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Divide and Conquer

01 Sep 2010

Do you dread having conversations about intellectual property? Not sure where to start? This article gives some practical guidance on how to think about the intellectual property (‘IP’) in your business so that you can talk with confidence to investors, lawyers, patent attorneys and accountants and ensure that all of your IP is working for you.

A portfolio of individual rights

The trick to talking about IP is to conceptually break down your IP portfolio into individual assets rather than thinking of it as one big piece of property. In any product or service there may be several types of IP, each of which can be sold, transferred or licensed. Each type of IP has different rules governing its creation, ownership and use. Furthermore, IP rights are territorial. Take patents, for example. There is no such thing as a world-wide patent; patents are granted in individual countries.

So if you have a patent for the same invention in six countries, each of those six patents is a separate piece of property. Here are five good reasons to think about your IP this way:

1. Asset management: Identifying each asset helps you make sure that each is working hard for you and that you manage the whole portfolio of IP in a cohesive way.

2. Competitive advantage: Each type of IP has different rules about how it comes into existence, who owns it, and what you can do with it. Identifying the type of IP is the first step to making sure you get the IP rights you need to retain a competitive advantage.

3. Offshore strategy: Understanding the territorial aspect of IP is essential for exporters and for anyone wishing to license overseas IP rights to others, rather than exporting directly.

4. Better tax position: Tax treatment varies from one type of IP to another, so identifying each piece of IP will help you optimise your tax position.

5. Partnering for success: Identifying and understanding the various IP rights relating to a product increases your negotiating options and makes it easier to get to “yes”.Here’s a practical example: Fred’s GPS Limited (FGL) is a small business making and selling a new piece of location equipment it has developed.

FGL has a patent for one particularly clever component in the equipment. Patents cover ideas which are new, useful and inventive, and give the owner the exclusive right to make, use or sell the invention in the countries in which it has obtained a patent. FGL might choose to file patent applications in countries where it sees potential to make or sell the equipment.

There may be software embedded in the equipment, and copyright would subsist in that software if it is original. Copyright protects the expression of the idea, but not the idea itself, so it restricts someone from copying FGL’s source code but not from writing other software that does the same thing. If FGL has new manuals written for the equipment, copyright will subsist in these too. In New Zealand, copyright might also subsist in moulds for the plastic covers, and in any prototypes developed, if they are sufficiently original.

Copyright does not require registration in New Zealand, but the degree of protection provided and the circumstances in which registration is required varies from country to country.FGL then designs a stylish cover plate for the face of each product. It might file a design application for the design in New Zealand and in other countries (some of which use the term ‘design patents’). A design registration would give FGL the exclusive right to apply these non-functional design elements to its GPS equipment.

This protects the distinctive look of FGL’s product and helps to stop others from making knock-off products. It is essential in countries where copyright does not provide protection for manufactured articles. FGL also develops a distinctive brand name for the equipment and applies for a New Zealand registered trade mark in relation to the goods and services for which it will use the mark. This can prevent someone else from using the same or similar mark for the same or similar goods or services as those covered by the registration.

Again, FGL should apply for a trade mark in each country in which it wants to be able to protect that brand name. How to work out what you have The Intellectual Property Office of New Zealand (IPONZ) has some good general information about different types of IP.

For advice about IP in New Zealand and overseas, see a lawyer who specialises in intellectual property or a patent attorney