Intellectual Property Q & A

Every month Insider invites readers of the Insider Daily newsletter to submit their questions about a range of business topics to top professionals from the North West business community.

This month Mark Shipley, managing director of Shipley Solicitors, answers your questions on intellectual property (IP).

All answers are for general guidance only. Each case must be handled on individual facts.

Q: I am looking to sell my software business and want to make sure I’ve got my IP in order to ensure I get the best value for the business. We’ve been developing a lot of new products recently and it’s hard to keep track. What’s the minimum protection I need in place to ensure the buyer is satisfied?

A: "IP protection of software has been a hot topic in recent months; many questions having been raised as to the patentability of software programs. You may find that after discussions with an IP lawyer your software is not patentable. Protection shouldn’t stop at patents.

"Copyright can exist in software; both the code behind the program, and images and artwork which may be used as the ‘front end’. Copyright arises automatically on creation, provided that it is original.

"The first point I as a buyer would look at is ‘who owns the IP?’. If external coders have been used in a freelance, consultant capacity as opposed to being an employee, the rights in the software may vest in the coder rather than your company.

"The first step would be to check any written agreements with these coders for whether any provisions are present dealing with the IP. If no express terms are present, a Copyright Assignment will need to be used to transfer the rights to the company.

"You should not just consider what the minimum protection is, but also what you can do to add value to the company. A buyer will want to see that the company has a firm grasp of what IP it has. Having a focused IP strategy would demonstrate this. Ask how you sell the software. Is it branded? Why not apply to register the name of the software as a trade mark?

"If a buyer can see a strategy set out and focused, they can see greater substance to what they may be buying."

Q: How do design rights differ from patents and trade marks? When do I need to consider securing design rights?

A: "Design rights are a too often overlooked IP right. They can exist in both unregistered and registered forms, though we would always urge you to register your designs due to the likely high costs involved in proving and defending unregistered rights.

"Design rights have often historically been regarded as applying to spare parts and fabric designs. The protection given is actually much larger.

"One way to look at the difference is: a trade mark protects your brand - a design right may protect either the aesthetic or functional aspect of the goods you sell under the brand - a patent may protect the technical and innovative workings within your goods. A registered design can, so long as that feature is viewable by the user in normal everyday use.

"A registered design does not apply to technical aspects or features which are solely dictated by the items function. If you are considering making an application for a registered design, you must make the application with 12 months of putting the design to market. This gives you an opportunity to ‘test’ the demand for your design.

"An interesting amalgamation of design rights and trade marks was the registration by Arsenal Football Club of its redesigned badge. This was in response to problems with bootleg merchandise sellers. Although protectable as a trade mark, having a design right as well added further enforceable rights regarding the use of the design. The different IP rights can, and do, cross over.

Q: I’ve heard that the UK Intellectual Property Office has launched two new patent databases on its website that could help businesses to lawfully exploit the ideas of others. What does this mean for my patents? Do I need to secure extra protection?

A: "The Gowers Review, published in 2006, made two recommendations regarding what information the Intellectual Property Office should  publish. The first was to provide information of all patents that an endorsed Licence of Right had been given to, and the second, to provide information of all UK patents that are no longer in force.

"These changes, however scary they may seem, don’t reduce your patents of protection they may have. In fact, these changes may present many new opportunities for you and your business. If you have many patents in your portfolio, you may find there are some that you just don’t get the chance to, or don’t want to, develop.

"If you were to endorse these patents with a Licence of Right, others may seek a licence, which must be granted, to use the patent. The licence terms may be negotiated for each licensee. Whereas this patent may have been sitting in your portfolio costing you in renewal fees, it may now be generating you revenue. By endorsing a Licence of Right you also gain the added bonus of only having to pay half the renewal fees, due on every fourth anniversary of its registration.

"You may be wary that others are waiting to exploit your patent as soon as its protection expires; especially with the new database flagging these patents up. Your rights that you had from being the patent owner are gone.

"However, although others may be rushing to use the now expired patent, you can have built up a reputation in the brand under which you sold your product during the patents lifetime. You will be a step ahead of these competitors. That said, the chances are you will be working on the next technological step to patent by then."

Q: I am expanding my business into continental Europe and have heard that it’s actually easier to secure my IP in European countries than it is in the UK. Is this the case and what’s the minimum I need to do to ensure I am protected?

"European law regarding IP is becoming more and more harmonised, meaning European countries are beginning to sing from the same hymn sheet when it comes to IP. Rather than seeing it as ‘easier’, I would suggest you see it as being more ‘accessible’.

"If you are considering trading into the European countries, perhaps via an online shop, you should be thinking of protecting your IP. A Community trade mark should be the minimum protection you should be looking for. Too often we have had people come to us under the impression that a UK trade mark protects their brand outside of the UK. Likewise for a registered design, a Community application could be made.

"To protect patents in other territories you can make use of the patent cooperation treaty (PTC) through the World Intellectual Property Organisation. This process is not as straight forward as for designs and trade marks and will require you to carefully consider exactly which territories you are planning on entering. It is far easier to apply through PTC than going to each individual EU territory."