Intellectual Property (IP) is a new idea or invention that is commercially (or artistically) useful.
IP is an important intangible asset that can complement the tangible assets of a business.
It exists in various forms: a brand, new innovative product or process, design or piece of software.
IP rights protect a business’s competitive point of difference and are important when establishing a product or service in the market. IP protection, as part of overall business model, can often be the difference between success and failure.
IP rights:
- reduce business risks by deterring competitors from using the protected IP
- provide ownership over a business’s intangible assets and ability to exploit them to maximum potential
- turn intangible assets into exclusive property rights
- provide a valuable bargaining tool that can be sold for financial gain
- help the owner compete on the basis of the reputation associated with a product rather than on price alone
- give the owner the right to determine who can use the IP and how it can be used
- provide the owner with a number of options in the event that the owner cannot afford to manufacture the IP, or position themselves competitively in all potential markets.
The most common way of commercialising IP is through licences.
Investing in IP rights
If the key intangible resources of a business, such as innovative ideas, creative designs and powerful brands of the SME are not legally protected by IP rights, they may be freely and legally used by others without limitation. This has the potential to reduce a business’s competitive advantage.
Investing in an IP portfolio can also expand a business’s asset base and increase future productivity. Markets will value a business on the basis of its assets, its current business operations, and expectations of future profits, which may be considerably affected by the acquisition of key IP. Investment in developing a good IP portfolio is, therefore, much more than a defensive act against potential competitors.
Documenting the evolvement of a business’s IP over time is important and you should consider developing measurement and documentation approaches to:
- understand how to protect the business and the costs involved
- evaluate the market value of the IP
- embrace valuation methodologies, educational processes and accounting theory
- undertake regular IP audits.
Types of IP
IP rights exist in many forms and each type provides different competitive advantages:
- trade mark: identifies the particular goods or services distinguishing the SME’s business from other traders
- patent: protects how an invention works or functions
- design registration: protects the visual appearance of a product
- plant breeder’s right: protects new plant varieties
- copyright: automatic right that protects an SME’s original expression of ideas, but not the ideas themselves
- trade secrets: a proprietary knowledge that can be protected through confidentiality agreements
More information on the types of IP is available on IP Australia’s website.
Link here – https://www.ipaustralia.gov.au/understanding-ip/getting-started-ip/types-of-ip
Trade marks
A trade mark is the most common IP right that an SME should consider and can help distinguish goods and services from those of competitors. It’s usually the words and/or image of their logo, but could also be a letter, number, a shape, or even a smell that distinguishes their business. A trade mark is your corporate identity, the way you show customers who you are and can be a valuable marketing tool. The more successful a business becomes, the more valuable the trade mark is.
When you start a business, you need to register a business name with the Australian Securities and Investments Commission (ASIC) if you plan to operate under a name other than your own. A common misconception is that by registering a business, company or domain name, a customer is protecting their IP. They are not. Only a trade mark can provide the exclusive and legal rights to use that name.
A trade mark is granted in relation to the goods and services chosen. Goods and services are divided in 45 categories called trade mark classes. Classes 1 to 34 are for goods and 35 to 45 for services. Most SMEs may only need to select one or two classes but this is dependent on the scale of operation. There is no limit to the number selected, however, you will pay for each class. They can also be open to non-use action if the trade mark is not used for those classes.
To help save money and decide what goods or services to list, consider:
- what you are known for by your customers?
- what products or services does the business provide?
If you wish to consider registering a trade mark for your business or other IP rights, we recommend you seek expert advice from a specialist IP attorney or contact TM Headstart, an online service offered by IP Australia that assesses a trade mark application and helps identify problems before you file publicly.
