Though intellectual property should be respected as much as physical types of property, it often isn’t. How do you protect something that is the core of your business and makes it unique?
Intellectual property represents the product of your mind or intellect. IP can be an invention, trade mark, original design, or the practical application of a good idea. These rights are very valuable assets that can distinguish your business from your competition, making your products and services unique and attractive to your customers. Registered IP takes on many forms: patents for inventions, trade marks for logos and brands, designs for the way a product looks and plant breeder’s rights for new plant varieties.
Aside from patents, trade marks and designs there are a number of other IP rights that exist without the need for formal registration, such as copyright and confidential information. The law of passing off and the Trade Practices Act 1974 also offer businesses some protection against exploitation from competitors.
Nearly all businesses own some form of IP that is important to their operations and ongoing success. IP can be simple information such as a customer list that should be kept confidential, or it could be a patented product arising from significant research and development undertaken by employees who are bound by confidentiality obligations. Other examples include an unforeseen and fortuitous by-product resulting from a core business activity.
The sheer diversity of types of IP, and circumstances surrounding its creation, often makes it impossible for a company to be aware of the full extent of its IP. An IP audit can help remedy this.
Conducting a simple IP audit can help you to identify IP assets you didn’t know your company owned. You may also realise that your IP assets are not adequately protected. For example, have you registered your business name as a trade mark? If not, it is something worth thinking about.
Be systematic in identifying your IP and don’t be too conservative about the time and resources you allocate to doing the job thoroughly. Ask yourself questions about IP assets that are key to your competitive advantage and which should in turn be protected. Some questions you should be asking include:
* Do you have any registered trade marks, designs or patents?
* If so, when are they due for renewal?
* Do you own the IP you are using? Can you prove it? Do you have the contracts and other proof that a court of law would require?
* What are the processes or knowledge critical to your business success? Are they unique to your business? If so, have you protected them?
* Do you have signed agreements with key personnel, contractors, consultants or other external suppliers which assign any IP they develop when working for you, to your business?
* Do you have valuable customer lists or databases?
* When completed, store in a safe place and renew regularly.
Once you have identified and protected your IP you can explore how to make your IP turn to profits. Commercialising IP is the process you undertake to get your innovations, whether they are in the form of products or services, to the marketplace. Before you decide on your commercialisation strategy, you will need to explore all options fully. Assess these in light of your personal and professional circumstances to ensure you follow the path that enables you to maximise your potential profit, with the least difficulty. Your commercialisation strategy determines how you can take the best advantage of the exclusive rights associated with your IP.
The two most common ways of commercialising your IP are to undertake all the steps in-house, or to work with a partner. When you commercialise in-house you develop your product to a market-ready state without any external assistance. Going it alone means that you take on all the work and risk associated with launching a new product. It also means that if you are successful, you reap all the benefits.
Commercialising in-house might involve having or building your own manufacturing facilities; manufacturing the product using your own facilities, staff and resources; marketing and promoting the product using your own staff and resources; and, arranging all distribution and sales channels.
Commercialising with a partner means you involve one or more parties to either undertake or assist with some or all of the above steps.
If you don’t have the capability to personally and exclusively manufacture, market or sell your IP product, and you don’t wish to partner with another company, you may be able to outsource one or more of the required tasks.
There is no such thing as a ‘best’ strategy to commercialise your product. It very much depends on your ‘business profile’, the attributes of the IP and your desired outcomes. How you decide to commercialise depends on your particular IP circumstances, existing core business capabilities, understanding of the market, and ability to generate finance.
Once you have decided the best approach for the Australian market, the potential for international expansion might be a consideration. IP Australia can assist with information about how to help your business take off overseas.
Once you have your IP secured, you now need to make sure your rights aren’t being infringed. Infringement is the unauthorised use of another person’s IP rights. To take action against an infringer is called enforcement. In your business, you want to avoid infringement on two levels–the first is to protect your IP against infringement; the second is to protect yourself against infringing others’ IP.
A method for detecting infringements should be developed where IP assets are critically important for business income and success. Know what your rights are and be prepared to act if they are violated. When you detect infringement of your IP rights, it is a good idea to seek legal assistance in dealing with the infringement–this law is complex and you can be sued for unjustified threats of infringement. Make sure you can prove that infringement has occurred.
Understand the costs, benefits and the risks of infringement actions–legal action can be costly and drawn out. If infringement has occurred, seek the professional advice of an IP lawyer first, as there are a range of options you may be able to use before taking the infringer to court. These range from a letter of warning from your attorney or legal adviser, negotiations to settle out of court and, if this fails, court action. Whatever action you do take, make sure any infringer knows you are serious about protecting your IP. Delay could also jeopardise your legal rights to obtain an injunction.
And don’t forget to educate your staff about IP. Even if you don’t regard IP as a core business asset, it’s worth educating staff about your IP and the steps to avoid infringing or inappropriately using the IP of others.
Enforcing Tea Tonic’s intellectual property has shaped up to be one of the biggest battles for Victorian herbalist and tea-maker, Lisa Hilbert. “There have been other people out there who have copied lots of my teas–not properly, but that’s another issue.”
One case has led to a fight over IP infringements after another tea company started copying Tea Tonic’s blends. Legal letters were dispatched and Hilbert says the process has been stressful. Financial restraints have made it difficult for her to take legal action, but she has had small legal wins.
“At least they couldn’t use my name Tea Tonic, so it protected me in that way,” Hilbert says.
A key reason for pursuing IP protection, she says, is to protect customers. “I don’t want to create any market confusion.”
Hilbert adds that many companies don’t place enough importance on safeguarding their brand: “It’s intellectual property, and it is valuable.”
Peter Baron, CEO of Unistraw, makers of the Sipahh straw, takes a different approach to protecting the company’s IP. Sipahh, a milk flavouring straw invented by an Australian for his grandchildren, has taken off across the world. In just over two years since the company’s official launch, Unistraw has signed distribution contracts with 35 licensing partners for 100 countries.
Since launching as a food technology company in January 2005, Unistraw has gone to extraordinary lengths to protect its intellectual property, creating its own licensing model and pursuing patents.
Partner Martin Chimes says, “We’ve had to develop and protect our intellectual property–that was a key focus for us. In our strategy towards protecting intellectual property, number one was that we should protect ourselves as much as we are able to in the form of patents, registered design rights, trade secrets, copyrights, and trade mark applications.”
Unistraw has implemented a sophisticated protection measure: it segments the manufacturing process to ensure that its products and systems are not violated. “Although we own the intellectual property, there’s not one person in our company who knows the whole manufacturing process from end to end,” says Chimes, who reveals that Sipahh flavours and filters are produced in separate plants and then assembled on other sites.
Despite such impressive security layers there have still been problems. When the product was first shown in Germany in 2005 at Anuga, the world’s largest food and beverage trade show, Unistraw learned that a food giant competitor was about to launch a similar straw in supermarkets. That set off alarm bells. Baron had been in preliminary discussions with the company back in 2003 to develop the product. While those talks eventually stalled, the competitor company executives did get a chance to examine Unistraw’s manufacturing process and try out samples in Sydney.
Unistraw has since taken the company to the High Court in London. The case has been settled out of court and the terms are confidential. It is understood that the competitor only sells and markets its straws in the UK. Another company that launched a flavoured straw in China through the internet was shut down in 24 hours.
Starting IP Smart
Here’s a summary of what you need to do to ensure your business is IP smart.
* Treat intellectual property as a business–put a dollar value on it.
* Understand the different types of IP and the advantages of each one.
* Keep your smart idea confidential until it’s protected.
* Protect your idea using the IP system–seek advice from an IP professional.
* Build a model of your invention to help prospective financial backers visualise your smart idea and its market potential. Make sure you have a confidentiality agreement in place before you let anyone see it.
* Keep track of all your development and protection costs–this will help you to put a value on your IP and give you an idea of how profitable your venture should be to recover costs.
* Research your potential market and understand its likely consumers, competitors, buyers, licensees, investors, manufacturers, and distributors.
* Commercialising your idea needs a variety of business skills–consider taking a course in business management.
There are different ways to make money from IP. You can sell it, license it, make products yourself or form partnerships. Get legal advice on any contracts you intend entering into with other parties.
Be infringement ready!
IP Australia is the Australian government agency responsible for administering patents, trade marks, designs and plant breeder’s rights. For more information visit www.ipaustralia.gov.au/smartstart/
During February seminars will be held across Australia for small businesses considering exporting. For more information on the ‘IP Passport – Helping your business take off overseas’ seminars, visit www.ipaustralia.gov.au/ippassport/
Developing, registering, commercialising and protecting IP is important to any business. Professional advice can be sought from IP lawyers and attorneys, accountants and business advisers. For more information visit www.ipaustralia.gov.au
* Ruth Weichard is senior project officer for marketing & customer engagement at IP Australia