This article is the second of a three-part series by Dr Sudhanshu Ayyagari that focuses on the importance of intellectual property for startup companies.
Intellectual property rights are an indispensable consideration in ensuring your startup has the best possibility to succeed in the future.
In this article, we discuss what startups should consider in the context of different intellectual property rights, and provide general tips for startups before commercialising their product.
Patents and designs – What should you consider?
i) Disclosing your idea
Public disclosure of an invention or use of an invention prior to properly setting up an intellectual property protection strategy can render any subsequent patent and design applications invalid. For example, for a patent application to be granted, the idea needs to be novel and inventive, when compared to what has been published or used (the prior art base) before the application date. The prior art base, will also include your own publication or use before the application date.
Applying for patent protection after already operating a business can be a long and drawn out process which is often not very successful. While some countries do allow grace periods for filing a patent following public disclosure, other countries do not provide these exceptions and obtaining grant of a patent will likely become impossible in many countries in Europe and New Zealand.
Therefore, ideally, before disclosing your idea publicly, you should obtain advice on your potential intellectual property rights, including how you might commercialise these and any protection you need to support that commercialisation.
In most cases, you will also need to present your idea to third parties, for example venture capital investors. We recommend when discussing your idea with any third parties you should make sure to explain that what you are about to disclose is confidential. Better still; get them to sign a non-disclosure agreement before you disclose anything.
ii) Using open source software
Open source software can be useful in terms of development of a project. However, while it might sound like a great idea, you can quickly jeopardize your potential to obtain intellectual property protection by using open source software.
You will need to be wary of crucial mistakes when opting to use open source software. For example when using open source codes, even in small bits, you might need to disclose this source code to your competitors. Unfortunately, using open source software may also prevent you from obtaining registered intellectual property protection to protect your newly developed idea.
Our advice is to as much as possible, avoid using an open source software altogether. Or if you do need to use it, use it only for the non-crucial aspects of your project. If the scenario does arise and you are thinking of using open source software, you should consider seeking the advice of an intellectual property professional before doing so.
Trade marks – developing your start-up’s brand
Selecting a good trade mark is synonymous with choosing a good brand, and is an important intellectual property right a start-up business can establish early on. Trade marks can become valuable assets, representing the goodwill in a company and can later be sold or licensed. Trade marks allow you to begin building your reputation in the marketplace, attracting more customers and assisting in gaining more venture capital to grow your business.
The most important consideration when choosing a trade mark is to ensure the trade mark is distinctive. This is because the main function of a trade mark is to act as a badge of origin and distinguish one business’ goods and services from those of others. A trade mark which is non-distinctive is one which describes the goods or services, or a quality or characteristic of these. For example, a descriptive trade mark may be “Delicious” for a food delivery service.
The more distinctive and creative your trade mark is, the more likely it is to obtain registered protection and translate into a strong marketing brand for the future of your company.
Copyright – valuable protection for your expression and creativity
Copyright protects many forms of original expression, including writing, art, photographs, music, films and broadcasts. Copyright protection provides you with legal ownership in the original works that you produce and is an important intellectual property right for startups. Copyright comes into play automatically when original works are created, and ensures that only you as the copyright owner and third parties who gain your permission can copy, perform or alter these works.
As discussed above, signing the right contracts is particularly important when it comes to copyright. For example, you might engage a contractor to design a website or logo for your startup company. Having the correct contracts in place for the commissioning of the work is vital to ensure you secure ownership of the copyright in the website and logo going forward.