For entrepreneurs with a unique idea, understanding the different types of intellectual property is the first step in making money from it. David Walker, founder of Grid Law, provides a comprehensive overview of patents, registered designs, trademarks and copyright.
Origins of intellectual property
The oldest form of intellectual property rights are thought to be patents and their origin can be traced back to the Statute of Monopolies 1624. As commerce, science and technology evolved over time, new types of intellectual property rights were created to protect them. I could easily fill a book on all the different forms of intellectual property that exist, but for most businesses, there are just four main types they should be aware of. These are:
Some people think trade secrets are a form of intellectual property, but that?s not strictly correct. Trade secrets are protected by other laws so I?m not going to cover them here. If your business relies on trade secrets, you can find out how to protect them in my previous article ?Understanding the new rules for protecting trade secrets?. So, let?s take a look at the four main types of intellectual property and what they protect.
Patents protect how new inventions work. In most cases, these inventions will be a new, innovative piece of technology. However, patents have a much wider application than that. In the right circumstances, patents can also protect software and methods of doing business. Not all inventions are patentable. To qualify for patent protection, they must fulfil three criteria:
The invention must be new
There must be an inventive step
It must have an industrial or commercial application
So, what does this mean? ?New? means that the way in which your invention works must not have be disclosed publicly anywhere before. If you?re already selling a product that uses the technology, if you?ve written articles about it, or you?ve displayed a prototype at an exhibition, there?s a good chance it?s been made public. If it has, it?s no longer considered to be new and therefore you won?t be able to patent it. Unfortunately, this requirement to be new means that you can?t go back through old ideas and retrospectively apply for patent protection for them (unless of course they have never been made public). However, all is not lost. If you can develop your ideas further, and create something new from them, you may be able to patent the upgraded technology. This brings us to the next criteria ? there must be an ?inventive step?. An inventive step means that the advance in technology must be taken a significant step forward. It mustn?t be an obvious development of existing technology. Finally, there must be an ?industrial or commercial application? for your idea. Basically, this means that you must be able to sell it, or sell a product incorporating it. Patents can be extremely valuable because once granted, they give you the exclusive right to use your invention for up to 20 years. If a rival business copies your invention, or even creates their own technology that?s too similar to yours, they will be infringing your patent. You can then take legal action to stop them from selling it and claim compensation for the sales they have made. As you can imagine, if your patent protects a key piece of technology with multiple applications, it will give you the opportunity to really dominate your market place.
Unfortunately, there are a couple of drawbacks to patents. First, in exchange for this exclusivity, you must show the world how your technology works. In your patent application, you must describe what your invention is and how it works. It?s then published in database that anyone can search for free. This means rival businesses can study your patent and try to find a way around it. Alternatively, it may give their R&D department a head start on developing the next technology that will eventually replace it. Second, patents can be expensive. If you want to keep your patent ?live?, you have to pay renewal fees every year from the fifth year after registration. You therefore have to be confident that you will sell enough products to cover the cost of the patents and still make a profit. After 20 years, your patent will expire and everyone will be free to use your technology. A recent example of this is Amazon?s ?one-click? shopping patent. If you sell anything online, you can now use this technology without any fear that Amazon will try to sue you for patent infringement.
Registered designs protect the aesthetics of how a product looks. For a design to be registerable, it must fulfil three criteria. It must:
Have individual character
Not be specifically excluded from protection
?New? means that the design must not be identical to, or too similar to an existing design. But, unlike patents, you don?t have to register your design before making it public. Designers have a 12-month grace period from when their design is first disclosed until it has to be registered. ?Individual character? means that the design must give an overall different impression to other designs. Some examples of designs that are excluded from protection include the surface design of a product, purely functional designs and designs that are dictated by the way the parts of a product fit together. Registered designs can be used to protect either the whole or just part of a product. They can also protect 2D as well as 3D designs. Good examples of registered designs are the shape of a Trunki (the children?s suitcase) and many of the icons for the apps on your mobile phone. In my opinion, registered designs are one of the least understood and most underutilised forms of intellectual property. This is a real shame because they can offer smaller businesses a really good level of protection for their products and the protection lasts for 25 years. Registered designs are also much cheaper to register than patents because the application process is much simpler. You can expect to pay a few hundred pounds to register a design, rather than a few thousand pounds to register a patent.
Trademarks protect brands. When protecting a brand, most people will just think about protecting names and logos. However, trademark protection can be much wider than this. Trademarks can protect anything which distinguishes your products and services from those of your competitors. So, trademarks can also protect slogans (such as Nike?s ?Just do it?), packaging (think of the shape of a Coca Cola bottle) and colours (for example, green for BP filing stations). Once again, not all elements of a brand are registerable. To be registerable as a trademark, the mark must:
Be capable of being represented graphically
Be distinctive, not descriptive of what the product or service is or does
Not be excluded from protection
Examples of marks that are excluded from protection are special emblems such as national flags or elements that indicate the geographic origin of the products or services. When you?re applying for a trademark you must choose the classes of goods and services that your trademark will be registered in. (There are forty-five classes altogether.) For most small businesses, their products and services fall into just one or two classes. If your business is well known for a wide range of products or services, you may choose to register your brand in more. A word of warning: Avoid trying to protect your brand in classes you will never use it for. If you do, you will put your trademark at risk of being cancelled. For more information about this, please see my previous article ?What small businesses can learn from the McDonald?s ‘Big Mac’ trademark battle?. Applying to register a trademark should be well within the budget of most small businesses. Depending on how many classes you register in, you should be able to register a name and logo for a few hundred pounds. Costs only start to escalate when you start trying to protect your brand internationally. Once registered, a trademark lasts for 10 years. But, unlike patents and registered designs, trademark protection can potentially last forever if you continue to re-register them at the end of every ten-year period.
Copyright protects original works of art, music and literature. In a business context, art could be the surface design of a product, music could be the jingle you use in your advertising and literature could be the instruction manual of a product, blog posts or any number of other written materials, including software. There are very few restrictions on what it takes to gain copyright protection. In most cases, if your work is original and hasn?t been copied from somewhere else, it will automatically be protected. There are also no fees to pay. Unlike patents, registered designs and trademarks, copyright doesn?t create a monopoly or give you any form of exclusivity. Therefore, it?s not the strongest form of protection. For example, if someone else has the same idea as you and independently writes a piece of software that achieves the same result as your product, you can?t stop them from selling it. Your copyright is only infringed if you can prove your work has been copied. Understanding what the main types of intellectual property are is essential for all business owners. You only need a little bit of knowledge to dramatically increase the value of your business (especially if you?re considering selling it). For example, if you?re designing a new product and you know that the way it looks can be protected as a registered design, you can factor this into the design process. Likewise, if you?re rebranding, trademark protection should be considered from the outset. It can be extremely costly to settle on a new name for your business, products or services only to find out that it?s too descriptive and can?t be protected. If you have any questions about intellectual property rights and how they can benefit your business, please feel free to email me at email@example.com.
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.
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