Plain English Guide to Intellectual Property

It is becoming increasingly common for intellectual property to be one of the most valuable assets of a business. Indeed, in many cases it is the most valuable asset of a business. It follows that the steps a business takes to protect its intellectual property can have a significant bearing on its goodwill and its ability to fully exploit the intellectual property. This rings particularly true upon the sale of a business. If the intellectual property is not appropriately protected, the sale price may be adversely affected or, at best, the sale process can become more difficult, time consuming and costly.

This Plain English Guide provides an outline of the various types of intellectual property and answers some of the more commonly asked questions regarding the protection and exploitation of intellectual property.

What is intellectual property?

The expressions “industrial property” and “intellectual property” are used to describe the rights affording protection to creative and intellectual effort and include copyright, designs, patents, trade marks, circuit layouts, plant varieties and confidential information. A single development may be affected by a number of these areas.

Trade Marks

A trade mark can be a word, phrase, letter, number, sound, smell, shape, logo, picture, aspect of packaging or a combination of these used to distinguish your goods and services from those of other traders.

The law in relation to the registration of trade marks and infringement of registered trade marks is governed by the Trade Marks Act 1995 (Cth). A registered trade mark provides the legal right to use, license or sell the mark within Australia for the goods and services for which it is registered.

The difference between trade marks, business and company names sometimes causes confusion. Registration of a business name and company name does not in itself give you any proprietary rights - only a registered trade mark can give you that kind of protection. The same word or words may be registered by different people as business names, company names and trade marks. However, the registered trade mark owner can sue the business or company name owner for infringing the trade mark if the business or company name owner uses it on goods or services similar to those covered by the trade mark registration.

When your trade mark is registered, you do not have to prove that you have gained a reputation in any market to bring an infringement action under the Trade Marks Act for another person’s breach of your registered mark. Upon registration, you obtain the right to:

• exclusively use or authorise another person to use the mark throughout Australia in relation to goods or services specifi ed in the registration;
• sell the trade mark as personal property;
• and, notify the Australian Customs Service of objection to the importation of goods that infringe your rights in the marks.

A trade mark is only registrable if it is distinctive. A mark will only be distinctive if it is capable of distinguishing specifi ed goods or services from those of other traders in the market. A trade mark application is likely to be rejected if it:

• contains or consists of a prohibited sign;
• cannot be represented graphically;
• is not capable of distinguishing your specifi ed goods or services from the goods or services of other persons;
• contains or consists of scandalous matter or if its use would be contrary to law;
• would be likely to deceive or cause confusion if used in relation to the specifi ed goods or services;
• is substantially identical with, or deceptively similar to, a trade mark registered or pending in the name of the another person in respect of similar goods or closely related services (unless you can establish particular exceptional circumstances).

The easiest trade marks to register and protect are those consisting of newly invented words with no meaning, or trade marks consisting of random or arbitrary names, which have a meaning not connected to goods or services they represent. A good example is “Fanta” for orange flavoured soft drink.

Trade marks which are descriptive of the goods they represent are very difficult to register, as are trade marks which claim laudatory titles such as “perfect” or “outstanding”. Trade marks which consist of generic words which can be used for a common product or service are also likely to be difficult to register, for example “lemonade”, “t-shirt” or “mobile phone”.

The initial registration period is 10 years, and registration may be renewed indefinitely for successive periods of 10 years (upon payment of the required renewal fees). It is important to use your registered trade mark otherwise it may be vulnerable to removal from the register for non-use.

Trade mark registration is not compulsory but allows maintenance of goodwill held by valuable trade marks and avoids the more expensive route of common law court action against an infringer. The process of registering a trade mark typically takes 9 to 18 months.

Copyright

The law in relation to copyright was originally formulated to protect literary endeavour. Copyright now encompasses all manner of productions, from computer programs to films.

Copyright is a type of legal protection for people who express ideas and information in certain forms, the most common of which are writing, visual images, music and film. Accordingly, large industries such as publishing, film, music and computer software all have their basis in copyright law.

In Australia, the law of copyright is governed by the Copyright Act 1968 (Cth). Copyright constitutes personal property. There is no system of registration for copyright protection in Australia.

Copyright protects only the form or way an idea or information is expressed, rather than the idea or the information itself. Copyright protection is free and automatic. It is not necessary to publish the work, to place a copyright notice on it or do anything else to be covered by copyright. However, the work must result from its creator’s skill and effort and not simply be copied from another work.

For many businesses, copyright can exist in various materials produced by the business such as procedures manuals, marketing brochures, packaging, computer programs and databases. As copyright protects the “creator” of the work, issues regarding the true ownership of copyright and legal authority to use the work can often arise for businesses that contract or outsource any creative functions to third parties. It is important to ensure that these issues are appropriately dealt with before authorising a contractor to undertake work for your business.

The general rule is that copyright lasts for the life of the creator plus 70 years, or in some cases for 70 years from the date of first publication.

Patents

Rights in relation to patents are derived under the Patents Act 1990 (Cth). The owner of a patent is called a “patentee”. Patents granted under the Patents Act confer on the patentee a monopoly for inventions which are novel and not “obvious”. A patent provides the patentee a monopoly right to prevent others from using, selling, making or otherwise exploiting an invention, for the duration of the patent.

There are certain criteria that an invention must meet in order to be patentable. These are set out in the Patents Act. In a nutshell, the invention must be novel, ie new, and inventive, and must relate to a field of commercial endeavour (rather than artistic endeavour).

Patentable inventions typically include devices and industrial or technical methods or processes. However not all inventive concepts lead to patentable inventions. An example is the mere discovery of natural phenomena, or the mere presentation of information.

In order to meet the requirement of being “new” or “novel”, the invention must not have been published anywhere in the world or used anywhere in the world by any person, before the “priority date” of the patent application. Accordingly, the confidentiality of all information relating to an invention is of importance to a successful patent application.

In Australia there are 2 types of patent protection:

1. a standard patent – allows a maximum 20 year term
2. an innovation patent – allows a maximum 8 year term.

As there is a great deal of skill involved in applying for a patent and the process is very technical, it is common to involve a specialist patent attorney. The system of patent registration is territorial. That is, a patent must be registered in each country in which protection is sought.

Designs

In the context of intellectual property, the term “design” refers to the features of shape, confi guration, pattern or ornamentation applicable to an article of manufacture. In other words, “designs” relates to the artistic element in or overall appearance of manufactured products.

In Australia there is a system for the registration of designs under the Designs Act 2003 (Cth). A registered design will protect a newly created appearance for an article or product from copying by competitors for up to 10 years.

Registration of a design gives the owner protection for the visual appearance of the product but not the feel of the product, what it is made from or how it works.

To be registrable, a design must be new and distinctive. A design is generally distinctive unless it is substantially similar in overall appearance to other designs already in the public domain. Under the Designs Act, infringement of a registered design occurs where someone uses a design that is substantially similar in overall impression to the registered design. In making this assessment, more attention is paid to the similarities between the designs rather than the differences between them.

Registration of a design initially protects the design for 5 years, and the registration can be renewed for a further 5 years.

Confidential Information

“Confidentiality” and “trade secrets” are both types of intellectual property and strategies for protecting intellectual property. Confidential information may be anything from a concept or business idea to a formula or plan to make something. As this type of confidential information may be difficult to protect under laws relating to other forms of intellectual property such as trade marks or copyright, a Confidentiality Deed may be an appropriate form of protection for the confidential information.

A Confidentiality Deed is an agreement between parties to keep specified information confidential. Parties may be companies or individuals or a combination of both. One party may disclose confidential information to another, or both parties may exchange information. Common situations in which Confidentiality Deeds are used are:

• negotiations for the sale of business, where a seller of the business may allow a potential purchaser to inspect accounts and other financial information relating to the business, for the purposes of deciding whether to purchase the business;
• joint venture or partnership, where parties considering an alliance to benefit both of them may each reveal business information or secrets to the other for the purpose of deciding whether to enter into a business relationship together, or having done so, to share information for the benefit of each;
• a new business idea or concept, where a person with a business idea or concept approaches another as a potential partner, or for finance, for technical support or otherwise;
• as part of an employment contract to prevent an employee from making unauthorised use of the employer’s information during the period of employment and after employment ceases.

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