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Part 4 - The different forms of IP protection: which ones are right for your business?

Choosing which forms of IP are right for your business depends on a few factors including, what you’re seeking to protect or achieve through protection, whether it’s technology or product-directed, and the relative costs/benefits of acquisition, management and enforcement.

In previous articles, we’ve dealt with the bigger picture of understanding intellectual property (IP) and your business, what role it plays in value creation, how to approach IP strategy, and things to consider when deciding whether to protect your IP or not.

It’s now time to delve into a bit of the detail around the different forms of IP protection, and which ones are right for your business.

Choosing which forms of IP are right for your business depends on a few factors including, what you’re seeking to protect or achieve through protection, whether it’s technology or product-directed, and the relative costs/benefits of acquisition, management and enforcement.

But first a few words of caution.  If the Holy Grail for business is to secure a monopoly over a product or service that everyone wants, then it might stand to reason that the best IP rights are those that confer monopoly rights.  Unfortunately, it isn’t as black and white as that. 

Choosing which forms of protection are right for your business depends on a cocktail of factors, not least of which is what it is you’re seeking to protect and why, whether it’s technology or product-directed, and the benefits/costs of such protection.

Let’s start with understanding unregistered IP rights.

Copyright

Copyright exists automatically on the creation of certain original works.  It applies to musical, dramatic, artistic or literary works (including models, drawings, sculptures, software, books, advertising copy). It protects the way in which an idea is expressed but not the idea itself.  If you’re in the content business (producing music, books, film, software and the like) copyright comes into its own.

Copyright is used to protect the way in which an idea is expressed, but not the idea itself. It applies to original works (e.g. music, literature, drawings, designs), as well as the shape or configuration of a product or its packaging.

Less well known is that copyright can also apply to the shape and configuration of a product or its packaging or promotional materials. As a consequence, there is likely to be copyright in most replicable products you create.

Copyright is not a property right like a patent or a trade mark registration. As the name suggests, copyright confers the ‘right to copy’. So it doesn’t confer a monopoly, but it may offer the ability to stop unauthorised copying of any product, artistic work or literary work (including software). Copyright therefore doesn’t provide the strongest form of protection for innovations.  That’s more the territory of patents and registered designs which we discuss a bit later in this article.  

Confidential information and trade secrets

Confidential information and trade secrets can be good forms of protection for things such as the way something is manufactured or the ingredients used in a new product formulation - providing they can be kept confidential or secret.  That’s the key, and for some businesses it may simply not represent a high enough threshold for sustainable competitive advantage. 

Confidential information and trade secrets refer to formulations, recipes, know-how and valuable commercial information, whether documented or not.  They must remain confidential or secret to be effective forms of protection.

The recipe for Coca-Cola is the best-known example of a well-kept trade secret. Over decades extreme care has and continues to be taken by the Coca-Cola Company to keep it that way. 
But this isn’t the only form of IP protection employed either.  The company also invests heavily in protecting and enforcing its trade marks, get up and packaging designs.

Trade marks

If your main market advantage is driven by the distinctiveness or provenance of your brand, product or service, you will want to consider trade mark protection.

Trade marks are signs that help distinguish your product or service in the market and can comprise words, symbols, sounds, smells and colours.

A trade mark helps distinguish your products and services from others and can comprise any marking such as a word, phrase, symbol, picture or any combination of these.  A trade mark can also be a colour, shape, sound, or even a smell if capable of being represented graphically. 

Registration of a trade mark confers on the registered owner the exclusive right to use that mark in relation to the specified goods and services (known as classes), and in the jurisdiction(s) for which registration has been granted.  Some businesses use registration to restrict the same mark or confusingly similar marks from being used by others. 

A good example of a recent trade mark stoush was that between French fashion label Christian Louboutin and Dutch company Van Haren.  Van Haren was found to have infringed Louboutin’s ‘trade mark’ red soled high heel shoes.  The court ruled that it didn’t matter that Van Haren’s shoes were different shapes. The trade mark registration was designed to protect the application of that colour to a specific part of a product.

Registered designs

Then there are designs and patents.  Registered designs protect aspects of the appearance of an article – its shape, pattern, configuration, or ornamentation – but not its functional aspects unless these aspects also contribute to its aesthetic appearance.  If the look of your product is a key influencer in a buyer’s purchasing decision then a design registration can provide stronger protection against would-be copiers than is available under copyright. 

Registered designs protect aspects of the appearance of an article – its shape, configuration, pattern, or ornamentation – but not its functional aspects.

Patents

Patents provide protection for the ideas embodied in novel technologies, products and processes.  They cover a principle or idea and not just a single physical form of an invention, so the monopoly granted by a patent can be wide in scope and cover many variations of a basic product or process.

Patents protect the ideas embodied in novel products, technologies, processes and improvements to existing products and processes. They cover how things function, a principle or an idea, and not just a single physical form of an invention.  

Most breakthrough technologies or processes involve significant investments of money, time and effort.  While the thresholds for acquiring and owning a patent are considered a lot higher than other forms of protection, the benefits can often far outweigh the costs in the long-run.

A key advantage of patents is that they represent one of the strongest forms of protection against the copying or exploitation of an invention.  Sometimes, the mere existence of a patent (or even a patent application) can be enough of a deterrent.

Furthermore, the owner of a patent is granted a 20-year monopoly right over the manufacturing, marketing, licensing or sale of the invention covered by the patent, providing a lucrative window of opportunity to secure a strong foothold in the market.  Unprotected innovation doesn’t afford the owner as much of an advantage, and is far more difficult to sell or license.

One doesn’t need to look far to find evidence of the commercial value of patents which tend to play a particularly vital role in high-tech, high growth industries from software, electronics and electrical innovations, to aviation, healthcare, pharmaceuticals, chemicals, biotech and more. However, investment in R&D and the rate upon which returns can be generated from its output can take time and there isn’t always a direct correlation, so it pays to find the right balance.

What can be said is that if your business involves the development of a new product, technology, or improvement to an existing product or technology, and has the potential to pass the tests of novelty and patentability (topics we will cover in a future article), then there is every reason to seek expert advice from a patent attorney as early as possible. 

Of all the forms of protection discussed in this article, patents are the trickiest to navigate, the easiest to get wrong, and the costliest to acquire – so you want to get it right.

Don’t be put off by the process

In the early stages a business’ only assets may be its intellectual property.  Yet, IP protection and management is sometimes viewed as too complex or costly to consider or is put off until it’s too late.

The process doesn’t need to be daunting. It does however need to be owned, otherwise you run the very real risk of forfeiting valuable intangible assets that may be the principal well-springs of your business’ value and competitive edge.

Ceri Wells is a founding partner of national intellectual property law experts James & Wells. He has been involved in patent drafting, litigation, trade mark ownership, unfair competition and copyright matters for around 30 years and specialises in working with start-up companies, venture capitalists and seed-funding organisations to encourage and commercialise NZ innovation. For more info visit www.jaws.co.nz or email Ceri at ceriw@jaws.co.nz

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