This article is the first of a three-part series by Dr Sudhanshu Ayyagari that focuses on the importance of intellectual property for startup companies.
Here we examine the different types of intellectual property rights and their importance for a business.
A patent is a monopoly for an invention, which confers on the rights owner an exclusive right to use the invention in New Zealand for up to twenty years. After this timeframe, the public can use and develop the patented technology.
In order for the rights in a patent to be granted to the owner, these need to be formally created through registration at a patent office. An invention is able to be patented when three requirements are met – it’s novel, useful and has an inventive step.
A registered design is similar to a patent in that it needs to be registered and is for a monopoly, but a registered design protects the way in which a product looks.
An example of a well-known design is Apple’s iPad, which has a registered design for a rectangle with curved corners. A registered design can last up to fifteen years in New Zealand.
A trade mark is a third type of registrable intellectual property right. The prime function of a trade mark is to act as a badge of origin of particular goods and services, distinguishing your goods and services from those of other businesses. Trade marks also serve as valuable tools to advertise, promote and develop startup businesses.
There is no legal obligation to register a trade mark, however, there are a number of advantages in terms of protection and value in obtaining rights in a registered trade mark rather than relying on rights in an unregistered trade mark.
An example of an unregistered intellectual property right is copyright. Copyright protects many forms of original expression, including writing, art, photographs, music, films and broadcasts.
Copyright arises automatically without any need for registration, provided certain requirements are met under the law. If someone uses an original work you have created without your permission, you can take action against them to protect your work.
Why is intellectual property important?
Competitive market position
To retain a competitive market position, startups need to invest in intellectual property in the early stages of their growth. Startups should consider protecting their own intellectual assets through the use of patents, trade marks or other registered and unregistered rights.
The proper and strategic use of intellectual property rights will provide a startup with protection and security, and can be used as leverage with prospective investors.
In addition, secure intellectual property rights will provide your startup with more protection against potential infringers seeking to copy and unfairly benefit from your original ideas. Registered intellectual property rights can improve your ability to take action against potential infringers and obtain compensation if a third party does use your ideas without permission.
A well-protected business results in protection for your end users too, as customers know they are purchasing from a legitimate company that will uphold their consumer rights. Registered intellectual property rights can also prevent counterfeit products from causing you greater problems down the road, once you have a product in the marketplace.
Another indispensable benefit for startup companies is the improved attractiveness to investors of companies who have registered their intellectual property rights. For investors, these rights can increase the value of a startup, thus improving your ability to secure investment and raise the funds needed to support your startup.
Registered trade marks, for example, convert the goodwill of your business into a protectable property right and this is important when it comes time to assign or licence these rights in the future.
You don’t necessarily need a fully-fledged intellectual property rights portfolio, but you should be able to demonstrate to investors that you at least understand the importance of intellectual property and know how you plan to go about securing your rights in the future.