Protecting Intellectual Property for Early-Stage Companies

For new and developing companies, the underlying intellectual property is often the most valuable asset they will have when seeking investment and raising capital. Potential investors will require evidence that any intellectual property is appropriately protected and held to the greatest extent possible by the business itself, rather than being held by various third parties in varying degrees of ownership. It is therefore crucial that when starting any new venture, the ownership of intellectual property must be considered at the earliest possible stage.

Copyright

Copyright protects original works of authorship such as and does not require any registration process, arising automatically upon the creation of literary works (including source code) and computer software once fixed in a tangible medium of expression. Copyright therefore does not protect ideas, rather it protects the tangible expression of these ideas. The copyright is owned by the author of the work, unless the work is created by an employee pursuant to a contract of employment and lasts for the author’s life plus an additional 70 years. It is therefore of particular importance for early-stage startups to take care when purchasing or using any source code from a third party or engaging a third party to design a website on the company’s behalf, as the third party will own the copyright unless the relevant contract provides otherwise.

The effect of holding copyright in a work gives the author both:

• Economic rights, preventing others from copying the work, making the work available to the public or making an adaptation of the work without the owner’s permission and enabling the creator to charge a fee for the reproduction of the work; and
• Moral rights, including the paternity right (the right to be identified as the author of the work); the integrity right (the right to prevent mutilation, distortion or other derogatory alteration of the work) and the right of false attribution (the right not to have a work falsely attributed to you). Moral rights may be waived, if done so in writing.

Trade Marks

A registered trade mark provides a guarantee to customers as to the origin of the services or goods being provided and their quality. Trade marks must have a distinctive character in order to be registerable and cannot be identical with or similar to another trade mark which protects identical or similar types of goods or services.

As holder of a registered trade mark, you will be entitled to statutory rights which protect your mark against any other party which uses a trade mark identical with or similar to your own. A trade mark can take the form of, for example:

• a word;
• a figurative mark, such as a logo;
• a combination of word and figurative elements;
• a shape;
• a sound or combination of sounds; or
• a hologram.

If your trade mark is not registered, any party who uses a mark identical with or similar to your own will be able to do so unless you can establish holding a ‘reputation’ in relation to the mark under the common law action of passing-off, which is difficult to establish and expensive to prove. Amongst other characteristics, in order to succeed in a passing off action you would be required to prove that this other party had made a ‘misrepresentation’ calculated to injure your business or goodwill.

Rights of ownership of a registered trade mark last for ten years and can be renewed indefinitely.

Patents

Early-stage companies involved in creating a new invention should consider applying to register a patent, which grants its owner a monopoly protection in the relevant invention for either a ten-year period or a twenty-year period.

Patents apply only to new inventions which have never been made available to the public in any way, anywhere in the world and which involve an inventive step i.e.  a step not obvious to a person skilled in that area. It is therefore critical that businesses seeking to patent an invention have never publicly disclosed the invention, otherwise the patent application will fail. In order to successfully supply to register a patent, the invention must also be capable of being made or used in some kind of industry.

Patents granted by the Intellectual Property Office of Ireland are valid only in Ireland and renewal fees must paid each year.

Industrial Designs

An industrial design is the outward appearance of a product or part of it, resulting from its lines, contours, colours, shape, texture, materials or ornamentation. Startups will often register designs for on-screen icons, GUIs and packaging. Registration of a design is often desirable as successful registration grants exclusive rights to apply the design to various products of certain specified classes and there is no need to prove that an infringer has copied the design – simply holding a registered design is all that is required to be shown to prevent infringement.

A design is eligible for protection in Ireland if no identical design has been previously made available to the public and a relevant consumer would find the design different from other existing designs. An industrial design must be primarily of an aesthetic nature rather than a technical nature, which can be protected separately by a patent. Registered design rights can be renewed every 5 years up to a maximum of 25 years.

Designs can also be protected across the EU as Unregistered Community Designs (which lasts for three years from the date the design was made public) or as Registered Community Designs (which last for 25 years). The World Intellectual Property Organisation also allows for designs to be registered on an international basis.

How we can help

If you are interested in discussing any of the information contained in this article further or you would like to keep up to date with the latest legal developments for early-stage and scaling companies, follow us on LinkedIn or contact Joe McVeigh, Partner in our Corporate Department, on jmcveigh@bhsm.ie / +353 1 440 8300.

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.