Insurance · 19 December 2016

How to defend intellectual property rights as a small business owner

Defend intellectual property rights
As a small business owner, it is vital to your company’s health that you understand the ways in which you can defend intellectual property rights.

For his latest article, Grid Law founder David Walker considers the ways in which a small business owner can defend intellectual property rights.

So far in this series we have been looking at what intellectual property rights your business may have, and how they can be used to make you money. However, like any valuable assets, if you don’t look after them, they can be lost or stolen.

Now we are going to look at how this can happen and what action you should take if you find someone taking an unfair advantage of your intellectual property rights.

Some intellectual property rights, for example patents, registered designs and trademarks, give you a monopoly over the technology, design or brand they protect.

If somebody produces or sells an exact copy of your product, or one that looks very similar to it, you can defend intellectual property through legal action.

If they sell their own products, using packaging or branding that is the same as or confusingly similar to your trade mark, you can also stop them. You can claim compensation too, which we shall discuss further below.

You don’t have to prove they have copied you. To defend intellectual property, all you have to do is refer to your registered rights and show they are the same or confusingly similar to your intellectual property.

This is one of the benefits of these registered rights because the infringer can’t use the defence that they came up with the idea independently.

Copyright laws

Copyright laws don’t have this benefit. They don’t create a monopoly so if this is the only protection you have, you must show that someone has actually copied your work to be able to stop them.

If you can’t show that your work has been copied – and the other party can show they came up with the same idea independently – you may not be able to make a claim.

These are direct forms of infringement, but there is another subtler form of infringement that’s becoming increasingly common.

Pay-per-click advertising

I am dealing with more and more disputes where a competitor has used my client’s business, product or service names as key words in their pay-per-click advertising. Then, when people search for these terms and click on the adverts, potential customers are diverted to the competitor’s website rather than my client’s.

Clearly, this leads to lost sales for the client or increased sales for their competitor.

The courts are still finding their feet with these claims, but if you have a registered trade mark you have a very good chance of stopping a competitor from using your brand in their advertising and claiming compensation if they do.

If you find someone infringing your rights, you need to take action fast to defend intellectual property, or you may lose the protection you have.

How to defend intellectual property

The first step is sending a “cease and desist” letter. This serves as a warning to the infringer to immediately stop what they’re doing and that you intend to claim compensation from them.

However, you need to be careful with these letters because you must not make unjustified threats of intellectual property infringement. If you do, you could be sued, so it’s best to take professional advice if you are unsure what to do.

The next step is to calculate the compensation you’re owed. You can claim compensation for your lost sales or an account of the infringer’s increased profits. It’s up to you which you choose, but it is usually easier to prove their gain than your loss.

To calculate your compensation, you are well within your rights to ask the infringer how many products they have sold and at what price. They would have to provide this information during a legal battle, so there’s no reason for them to withhold it beforehand.

With this information, and provided you have strong protection in place, a settlement can usually be reached and compensation agreed without needing legal action.

Even if you have a strong intellectual property portfolio and they are not infringed, your rights can be diluted or even lost if you don’t remain vigilant to what is happening in your industry. This can happen to patents, registered designs and trademarks if someone tries to register their own intellectual property that is too similar to yours and you don’t object.

Therefore, as well as being on the lookout for infringers, you must also keep an eye on what applications are being made to register new intellectual property.

All of this can be very time consuming, but it’s essential if you want to maintain the value of your intellectual property rights. Therefore, if you cannot do this yourself, it’s worth considering engaging someone to provide this service for you.

In my next article, I’m going to explain how to avoid inadvertently infringing someone else’s intellectual property. But in the meantime, if you have any questions on anything I have covered so far in this series, please get in touch at editors@businessadvice.co.uk.

Catch up on the rest of David Walker’s intellectual property series:

David Walker is the founder of commercial law specialists Grid Law.

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry – advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

From the top

Find out how KPMG Small Business Accounting can really work for you

FIND OUT MORE