Patent and Intellectual Property Rights

As an SME owner, you may think if you don't hold stock, have staff or own property you have no assets. However, all businesses own their intellectual property (IP) and it is vital to protect this - and, when needed, patent it. four key aspects of your business to protect are:

• Trademarks - IP
• Copyright - IP
• Design - IP / patent
• Product - patent

Value your intellectual property

Protection is cheaper than prosecution

As all business owners know, building a business takes so much time, energy and money so surely we would be crazy not to protect this investment? Not one of us would ever give any of this to a competitor on a plate but if you don't invest in protecting your IP or a patent then you could be regardless.

Patenting and IP law is in place to protect what is of value to a company and this includes paper and actual product. If you own the brand name as the limited company name and brand domain, you already have a level of protection. A competitor would not likely choose a brand without owning the limited company name or website domain.

If you are a sole trader and have not protected your IP then a competitor could use your brand at any time and you would have to rely on 'passing off' rights, which is unsafe and unreliable. It is cheaper just to register your trade mark and have protection for the life of your business. You only have to renew every ten years so remember, if you ever sell your business a big part of this will be the brand, name and trademark.

The commercial value in protection

A patent is an asset as you can sell it when it becomes valuable. You can also licence it under a franchise or other agreement so it will help your business grow without you having to increase your cost base.

If protected legally you can charge royalties for IP use, and some banks and lenders will consider securing finance against IP or a patent. If you are looking to secure investment from a private investor they will have more of an appetite if you are protected.

Trademark basics

What is a trademark (TM)?

Customers remember names, words, logos or sounds which is why we use them in business to sell our products. From the music of a British Airways advert to the character on a cereal box, all elements counted as TMs and must be protected.

How do I register my TM in the UK?

You have three options to register your TM. You can either do it yourself, go through an IP attorney or use an online TM broker. Doing it yourself will always be the cheapest option.

Copyright basics

What is copyright?

Copyright is a law that protects documents produced by an author when there is a record of them being created.

What does it cover?

It covers literary documents including spreadsheets and written documents. Artistic work such as paintings, charts, photographs and sculptures are also covered.

How do I register Copyright?

As there is no UK copyright registration system; you can't actually register any copy. Keeping records of any works covers you.

The grey area

As employees will write content and create documents, copyright law can be grey in this area. You need to ensure that your contract of employment with the employee covers confidentiality and copyright. You need to detail that you own the rights to all documents or content created by them while under your employment and this will remove any grey area.

Patenting your intellectual property

What is a patent?

In a nutshell, a patent is a legal order (grant) that protects a product with new technology or technical elements from being duplicated or copied within a close comparison. You must be aware that all details about the patent will be published in the public domain if accepted.

When should you apply for a patent?

It is always advisable to apply for any patents PRIOR to advertising or discussing your product externally with anyone. If this is impractical get a Non-Disclosure Agreement signed then prior to discussing your product.

Why do you need a patent?

There are a number of reasons why you need a patent but the fundamental reason is for protection of the product being duplicated or copied by competitors. Having a granted patent adds a huge deal of commercial value to any product.

 

International IP and patenting

There is no such thing as a full international patent as each country's laws are different. You can however apply for an umbrella patent that covers 140 countries who have signed up to a patent treaty. If you do need this level of patent it is wise to engage a patent attorney who will ensure you take the most commercial approach.

Overview of the UK patent application process

1. Decide if you are going to do it yourself or engage with a patent attorney. If you choose to use an expert let them led you; if not you will likely need at least six weeks to do the work.

2. You need to do a pre-filing search to ensure that what you wish to patent really is new and there is no granted or pending patent for a similar product. 

3. You can now complete the application form. In doing this you have to ensure you have an excellent technical knowledge of the product and can explain this in writing. It is advisable to have the invention or product at least to a prototype stage to ensure it will mechanically work. The application has different elements to it including a technical write up so the more information and the better the prototype, the stronger your application will be. You will need drawings and any sketches of the creation of the product if you have no prototype.

4. You now need to file the application with the Patent Office. This can be done by paper or online. Doing this will provide you with a "priority date" which fixes the date you registered your product in the patent system.

5. You have to file for a "prior art" search within the first 12 months of the application being made.

6. The Patent Office will allocate your application to an examiner to consider the legal side and technical aspects and "prior art" searches. They will then issue an examination report detailing their opinions and issues. This element of the application often results in arguments between the examiner and the person lodging the application until the examiner is persuaded to accept the application and grant the patent.

7. Once it is granted, you will have to renew each year to keep the patent in force.

8. Be aware that people can challenge your patent even after it has been awarded if they believe it to be invalid.

Tax benefits through patents

In 2013 the government launched a tax incentive called the Patent Box which reduces a company's corporation tax by 10% on profits relating to a patented invention.

Useful tips for protecting your intellectual property

Confirm IP ownership when using agencies

When using a third-party creative / web company, ensure you confirm ownership of any IP at the beginning of the relationship you're in for a rough ride. A simple but essential tip is having a contract with the company so when you commence work its clear who owns what rights.

Be careful who you buy other IP from

• Good news: you have found a great web designer and they build you the best site in the world.
• Bad news: a few years on you get a letter from a photographer or agency asking you to pay for the pictures the web designer used. 

Stock image websites such as Getty Images employ staff to find sites who are using their photos in an unauthorised  manner. It is crucial that when you commission a website the website designer confirms all photos are royalty free or they agree to take the liability. This seems like a simple tip but if you don't it could turn out to be a costly error.

Talk to an IP / patent attorney

If you are unsure of what to do at any point contact a IP / patent attorney as most of them offer a free of charge consultation to establish what your needs are.

Protect your IP with intellectual property insurance

Given the increasing legal costs and awards, IP litigation could have a substantial, material impact on a business, making risk transfer highly attractive. 

Intellectual property insurance helps your business defend itself against claims of IP infringement or theft of IP and/or contractual indemnities. It can also assist you pursue parties who are infringing on your patent, copyright or trademark.

IP insurance from Towergate

Our intellectual property policy covers the defence of patent and all other IP infringement claims being brought against you, including legal costs, damages, settlements and counterclaims. 

See our specialist webpage or get a quote.

About the author

Alison Wild BCom (Hons), MAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has over 20 years' experience as a residential landlord.