Business owners often come up with great ideas or make great products but don’t know how to get a competitive edge and stop others taking advantage of their blood, sweat and tears.
We give you 5 tips for protecting your intellectual property (“IP”) and business ideas that you can easily put into practice right now.
Let’s take an example of Seb who is developing a software program that creates great colour combinations which he plans to sell to a paint manufacturer as a marketing tool. We’ll show you how Seb can use the law to protect his IP and the confidential business concept.
Register a distinctive name with IP Australia so that your competitors can’t trade off it to sell the same kind of goods or services as yours.
A trademark can give you protection over a name even if you haven’t started using it yet. If you don’t have a trademark you will need a well-established reputation before you can use the general law of passing off to stop other traders using your name. It's much easier, therefore, to simply register a trade mark so you won't need to establish brand reputation in order to protect your brand.
You can also trademark logos, sounds, colours, smells and movements that are distinctive to your name or products.
Seb chooses the name “Red White and Blue” for his colour matching software. This is a distinctive name that no one has used before for this software so he can register it as a trade mark and stop others using it.
While your business secrets or ideas won’t be protected by copyright or other intellectual property rights, you can protect them with a confidentiality agreement. The recipe for Coca Cola is a classic example of a trade secret that has been successfully protected over the years through confidentiality agreements.
Before you give away your business secrets or other confidential information, make sure the person you are dealing with signs a Confidentiality Agreement. This is a simple document that says the recipient won’t use your confidential information – such as your business concept or customer list – except for the stated purpose – for example, evaluating whether to go into business with you or to buy your business or new product.
When Seb goes to the paint manufacturer to pitch the idea of a paint matching software application as a marketing tool, he has them sign a Confidentiality Agreement that says they will only use his confidential information for the purposes of evaluating whether to fund or buy his product.
Try Legal Zebra’s Confidentiality Agreements. They are simple documents that you can download and complete in minutes.
At the end of this article, you will see we have put “© Legal Zebra 2016” to show that it is protected by copyright, so others can’t reproduce it without our permission, and that the copyright protection period starts in 2016. It also shows who owns the material if someone wants to find out about using it.
You can do the same to show the world that you have copyright protection over your works including written materials like books, business plans and articles, software, photographs, musical scores and film and audio recordings.
In Australia, there is no registration system for copyright so you use this sign your are free to use this sign without the need to register anything. Copyright protects the material form in which something is expressed. It won’t give you protection over the idea itself. For example, if you a software program for picking great colour combinations, the code for software will be protected by copyright, but someone else could write their own code for the same idea.
Once you have applied for a trademark you can use the TM symbol to show the world that you have a trademark application pending. Then, once the Trade Marks Office accepts your registration, you should use the ® [R in a circle] symbol to show that your mark is a registered trademark and warn others against using it.
When you engage people to develop your business materials, make sure you have them sign an agreement that confirms that you own or at least have the rights to use the IP and also spells out whether they may use the IP themselves.
This is important when you are engaging photographers, graphic artists, web designers, software programmers, writers, researchers or any other IP developers to contribute to your business. If you are engaging the IP developer as an employee, you should make sure that the employment agreement clarifies what you own and what the employee owns.
Sometimes you can rely on legislation such as the Copyright Act in Australia which says that employers own works created by their employees in the course of employment. However, it won't always be clear that your employees have developed your materials "in the course of employment". For example, they could be working on your projects outside of work hours, at home or in conjunction with their own projects.
Therefore, a good employment or consulting agreement will specify that the IP is owned by the employer or the person engaging the consultant.
The biggest danger is with consultants or contractors who develop your IP and don’t give you an assignment of rights in it. You might find that when you want to sell your IP or enforce your rights in it, you can’t prove you own it.
Worse still, you might find that when you want to make changes to the IP materials in your business, the person who developed it for you charges you to use it in a different form such as a billboard instead of a brochure.
Before Seb engages his software development company, he requires them to sign an Agreement for Consulting Services that confirms that he owns the software and so they can’t sell it to a competitor.
You don’t obtain IP rights for nothing. Once you’ve gone to the trouble of registering your trade marks, making sure that you own the IP that your employees and contractors develop for you and getting confidentiality agreements signed-off, you are in a great position to protect your business.
You don’t obtain IP rights for nothing. Once you’ve gone to the trouble of registering your trade marks, making sure that you own the IP that your employees and contractors develop for you and getting confidentiality agreements signed-off, you are in a great position to protect your business.
Seb’s example:
The paint manufacturer loved Seb’s idea for a paint matching product. However, they waited for him to develop it and then went to his software development company and bought the code, cut Seb out and started marketing the product themselves as “Red, White and Green”.
“Game On” said Seb. He was furious.Fortunately, as Seb made the paint manufacturer sign a Confidentiality Agreement, he could sue them for breach of contract.
He was smart enough to have the software development company sign an Agreement for Consulting Services that assured him of ownership of the intellectual property in the product, so Seb could also sue them for breach of copyright.
Finally, because the paint manufacturer was using the name “Red, White and Green” it was confusingly similar to Seb’s trademark, “Red, White and Blue” so Seb also had a case for trademark infringement even though he hadn’t started using his trademark.
Needless to say, Seb went to a lawyer and got a healthy settlement and continues to run his business.
In summary, your intellectual property is a valuable asset and there are some simple yet effective steps you can take to protect it. Putting appropriate legal agreements in place should be a key part of your strategy.
