Developing Intellectual Property - Basic Considerations

Whether they know it or not, every business owns Intellectual Property (IP) in one form or another. IP can be a critical part of a company's assets, providing it with ability to prevent competition and rapidly scale the business by licensing. Indeed, many businesses would not exist if they had not taken proper steps to identify, protect and exploit their IP.

This article sets out to cover a brief overview of some of the main considerations when developing intellectual property and taking it to market, from the perspective of a UK patent attorney.

What is IP?

IP is an umbrella term for a variety of specific different rights, generally divided into unregistered and registered rights.

Unregistered rights arise automatically and generally only need to be considered (other than for ownership purposes) if a competitor copies something. Such rights include copyright, and UK and Community design rights, each of can be used to prevent third parties copying creative works.

Registered rights require action to be taken to acquire them, normally by filing an application for protection with the relevant authorities. Such rights include patent, trademark and registered design rights, each of which provide the owner with an exclusive right to exploit the intellectual property they cover.

In the UK and Europe patents protect technical solutions to technical problems. In other territories patents can cover other subject matter; for example, in the US card games are patentable.

For UK patent protection to be granted an invention must be 'novel' and 'inventive'. Novel means that exactly the same thing hasn't been non-confidentially disclosed before. Inventive means that it isn't an obvious modification of the most similar things.

Developing IP

If your business is developing creative works or innovations in any form you need to ensure that your business owns all of the IP at the end of that development process. This normally isn't an issue if you are contractually employing staff to do the development work because employers own IP rights created by employees in the course of their employment. However, care needs to be taken with any work a business commissions from a third party.

If your business commissions a third party to create something on your behalf, you would expect to own all rights to whatever is finally developed? Unfortunately that is not always the case.

For example, you commission a design agency to produce a company logo for your business. The logo is automatically be protected by copyright and unregistered Community design rights. The legal owner of those rights is the person or business that you commissioned to create the logo.

Your business may, under UK law, be the 'beneficial owner in equity' of the IP rights, but this split ownership can lead to serious problems and disputes.

Worse still, let's suppose you commission the manufacture of a prototype and in that process the commissioned party has to overcome a problem to make the prototype work, and in the process makes an invention protectable under patent law. They own that invention and your business cannot be validly granted a patent for it without the commissioned party assigning rights to your business. What if it's such a good invention that they don't want to assign it?

Thus, in the absence of an appropriate contract to the contrary the person or company a business commissions may, at the end of the development process, own some or all of the IP rights in the final product or process. It is therefore essential with most commissioned work to have an appropriate contract in place at the outset.

Along with other terms the contract should state that once the work has been done the commissioned party will assign all IP rights that have been developed to the commissioning party.

Commissioned works are frequently the subject of litigation, so ensure your business is fully protected.

Confidentiality is another major consideration. Although employees and commissioned third parties have an implicit duty of confidence, it doesn't harm to have them also sign a confidentiality agreement, as this provides another course of action should a breach of confidence occur; i.e. breach of contract. Bear in mind that if the worst happens, and an invention is non-confidentially disclosed through a breach of confidence, there is a six month grace period in the UK and Europe for filing a patent application for valid protection.

Turning to generally less important (but sometimes critical!) points, keeping detailed, dated information of what you have developed is good practice if the US might be an important market. This is because the US patent system works on a 'first to invent' system rather than a 'first to file' system as in the UK and Europe.

It's also worth noting that any technological R&D can be assisted by conducting patent searches. It has been estimated that around a third of money spent on R&D in the UK is wasted as all the information is available in published patent applications. Whether that percentage is true or not, there is a huge amount of information freely available in published patent applications, most of which can be accessed through the espacenet website: http://gb.espacenet.com

Watching published patent applications also helps you keep an eye on what your competitors are doing.

Identifying IP

Before any application for protection can be filed a business must first identify whether or not they have anything to protect. This may sound obvious, but many businesses, even large ones, fail to fully address the matter of identifying of IP.

Such an identification process should be ongoing, or at least periodic. Many large businesses have established methods for gathering information on what their employees are doing, even offering financial incentives to submit information on possible inventions and developments made in the course of their employment. This information is reviewed and sifted and those inventions that might be commercially valuable are put forward for protection.

Evidently smaller companies often do not require such measures, but the possibility that you might be developing IP or may have recently done so should always be borne in mind.

The main question that needs to be asked by any business is 'do we have something new that provides an advantage?'

Because an invention needs to be novel to be patentable the identification process needs to be done at the right time. It is often disheartening for us (as patent attorneys) when someone asks if they can protect their marvellous new product as 'it's selling really well'. Unfortunately it's then too late to get valid UK patent protection as the invention isn't novel - they have non-confidentially disclosed it.

It should be noted that in such circumstances patent protection might be available in those countries that have a 'grace period' for filing a patent application (e.g. the US, which has a 12 month grace period from the first non-confidential disclosure).

So if a business finds they have something new that provides an advantage, and might be commercially valuable what should they do?

In short, consult a patent attorney. This may sound self-serving, but the law is complex and there are many misconceptions about what can and can't be protected by a patent. For example, there is a general misconception that software is not patentable. In fact it can be patented in the UK and Europe if it provides a 'technical effect', and it can be patented per se in the US.

All patent attorneys should provide a free half-hour consultation and will be able to advise you on whether or not you stand a chance of obtaining protection.

Protecting Patentable IP

If you do choose to pursue patent protection timing can be critical. There are conflicting imperatives between filing as soon as possible and delaying filing. For example:

In general an invention needs to be as fully developed to file a patent application. That's not to say that you need a working prototype, but an application for protection must be able to describe one way of working the invention such that someone reading the application can exploit the invention without exercising any inventive effort.

However, even if an invention is fully developed, filing a patent application sets the clock ticking on a number of deadlines. Thus, if the funds will not available be to meet the costs that will be incurred at those deadlines it may be better to delay filing.

On the other hand, with every passing day more and more information is published. The sooner you file the more chance you have of obtaining patent protection. This is because if something is published that means your invention is not 'novel' or 'inventive' then you lose the chance of obtaining patent protection.

Even considering just these three factors (there are others) it can be seen that filing strategy needs to be considered on a case-by-case basis.

Summary

Developing anything in which intellectual property subsists, and taking it to market, involves many IP considerations and any business is well advised to seek professional legal advice to support them throughout the whole process and to ensure that their rights are safeguarded.

© London IP, September 2011. All rights reserved.