One of the legal issues often encountered by startups is protecting their intellectual property (IP). A secondary, and more financial, issue for startups is to know when to invest money in protecting IP and when to hold back. It is important to consider these issues early to boost brand protection and enforce your intellectual property rights (IPRs) against infringers.
For many startups, the majority of the company’s value comes from the IP created by its employees. That being said, the Australian Bureau of Statistics estimates 74.6% of businesses with zero to four employees use no protection methods when it comes to intellectual property.
Each type of IP offers different benefits and competitive advantages for startups, which is why it’s worth having an understanding of the various types. To increase your business’ lifespan, generate further income and maximise future value, you should take steps to protect your IP, while managing the risk of over-investing limited funds into an idea or business model that might need more testing.
Types of Intellectual Property
Startups should consider the four types of intellectual property and the different fees involved in registering IP with IP Australia. Keep in mind, not every business needs patent protection. Almost every company will have copyright and trade mark protection to some degree, while only some businesses utilize trade secrets at all. As a startup, you may also need confidentiality agreements to prevent employees from revealing secret knowledge during and after their employment.
A trade mark is a sign or symbol used to distinguish the goods and services of one trader from another. Typically, startups trade mark the brand name and logo of its business. Trade mark registration gives the owner the right to exclusively use the trade mark, Australia-wide, for the goods and services they provide for a period of 10 years starting from the date of filing, and can be renewed indefinitely. Trade mark registration costs vary, depending on the breadth of protection you are seeking, though generally trade mark applications cost from $120 and registration fees begin at $300. These costs may vary depending on the number of classes for which you apply, as well as the different costs of trade marking in different jurisdictions.
Remember that the registration of a business name, company name or domain name does not provide these rights. Accordingly, you should conduct a trade mark search before registering a new business or company name to ensure the new name is not infringing an existing trade mark.
A patent is a means to describe and define an invention that is new, not publicly disclosed, and has commercial potential. It grants the owner the exclusive right to commercially exploit the invention for the life of the patent. Startups can apply for a patent to protect a number of inventions, including computer-related inventions, business methods and mechanical devices.
Startups must comply with the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), which requires patent applicants to prove they are making a significant advance on what is already in the market. Similar to trade marks, patent registration costs can also vary depending on the breadth of protection you are seeking, and cost from $110.
Copyright concerns the owner’s original expression of ideas and not the underlying idea itself. For a startup, copyright may apply to website content and software source code. In order to be protected under the Copyright Act 1968 (Cth), a work must be original, recorded in material form and connected to Australia. Once an idea is expressed, e.g. in words, film, art or an image, it has automatic copyright protection and does not need to be registered.
Sometimes a trade secret will be more valuable (and affordable) than a patent. It also has a longer life span (provided it remains a secret).
It may be more valuable to the business to get your product on the market quickly, rather than going through the process of patent protection. Don’t bother registering your patent idea if you cannot afford it and have not tested the gap in the market. Keep it a secret until more investment opportunities present themselves.
What are the benefits for a startup to register its IP?
Tech investors look positively on startups that take steps to protect their IP. Registering your IP not only establishes a competitive advantage, but can also be a source of income through licensing fees. In addition, startups that are seeking to raise capital from investors, or grow the business to sell, should register their IP, as it gives investors a sense of security while they consider investing in your business.
It’s fine to require that your employees and contractors sign Confidentiality Agreements that state that they will not use or disclose your IP to anyone during and after employment.
It is not fine to ask the same thing of investors. Investors see hundreds of startups a year and the last thing you should try to do is have them sign a Confidentiality Agreement. If you’re worried about them taking your idea and using their millions of dollars to make it into the next Facebook, think again! They don’t want your idea. They want entrepreneurs who turn ideas into money.
Startups that fail to register or monitor the use of their IP run the risk that someone could steal or copy their brand or products after having invested considerable time and money into them. Take the time to create a well-documented, clear chain of title to all the intellectual property in the venture and determine whether anything should be registered with IP Australia.
And finally, be discerning about what IP you choose to protect and when. If money and resources are scarce, and investment opportunities limited, don’t blow it all on protecting an “idea”.
If you would like to discuss protecting your startup’s IP through patents or trade marks call us on 1300 544 755 or fill in the form and one of LegalVision’s intellectual property lawyers will be more than happy to assist you.
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