How should you protect your IP?
Once your business has identified its IP you will need to decide if and how you are going to protect it.
A prudent approach to IP is to obtain patent protection for your inventions/designs and register any brands your business has. A less conservative approach is to rely on the protection offered by unregistered IP, such as copyright and unregistered trade marks.
Weighing the cost of IP protection against the potential value of the IP to your business will help you decide which approach to take.
Factors to consider are:
- Is your invention actually patentable? Is it sufficiently developed? Is it actually an invention or have you just “discovered” something that already exists (you will need to have a search conducted to check this out)?
- Can your business keep its invention secret?
- Can your invention be easily “invented around”? Can your competitors build on, break down or modify your product or process in a way that will not infringe your patent if you obtain one?
- If you operate in a fast-moving area of technology, will your invention be “yesterday’s news” by the time you actually get patent protection in place?
- Does your business have the resources to protect the patent if it is infringed (by taking legal action) and are your likely returns sufficient to justify the (not insignificant) patent costs?
- If you do decide to patent, will one patent be enough to cover a key aspect of the invention or will you need a number of patents to try to minimise competition?
- Does your business need patent applications to be filed (even if they are not eventually accepted) to give credibility to the invention and the possible commercialisation of it?
- If your business has created a new design, should you consider registering the design or will copyright protection be sufficient?
What is the benefit of registering your IP?
IP registration gives an exclusive legal right in the country where the IP is registered, which enables you to:
- prevent others from using your IP without your permission
- prevent others from imitating your product or technology
- sell or trade your IP right
- license your IP to another, generate royalties or licence fees (and potentially tax benefits), and create potential franchise opportunities
- create brand loyalty for your product or technology, backed by a trade mark.
Copyright
Copyright (commonly recognised by the symbol ©) gives the creator of an original work exclusive rights in that work, and controls how the work is exploited by others. Copyright is free and automatically protects the original work as soon as it is created. There is no registration system in New Zealand, which means no forms to fill in to protect your copyright. However, this isn’t always the case overseas.
New Zealand’s Copyright Act 1994 protects a wide range of original works, including art, literature drama, music, recordings and computer programmes.
In New Zealand, copyright protection lasts from the time the work is created until 50 years after the author of the work has died (although some exceptions apply depending on the nature of the work).
Copyright is generally owned by the person who creates the relevant work, but in New Zealand:
- employers own the copyright of work created by employees acting in the course of their employment; and
- a business that commissions a person to create certain works specified in the Copyright Act (including computer programs, drawings and diagrams), owns that copyright.
These general “rules” can be varied by agreement.
New Zealand has signed-up to several international agreements that may mean that your copyright is automatically protected overseas. An original work created in New Zealand is protected by the copyright laws of other member countries of the World Trade Organisation (and vice versa).
Marking any original works with the © symbol, the name of the copyright owner and the year the work was created, extends copyright (or the right to file for copyright registration in countries where this is required) to countries that are signatories to the Universal Copyright Convention. For instance, this marking could appear as: “Copyright Einstein Limited 2008” or “© Einstein Limited 2008”.
Not all countries are signatories to these international agreements. Check with a specialist legal adviser if you are unsure if your copyright is adequately protected in your target market.
Printed circuit layouts
If your business’s IP involves an original layout design for an integrated circuit board then it may be protected as a layout design under the Layout Designs Act 1994. This protection lasts for up to 15 years and, like copyright, no registration is required. The maker of the layout design will own it, unless:
- they are an employee acting under their terms of employment; or
- the layout design is commissioned by someone else.
Unregistered trademarks
A trademark is a symbol, mark, brand or logo used to identify or distinguish goods or services. A trademark can help your business to stand out against its competitors.
You do not need to register your trademark to protect it. You can mark your product with the ™ symbol to show that your business has an unregistered trademark. The main limitation of an unregistered trademark is that it can only be enforced against another person by going to court.
The two main grounds to claim a right in an unregistered trademark in New Zealand are under the common law tort of passing off (essentially where someone else “passes off” your trade mark as theirs), or a claim under the Fair Trading Act 1986. These actions can de difficult to prove and the court process can be long and costly.
Generally, registration in each of your target markets is your best option to protect your trademark. Registration gives an automatic right of action to prevent the use of a confusingly similar trademark; if you owned a registered trademark you would not need to prove your reputation or goodwill in the mark to enforce the action.
Registered trademarks
The best way to protect a trademark in New Zealand is to register it with the Intellectual Property Office of New Zealand (IPONZ) under the Trademarks Act 2002. Registration gives you the exclusive right to use your trademark in New Zealand to promote the goods and services covered by the registration. If a competitor attempts to use a similar trademark for similar goods or services they will be infringing your trademark.
Registered trademarks can include invented words, e.g. KODAK, XEROX and DULUX, logos, signatures, shapes, colours, smells, sounds and labels.
To qualify for registration a trademark must be so distinctive that consumers associate it with your business and not your competitor’s business. The trademark must not be the same as, or confusingly similar to, any other trademark. It also can’t simply describe a characteristic of the goods or services. For example “Bluff Oysters” is unlikely to be registered, as it only uses geographic location to describe the shellfish and is not distinctive.
Applying for a trademark
An application for registration of a trademark is filed with IPONZ. They examine whether the trademark meets the requirements for registration. If there are no objections to the registration or any objections are overcome, the application is accepted for registration and published.
The registration of a trademark can be opposed by third parties within three months of publication. At the completion of this process, the trademark will be registered. This provides protection for 10 years from the date of first application. The registration is renewable every 10 years on payment of the renewal fee.
When your trademark is registered you can use the ® symbol to alert third parties to your rights. If the trademark is not registered you should use the ™ symbol instead.
Always conduct a search before adopting a new trademark to ensure it meets the registration requirements and will not infringe the rights of other registered trademark owners. Your patent attorney or lawyer will be able to assist you with this.
You will generally need to file for trademark protection in each of your target markets. However:
- If you are filing within the European Union, you can file a “Community trademark application” which will (if granted) provide protection in all European Union member states. Sometimes you can make a “convention application” (under the Paris Convention). This gives “priority” to your trademark (over others who may apply for a similar trademark) from the date of the first application in New Zealand – provided you file within six months of the New Zealand application.
- The Trademarks (International Treaties and Enforcement) Amendment Bill 2008 is currently before Parliament. If it is passed into law it will enable you to file a Madrid Protocol application in New Zealand. This system enables trademark owners to apply for protection in many countries by filing a single trademark application with IPONZ. To be eligible to file a Madrid Protocol application you must carry on business in each overseas country which is a subject of the application.
Patents
A patent protects the IP developed while creating new technology and inventions. Patent protection gives the owner the right to make, use and sell the invention in the country where the patent is registered. You may need to file a patent application in each of your target markets.
Patent protection is not automatic. In New Zealand you must apply to IPONZ, which grants patents for inventions that meet the requirements of the Patents Act 1953. The invention must:
- be new (it must not have been used, displayed, published or known in New Zealand before the date of filing the patent application)
- be capable of industrial application (able to be made in some kind of industry)
- contain an inventive element (not be obvious).
You need to be very careful about disclosing your invention to others before a patent application has been filed, as you can’t patent an invention if it has already been used, displayed or published in New Zealand. Once the patent application is filed in New Zealand the invention can be publicly disclosed without fear of invalidating the patent.
Patent protection lasts for 20 years from the date that IPONZ receives the final application, provided all renewal fees are paid.
The application process for a patent can be complicated. Consult a patent attorney if you think your business may require patent protection.
The law on patents may soon be changing. The Patents Bill 2008 is currently before Parliament, and if passed into law it will replace the Patents Act 1953. The Bill is likely to make it more difficult for an invention to qualify for patent protection, and increase the fees for the grant of patent protection.
Design rights
Design rights are a form of IP that relate to the visual appearance of an article – its shape, pattern or configuration. Design rights are not often used because copyright also protects designs (although to a lesser extent than a registered design).
A design right registered under the Designs Act 1953 gives the owner the right to make, import, sell or hire an article covered by the registered design. Applications are filed with IPONZ who examine them to ensure they meet the requirements for registration. To qualify for registration the design must:
- apply to the shape, configuration or surface pattern or ornament of the article
- be applied to an article by an industrial process or means
- have eye appeal
- not be purely functional
- be new or original, meaning that it has not been used in New Zealand or described in any publication available in New Zealand prior to the date of application.
The full term of a design right registration is 15 years. A design right is registered initially for five years following the application date, and may be renewed for two subsequent five year periods.
To protect a design right overseas you should seek registration in each of the countries where you intend to apply the design. If you file for a design right within six months of your New Zealand application, you may be able to file a convention application to claim priority from the date you filed in New Zealand.
Plant variety rights
You can also apply to the Plant Variety Rights Office for IP rights in new varieties of plants. Plant variety rights can protect new plants, fruit and flowers (for example, a new variety of kiwifruit).
An owner of a plant variety right is granted the exclusive right to produce and sell the new variety. To qualify for a plant variety right the variety must be new, distinct, uniform and stable, and have an acceptable name. Plant variety rights last for up to 23 years depending on the type of plant.
Trade secrets and confidential information
Most good ideas need to be disclosed at some stage (for example, to consultants, employees or potential investors). It’s important to know how to keep your ideas and confidential information secure when you do need to disclose them.
The right to keep something secret or confidential is protected at law. Over the years, the courts have allowed owners of confidential information to sue others to prevent misuse of confidential information if:
- the relevant information was of a confidential nature
- the information was communicated in a way that introduced an obligation of confidence
- an unauthorised use or disclosure of that information was made or was about to be made to the detriment of the discloser.
Having the right to make a legal claim in the courts for breach of confidence may make a lengthy registration process, such as for getting a patent, seem unnecessary. However there are limitations to relying on this method of protection. An action for breach of confidence usually happens after your information has been disclosed to the public. By this stage there may be little use in taking an action in the courts. In any event, proving a breach of confidence in the courts may also be more costly and time consuming than registering your IP rights.
The court does not need to be your first resort to enforcing confidential information. An alternative approach is to prepare a confidentiality agreement which sets out the restrictions on how your confidential information can be used.
Making money out of your IP
IP is about more than just protecting your assets from your competitors. If exploited to its full potential, it can be a useful source of revenue for your business.
After your business has taken the necessary steps to identify and protect your IP, there is nothing to stop you using your IP to generate the maximum commercial advantage. There are many avenues to generate income using your IP. Common ways to commercialise your IP include licensing and developing your IP with third parties.
A licence allows your business to grant a third party (the “licensee”) the right to use your IP in accordance with terms agreed between you and the other party. Generally a licence will include a term that the licensee may use the IP but it will continue to be owned by the IP owner (“the licensor”).
Financial advantages for the licensor include receiving an upfront payment or ongoing royalty fees. Licensing may also help to increase recognition of your brand and capture greater market share.
The licence can be as broad or narrow as the parties agree, and typically includes the following terms:
- exclusivity – whether the licensor can grant a similar licence to that IP to another party
- revocability – whether the licence can be revoked, and if so, under what circumstances
- duration – whether the licence is for a limited term, or continues indefinitely
- royalties – whether the licensee will pay the licensor a royalty to use the IP
- transferability – whether the licensor can transfer the licence to others or sublicense it
- scope – whether the licence is worldwide, or specific to a particular geographic area
- purpose – what purpose the licence is granted for, i.e., to access, adapt, commercialise, exploit, use, modify, reproduce, backup and/or develop the IP.
If you collaborate with a third party you can both apply what you learn from using the product to further develop and improve it (potentially increasing the value and useability of your IP). A well drafted agreement is essential. It ensures that by sharing your IP you are not unintentionally reducing your own rights to use, develop and exploit it.
Seek advice
There are pros and cons to all types of IP protection. You should seek advice from a specialist legal advisor to fully understand which approach or combination of approaches is right for you and your business.
Find out more about the types of IP protections from the Intellectual Property Office of New Zealand.
Find out more about protecting your IP overseas from the World Intellectual Property Organisation.
This guide is provided subject to our terms of use.
Use of the information contained in this guide is at your own risk and we are not responsible for any adverse consequences arising out of such use. This is a complex area and we recommend that you seek legal advice before taking any related action. NZTE is not responsible for content we link to on external sites.
