In the second of David Montegriffo’s Entreneurship series, where he looks at the ins and outs of setting up a business in Gibraltar, today he discusses Intellectual Property Rights and Beyond – practical ways to protect your ideas and creations.
Start-ups often over-enthusiastically share big news and successes with the world and thereby risk sharing sensitive information. There are various measures which can be implemented in order to protect their valuable intellectual property.
In a general sense, intellectual property is a broad term referring to creations of the human mind – an intangible asset which is the outcome of creative processes. This includes artistic works, literary works, designs, and inventions. The main categories of intellectual property rights are: trade marks; patents; designs; copyright; and trade secrets. This is a nuanced area of law and the appropriate protections will depend on the type of intellectual property held.
Ensuring any relevant registrations are in place.
Registration of IP rights
Certain forms of intellectual property require registration in order to ensure that they are suitably protected. Registration creates a public record of ownership and will prevent others from exploiting the same or similar rights. Registration requirements will vary between jurisdictions and, in some cases, there are international registries which provide for protection across various countries (e.g. the EU Intellectual Property Office). Registration will not be required for all creations, so it is important to understand which form of rights you are trying to protect before you proceed with any attempts to register – it is always useful to discuss with a lawyer at the earliest opportunity.
Register trading names, product names and domain names
Further protections include registering a company’s trading name, product name or a particular domain name associated with the business. These names form an integral part of a business’ brand. Businesses with an international focus will also need to secure registrations in each jurisdiction where they are operating. In cases where your business is expanding internationally, it is possible that the name used in your home country is already taken in the new jurisdiction. In such circumstances, the business will be precluded from conducting business under that name in the new jurisdiction (unless it is able to reach an agreement with the holder of the existing name). A classic example of this issue is seen in Burger King’s expansion into Australia. Burger King was unable to reach a deal with the existing holder of the name (a local food shop) and were therefore left with no other choice but to use an alternative name of “Hungry Jacks” when operating in the Australian market.
Put the right agreements in place.
A common (and potentially costly) error often made by entrepreneurs involves failing to secure the rights to work which they have commissioned. Where an external party is approached to create work for a business (e.g. logos, software etc), the transfer of the intellectual property rights should be explicitly covered within the contract. Without these points set out in contract, the ownership of the creation will not automatically transfer to the business and the commissioned designer will retain the rights over the work.
In other cases, information can leak out through team members or as part of discussions with prospective investors. Where information is disclosed without adequate protections in place, someone else may go ahead and begin using it. A common method used to protect sensitive information or trade secrets is through non-disclosure agreements (known as “NDAs”) which set out the specific scope in which the relevant parties can use the confidential information. An NDA should be drafted broadly enough in order to cover any deliberate or inadvertent disclosure of the information which it is seeking to protect.
Use common sense.
Implement security measures
There are common sense measures which can protect a valuable idea, the most obvious being to limit the number of people who have access to sensitive information. We are all familiar with the stories (probably myth) surrounding Coca-Cola and how only two individuals know the recipe (and are unable to take the same flight). Although the Coca-Cola example may be extreme, it is good practice for a business to avoid oversharing sensitive information and to keep detailed records of who can access confidential information.
Further, keeping physical files in locked drawers and safes and ensuring that the relevant premises are protected by CCTV will be a practical step in the right direction. Digital solutions such as firewalls, robust passwords or data encryption will also be helpful.
Document your creations
Copyright is a protection covering a creator’s original works – this could relate to literary works, film, music and software. Rights existing under copyright laws cover original work that is tangible and fixed (whether in a song, film, book, photographs etc). In order to benefit from this protection, it is important to be able to demonstrate that you are the creator of the original work. The easiest way to prove this would be to keep thorough records of when and where the original work was created. Using time-stamped methods to record your work (or initial draft versions) will assist a court in determining that your original work pre-dates that of a copy-cat or a party claiming they are the original creator. With this in mind, you could take a digital photo of your work or send it to yourself via email.
In the next instalment, David looks at Shareholder Relationships.