If you have a new business you often know – somewhere in the back of your mind – that you should be protecting your intellectual property (IP), but you tend to focus on what really matters: making money.
Ironically this lack of attention comes back to bite you when your business becomes successful (and conversely you feel glad you didn’t bother if your business bombs). So, here are some tips about what to think about when you start a new business.
Before we begin: what is ‘intellectual property’?
IP consists of four things: designs (like the design of a Coca-Cola bottle), patents (like the chemical property of a new drug), copyright (like this article, but also photographs, movies, music (lyrics and sound) and art works) and trademarks. You have to register patents and designs with the Companies and Intellectual Property Commission (CIPC), you should register trademarks and you can’t register copyright (unless it is a film).
Who is going to own the intellectual property?
This seems like an odd question right? It’s not. It’s actually a really important question. The reason this is an important question is because we live in South Africa and we have foreign exchange control. What this means it that the government can prevent you from selling your IP out of South Africa.
For example if you become massively successful you may want to sell your IP to Google (USA). However you subsequently discover that you need to get foreign exchange approval from the South African Reserve Bank. You request permission – they refuse – your sale falls through. Most other countries do not have foreign exchange control and would be horrified to discover that the sale of your IP can be blocked in this way. And suddenly you think, ‘hang on, what if the IP were owned by a UK company?’ This is the point I am making. Sure ‘you’ will be owning the IP. But will this be your UK or your SA company?
Unfortunately the issue is a whole lot more complicated than this, but you should think pretty seriously about this question from the start because it is too late to fix this once you are successful.
Trademarks: what to register and where to register
A trademark is generally the name of your company, but it can also be the name of your product. For example, Fanta is owned by Coca-Cola. Here are some high level things to think about with trademarks:
- Choose a distinctive name: If you name your product ‘door’ or any other normal English word, you effectively make it impossible to trademark. Ideally your trademark should be a word that cannot be found in the dictionary – like ‘Novcon’ (Hey! That’s ours!).
- You can trademark both text and images: This means that you can trademark both the word ‘novcon’, as well as the Novation Consulting image as well as both of them together.
- Choose the classes you want to register in: Classes? Are we in school again? Trademarks can be registered in 45 different classes. For example, you can register ‘Novcon’ in class 45 (legal services) but not in class 37 (construction). This means that if someone opens up a construction business and uses ‘novcon’ as their name, then they are not infringing your trademark as they are not using that name to compete with you (they are in a different industry). (Tricky, hey?)
- Do a search first: While I know that you are the most creative person around, there is still a chance that some genius may just have thought about your name first. So CHECK! Whatever you spend to do a trademark search is almost always money well spent and it is massively cheaper than having to rebrand your entire business in 2 years time after you have built up your name in the industry and suddenly discover that someone else owns the trademark to your name and is taking you to court to prevent you using it. Prevention really is better than cure.
- Choose the countries: Unless you are really wealthy you need to pick the countries you will register the trademark in. In general you should register your trademark in one country (at least) and then progressively register that trademark in new countries that you want to expand into (as your budget allows). What this means is that your trademark portfolio should be a moving target – you should review it at least once a year.
If your business is product based (rather than services based) you may have produced a product that has a distinct look. If you have, there is a reasonable chance you can register this design. If you do, this allows you to prevent your competitors copying your design and passing it off as their own.
For example, if you are in the cell phone manufacturing industry and you come up with a double-sided, expandable curved cell phone (yes, yes I know I got carried away) you may want to register your design as it took you a lot of time and research to figure out how to make that design.
As with trademarks the first thing to do when you want to register a design is DO A SEARCH FIRST. If someone has already registered that design that may change your entire business strategy. You need to know this before you commit to producing 200 000 cell phones.
Patents: Can you really register an idea?
Turns out you can. The whole point about a patent is that no-one has thought of it before (it is ‘novel’). Ironically the first think you do with a patent is tell everyone exactly what your idea is and how to make it. Seems weird right? You have just come up with this idea that no-one else has thought of and instead of creating a Fort Knox around your idea, you give it away to the whole world!
Although everything I said in this last paragraph is true, (you really do tell everyone about your idea), a patent then allows only you to exploit that idea for the next 20 years. In essence the concept behind registering patents is to allow the whole world to benefit from your idea, but to give you an exclusive right to use that idea in your products for the next 20 years. So patents are really useful if you are sure that your competitor is just about to discover (in 6 months) what you have already discovered. You go ahead and register your patent and that will prevent them from using that idea in their products (even though they spent a massive amount of money on research. Ow!).
Copyright: Are we still talking about registering ideas?
Not really no. While a patent needs to have a really novel idea, the bar for something to be copyrighted is really pretty low (close to ground level). You also don’t need to register it to have that right (except for movies) and – even better – as a result of the Berne Convention (this is a treaty between a lot of countries) you can enforce your copyright in 172 countries (basically all of them).
So why do people put ‘Copyright 2017, Novation Consulting (Pty) Ltd’ on their articles? Mainly to remind people that you own the copyright and from when the copyright began. (Copyright exists for such a long time that you don’t need to worry about when it expires.) Copyright still exists irrespective of whether I put that notice on the article or not, but it can help you to prove that it was yours and (more important) that the person copying your stuff knew it was yours when they copied it and sold the copy (this is actually a criminal offence).
The problem with copyright tends to be that it costs a whole lot to enforce your copyright (often more than it is worth). So while you have the right (in theory), in practice a small business in South Africa that has its pictures copied by a Chinese company really cannot afford to take legal action. What this in turn means is that you need to have tighter control over the stuff you make and you need to insert clauses into your contracts to make sure that you can sue the South African company who gave your stuff to the Chinese company, rather than the Chinese company.
Is that it?
Hell no. Intellectual Property is a complicated subject. This article is really about making sure you are aware of how much you don’t know. If you would like us to consider your intellectual property portfolio give us a call and we will chat to you about it.