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Whether your business relies on innovative new products or just the strength of your reputation, it almost certainly involves some intellectual property (IP). You will not reap the full benefits from your IP unless you manage it effectively.
You need to keep careful track of your IP, identify whether and how to protect it, and devise a strategy for exploiting it commercially. You also need to be sure you are not infringing the rights of others.
1. Tracking your intellectual property
Record all innovation-related activities in your business
- Detail relevant research, meetings, designs, plans and so on in a tamper-proof logbook. Sign, date and, where necessary, witness-sign entries for legal evidence of ownership in any future dispute.
- Ensure staff you employ are familiar with the logbook's existence and know how to use it. Consider introducing an incentive scheme to encourage people to record their innovations.
- Study logbook entries regularly. They can highlight IP which might otherwise have been overlooked.
Carry out regular IP audits
- Consider all areas of your business. IP does not just reside in innovative processes, products or services. For example, there is likely also to be valuable IP in any bespoke software, databases you have built, marketing material and branding.
- An audit can also determine who owns your IP and alert you when registered protection should be renewed.
Clarify ownership of IP created by employees or third parties
- IP created by employees during the course of their work usually belongs to the employer. To avoid misunderstandings you should cover this issue in employment contracts.
- Ensure IP created by contractors and freelances is assigned to your business. Otherwise the IP rights will remain with the contractor (though you have the right to use the IP for the purpose for which you originally contracted them).
- For example, if an IT contractor writes bespoke software for you, ensure the copyright in it is assigned to your business so you can use, modify or upgrade it at any time in the future, without costly ownership disputes or licence fees.
- If you commission someone to create a design for you, they will own the right to that design unless you have agreed a contract that states otherwise.
2. Protecting your IP
There are four main kinds of IP which can be protected
- Inventions, which you may be able to patent.
- Designs, which can be protected by design right or by design registration (see Design protection).
- Property such as publications and recordings, which can be protected by copyright.
- A name or symbol for your product or service, which can be protected with trade mark registration.
If the IP is already protected by someone else, you will not be able to protect it
- If you infringe someone else's IP rights, they will be able to take legal action against you.
- A patent search will reveal existing patents and applications that might affect your invention. You may then be able to modify your product to distinguish it.
- A trade mark search will avoid conflict with names (etc) which are already protected.
- Questioning the creators of products, marketing plans and so on about their sources may reveal possible problems. For example, if they have used copyright material or others' trade secrets.
If you have the rights to any IP, you must decide whether it is worth protecting
- The right protection makes it easier to profit from your IP. But there is no point in paying to patent an invention, for example, unless it is commercially viable.
- Obtaining legal protection can be expensive and time-consuming. Some limited forms of protection are automatic and free (eg copyright).
- You must be prepared to enforce your rights, possibly risking expensive litigation. The IP rights of small businesses and individuals are especially likely to be ignored. You have to discover and prove the infringement.
Keep commercially sensitive information secure
- Guard against disclosure in electronic form by using password-protected systems and installing firewalls and up-to-date anti-virus software. Keep back-up copies of all electronically held information and store them in a separate location.
- Lock hard copies of sensitive information away securely.
- Relying on trade secrecy may be an alternative to patenting. For example, if your innovation is a process which cannot be deduced from the end product
Consider insuring your IP against the cost of challenging infringers
- Apply for insurance before your IP is in the public domain. If you do not, you jeopardise your chances of finding an insurer.
- Premiums for insurance can be high. However, the cost of litigation in the High Court is much higher. Advertising the fact that you are insured can also deter potential infringers.
A new invention can usually be protected with a patent. This allows you to stop others making, using or selling your invention for up to 20 years.
Is it an invention?
- It must be some kind of device, product or process which can be used in a practical activity (eg industry or agriculture).
Is it new and not obvious?
- You cannot patent something which is already publicly disclosed or which would be obvious to someone with good knowledge in that area.
- Your invention must not be a 'trivial' variation. Does it provide a clear advantage over what is already known?
- You can search patents on the Intellectual Property Office (IPO) website for free. They also provide a commercial search service.
- You have to pay for more sophisticated searches by a patent attorney or professional patent searcher, but they can prove worthwhile.
Guard against any public disclosure of your invention before it has been registered
- You seriously jeopardise your chances of future patent protection if details enter the public domain.
- Public disclosure can take place on websites, in media interviews and in business plans used to find investment - even during casual conversations.
- Use written confidentiality or non-disclosure agreements (NDAs) when you must give details of your invention and you have not filed a patent application. NDAs should be signed by everyone that you need to share details of your IP with.
4. Obtaining patent protection
Most businesses use a patent attorney
- A patent is a complex legal document. A patent attorney can help draft the specification and process the application.
- Many attorneys will offer a free consultation.
- Typical costs start at around £800 for preparing the initial application and from £3,000 to complete the full UK patent application process.
- The more complex the technology, the higher the costs will be.
- The more preparation you provide (eg description, drawings, information on existing products), the lower the cost.
Before exploiting the invention, you must 'file' (submit) an initial application
- The initial application is free and contains a request for a patent, a description of the invention and your name and address.
- At this stage, only the title of your application is made public (not the details).
- You can file the initial application yourself. But if your initial application is badly drafted, it may limit the scope of the patent you can obtain or you may not be able to get a patent at all.
- Though the formal process of getting a patent can take up to four years, you do have a monopoly right from the day your application is filed.
You have 12 months to decide whether to take things further
- Within 12 months, you must send the IPO details of the technical 'claims' which define the invention you are seeking to protect. You can use this time to research the viability of your invention, or to modify it.
- You pay an application fee (£20 online or £30 by post) and for a preliminary search (£130 or £150).
- The IPO Examiner will check your application and will also produce a 'search report', listing documents that have a bearing on whether your invention is new.
- Your application is published 18 months from the filing date. Within six months of publication, you pay for a full examination of the application (£80 or £100).
- If there are problems, you can amend it.
The full process of obtaining a patent usually takes three to four years
- The process can be accelerated if necessary.
- Once a patent is granted you can maintain it for up to 20 years from the filing date.
- Four years after filing, you start to pay annual renewal fees. These are currently set at £70 for year five, gradually increasing to £600 for year 20.
Your patent can still be challenged in court
- The patent can be amended or revoked if it is shown that the idea was obvious or not new when the original application was filed.
- You can apply for a non-binding opinion from the IPO on the validity or infringement of any patent. This may help settle disputes without the need to go to court.
Your UK patent only protects your invention in the UK
- You are protected from imports but have no protection when you export.
- Ask your patent attorney about European and other foreign patents (at extra cost) if you need protection in other countries.
- Overseas patents must be applied for within a year of your UK filing date.
5. Using patenting to your advantage
Time your application carefully
- You do not want to fail to get a patent, or a sufficiently protective one, because your plans were at too early a stage. But neither do you want competitors to beat you to it by holding off your application for too long.
- It can be worth timing it to rush to market in the time between filing for a patent and 18 months later, when the patent application is published in full and competitors find out the details.
Register as broad an application as you can get away with to catch out potential competitors
- Keep your options open by using the flexibility of the patent-pending situation in which amendments can be made to your application in the first 12 months after filing.
Consider using spoiling tactics
- You can prevent others from getting a patent for your invention at a later date by having your own patent application published but taken no further.
- This is an inexpensive way of stopping a competitor getting exclusive rights to the same invention when you cannot afford to buy those rights for yourself.
- Any other kind of public disclosure of your invention - for example, in a magazine article or on a website - will also render ineligible later patent applications from others.
Hold back know-how where possible
- It may be possible to word your patent application to describe one way, but not the optimal way, to produce your invention. If someone infringes your patent you can enter negotiations to offer them this additional know-how, rather than go down the costly route of litigation.
- Take care. The law requires that a patent describes your invention clearly and completely in order that a third party can replicate it. Never omit any essential features. Take advice from a patent attorney.
- If you register a patent overseas there may be a statutory requirement to disclose the best way to produce your invention.
Don't rely on a patent to preserve your competitive advantage
- You need to continue developing your ideas in order to stay ahead of the game.
6. Design protection
New designs - for the shape or appearance of an article - can be protected by 'design right' (similar to copyright) or by 'design registration'.
Some designs do not qualify
- Designs that are purely functional cannot be protected in this way (but might be suitable for patenting).
- Designs that are determined by the need to fit or match another article (eg spare parts) cannot get design protection.
Design right gives limited but automatic protection for a new design
- You do not have to apply for design right.
- Keeping evidence of the creation and date of the design will help if you later need to defend your design right.
- Design right lasts for ten years after you first market articles using the design (subject to a limit of 15 years from the creation of the design).
- Two-dimensional designs do not get design right, but get copyright and can be registered.
Design registration gives stronger protection and makes it easier to defend your rights
- Design right is specifically concerned with the appearance of all or part of a product or its packaging.
- The design must be new, have an individual character and not be publicly available or published anywhere in the world at the time you apply for registration. These requirements differ from country to country.
- You must apply to the IPO. You can get help from a patent attorney or trade mark attorney, or make the application yourself.
- Design registration lasts for an initial five years and can be extended up to 25 years. Initial fees are £60 for a single application. For multiple applications the first design is registered at £60 with subsequent designs on the same application registered at £40.
- Extending the design registration currently costs £130 for the second five years and increasing amounts after that.
- Deferring a design registration for up to 12 months will cost an additional £40, to be paid when publication is requested.
- You can apply for a Registered Community Design to protect your design throughout the European Union (EU).
Copyright protects the creators of original text, artwork, recordings, films and computer programs, whether published or not.
Copyright is automatic
- You control the rights to copy, perform, broadcast or adapt your material. Limited use of the material without your permission is still allowed for private study, for reviews and for teaching in schools.
- Copyright for literary, dramatic, musical or artistic works, and computer programs, lasts for 70 years after the author's death. It lasts 70 years for sound recordings and performers rights in sound recordings. Copyright for other material lasts 25, 50 or 70 years.
- Under international conventions, copyright covers most countries.
- While employees or contractors may not own the copyright in work carried out, they retain moral rights, which can be enforced if they consider use of the work to be derogatory.
Copyright can be difficult to enforce
- Adding the copyright symbol © or the words 'copyright - all rights reserved' and your name and the year of creation to the material is a useful way of emphasising that copyright exists, and it is essential in some countries.
- Keeping copies of the work originally created, and dated records of disclosures to other people, is important. You may want to mail a copy to yourself, by registered post, and keep it secure and unopened to be used in court later if necessary.
- You can insert deliberate mistakes to catch out copyright infringers. For example, including lines of dummy code in software, or including your own address with a minor but noticeable change in a customer database.
- Proving that a different (adapted) work is a breach of your copyright can be difficult.
8. Trade marks
Trade marks help distinguish your product or service from the competition
- They can be an invaluable marketing device. Your company or product name registered as a trade mark can form the basis of a valuable future brand.
- Trade marks can be symbols, signs, words, sounds or shapes.
There are some registration restrictions
- In general, a mark cannot use words other traders should reasonably be allowed to use (eg purely descriptive terms).
- A mark must not be deceptive or be easily confused with another registered mark.
Registering helps protect your rights to the trade mark
- Unregistered trade marks get some protection, if you have built up sufficient trading reputation and goodwill in the trade mark. But such trade marks can be far harder to enforce than if they were registered.
- Before using a trade mark, you should have a search carried out to see if you are free to use it. You can then file an application to protect your interest in the mark.
- Once registered, you can defend your rights and oppose the registration of future trade marks that are the same as or similar to your own.
- You can apply for a Community Trade Mark to protect your mark throughout the EU.
Applications for UK registration are filed at the IPO's Trade Marks Registry
- The initial application contains details of the mark and the goods or services it will be used for, and must be accompanied by the appropriate fee (from £170).
- A 'Right Start' trade mark application allows you to pay only half the relevant fee upfront. You only have to pay the balance if you decide to proceed with the application after seeing the examiner's report.
- An examiner will search to see whether any conflicting marks have already been registered and send you the results. Once you have received the examiner's report you have two months to decide whether to continue, amend or withdraw the application.
- The application is then published and is held open to third-party objections for three months. After this period, once any objections have been resolved, the mark can be registered.
- Most businesses use trade mark attorneys for their applications. Typical costs are £700 to £1,000 for the full process, depending on the complexity of the application and how many types of goods or services the mark will cover.
Registered trade marks can be renewed indefinitely
- After the first ten years, you have to pay a renewal fee (currently £200), for each subsequent ten-year period.
- Trade mark registration can be overturned by competitors if a mark is not used for five consecutive years.
9. Profiting from your IP
Protecting your IP can help attract funding
- A patent can help convince investors about your innovative idea. Venture capitalists in particular will often not be interested unless protection has at least been applied for.
- Setting the patenting process in motion is relatively inexpensive and can help you attract interest from potential licensees. This may help you to raise enough money to meet the costs of a full patent application.
Consider commercialising your IP yourself
- You could start up a business to develop, produce and market your innovation, diversify your existing business to do so or spin out a new business from your existing one.
- This is most suitable for products that are cheap to bring to market or where you already have a suitable business and production infrastructure.
- You will need a thorough and realistic business plan if you are to convince potential investors to part with their money.
- Bear in mind that your core strengths may lie in creating IP, but not in the commercial realities of developing and marketing it.
You could earn royalties by licensing your IP to another business
- Licensing is particularly suitable when you have developed your IP to the point that its business potential can be seen, but its exploitation would mean high start-up costs. It can be a relatively low-risk route to realising the value of your IP.
- Licensing is also a good option when you do not have the requisite business expertise in house; if you want to be a manufacturing-free outfit; or if a potential licensee is already well established in your market.
- Licensing can be a good way to exploit the secondary applications of your IP if your strategy is to concentrate on its primary application.
- You may want to consider a possible cross-licensing deal where you give one or more other parties access to your patented technology in return for access to theirs.
Consider a joint venture to develop and market your innovation
- Beware of joint ventures in which your partner doesn't have a similar amount to lose as you. The best joint ventures are those of equal-sized businesses, where pooling expertise and infrastructure benefits both parties equally.
Franchising may be a good option for the future
- If your trademarked brand has strong value, franchising can be a good way to expand rapidly at home or overseas.
- Read more on patents from the IPO.
- Read more on designs from the IPO.
- Read more on copyright from the IPO.
- Read more on trade marks from the IPO.
- Read advice on drawing up a non-disclosure agreement from the IPO.
- Find a patent attorney through the Chartered Institute of Patent Attorneys (020 7405 9450).
- Find a trade mark attorney through the Chartered Institute of Trade Mark Attorneys (020 7101 6090).
- Find out about licensing through the Institute of International Licensing Practitioners.
- Find out more about patents in Europe from the European Patent Office.
- Find out more about protecting trade marks and designs in Europe from the EU Intellectual Property Office.
- Find your local Business Innovation Centre through the European Business & Innovation Centre Network.
The law is complex. This factsheet reflects our understanding of the basic legal position as known at the last update. Obtain legal advice on your own specific circumstances and check whether any relevant rules have changed.