Out-Law Guide | 08 Oct 2020 | 2:41 pm | 4 min. read
Every business will generate IP on a daily basis. IP is part of the value of a business, and may even be a business critical asset. A business must capture all of its IP in order to maximise efficiency, revenue generation and market presence. Having your house in order in relation to IP is also important in the context of taking investment or selling assets.
The first step for a business is to understand what IP is being developed, where in the business that is happening and who is developing it. This will involve a review of existing business processes and procedures.
For some businesses, it will be obvious what IP is being developed. For example, the valuable IP for a software company will be in the software it is developing and related know-how; for a food and drink business, in its recipes, formulations and packaging; and for an academic institution, in its teaching and research materials. It may be less obvious where internally developed 'products' as such are not the focus of the business. Some deeper analysis may be required of core business processes.
This initial identification exercise is essential to understanding what IP exists and needs to be protected, and whether the business itself owns that IP – and, if not, what can be done about that.
Consider whether all relevant developments are being regularly reported back to the business centrally. If not, a streamlined process should be put in place to allow this to happen to address the risk of valuable IP being lost. An online idea or concept capture form for employees to complete and submit is one possible solution.
The next step is to assess whether the IP is properly protected. Sometimes, IP protection arises automatically. An app or other piece of software will be protected by copyright as soon as it is written. The shape of a product or its packaging will be protected by design right when it is captured in a design drawing or manufactured. These rights do not need to be registered. The important thing for a business is being able to evidence that those IP rights subsist, and that the business itself owns them, in the event of enforcement against infringers, or exploitation to generate additional income. The best way to do this is for a business to hold evidence of the development process, known as a 'design trail'.
Hard copy documents should be dated and carefully stored, noting the names of all the parties involved. Digital documents will be electronically 'stamped' with dates, times and user identity, and these should also be securely stored, and systems regularly backed up. Third parties developing IP on behalf of the business should be required to hand over the development documentation they have, and, if necessary, to assign the IP to the business.
Warn off potential infringers by adding copyright notices to copyright protected materials. Adopt digital rights management processes or plant deliberate errors in your copyright materials – such as an unnecessary line of code in your software, for example – to help evidence that unauthorised copying has occurred.
It is possible to obtain registered IP protection via registered trade marks – to protect core aspects of a brand; registered designs – to protect the 'look and feel' of a product or its packaging; and patents – to protect inventions.
Registered rights can sometimes offer longer and stronger protection than unregistered rights, so it is always worth considering if registration is possible. The trade mark registration process is usually straightforward and low cost, and businesses can choose the countries in which they want protection. Similarly, registered designs are often overlooked but they can be easy and relatively cheap to obtain, and there is no examination process. Even if a design registration turns out to be invalid, its initial existence can act as a useful deterrent to infringers.
Unregistered design and patent protection is usually only possible where the product is not already known to the public, so it is important that businesses keep these products confidential until applications have been filed. Seek advice from an IP professional on making appropriate applications without delay.
The actions involved in properly understanding and protecting IP within a business can seem overwhelming. A good idea is to compile an audit 'to do' list in order of priority and to begin to work through that.
Businesses should incorporate some 'quick win' tasks towards the top of the list. This can help to demonstrate the value of an audit to the business early in the process. One such task might be, for example, to review the definition of 'territory' in existing IP licences. If this is defined as the EU currently, then the UK will not be included within that territory from 1 January 2021 and the agreement will need to be amended in order to avoid future disputes on this issue.
A royalty audit can also establish whether all potential revenue has been fully collected from your licences. If not, this can be clawed back, bringing some immediate income to the business. Royalty audits should, however, always be handled carefully to ensure no lasting damage to the existing, and future, commercial relationship.
Where businesses already have a well-defined portfolio of registered IP rights, they should consider if immediate cost savings and efficiencies can be made. An assessment could be undertaken as to whether all of the existing IP rights are still needed in all jurisdictions or whether some can be allowed to lapse to save on renewal fees. If there are obvious gaps in the portfolio these should be closed by filing for registered rights to reduce exposure to the risk of third party infringement.
The issue of why and how businesses should carry out an IP audit was discussed by IP law experts at Pinsent Masons, the law firm behind Out-Law, in a recent webinar: 'Solutions for Getting Your IP House in Order' is available to download.