Whether it's recognised on the balance sheet or not, most Australian businesses own intellectual property (IP). This means a working knowledge of the different types of IP is essential for any organisation trying to maximise the commercial returns from their unique products or services.
For most Australian businesses IP means patents, designs, trademarks, trade secrets and confidentiality and copyright. IP registration and rights with the exception of copyright, which arises automatically, and trade secrets are administered by IP Australia, a government agency in the Department of Industry, Innovation, Science, Research and Tertiary Education.
While the different types of IP have their own registration and filing requirements and offer different degrees of protection, the rights from each should be considered complementary.
“The idea of building up a portfolio of rights and using one to support the other is an important one,” says Philip Heutzenroeder, principal at IP law firm Spruson & Ferguson.
Patent or trade secret?
When businesses consider a patent application they need to decide if it’s appropriate in terms of among other things cost, lifecycle of the product, the need to secure financial backing and what other options exist for IP protection.
Standard patent applications can take years, as a comprehensive search and examination process needs to be completed to ensure the product is unique and meets innovation criteria but the reward is up to 20 years (25 for pharmaceuticals) of legally enforceable protection of a monopoly right to commercialise the patent.
An innovation patent offers less protection, but uses less rigorous registration criteria. Innovation patents last for up to eight years and can protect, for example, the individual steps of product development.
Application fees and annual maintenance fees are payable on all patents, varying according to the type of patent and the number of years elapsed since it was filed.
The quid pro quo of getting a patent, Heutzenroeder explains, is that the government will grant a finite monopoly on commercial returns from an innovation in exchange for publication of the details of that innovation. If you rely on trade secrets or confidentiality agreements to protect your IP, as Coca-Cola famously has done with its secret recipe, no such disclosure is required and you can be protected indefinitely.
But trade secrets are hard to keep and offer no protection from clever competitors. “If something can be easily reverse-engineered then it wouldn’t work as a trade secret,” says Michelle Cooper, senior associate with specialist law firm Shelston IP.
Patent protection could also be critical in securing investors if an innovation needs financial backing to realise its full commercial potential, Heutzenroeder adds.
In IP, timing is everything and patent applications need to be well under way before any disclosure of the “great new product”, or there is a risk the application will be denied on the grounds that it is not new.
Any mention on a website, to favoured customers, or any marketplace trials before the registration process has reached a certain point could invalidate the application, Cooper warns.
“Don’t disclose to the market before you’ve got your provisional priority date secured,” she says.
Seek confidentiality agreements before briefing potential backers, and ensure employee contracts include confidentiality and non-disclosure clauses.
The look of a product can also give it a competitive edge and if the shape or appearance is new and distinctive, the design can be registered with IP Australia.
Design registration secures exclusive rights for up to five years, with an option to renew for a further five years, but although the application fees are not especially high, the fees for engaging specialists to expedite the process could mount up over what can be a lengthy process.
The same pre-registration disclosure constraints exist for designs as for patents, so as always it’s advisable to register as early as possible.
Registering a patent or design is just the first step in commercialising a new product or service, and once it’s under way businesses should quickly turn their attention to protecting its identity in the market place. “Timing is crucial,” Cooper says. “Get your patent in place, work out your branding as soon as possible then register your trademark.”
Trademarks distinguish the products or services of one business from another. Registering a unique brand identifier, whether it’s a logo, word, phrase, shape or even a colour, gives exclusive rights to its use in marketing those products or services.
“Trademarks are the piece of intellectual property that never dies,” Cooper says. “They can go on indefinitely.” A registered trademark can be crucial in protecting the brand identity of new products, as well as when a design registration has expired and the design has evolved to become synonymous with the product. The Coca-Cola “contour bottle” shape is a classic example of this and sits alongside the Coca-Cola logo in its portfolio of registered trademarks.
IT’S MUCH EASIER TO PURSUE AN ACTION FOR TRADEMARK INFRINGEMENT, BUT YOU MUST HAVE A REGISTERED TRADEMARK TO DO THIS. DONNA SHORT, HENRY DAVIS YORK
Trademark registration attracts an application fee and initial registration is for 10 years, but can be renewed every 10 years for a further fee. However, trademark applications can be time-consuming if, for example, the registrant has to respond to a Notice of Opposition filed by another business claiming to have registered a similar trademark for the same class of products or services. That said, IP Australia offers a useful service that allows a pre-application check for this kind of barrier to a successful application.
If a trademark is in use but unregistered, it is possible to protect it by recourse to either a claim of “passing off” or a claim for misleading or deceptive conduct under section 18 of the Australian Consumer Law (formerly section 52 of the Trade Practices Act 1974). However, passing off can be hard to prove. “It’s much easier to pursue an action for trademark infringement, but you must have a registered trademark to do this,” says Donna Short, partner and practice leader for IP at law firm Henry Davis York.
Businesses should ensure they have been assigned ownership of any copyright works for any artistic devices or logos used in branding or packaging before applying for a trademark for the device or logo, she says.
Copyright arises automatically at the point of creation for unique artistic, musical and literary works under the Copyright Act 1968. Although registration is not required, the work has to be documented to be protected.
“Copyright has to be expressed in material form,” Short says. “You can’t actually protect the idea.”
Protecting against copyright infringement can mean legal action and since copyright generally lasts for 70 years after the death of the author, it will often be done on their behalf.
But in many cases infringement of any type of IP can be managed without recourse to litigation by simply sending a letter of demand, says Short. “The IP statutes are all federal pieces of legislation so protection is nationwide,” she explains.
Protecting IP overseas generally means registering according to the laws of individual countries or applying via one of the international agreements such as the Patent Cooperation Treaty. Regardless of jurisdiction, a review of IP protection should be part of the audit process in any business, Short says.
“They are assets and in some companies, they are worth more than tangible assets.”