Are you a new innovative business or exporter and still coming to grips with your Intellectual Property (IP) options?
Do you dread having conversations about intellectual property (IP)? Not sure where to start?
This article gives practical guidance with a case study example to get you thinking about your IP1 options and to help you talk with confidence to potential investors as well as lawyers, patent2 attorneys and accountants.
The trick to thinking about IP is to recognise that one product will often include several types of IP, each of which can be valued, sold, transferred or licensed separately. Each type of IP has a different use and different rules governing its creation, ownership and use. Furthermore, IP rights are territorial. Take patents for example. There is no such thing as a world-wide patent; patents are granted in individual countries or regions. So if you have a patent for the same invention3 in six countries, each of those six patents is a separate piece of property.
Here are five reasons why this is important:
- Asset management: Identifying each asset helps you make sure that each is working hard for you and that you manage the whole portfolio of IP in a cohesive way.
- Competitive advantage: Each type of IP has different rules about how it comes into existence, who owns it, and what you can do with it. Identifying the type of IP is the first step to making sure you get the IP rights you need to retain a competitive advantage for your particular business.
- Offshore strategy: Understanding the territorial aspect of IP is essential for exporters and for anyone wishing to license overseas IP rights to others rather than exporting directly.
- Better tax position: Tax treatment varies from one type of IP to another, so being able to identify each piece of IP will help you optimise your tax position.
- Partnering for success: Identifying and understanding the various IP rights relating to a product increases your negotiating options and makes it easier to get to "yes".
How does this work in practice? Suppose that Clever Medical Devices Limited (CMD) has developed a new personal medical monitoring device.
- Patents: CMD applies for patents for one novel function in the device. Patents cover ideas which are new, useful and inventive, and give the owner the exclusive right to make, use or sell the invention in the countries where it has a patent. CMD should file patent applications in countries where it plans to make or sell the device.
- Copyright: There is software embedded in the device, and copyright would subsist in that software if it is original. Copyright protects the expression of the idea, but not the idea itself, so it restricts someone from copying CMD's source code but not from writing other software that does the same thing. In New Zealand, copyright might also exist in physical components such as moulds for the plastic cover. Copyright is not registered in New Zealand, but the scope of copyright varies from country to country as do the circumstances in which registration is necessary.
- Registered Designs: CMD designs a stylish face plate for the display panel, for which it might apply for a registered design in New Zealand and other countries (some of which use the term "design patents"). This protects the distinctive look of CMD's product and helps to stop others from making look-alike knock-offs. It is essential in countries where copyright does not apply automatically to manufactured articles.
- Trade Marks: CMD develops a great brand name for the equipment and applies for a New Zealand registered trade mark in relation to the medical apparatus and instruments. This can then be used to prevent someone else using the same or similar name for similar products. Again, FGL should apply for a trade mark in each country where it wants to protect that brand name.
- Confidential Information: Confidential information which CMD has about the manufacture of the device is also valuable providing it is kept confidential.
Of course, CMD is not a real company and not all types of IP will necessarily be relevant for all businesses, but it is typical of many of New Zealand's leading exporters and manufacturers. Go forth and conquer!
1 Refers to the ownership of an intangible
thing - the innovative idea behind a new technology, product,
process, design or plant variety, and other intangibles such as
trade secrets, goodwill and reputation, and trade marks. Although
intangible, the law recognises intellectual property as a form of
property which can be sold, licensed, damaged or
trespassed upon. Intellectual property encompasses
patents, designs, trade marks and copyright.
2 A proprietary right in an invention which provides the owner with an exclusive right for up to 20 years to make, sell, use or import the invention. In exchange for this monopoly the patent is published so that others can see how the invention works and build on that knowledge. The patented invention may also be used by the public once the patent lapses.
3The product of the creative process of inventing. In intellectual property law "invention" is a legal term usually describing patentable subject matter. Under current New Zealand legislation that subject matter includes any manner of manufacture which is new and involves an inventive step. However, certain types of invention are excluded from patentability. They include inventions which are contrary to morality (for example weapons of mass destruction) and methods of medical treatment (on public policy grounds that such methods should be available for health practitioners to use to the benefit of all society).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
James and Wells is the 2010 New Zealand Law Awards winner of the Intellectual Property Law Award for excellence in client service.