Intellectual Property – a quick guide to identifying rights in your business

Intellectual property (IP) is the collective term used to describe creations of the mind. IP rights can arise automatically (unregistered rights), whilst others need to be applied for and require formal registration (registered rights). Almost every business will own some form of IP; it is often among its most valuable asset and key to commercial activities.

This quick guide will help you identify IP owned and used in your business, whether developed or created by or specifically for your business, as well as IP used under licence, such as software. Protection of IP rights is important throughout your business’ life cycle, and an IP audit can be particularly common and useful ahead of a business reorganisation, disposal or investment.

Trade marks

What trade names, brand and product names, as well as logos or other insignia does your business use to identify its products and services? The signs under which products or services are sold are trade marks. Trade mark rights may be registered with the Intellectual Property Office or unregistered. An unregistered right arises automatically where a mark is used commercially to identify goods or services. Protection of an unregistered right relies on building and proving reputation and goodwill associated with that brand.

Copyright

This protects original creative works. It is an unregistered right that arises automatically on creation. Almost every business will own some form of copyright, often without realising. Artistic merit is not required. Common examples of copyrighted works found in business include:

• Marketing materials: the look, feel and content of websites, social media pages or consumer interfaces, the copy and media in adverts and marketing materials. 
• Know-how resources: documented processes and procedures, staff training materials and handbooks, technical specifications, design drawings.
• Customer information: product or service guides, terms and conditions, documented advice.
• Software: the written coding of programmes, apps and databases (but not what the coding does).

Designs

The appearance (but not the technical function) of goods (3-D) and graphic (2-D) designs can be protected by design rights. These can be unregistered or registered. If your business develops, manufactures and/or sells tangible products, design rights may exist in the appearance, shape or configuration of those products. Design rights are common in fashion and consumer goods, but can also exist in non-technical features of items not ordinarily associated with aesthetics, such as industrial machinery.

Patents

New and original technical ideas or inventions may be patented. This is a form of registered right which grants the owner exclusivity for use of that invention. Patents are common in high-innovation sectors such as healthcare, technology (including software) but can also arise in industries such as agriculture (e.g. patented crop varieties).

Data

A methodical or systematic arrangement of data, where there has been a substantial investment (in time or money) in collating the contents of the database, can be protected by a database right. This is an unregistered right that arises automatically on completion of the database. In a recorded form, data and databases may also benefit from copyright. Examples include intranets, purchase order systems, document management systems, knowledge management systems, customer lists and mailing lists.

Other rights

Further specialist rights apply to specific sectors. Examples include plant breeders’ rights, topography rights and performance rights.

Trade secrets

A trade secret is not protectable as an IP right in and of itself. Material forming part of your business’ trade secrets may be or become protected by one or more of the rights above, however, where this is not possible the only relevant protection is confidentiality. If you are disclosing know-how, the recipient should be bound by relevant contractual obligations.

Responding to due diligence requests

In corporate transactions, the buyer will usually seek to understand what IP rights the target business owns and/or uses via a due diligence process. In completing your replies, consideration of the rights above is a good starting point. You may also be asked to confirm when and by whom the rights were created and to provide evidence of how rights to that IP vested in your business. If your business owns registered rights, providing registration details will be sufficient. For unregistered rights, you should provide appropriate descriptions (and possibly images) of the protected IP and, if third parties were involved in their creation, consider how ownership was transferred to your business.

Most businesses also use at least some IP under licence. The most common example is software, such as for operating systems, data storage and productivity applications. The due diligence request will typically ask you to provide a list of third party owned software used in the business, together with copies of details of the relevant licences (e.g. the supplier’s terms).

For a share sale, the buyer will want to be sure that all relevant IPRs are vested in the target company; on a business and assets sale, the buyer will want to be sure the seller has valid rights to assign those IPRs with the sale. Where any IPRs are not owned by the target company or by the seller, remedial action will often be necessary prior to completion, to ensure the buyer takes the benefit of those IPRs from purchase.

Securing your IP rights

An effective IP management strategy is key to securing your business’ IP rights. Key stones of any strategy are:

• Processes to identify and document IP created and/or rights acquired;
• Assessment of the commercial value of that IP, and when to pursue registration;
• Use of non-disclosure agreements and digital security measures to maintain confidentiality;
• Contracting on terms that clearly define IP ownership and usage rights (this includes in commercial, employment and development agreements);
• Appropriate licensing strategies to commercialise your IP rights;
• Monitoring for infringements and enforcement of rights where necessary.

If you need help creating and IP strategy, registering rights or managing your IP portfolio please get in touch with our Commercial Technology team at [email protected].