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Who owns your intellectual property?

View profile for Robert Taylor
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In 2008, Beyoncé topped the charts with ‘Single Ladies’, a song reminding single men that if they liked it, then they should’a put a ring on it.

It may have been conveyed with a catchy chorus and killer choreography, but Beyoncé had a point: if you don’t make an effort to commit, you can’t complain when someone else swoops in and takes your place.

Well, just as it is in the dating world, the same applies to your intellectual property. However, rather than getting all of our lawyers together to recreate the Single Ladies music video, we thought a simple blog would suffice.

(You can stop picturing me in a leotard now.)

Ensuring your company owns and controls all of its intellectual property is absolutely essential, and failure to do can cost you in more ways than one.

Unfortunately for many businesses, the issue of intellectual property ownership only arises when it’s too late, for example, mid-way through a business transaction.

So, how can you “put a ring” on your intellectual property?

What is intellectual property?

Before we talk about protecting your Intellectual property, lets be clear about what that term means so that there’s no confusion. Intellectual property refers to the rights that exist to protect creations of the mind.

(When I say ‘creations of the mind’, I don’t mean your dreams or fantasies: let’s face it, no ones trying to steal that ‘naked at school’ nightmare you have.)

Intellectual property refers to your unique inventions: physical creations such as artistic or literary works, images, designs, films and music. The idea you once had for a sci-fi novel doesn’t count – unless of course, you’ve finally started writing it.

As a business owner, you’ll find intellectual property at the heart of everything you do: from the name of your brand, your website and your logo to the particular products you offer to your customers. Intellectual property encapsulates everything within your Unique Selling Point: it’s the soul of your business – and in that sense, it’s the last thing you want stolen.

When it comes to protecting your IP, understanding which type of protection you need is essential:

  • Patent
    This type of protection is used for inventions, and is granted by the government to prevent other businesses or individuals from replicating or selling this invention without permission. When a patent is granted, the invention becomes the property of the inventor, and just like any other business asset, it can be bought, sold, rented or hired at the inventor’s discretion.
     
  • Trademark
    If you’re looking to protect your brand (i.e. your company name, your logo, the words or colours you use) you should consider registering a Trademark. Trademarks serve as a ‘badge of origin’ to indicate the source of a product and distinguish it from other traders. Once your brand is registered as a trademark, it’s protected from counterfeiters. You can still license and sell your brand if you wish, but anyone looking to use your brand will have to gain permission.
     
  • Copyright
    Copyright protects the original work of an author from unauthorised use or distribution. Web content, software, photographs, illustration or film recordings are all automatically protected by copyright: there is no need to apply or pay a fee. By marking your work with the copyright symbol (©) you are preventing anyone from copying, renting, lending or distributing your work. You’re also preventing them from putting it online or making their own adaptation of it.
     
  • Registered Design
    By registering the look of your product, you can stop others from copying its appearance, its physical shape, its decoration or configuration. Take Crocs for example. This hideous design is registered to prevent any other shoe manufacturers from replicating it. Because apparently, these “shoes” are pretty popular.

Who owns my intellectual property?

When a business creates something: a piece of software, a website or a brand new product, the issue of ownership isn’t always clear. Often, neither employers nor employees know where they stand with their creations: a common cause for dispute, particularly within the creative industry.

The first mistake you can make is to assume.

Just because your business instructed and paid for work to be carried out, it doesn’t necessarily mean your business is automatically the legal owner. In fact, when it comes to ownership, your legal position will differ greatly depending on who created the work and the contents of your original contract.

Take an employee, for example. Under the UK Patent Act 1977, if an employee produces work for their company during the time they are employed, the owner of the intellectual property rights is the employer. This is because the work they produced was an expectation set out in the original terms of employment. Simply put: they were hired to be creative.

Unless of course, you failed to mention Intellectual property in their terms of employment. If you don’t know, it’s definitely worth checking! 

You might think a director or another senior member of the company may have more swing when it comes to the rights they have regarding their inventions, but actually, the UK Patent Act 1977 covers them too. As a director, your duty is to further the interests of your company. Therefore, anything you create during this time will still belong to your employer rather than you as an individual.
As a business owner, you wouldn’t be the first to assume that your company legally owned the work you instructed an independent contractor to carry out. However, unless there is a written contract in place that transfers ownership as soon as the work is complete, the independent contractor will almost always own the IP they have created.

Understanding who is the owner of an invention or creative works is absolutely essential in determining who can make money from it, and who can apply for IP rights.

What happens if I dont own my intellectual property?

Think back to Beyoncé. If you don’t put a ring on it, then all you have is the assumption that you will stay together forever, no matter what. For a business, the consequences are on par with a break-up.

With no ownership of your intellectual property, your business is unable to prevent competitors or counterfeiters from using it, distributing it and basically doing whatever they want with it. With no protection over your IP, you’re letting absolutely anybody use your creation for their own financial gain. That’s a pretty big risk.

But it goes deeper than that.

Let’s say it’s early days for your business: you’re just getting off the ground and you’re looking for funding from a VC firm or investor. They’re going to perform what’s known as ‘due diligence’ – an investigation into who you are, what you do and whether you’re worth investing in. If they find that you don’t own your intellectual property, this will ring some very loud alarm bells.

Investing in your business will now seem risky; as you don’t have sole ownership of the product you’re selling to your customers. If they choose to proceed, it could still drastically lower their original valuation.

This same issue can arise during the due diligence process of a business transaction. If an acquirer is looking to potentially buy your business, only to find it doesn’t have control over its intellectual property, this will make you look pretty unattractive. And, even if they decide to go ahead with the transaction regardless, any intellectual property ownership issues will have to be resolved prior to the acquisition, putting everything on hold for a considerable amount of time.

I could go on, but I think you get the picture:
Failing to protect your intellectual property early on can have some profound consequences for your business.

So, what should I do?

A good idea right about now would be to assess all of your company’s intellectual property to determine legal ownership. While it might be difficult, (but certainly not impossible) to claw-back the IP from another party’s hands, there are certainly some proactive steps you can take to ensure this kind of issue doesn’t arise in the future.

At 360 Business Law, we offer constructive legal advice for businesses of all shapes and sizes.

When you instruct one of our expert business lawyers, we’ll perform an extensive intellectual property audit to determine where the issues lie. Once we have assessed your situation, we will work to devise a strategy that helps you protect your commercial interests before it’s too late.

By opting for our subscription service, you’ll benefit from an agreed fixed monthly fee that incorporates all the necessary work: from the in-depth investigation to the strategy we devise and action we take to secure your intellectual property. That way, you won’t have to worry about rising costs or a hefty legal bill once your IP is under control.

So, whether you’re preparing for a corporate transaction, you’re looking to close an investment deal or you’re involved in a dispute regarding your intellectual property, our specialist team will be at hand for tailored solutions, strategic advice and representation should it come to that.

Once your intellectual property ducks are all in a row, you’ll gain the peace of mind that your company’s unique creations aren’t open to theft or counterfeit.

As your business grows, developing ideas, inventions and unique products, remember the importance of taking action to minimise risk and prevent costly disputes.

Or, in other words:

Protect yourself before you wreck yourself.

Get in touch with us today through our simple enquiry form or call us on 01276 804432.

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