Connect with us

Intellectual Property

5 Steps To Protecting Your IP

Worried that someone might be able to wrest your intellectual property away from you? Here’s how you protect your IP.

Kyle Torrington

Published

on

Copyright

For most businesses, ownership of the rights to a brand name, slogans, designs, content, inventions and code bases are of utmost importance for the success and value of the business. These rights are collectively known as intellectual property rights.

Getting a business’ intellectual property protection wrong can be a very expensive mistake, in both the long and short run, and, whilst getting it right is not too difficult, it requires awareness of the best avenues available to protect one’s rights.

Intellectual property protection quite often requires a combination of carefully constructed agreements being put in place with both internal employees and external parties to protect and enforce such rights, in conjunction with the registration of rights where possible.

Related: The Role Of Intellectual Property In Your Business

How to avoid five common IP mistakes

Below are some of the common mistakes made in the treatment of intellectual property rights and how best to avoid them.

1. Ownership of intellectual property rights created by an independent consultant or sub-contractor

Generally, intellectual property rights created by a consultant or sub-contractor, are, by default, owned by the consultant or sub-contractor concerned and not by the company that contracted with the consultant or sub-contractor.

Solution

Included in the agreement with the consultant or sub-contractor should be a clause to the effect that all intellectual property rights created by the consultant or sub-contractor are automatically transferred and assigned to the company upon their creation. There should also be a provision to the effect that the consultant or sub-contractor is required to facilitate and assist in such transfer and assignment.

2. Ownership of intellectual property rights created by employees

The general rule in this regard is that intellectual property rights created by an employee are automatically owned by the employer. Difficulty can, however, arise in instances where it is disputed that such intellectual property rights were created in the course of the employee’s employment.

Should intellectual property rights be situated on, for example, an employee’s private resource, such as his or her own laptop, or be demonstrated to have been created outside of working hours, doubt is cast on whether the employer is entitled to own intellectual property rights arising from this.

Solution

The inclusion of a clause in an employee’s employment agreement where the employee acknowledges that all intellectual property rights created by the employee during the tenancy of such employment are deemed to belong to the company.

Related: How To Create Founding Documents

3. Moral rights of the author of copyrighted work

Another aspect often overlooked arises in a situation where a copyright is assigned to a third party in regard to, for example, a computer program, where the software was created by an employee of the company. Although the employer owns the copyright to the computer program, prior to it having been assigned to a third party, the author’s (employee’s) moral rights need to be taken into account. The employee may, in certain circumstances, prevent the third party from distorting, mutilating or modifying the computer program. 

Solution

An addition to the employee’s employment agreement of a clause in which the employee, as author, waives all moral rights in and to the copyrighted materials.

4. Who may apply for a patent?

The Patents Act 57 of 1978 only makes provision for the inventor, or another person who has been assigned a right from the inventor, to apply for a patent.

Solution

Should a company be dealing with a consultant or sub-contractor, a clause should be included in the consultancy agreement or sub-contract, requiring that the inventor of any patentable inventions consent to the transfer and assignment to the company of any patent for such inventions. In doing so, the agreement should specify, in as much detail as possible, the specifics of such inventions and identity of the inventors.

Related: The Basics Of Registering A New Company

5. Disclosing a patentable invention to the public

In terms of the Patents Act 57 of 1978, as soon as a patentable invention is disclosed by an employee, for example, to the public (whether orally, in writing, or by using such invention) the invention will no longer be deemed patentable.

The above is on account of the requirement of a patentable invention to be new or novel. Any non-confidential disclosure of an invention destroys the potential patentability of the invention.

Solution

Inserting a clause, in addition to the more standard confidentiality and non-disclosure clauses into an employee’s employment agreement, wherein the employee undertakes to regard all inventions of the company as confidential in nature and not to be disclosed.

These considerations are naturally not exhaustive, but should serve to raise awareness of the importance of the role of intellectual property assets in any business. The importance of consulting with a legal professional with specific expertise in IP cannot be overstated, since the failure to do so could have potentially disastrous implications for a business.

Kyle Torrington is the co-founder of Legal Legends, a company that aims to revolutionise the legal industry by being Africa’s first eCommerce website for quality legal services aimed specifically at start-ups and entrepreneurs

Intellectual Property

Why Protecting Your IP Might Be The Most Important Thing You Can Do

What’s the worst that can happen if you do not protect your company’s intellectual property? Worst case scenario — you can lose everything you’ve worked so hard to build.

Kyle Torrington

Published

on

intellectual-property

In the context of a cut-throat business world, the naivety of a first-time entrepreneur or SME owner can often lead to dire consequences for the entrepreneur’s business. If intellectual property is not adequately protected, ownership in, and to, it can be lost in its entirety, or it was never actually owned at all in certain circumstances. This can leave an entrepreneur with an empty shell of an entity, gutted of its most important innards, no longer able to operate efficiently, effectively, or at all.

This article explores some of the worst consequences of what may happen should a business not effectively protect their intellectual property.

1. Think you own the copyright to the logo, website or app you outsourced? Think again

If you are like most business owners out there with a tech idea, but no ability to bring the technological aspects to life because you are a non-technical founder, you may use the services of an outsourced software development agency. Watch out!

By default, works created from tasks like these are the subject of a copyright, such as the look and feel of a website, or the source code comprising it. In addition, aspects such as logo design, outsourced blog and content articles, as well as technical drawings are all the subject of a copyright which, if outsourced to an independent contractor, are, by default, owned by the independent contractor.

Related: Massive Alliance Offers Start-ups Advice On Safeguarding Intellectual Property

So what does the above mean? Well, in the case of you outsourcing the development of your new Uber for X concept, should you and your developer ever get into a spat, the developer can effectively hold you ransom as he owns the rights to ‘your’ software.

This will only change if you make your independent contractor sign a written Assignment of Copyright Agreement, which transfers the rights back to you.

Luckily, Legal Legends offer a free downloadable version of the Assignment of Copyright Agreement, which can be found here:

2. Have you been funded by a government programme? That could mean the government owns the right to your IP

Although not yet brought into law, should the Copyright Amendment Bill 2017 be enacted in its current form, you will not own the copyright to any of your works which are funded by government. These copyrighted works will be owned by government along with, by default, the Guptas, and a Copyright Assignment Agreement will not change this state of affairs. So, watch out government fundees!

3. What’s to stop another entity from using your business name to ride your coattails?

You probably assume that by reserving your company name and registering your company, you own the exclusive rights to the use of your company name. You are wrong!

By securing a company name, all you do is prevent another company from registering a confusingly similar company name to yours. This does not mean that a sole proprietor, partnership or other entity (other than a company) can’t utilise a similar name to yours, or that someone else out there who has been using a very similar name to yours for many years, can’t continue using it. On the contrary, if that person has registered the name as a trademark, they could potentially force you to change your company name.

So, what is the solution? Ensure that when you register your company, reserve both the company name and register the name as a trademark.

Related: The Role Of Intellectual Property In Your Business

4. Protect your invention from the dangers of the public domain

Let’s say you’ve invented a new kind of superconductive metal, or an incredible new propulsion mechanism that could get us to Mars at 99,9% the speed of light, you most likely will have a patentable invention on your hands.

Most businesses do not realise that as soon as a patentable invention is placed in the public domain before it has been registered as a patent, it voids any potential registration as a patent, and hence can be copied by anyone with a brain.

Solution? If you feel you have a patentable invention on your hands, speak to a patent attorney about the possibility of filing the patent before you go to market or make it available to the public.

5. Are your trade secrets at risk?

Although copyrights, trademarks and patents provide certain protective measures outside of any contracts, for all other aspects of intellectual property that cannot find protection in the above, such as trade secrets, you are not protected. This means that going into a meeting and disclosing your Uber for X concept to any person with a keen ear, could result in their copying your concept and using it for themselves.

A trade secret may exist where, for example, you are a master wheel builder of high performance cycling wheels fit for a peloton on the Tour de France. In this instance, your components for the wheels are sourced from suppliers all over the globe. Knowledge and access to these sources by others could result in them exploiting your suppliers and competing with you. Hence, this is your trade secret.

Entering into an agreement with whomever may have access to your trade secrets, binding them to confidentiality and not disclosing such trade secrets, and further binding them to not compete with you, will protect you from exploitation in the long term.

Continue Reading

Intellectual Property

What You Should Know About Copyrights For Your Business

Your business and how the proposed amendments to copyright laws will affect it.

Kyle Torrington

Published

on

copyrights-for-online-copy

For those of you who run your own business, whether you are aware of it or not, copyrights are a primary mechanism to protect your intellectual property. For example, whether you are writing a blog post, designing a logo, writing the source code of a computer programme, or creating a piece of music, all these works are subject to a copyright. A copyright does not need to be registered in South Africa, but arises automatically upon its creation, preventing others from copying the contents of what you’ve created.

Copyrights can provide a very useful means to ensure that others don’t unlawfully compete with you, and can also be licensed for royalties. With the plethora of technological developments of the past decade or more, copyright legislation is fundamentally in need of an update.

The 2017 Copyright Amendment Bill recently published by the Department of Trade and Industry for comment, has been widely criticised.

Related: How to Register a Copyright

We’ve set out some of the proposed amendments that we believe to be unfair, lacking common logic, or that may affect your business if the 2017 bill becomes law.

Copyrights funded by the State

One of the most contentious introductions is the advent of state-funded copyrights. The bill stipulates that the state will own all copyrights it has funded, but does not define what it terms as ‘funded’. Accordingly, this may include grants, subsidies, loans, tax incentives, equity investments and the like.

Further, the bill does not set any minimum threshold to constitute state funded. This could mean that if the state provided 0,5% of the capital required to develop software, or certain educational course content, it would own copyrights flowing from the works.

The state is not permitted, by way of contract, to transfer back the copyright to the person who obtained the funding from the state. Contracts are the primary mechanism by which copyrights are transferred under the current Act.

With the Department of Trade and Industry introducing some great funding initiatives for start-ups, the risk is obvious in that any start-up that is part funded by the Department of Trade and Industry would not own the copyright to anything created as a result of that funding.

Should private investors be looking to provide a company with any later stage funding, a simple due diligence would reveal that the company simply does not own any of its ‘own’ copyrights. This would discourage most investors, which could curtail private funding for businesses that were initially state funded. These businesses are primarily owned and run by previously disadvantaged individuals, and hence, may have the effect of further curtailing transformation in our fragile economy.

The 25-year assignment

In a previous article, we touched on the fact that independent contractors tend to own the copyright to works they create on behalf of businesses (think outsourced web development and logo creation). Under the current law, independent contractors may permanently transfer a copyright, by written agreement, back to the company that instructed them to perform the work.

The 2017 bill proposes a 25-year limit on this transfer. Unless you are the independent contractor creating copyrighted works on behalf of others, this provision is severely prejudicial to most businesses that tend to outsource a number of their works. An independent contractor may assign the copyright back to the business that outsourced the work, however, the copyright will automatically revert to the independent contractor after 25 years.

Related: 5 Common Legal Mistakes Start-Ups Make – And How To Avoid Them

If you’re looking to sell your business, or raise funding, for example, the value of your business is inextricably linked to the intellectual property owned by it, such as copyrights, trademarks, and the like. With your business lacking the ability to retain a copyright that was assigned to it beyond 25 years, this could detrimentally impact the valuation of your business.

Unenforceable contractual provisions

As mentioned above, copyright assignment agreements are currently used to ensure that copyrights have been validly assigned from an independent contractor — for example, back to the company that outsourced the work. The 2017 bill provides that any contract that purports to take away a right, prevent or restrict any act in terms of the bill will be invalid and unenforceable. This means that, for example, a copyright assignment agreement, as mentioned above, would be void.

While the bill is not law yet, there could be far-reaching and detrimental impacts to your business should it become law. One can only hope, for the sake of our entrepreneurial community, that the concerns we raise are heeded, and the bill amended.

Future rewards

If proposed copywrite amendments are passed, it could severely impact the valuation of businesses going forward. Have a look at Legal Legend’s free copywrite assessment

Continue Reading

Intellectual Property

What’s Setting You Apart From Your Competitors?

Tick these boxes and you’ll attract funding attention. An investor is interested in two things — what are the barriers to entry in your industry, and can you keep potential competitors out of your market?

Published

on

business-competitors

“There are only two ways to establish competitive advantage: Do things better than others or do them differently.” — Karl Albrecht, German entrepreneur and 2nd richest man in Germany.

Getting a start-up company on its feet can be a very daunting task. There might be many big dogs out there that potentially threaten a start-up business. Competition is healthy, but it could also be costly and catastrophic for a fledgling business.

Who are you?

Before a start-up company enters the marketplace, guns blazing, it’s important for the company to first know itself. By knowing your company it creates surety and confidence in the team, which in turn directly reflects on potential investors.

Start-ups should therefore consider what makes them unique in terms of their products and/or services, who the target market is, who the competitors are, what their strategy is and whether they have a suitable team to meet the company’s requirements.

Related: Massive Alliance Offers Start-ups Advice On Safeguarding Intellectual Property

One mechanism by which a company can gain a massive head start from their competition and solidify their position in the market is through the strategic use of intellectual property. Intellectual property provides a mechanism by which exclusive rights can be obtained to specific goods or services that the start-up has developed.

Should your company be in the business of exploiting niches in the industry, intellectual property will enable you to solidify the unique value proposition you provide through your services or goods offering.

Defensible differentiators

A start-up that creates a product or service that is not easy to replicate, obtains absolute ownership over how and when that product or service is replicated (through the strategic use of intellectual property) and creates a long-standing network that leads to a sustainable competitive advantage.

A start-up should make use of these legal tools that are available and build their own ‘Great Wall of China’ by being defensible. This automatically turns the competitors into inferiors.

Another aspect of perhaps equal importance is a company’s reputation. A start-up’s reputation lies in its product and/or service. If a company produces or delivers a poor or disappointing product or service, this mirrors the company itself and detrimentally affects its reputation. Reputation is everything, it’s invaluable and ever-lasting.

Related: The Role Of Intellectual Property In Your Business

Maintain your reputation

In order to improve an undesirable reputation, the focus should be on strategic planning. A successful start-up has a strategy in place that includes a detailed business plan and model. An eager, ambitious and fruitful strategic plan is also a favourable indication to potential investors.

By keeping up with the competitors and maintaining a desirable reputation, a start-up has already laid down its roots and can only grow upward.

It’s important to identify the target market as it is beneficial to obtain feedback from clients and customers in order to establish your reputation and status, and build on it. 

Know your competition

Further, and most importantly, it’s paramount to know your competitors. By knowing your competitors you learn from their weaknesses and build and improve on their strengths. Investors can observe a start-up’s comparativeness by considering whether it’s ‘a step ahead’ and whether it keeps up with, and creates, trends.

A start-up may identify and better their views on their target market and competitors by placing themselves in the shoes of a customer or client. More specifically, by considering and evaluating the positive and negative aspects and experiences the customer will experience when engaging with the start-up, and acting on insights gained.

An investor is likely to have a similar mindset to a potential customer or client and can provide a start-up with a differentiation factor that sets it apart from others in the industry.

Related: 5 Steps To Protecting Your IP

The future is yours

It’s also important to keep in mind that a start-up is not generally only novel but it’s young and formless, a mere piece of clay that may be formed into anything. Start-ups should use these strengths as advantages in developing an outstandingly unique and unforgettable business.

Additionally, start-ups do not necessarily have the overheads that many competitors might have. A start-up can therefore provide products and deliver services more flexibly, which is a magnet for customers.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending