Before going much further, it is worth reminding ourselves of the IP tools in the toolkit. By that we mean the types of Intellectual Property, both registered and unregistered, that are available. A brief summary is all that we require here as endless resources are available online.
Unregistered Rights
Whilst they are very much country dependent, unregistered rights are often available. Unregistered rights are IP protections that exist automatically on creation of some IP asset; there is no need to register them. In other words, something for nothing, apart from that is your investment to create the asset.
Unregistered rights include know how, trade secrets, unregistered trade marks, unregistered design rights, copyright and a few other exotic rights that we won’t go into here. As will be discussed later, when it comes to unregistered rights, it is crucial that proper records be kept, as when it comes to enforcing them the stumbling blocks often relate to proving the date of creation, authorship and ownership. Although they remain unregistered, many of these IP assets will be critical to achieving a successful launch of the company’s product or service. They may however be of limited tangible value above and beyond the value to the product or service to which they relate given the difficulty in enforcing them against competitors and the ease with which they can be designed or worked around. Unregistered rights are often a weapon of last resort, perhaps because the company chose not to seek a corresponding registered right or was unable to have that right granted.
It should be noted that an IP asset might also be some technology, know how, trade mark etc that is licensed in from a third party. These can be extremely valuable, particularly where they provide the company with freedom-to-operate or provide exclusivity in a particular area.
Registered Rights
For the high-tech start-up, the focus is likely to be on patents. Patent rights can be broad in scope. The best case scenario is that a patent establishes a monopoly in an entire field of endeavour, such as might be the case where the company has identified a previously unidentified problem and the patent is able to cover all solutions to that problem. More commonly of course, the company has identified only an improvement to what is already out there in the same technical field. In this case the role of the patent is to monopolise that improvement as well as analogous improvements which provide a significant commercial advantage.
Patents can relate to physical products, software products and services, methods of manufacture and methods of use. Whilst there are a few areas that are excluded from patentability, these are rarely much of a roadblock in the high-tech space and this is not the place to consider them in detail. Suffice to say that if you have created an innovation that is technical or solves a technical problem, it will almost certainly not fall within the exclusions. At least at the outset, take a positive view when you think about the patentability of your innovations.
Patents are generally national rights. That is you get them on a country-by-country basis – but watch out for the new Unitary Patent right covering many of the countries of the European Union. Patents are a limited term monopoly, typically lasting 20 years from filing.
The cost and complexity of the patenting process varies greatly from country to country. Whilst some countries have very strict search and examination criteria, look for example at the US, Europe (EPC) and China, others such as South Africa and France do little more than a formal review of the documents and then stamp them “patented”. Regardless of the process to obtain a patent, in all countries there will be some post-grant mechanism to allow for invalidation of a patent. This can come as a bit of a shock to some entrepreneurs who are disappointed to learn that all of the money they have spent to register a patent might have been wasted in the event of a successful post-grant challenge. Of course, they will see the reasonableness of the system when the boot is on the other foot. What a patent almost certainly guarantees is a deterrent against infringement. It is a barrier that needs to be overcome by any potential competitors. Even if getting over the barrier is not impossible, it may be so burdensome that it is not worth the effort or risk to attempt.
An often overlooked right is the utility model. This is similar in scope and process to the patent. However, it is only available in a limited number of countries (not including the UK) and has a shorter term. Utility models can be attractive due to the generally simple application process, commonly not requiring any substantive search or examination, and the consequentially lower cost. Companies might seek utility model protection when they have a low level of confidence in the inventiveness of an idea but like the idea of scattering a few obstacles around to deter the competition.
A Registered Design right lies somewhere between a patent and copyright. It is defined by a set of drawings showing, typically, a three-dimensional industrial design - Registered Designs can also be obtained for computer graphical user interfaces. Registered Design right is by its nature quite narrow in scope as it is intended for the protection of principally aesthetic features of a product, i.e. those features that make a product better looking than your competitor’s product. It is difficult to use Registered Designs to prevent others designing around your product so long as their product looks clearly different. Nonetheless, they have a place, particularly when you hope to build an identity that relies on the look and feel of a product. As with patents, Registered Designs are most valuable when they protect features of a design that will be relatively long lived and that are or will become distinctive of your company. Think for example of the radiator grill on the front of a BMW™ which survives from model generation to generation.
Registered trade marks are also national rights and extend over certain specified classes of goods and services. Unlike the other registered rights, however, they are not time-limited. They can exist in perpetuity and can therefore be extremely valuable. That said, they do need to be taken care of and stroked occasionally to ensure that they continue to be relevant to your products and services and that the marks are not misused, by both yourself and others. A tech start-up will of course be focussed on the tech. Nonetheless, a few key registered Trade Marks are likely to be important, and that importance will grow with success.
All of these IP rights, both registered and unregistered, represent (intangible) assets of the company that can be sliced and packaged territorially, by technical application, and in many other ways. They can be bought and sold, licensed in and licensed out, and even used as collateral for loans.
And don’t forget the need to manage and pay renewal fees on your registered rights and on some applications. Missing payments is at the very least unpleasant and costly, and at worst catastrophic. Your IP adviser will generally assist with these, often working with a third party renewals payment agent. Whilst you can manage these yourself, perhaps to save costs, that is a risky business and best avoided.
