Great Product/Services + Superb Execution + IP = Great Companies
Here's the thing—one of the most important aspect of your business is the intellectual property of your startup. Ignore it and pay dearly for it. They say, great products and services with superb execution make great companies but then strong brands make an even greater company. By strong brands, I mean brands with comprehensive IP protection. Strong brands create great value—both commercial and intellectual assets that attract your product and services to your target market. What readily comes to mind when Intellectual Property (IP) is mentioned are the more common aspects such as copyright, industrial designs, patents, trademarks. The less common IP or IP-related rights include database rights, geographical indications, plant varieties, trade secrets, traditional knowledge, etc.
For startups, here's a quick one on some types of IP that may be relevant to your startup and that your startup badly needs to protect:
Copyright protects original literary, musical, and artistic works. It grants authors or creators exclusive right to produce, distribute, assign, license, or do other things with the work. If you have a web application or a website, then you will need to protect the source codes used to build it. You may need a contractual agreement on who should own the app or website especially if you contract a developer to build the app or website for you. Copyright protection takes care of this. Depending on the nature of startup, you will need to protect your copyright works accordingly. One of the most common copyright works startups often wish to protect, depending on the industry or sector they belong, include software programs (limited to the original source code used in writing the program only); marketing materials including ad copies and jingles; entertainment works including cinematography, motion picture, and musical works; web publishing including podcasts, training videos, web contents, etc. Any of these copyright works could become a valuable intangible asset for your startup especially if you know what you are doing.
- Industrial design
Industrial designs protect new combination of lines, colours, and two- or three-dimensional shapes. Industrial designs can help with the feel of your product such that it is uniquely packaged to stand out from the crowd. Though trademarks primarily do this, industrial designs also inherently will help buyers protecting your product from counterfeiting and other infringing acts by other competitors in the market. Imagine the classic shape of a Coca-Cola bottle, the unique patterns (lines and colour) of an African Ankara textile, or the three-dimensional shape of an Apple iPhone. These are just a few industrial designs registered by their owners.
But it is not every design that is registrable under industrial design laws. For instance, Nigeria’s Patent & Designs Act only accepts new designs that are strictly for aesthetic purposes and do not have anything to do with the functions of the product. So when a fan has blades for functional purposes, it’s not registrable as an industrial design. But if the blades are designed in a way that serves aesthetic purposes only, then it becomes registrable. Also, the design must be new and must not be contrary to public policy.
Startups often fail to give industrial designs attention, thus limiting the potential value of their product designs. Brands that understand the power of industrial designs often begin from the beginning—product conceptualization. By keeping your IP lawyer or law firm closer to you, you would realize that you do not only need to start paying closer attention to product design but also that your startup badly need to protect your IP in such designs.
Whenever startups innovate or disrupt, it’s often that a new way of doing something has been discovered. Sometimes, it’s a new technical solution to a problem. A patent protects these innovations or solutions as new and inventive products or processes. Even a new and inventive improvement on an existing invention qualifies for a patent. When granted, a patent gives an inventor an exclusive right to his or her invention.
But it is not all inventions that are patentable. To ensure that your invention is patentable, it must meet three requirements. Section 1(1) of the Nigeria’s Patents and Designs Act requires that your invention must be:
- results from an inventive activity; capable of industrial application; and
- constitutes an improvement upon a patented invention and also new, results from an inventive activity, and is capable of industrial application.
Some notable patents, as mentioned in FAQS on Patent in Nigeria, include Wilbur and Orville Wright’s patent for a “flying machine”, a manned-engined airplane; Apple’s patent for the original iPhone, etc.
With patents, startups can significantly boost their chances of success, whether short term, mid term, or long term. In the short term, a patent may boost investment opportunities. It boosts investor’s confidence in the future of the startup especially in a competitive market. Still in the short-term, a patent may make a one-time acquisition of the startup by a bigger fish in the water possible. In the mid-term, a patent may boost opportunities for strategic business partnerships and secure a market for the startup. And in the long-term, a patent may boost the startup’s revenue through both licensing and strong defence against law suits or legal actions against infringers. Patents even help businesses remain in the game when it seems the game is over. From Blackberry to Nokia, seemingly dying or dead businesses are licensing their patents to some of the biggest brands in the world today.
But startups often struggle with patenting their innovations. Many startups don’t know what to patent, when to patent, how to patent, who to speak to for patent, and where to patent. There are three major reasons for this: (i) patent application is complex; (ii) patent application is costly; and (iii) patent is either gradually giving way to other modes of IP protection or more innovators—particularly tech startups—now increasingly believe that superior execution beats protection. But anyone who understands how patent works would know that the last limb of the last sentence above could cause innovators their limbs. The most valuable global brands today didn’t stumble on it. Yes. They work with IP lawyers or law firms to develop an IP strategy that keys into the startup’s business needs. This is what startups badly need. It’s never patent for patent’s sake. It’s patent for business’s sake. IP is business.
Trademark protects distinctive words, logos, slogans, specific colours, and in some countries sounds, or other manners of identifying your startup’s products and services. Trademarking any of the items earlier mentioned make your startup a strong brand which can help you gain substantial share in the market. They will be distinctive and valued. Consumers will easily recognize you and with time, you will gain fan loyalty. The more reason also you need a comprehensive and bespoke policy for your startup. Branding your business and protecting such brand(s) will help you grow your business and increase brand value. Think of the Apple brand for example which has become one of the most valuable brands in the world today.
Making your startup brand a valuable intangible asset starts with having a trademark strategy. This should finely align with your business goals and risks. Early in the game, as a startup you need to consult an IP lawyer or law firm to determine whether your desired name for your startup or startup’s product or service is available and if available whether it is distinctive. Of the 45 classes of trademark, your startup will also need to come up with a list of all relevant for your products or services. Then your startup proceeds with registration. Your startup needs to keep a good eye on your domain name(s), monitor trademark expiration dates, and take care of renewals.
Does it end there? No. Trademark registration is not an end in itself but only a means to an end—achieving a strong brand value that becomes an independent, invaluable intangible asset. Align your startup trademark—and indeed overall IP portfolio—with your product development or service offerings; business development, growth, and expansion; partnerships and collaborations; marketing and sales, etc.
As Senator Ihenyen would say, “[u]ntil what you are selling is a brand, you are merely in busyness—an incremental rat race—not in business—an exponential phenomenon”.
- Trade secrets
A trade secret, where protected, confers an exclusive right on innovators who privately and safely keep the details of the secret or magic behind their innovations. This is in clear contrast to a patent which confers an exclusive right on innovators who publicly and clearly disclose the details of their inventions in exchange for state protection.
Trade secret is a large umbrella. If your startup has information it considers highly confidential, your startup has taken reasonable measures to keep such information secret, and the information has independent economic value owing to it being publicly unknown, your startup is holding in its hands an umbrella called trade secret. Keep a firm grip on it. Your startup trade secret could include algorithms, customer lists, formulas, manufacturing techniques, source code, or any other type of engineering, financial, scientific, technical, or other vital information.
Whether commercial, industrial, or manufacturing information, trade secrets protection sharpens your startup’s competitive edge in your market. Trade secrets may also be used if it is determined that your startup’s invention is too weak, too costly, would be too difficult to enforce, or not just patentable.
By protecting your startup’s trade secrets, you are securing the future of your startup.
Though there is no law governing trade secrets in Nigeria, protection applies as contract. So while your trade secrets do not require any registration with any government agency in Nigeria, it still enjoys protection. One of the common ways to protect your trade secrets against unauthorized use by competitors or other unauthorized persons is by having them sign a nondisclosure agreement (NDA). But protection is limited. This is because an NDA only applies to the party that signs it, not third parties. Also, simply having an NDA is not often adequate. What your startup badly needs is to develop efficient and effective trade-secrets protection measures. If your startup fails to take reasonable measures to keep your trade secret secret, you may lose it.
IP won’t make your startup successful, until you successfully integrate your IP to your business goals.
Most startups fail to realize the power of IP, so they simply relegate IP matters to the bottom of the budget, if included in the budget at all. This is because most startup founders think IP is not critical to product validation, building traction, scaling, or attracting funding. Wrong. If your startup gets a good IP lawyer or law firm, IP could be integrated into every aspect of your startup, thus creating immense value.
So when you wonder why your startup needs to protect its IP, it’s simple. IP won't make you rich—yes, the IP of your startup won't make you rich if you don't convert the IP rights (IPRs) into intellectual capital.
Secondly, your competitors may send you out of business if you don't have a comprehensive IP strategy for your startup. Just owning IP rights won't generate money.
As a startup, you most definitely badly need expert guidance to help with assessment of IP portfolio to IP monetization for your startup. With IP, the earlier, the better. Contact an IP lawyer or law firm today.
‘Why you badly need to protect the intellectual property of your startup' is part of Infusion Lawyers' 'What Startups Badly Need Series'. Subscribe to our blog so you never miss a post in this series.
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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.