dedicated method of IP protection available to them.
There’s an overlap between designs and copyright: copyright will exist in the artistic work until 50 articles have been made, at which point copyright protection lapses. If you don’t have a registered design by then, your design will be up for grabs.
Registering a design allows you to commercially and lawfully exploit it while offering you legal remedies if your competitors simply rip it off.
Designs you might own: jewellery designs you create, packaging you design, an innovative product you make.
Patents are available for new, useful and inventive or innovative products and services (such as medicines, scientific processes, etc). This is a highly technical area of law – in fact, patent attorneys are required to have a background in science – and protection is reserved for truly new and innovative products.
If you’re thinking of applying for a patent – keep in mind you can’t tell a soul! As soon as it’s demonstrated, sold or even discussed in the public domain, patent protection is no longer available.
Let’s stop for a second and qualify this: you need to weigh up the potential loss of patent protection against potential gains from disclosing your idea to a partner, investor or someone who can help you. If you’re taking meetings with potential partners or suppliers, for example, ask a lawyer how you can reveal enough to interest them, without losing any rights to protection.
Many people think they can get a patent when in fact their “thing” isn’t even eligible. It’s a good idea to get the advice of a patent attorney up front, so you know exactly where you stand.
Patents you might have: a process you develop, a formula you come up with, a device you invent, an innovative method you use in your business.
The littlest known and arguably most important piece of intellectual property when it comes to your business is your confidential information.
Confidential information is that information about you and your business that gives you your edge – your special sauce if you will. It’s not necessarily covered by other protections (except perhaps by copyright), but it’s critical to your business success – if it fell into the hands on your competitors, you’d probably be toast.
This type of intellectual property isn’t registered but protected by you practically, including by having anyone you release the information to sign a Non-Disclosure Agreement or Confidentiality Agreement.
Other ways you can protect confidential information include having a confidentiality clause in agreements with employees, contractors and suppliers, keeping confidential information stored in a secure location with access limited to a “need-to-know” basis and maintaining a strict policy on when and how confidential information can be disclosed to people outside the business.
Confidential information you might have: customer list, supplier contact details, sales pipelines, industry contacts.
Monetising your intellectual property
Most business owners don’t realise the full value of their intellectual property. One of the first and best steps you can take in the journey to monetising your IP is to understand the difference between an assignment and a licence (this is where the “bundle of rights” reference is going to start making a bit more sense).
If you assign your rights, you give them to the assignee totally. You can’t get them back. They step into your shoes completely. You can think of it like selling an investment property. Once it’s gone, you can’t make any more money out of it by renting it.
If you licence your rights (or just some of them), you let your licensee use them for a period of time, for a specified purpose, for a fee. You can think of it as a lease. Once the lease is signed, you have an ongoing source of income. Once the lease has ended, or if you’ve only leased part of the property, you can lease to other people and make more money.
Take the example of a social media content creator. You could agree to produce images on a monthly basis for your client and upload these are part of a management contract and agree to assign the copyright in the images. This means that your client owns the images and they can use them for anything – print advertising, other platforms, even client work – without further payment to you.
On the other hand, if you were to licence your client to use the images for Facebook posts and advertising only, you could reserve the other uses. If they wanted to use your images for something else – such as a print advertising campaign – you could change a further fee for the images. Boom! More money in your pocket. You can also use IP rights as bargaining chips when negotiating project rates. The possibilities are practically endless.
Intellectual property infringement
A common complaint amongst business owners is that their IP has been ripped off by a competitor. It might be a new player in your industry copying your website content, a competitor copy-and-pasting your terms and conditions or an international manufacturer using your Instagram photos as their own.
With the widespread availability of the internet and the social sharing culture made popular and ubiquitous by the likes of Facebook and Instagram, it’s easier than ever for would-be competitors to get access to your valuable IP.
To add insult to injury, legal redress for IP infringement is beyond many small business owners’ means. The cost, time and stress that goes into legal action can all be too much. So, what’s your next best alternative?
The first thing is to have an IP protection and infringement strategy in place. List out your IP and categorise it using the types of IP set out above. Then do your research and figure out what protection is available to you for each type and set out a strategy for protecting your most valuable IP.
Next, get that protection. If you can’t afford or aren’t eligible for a registrable form of protection, put in place practical protections, such as watermarking images, locking text documents down as PDFs before sending and limiting physical access to your IP. If you haven’t already, put a copyright notice on everything (it’s not necessary for copyright to apply, but it can be a deterrent).
Then figure out what you’ll do in the event of an infringement and write it down – this is your infringement strategy. Sort out in advance what advice, templates, systems, resources and team members you’ll need if you find out there’s been an infringement. Putting a plan in place now takes all the thinking, worrying and stress out of the situation if (when) it occurs – you just open up your strategy document and get to work following the steps.
Importantly, know your “walk away point”. In some cases, there may be a point where you start throwing good money after bad and you’d be better off just walking away. It’ll probably change from situation to situation, but always keep in mind that you do have the option to walk away (as tough as it might be).
Finally, make sure you’re you’re monitoring your IP. There are no “IP Police” – it’s your sole responsibility to protect your IP. This isn’t always easy, but you should keep an eye out for competitors and copycats. Often, if you’ve got a loyal customer base or social media following they’ll be the ones to give you the heads up – make sure it’s easy for them to get in touch with you.
Other strategies might include monitoring hashtags you use, setting up Google alerts and regularly checking the trade marks register for new applications. If you’re playing a big game, you could even look into software solutions like Getty.
Need help coming up with a strategy? Read our tips here.
What’s at stake – remedies for intellectual property infringement
IP infringement comes with some pretty serious consequences (for the big dogs like Microsoft, we’re talking in the billions of dollars). It has to, right? Otherwise, why would anyone go to the trouble and expense of protecting their IP?
If someone infringes your IP, you’re entitled to a remedy at law. Here’s a rundown on what you could claim:
- Damages (cash to compensate you for the loss they’ve caused you);
- An injunction (to stop them from infringing your IP further); or even
- An account of profits (where they are forced to pay you part or all of their profits).
Key things to remember about intellectual property
- There are different kinds of intellectual property. A certain “thing” may attract more than one, or none at all.
- It’s important to figure out the type of IP protection you’re looking for, as different protections apply.
- There are no IP police – applying to register your IP isn’t enough – you need to manage it. This is not a “set and forget” operation.
- Infringing someone else’s IP has serious and scary consequences.
- Even if you can’t afford to sue someone for IP infringement, there are still practical ways you can asset your IP rights.
Need advice about Intellectual Property in your business? Get in touch with Her Lawyer.