17 Apr 2015
With our focus on disruptive technology in this month’s E-Check, and no better example being seen in our focus on client digitalBTC, we thought it was important to highlight some of the basic legal issues in protecting innovation and technology. Read our summary and ask if your business is protected at even this basic level.
We have all read reports that the Australian economy is in the midst of several ‘disruptions’ in the next five years as a result of the following emerging trends:
• The use of wearables;
• A focus on predictive data;
• Social media sharing; and
• The digital economy.
These trends have resulted largely from increased activity in the technology space which has led to a more robust digital ecosystem, allowing information sharing and e-commerce to thrive and grow at rates not previously experienced before.
These technological advances have disrupted and effected many businesses and industries. For instance, we are seeing more and more Australians rely on smart technology and mobile internet devices both in their professional and personal lives. Smart devices are enabling us to monitor our emails, manage work tasks and communicate with clients and colleagues remotely and effectively, while wearables like Android Wear watches and Fitbits are allowing us to take control of our health and lifestyle habits at a mere glance and a slight swipe. Electronic “currencies” like Bitcoin and contactless smart cards have revolutionised the way transactions can be conducted and paid for.
If you have a small business with a vision to be the next Uber, Magic Leap or Snapchat (or even on a more modest scale), or if you run a business which incorporates or leverages some of the above trends, you need robust legal advice and clear strategic insight into managing risks and ensuring optimal performance in these areas. This e-checklist will focus on:
1. how business owners can identify and protect intellectual property assets when looking to create a new market, technology or process; and
2. issues business owners and CEO’s should consider when incorporating any new technology into operations.
Where you are the Innovator
Because intellectual property is not a physical, tangible asset, it is often overlooked, particularly by smaller business and innovators who are trying to minimise costs during their early start-up phase.
Business owners should consider very early on what intellectual property assets they own (or will own) and how these assets should be protected. There are several ways in which intellectual property may be protected in Australia – some which automatically vest, like copyright; some which require registration, like trade marks and patents; and some which are protected by virtue of remaining a trade secret. Businesses should ensure that they have a system in place to identify the nature of the intellectual property they utilise and who owns that intellectual property, as this is not always obvious.
Below, we have included a summary of common types of intellectual property and a checklist of some of the more basic issues for you to consider in order to best protect your most valuable business asset. HHG has the depth of expertise and experience to provide industry leading advice and service in these areas and beyond, backed by our own innovative service guarantee:-
What is your business’s competitive advantage – is it your technology or service, or your brand and reputation?
1. Have you developed a new or novel product or service?
If the competitive advantage of your business or products lies in its technological innovation, you should consider (1) who actually owns the technology; and (2) whether your innovation or invention is best protected by patent registration or kept as a trade secret.
If you created the technology yourself, you will need to decide whether you wish to continue to own the technology in your own individual and personal right, or whether it is better to set up a separate legal entity to hold the intellectual property. This will be an important consideration if you intend to take third party investors who will seek to have some control over the commercialisation of the intellectual property. If you developed the technology with a partner or team, or contracted a third party to develop the technology for you (such as a software developer), you will need to make sure that you own the intellectual property in the technology as a dispute may arise at a later time as to whether you own the intellectual property and have rights to deal with it, or whether the underlying rights remain with the creator (i.e. other members in your team or the contractor).
Your lawyer will be able to discuss with you whether you should licence the intellectual property to a separate legal entity or assign it to the separate legal entity for a licence fee or royalty.
Where your invention or system is completely new or has an element of novelty, you should consult with a lawyer or patent attorney to consider the registrability of your invention as a patent. Your advisor will also be able to provide you with their advice as to whether your invention infringes the intellectual property rights of a third party who may have a registered patent for an identical or similar invention.
Expert advice is necessary when considering the “inventiveness” of your new product or process for the purpose of patent registration. A patent attorney will be able to compare your invention with prior inventions and provide you with comprehensive advice on whether you are able to protect your idea through registration as a standard or innovative patent on the patent register.
In some circumstances, your idea may not meet the necessary inventive or innovative thresholds for either a standard or innovative patent, respectively, in which case your best chance of protecting your intellectual property may be to keep it a trade secret through contractual restraints on your business associates, employees, suppliers, contractors and other third parties.
If you choose to keep your idea a trade secret, you should ensure that all employees and third party contractors are bound by robust confidentiality clauses and that former employees continue to be bound from disclosing your business’s trade secrets after their employment is terminated.
To enable you to maximise the commerciality of your new design, product or service, your lawyer can assist you to consider ways in which you can commercialise your idea through licensing arrangements, research and development collaborations and distribution arrangements.
2. Do you have a distinct and recognisable brand?
If your business has taken the time and effort to develop a recognisable brand and reputation, you should protect the goodwill associated with this name by registering a trade mark over the words or marks you use to identify your brand. Too few business owners solely focus on brand building and forget about brand protection. You should also take care to conduct a search on the Australian trade marks register early on to make sure your marks do not infringe similar or identical registered marks. By conducting a search of the register prior to investing in developing a name and brand, you can prevent the costly exercise of rebranding later on or defending any third party claims of trade mark infringement.
Franchisors are usually very protective of their branding and image as this is usually where the value of their business lies. The value to franchisees in purchasing a franchise operation is in the easily recognisable brand and established customer base of the franchise. Franchisors can implement restrictions and requirements on how the brand of the business is represented through a style guide or by imposing requirements on their franchisees in their license or franchise agreement.
3. Do you or will you operate in different jurisdictions?
Enforcement of your intellectual property rights can also be difficult in certain jurisdictions. It is important that the mechanisms you have set up to protect your intellectual property (i.e. through trade mark, patent or contract) are appropriate and suitable, considering the practicalities of enforcement in the various jurisdictions in which your business may operates. HHG is a part of the global Primerus network, connecting us with a broad range of experts in this area in various jurisdictions around the world. HHG also partners with specific experts in industry-specific intellectual property firms who provide high level, targeted expertise which can make all the difference. Where your business operates or plans to operate in several countries, we will be able to provide you with advice on how to best protect your intellectual property to suit the legal framework and practicality of enforcement in each jurisdiction.
Are you considering introducing new technologies or processes into your existing operations?
Before deciding whether to incorporate any new technology or processes into your business, you need targeted advice on the legal and practical implications for your business. Your lawyer can assist you with developing an appropriate framework for implementation while minimising the risk of intellectual property rights infringement claims. Common areas where legal advice adds real value include:
1. Does your business use SEO/online marketing services?
If your business has recently come on-line or started accepting payment in the form of e-currency like Bitcoin or through online payment systems such as Paypal, you will need to review your terms and conditions and payment conditions to ensure these terms are current and reflect your new payment system.
You will also need to ensure that your website does not infringe the intellectual property rights of any third party – such as using images without appropriate licenses or copying and pasting text written by third parties which may infringe copyright.
It is critical for all businesses to do the basics of domain-name registration, seek quality expertise in practising search engine optimisation, claim and manage business listings in key search engines and directories (such as Yelp, Tripadvisor and Urbanspoon), monitor their online presence and reputation, and take immediate legal action where others infringe their rights on line. Where anyone has made any defamatory comments or claims against your business online which aren’t true, you should seek legal advice on how you can protect your rights and seek any compensation for your loss of reputation.
2. Does your business engage with your clients through social media platforms?
All employees and management should receive appropriate training on social media use and abuse. You should have and implement a 14detailed social media policy to ensure, for example, that any promotional tweets or posts are in-line with the general branding and mission statement of your business. Your employment contracts should have specific social media use clauses, and clauses which enable you to control employee’s social media use in connection with your business and customers/clients, including when they leave your employ.
While websites are useful platforms to engage with consumers and clients, allowing employees to take control of your business’s online presence can put your business at risk of inadvertent disclosure of confidential information, infringement on trademarks by third parties, infringing posts of creative works (such as reposting images without authority) and inappropriate employee comments or product reviews.
Your policies and procedures should ensure that your business’s website and social media accounts are monitored and assessed regularly.
This checklist covers the bare basics only and there is much more to cover on this important issue. We would be pleased to discuss your business’s unique requirements and work with you to ensure protection in these areas.
This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.