INTELLECTUAL PROPERTY 101: WHAT EVERY BUSINESS SHOULD KNOW
Intellectual property (IP) often comprises a business’s most important assets. It covers a range of different rights including trade marks, patents, copyright, registered designs and plant breeder’s rights.
Each type of IP protects a business in a different way, depending on the products, services, designs, inventions or knowledge it contains. It’s essential to understand how each type of intellectual property works so you can make sure you protect the aspects of your business that make it unique and also avoid violating the IP rights of others.
What is IP?
IP may be described as property rights that exist over the practical application of the creations of your mind. IP can be an invention, a brand, an original work of art for example. IP rights offer exclusive legal rights over these assets. They can be bought, sold or licensed.
There are many different types of IP, but they fall into two main categories: registrable and non-registrable. In general, you need to pay fees to register IP rights such as trade marks, patents, designs and plant breeder’s rights, while there are generally no fees for non-registrable IP rights such as copyright. IP Australia is the Commonwealth government agency that administers registrable IP rights for patents, trade marks, designs and plant breeder’s rights.
As Patricia Kelly, IP Australia’s Director General notes, the proportion of company values comprised of IP has been steadily growing, making the ability to register and protect intellectual property is of growing importance to businesses. ‘Registering a trade mark or patent, or any of the other forms of registrable intellectual property available to Australian businesses, can protect and underpin company value. It ensures the opportunity for those who have developed intellectual property to earn a return from it, without the risk of another party freely using the IP and unfairly profiting from it,’ says Kelly.
‘We invite Australian small businesses who are thinking about their IP options to explore this website. It’s the complete guide for registrable intellectual property in Australia, full of case studies, publications and many tools you can use to find out more about your IP rights and obligations. We recommend you check this valuable resource thoroughly. If you’re exploring whether to seek professional advice, it’s an idea to review our website beforehand to get a good understanding of the IP process so you can approach potential advisers with fully informed questions,’ she says.
Why is IP so important?
IP rights encourage and reward innovation. They provide a competitive advantage and can be an important asset on your balance sheet. They also promote wider access to innovations and advance further research and development by others.
IP RIGHTS ENCOURAGE AND REWARD INNOVATION
According to Victor Ng, registered trade marks attorney and director of boutique intellectual property law firm Markwell, intellectual property is what gives a business its competitive advantage.
‘It’s really important to understand IP isn’t an idea or a concept; it has to take some form, such as an invention or a logo. You have to be able to see it, hear it or touch it. You can’t claim to have a monopoly right over an idea. But once an idea is tangible you can protect it,’ he says.
IP laws reduce the chance of your products and/or services being replicated and passed off as those of a rival trader — they can help protect your financial stability and open up new opportunities.
Different types of registrable IP
One of the main ways to protect an invention is with a patent. A patent is a right granted for any device, substance, method or process that is new, inventive and useful. IP Australia examines patent applications from Australian and international applicants who want to protect their invention in Australia.
A patent is legally enforceable. It gives you the exclusive right to commercially exploit your invention for the life of the patent. In exchange, you are required to disclose to the public how your invention works. You do this by filing a patent application that IP Australia will publish. You can apply for a patent online with IP Australia using eServices.
There is no such thing as an international patent. If you want to obtain patent protection in another country, you need to either file an application directly with that country’s patent office or file a Patent Cooperation Treaty (PCT) application with IP Australia. Visit patents to find out more about the application process.
Applying for a patent can be a lengthy process so you should include this as part of your business plan. There are also a range of costs involved in making an application (these are subject to change - visit time and costs to find out more). You will be granted a patent if your patent application meets all the legislative requirements.
A trade mark is the identity of your business. It is used to distinguish the goods and services of one trader from those of another and can be a letter, number, word, phrase, sound, smell, shape, logo, picture, aspect of packaging or a combination of these.
If you are thinking about a new product or service and you want to establish an image for it, you should consider a distinctive trade mark. The first step is to find out if anyone else has registered your chosen name, logo etc by searching ATMOSS - IP Australia’s trade mark database.
Once you decide to register a trade mark, you can use the online system TM Headstart to assess the registrability of your trade mark before making a full application. The system has a fast turnaround time and is confidential and cost effective.
‘You only have true IP rights in your name or logo once you have registered your trade mark. If you use an unregistered trade mark, you can’t rely on a trade mark infringement claim to protect it,’ says Ben Hamilton, a partner with law firm Hall & Wilcox.
Instead, if someone uses a similar trade mark to yours, and your trade mark is unregistered, you may be able to rely on a common law passing off action or an action against misleading or deceptive conduct under the Australian Consumer Law or similar state fair trading laws.
ONCE AN IDEA IS TANGIBLE YOU CAN PROTECT IT
‘But if you have registered a trade mark, you own it and you are entitled to its exclusive use. So your starting point is much stronger than for an unregistered trade mark,’ Hamilton says.
It’s also essential to register your trade mark if your business has plans to expand globally. Just like patents, there is not one international filing system, however, the Madrid Protocol allows you to file with IP Australia and request international registration with member countries. If you plan to expand globally, you should seek to register your trade mark internationally from the beginning.
DesignsRegistered designs protect the form and visual appearance of a product such as a shape, pattern or configuration. (This is different to a patent which protects the mechanics of how a product works.) Examples of registered designs are Speedo’s Fastskin suit, the portable cooler and the shape of the Holden Monaro.
YOU MIGHT NEED MORE THAN ONE TYPE OF IP RIGHT
A registered design prevents other businesses from copying a product. Design rights allow businesses to generate a return from their product, without the risk other businesses will make the same product and capture market share with it. As the registered owner of a design right you have exclusive rights to use and licence use of the design and you can take legal action against anyone who infringes your right. Find out more about design rights.
Plant breeder’s rights
Plant breeders can take advantage of the protection offered by Australia’s plant breeder’s rights legislation. Known as PBRs, plant breeder’s rights give you exclusive rights to commercially use and sell your new plant variety. PBRs are used to protect new varieties of plants that are distinct, uniform and stable. If you are developing a new plant variety, consider a PBR as a key part of your overall business strategy. Applying for a PBR is straightforward but can take some time due to the growing tests which may be involved. Find out more about PBR.
Different types of non-registrable IP
Copyright protects works such as written material, artistic works, music and other works of authorship. As the name suggests, copyright gives you the right to prevent copying of the work or a substantial part of the work. In Australia, there is no system of copyright registration. The right arises as soon as the material is created. But copyright doesn’t protect an idea or an underlying concept, just the expression of the idea. For instance, with software, copyright protects the coding, but not the functionality. The Commonwealth Attorney-General’s Department is responsible for Australian copyright and legislation.
The Australian Copyright Council also has many detailed fact sheets about copyright issues available from copyright.org.au.
The Council is an independent non-government and not-for-profit organisation which represents the interests of many copyright owners. There are several other forms of IP that can’t be registered, such as trade secrets and circuit layout rights.
- A trade secret is information used by a company to make its products or services, with this information being known only to the company. This can be useful where a product is difficult to reverse engineer. An example is the secret recipe for Coca Cola.
- Circuit layout rights give the holder ownership of the layout designs or plans for the electrical component in an integrated circuit. The Commonwealth Attorney-General’s Department is responsible for the circuit layouts legislation.
Putting it all together
‘You’ll often find there’s an overlap between the different forms of intellectual property,’ says Hamilton. ‘For instance, a business might have a patented invention which is exploited in association with a trade mark. Or part of an invention might be patented and other parts might remain as trade secrets,’ Hamilton adds.
An example of a product for which a number of IP rights is registered is the Sand Wedge. It’s a backpack, beach bag, beach seat and sun lounge in one. Inventor Katherine Drayton has a patent and registered design for the product, as well as a trade mark for the Sand Wedge logo. This has given Drayton and the Sand Wedge comprehensive protection for the versatile beach seat.
Now you know a bit more about the basics of intellectual property rights, explore our website to find out more about how you search for and register your IP in Australia.
WHAT’S IN A NAME?
The difference between a business name, company name, domain name and a trade mark is often misunderstood. But it’s important to be clear about the differences because they’re not the same and will protect your business in different ways.
Registering a business, company or domain name does not give you any exclusive rights for your goods and services. Only a trade mark can give you that kind of protection.
To make sure you’re covered here’s a quick overview:
Business Name: A business name, also known as a trading name, is the name under which your business operates and is connected to your Australian Business Number (ABN). It helps your customers find, identify and connect with your business.
Company Name: One of the benefits to registering as a company is being able to register a company name. A company name is commonly identified with a Pty Ltd. If you want to trade using a name other than your registered company name, you should register that trading name as a business name.
Domain Name: A domain name is your street address on the internet. It’s the way people find your business online. Domain names are registered on a first come first served basis, however, if a domain name is using a trade-marked name, the owner of the trade mark can take certain actions to recover the domain name.
Trade Marks: These give their owners exclusive legal rights to use the trade mark throughout Australia. Unlike a business, company or domain name, a registered trade mark lets you take action against other businesses using names that are the same or misleadingly similar to your trade mark.
It’s important to remember that registering a business, company or domain name, does not automatically give you the right to use that name as a trade mark.
ONLY A TRADE MARK CAN GIVE YOU THAT KIND OF PROTECTION
Likewise, the fact that you have been able to register a business, domain or company name does not mean that you are not infringing on someone else’s trade mark.
To find out more about registering your business, company or domain names, visit business.gov.au or talk to a business advisor and to learn more about the importance of trade marks, visit the trade mark section of our website.
STRATEGIC IP: VALUING YOUR BUSINESS
Protecting your business’s intellectual property is an important part of realising your strategic vision. Without proper protection, the business risks competitors copying and profiting from its IP.
Your IP is an important asset and commercial tool. Here, we look at how to protect and value it and the benefits of doing so.
Value your IP by conducting an IP audit
Just like doing your annual tax return or marketing plan, each year it’s a good idea to do an IP audit. Most businesses have potential or actual IP embedded within them. But the type of IP the business has depends on the nature of the business. When you do your IP audit, you will need to tailor it to the unique nature of the IP the business has.
Any audit starts with investigating the IP held within a business. The first step, says Victor Ng, registered trade marks attorney and director of boutique intellectual property law firm Markwell, is to understand what IP is and how it can be protected. It’s worth thinking about involving an IP expert in your audit.
‘An IP audit is a close examination of your business, what it does and how it derives a competitive advantage,’ says Ng. ‘Then you need to look at the IP involved in those things and the best way to protect this,’ he adds.
UNDERSTAND YOUR IP - CONDUCT AN AUDIT
An audit should identify any unregistered trade marks that should potentially be registered in the future.
A good audit will be strategic and identify what rights are likely to be of value, with the purpose of protecting the rights with the highest value.
To help you get started use the free, online Intellectual Property Explorer to help you understand the aspects of your business that could be protected. The tool was developed by the Asia Pacific Economic Co-operation (APEC) in partnership with IP Australia and other intellectual property offices.
Make sure IP is in your business plan
It’s essential your business plan discusses how IP in your business will be protected. This is because your IP can be what sets you apart from your competitors and can help to generate income and brand recognition.
‘Usually protection will take the form of the standard mechanisms such as trade marks and patents. A business plan is all about setting out what makes the business unique and the earlier you think about how you will protect that uniqueness, the better,’ says Ng.
There’s a lot to think about when it comes to properly protecting the IP in your enterprise. But gaining an understanding of the basics of IP, and thinking about which assets in your business need protecting, is a great place to start. Take a look at our IP basics for business video for more information.
There are many avenues you can pursue to increase your knowledge of how the IP protection system in Australia works, for instance seeking help from IP experts and also accessing the resources IP Australia offers. It’s worth making sure you investigate your options to ensure your unique assets are protected.
Benefits of protecting your IP
Protecting your intellectual property centres on maintaining your competitive advantage. ‘It’s about trying to insulate that advantage from your competitors and working out how your IP can add value to your business. Because IP is considered to be an asset of your business, if you protect it, the value of your business will also increase,’ says Ng.
INVESTORS WILL LOOK FOR REGISTERED IP
Patent attorney Ashley Newland from Calibre8 reminds business owners that you can sell or license your IP and that getting a granted patent means you can stop people from copying your product, which is important for small companies.
‘Being able to say you have a patent pending can help keep competitors away and gives you time to build your brand and recognition of your IP. If you get to a stage where you’re looking for investors, having registered IP is something they will look at,’ he says.
Inventor of the Sand Wedge beach chair, Kathrine Drayton, was able to use the time while her patent was pending to continue her market research and to further develop the design of the product, eventually applying for both a trade mark and design right as well.
Developing an internal IP policy
When it comes to developing an IP policy for your business, Ng says there’s no ‘one size fits all’ approach that can be taken. ‘The key thing is making sure your employees are IP-aware. They might not be across IP law, but it’s important to make sure they understand the value of the IP held in the business. They need to appreciate that maintaining IP means making sure you give it the right attention. It also means making sure they understand the consequences of actions such as copying information from the internet and using it in the business without paying attention to the consequences of doing this if they are breaching another business’s IP.’
He says in some instances, it’s essential to develop formal policies about how IP in the business must be protected, communicate this to staff and give them the appropriate training. But for other organisations, the approach to IP can be less formal and more about ensuring staff are IP-aware.
Newland says all businesses should have a policy about protecting trade secrets in the business. ‘It’s an idea to have something in employment contracts that indicates the company has trade secrets and employees must protect that information.’
IP and employee contracts
An important question many small businesses ask is how IP works when an employee innovates or creates IP on behalf of a business. As Ben Hamilton, a partner with law firm Hall & Wilcox explains, if a business owns a registered trade mark and an employee leaves, he or she cannot set up a competing business using the same trade mark.
‘In general, if an employee creates an invention during the course of his or her employment, and the business patents it, even if the employee leaves the firm, the patent remains with the business provided they have a clear employee contract in place.’ he says.
With copyright, your audit should ascertain whether original works created by employees or contractors are in fact owned by the business. Where employees create original works as part of their job, copyright in those works will usually belong to their employer.
Where a business has engaged contractors, ownership of any resulting copyright will depend on what is agreed between the parties. An example is a software development company that engages a contractor to write computer code for a computer program. The business should ensure that the contract is very clear about who owns copyright in the code developed by the contractor, and any pre-existing code that the contractor brings to the project.
It is important that you consider IP ownership, including copyright, early in any contract negotiations. It is likely to be much harder to get a former contractor to assign copyright in their work back to the business than it would have been to negotiate ownership at the beginning of the relationship. For more information, visit IP ownership.
TRADE MARKS: SECURITY FOR YOUR BRAND
Your brand represents what your enterprise is all about. It sends a message to the world about what you do, how you do it and the values your business represents.
A brand can also be a highly valuable asset. According to BrandFinance, the top Australian brand, Woolworths®, is valued at $8.3 billion. But it’s not just large businesses that have big brands. Even smaller businesses such as Boost Juice®, RM Williams® and the Byron Bay Cookie Company® have brands that are instantly recognisable and important assets for these businesses. Your brand is also one of your key assets, which is why it’s essential to get it right.
In addition, as businesses innovate more and trade globally, there is a greater need to actively manage their brands and make sure they are not being infringed.
So what is a brand? Your brand is what sets your business apart. It includes your name and logo and also the trade marks you have registered to protect your business. If you’re in the process of choosing a logo or name, don’t forget to do a search to make sure no-one else is already using the ones you want to use. Once you’ve checked you can use them — the next thing you need to do is take steps to protect them.
You can register words, numbers, slogans, sounds, smells, shapes, colours, logos, pictures and aspects of packaging as trade marks. Once you have registered your trade mark, you have the legal right to use and enforce it, as well as license or sell it. Initial trade mark registrations last 10 years, and you can renew it indefinitely, as long as you pay the renewal fee every 10 years.
IF YOU WANT TO GO GLOBAL, REGISTER YOUR TRADE MARK OVERSEAS
When you register your trade mark, think about where you want to register it. You may want to register it in Australia only. If you are considering branching into overseas markets you should also register it in those countries. And, before you submit your application, make sure you do a thorough search of the Australian Trade Marks Online Search System (ATMOSS), as well as searching internationally, if you are registering the trade mark beyond Australia.
You can learn about trade marks, figure out which is best for you, search for existing marks and even apply for a trade mark online by visiting the trade mark section of our website.
The Entrepreneurs’ Infrastructure Programme offers easy to access advice, assistance and tailored support to small and medium enterprises to help them become more self-reliant, competitive and growth focused.
For more information, visit business.gov.au or call 13 28 46. More in-depth face-to-face assistance is also available from AusIndustry’s national network.
Trade marks and classes of goods and services
When you apply, you will need to indicate under which classes of goods and services the trade mark will be registered. IP Australia uses the international Nice Classification system, which divides goods and services into 45 classes — 34 classes of goods and 11 classes of services. You can apply for your trade mark to be registered in more than one class. For example, Koko Black® is a registered trade mark for chocolate products in class 30, retail of chocolate in class 35 and restaurant services in class 43.
Applying internationally using the Madrid Protocol
If you’re keen to register your trade mark overseas, an easy way is through the Madrid Protocol. Through the protocol, you are able to register your trade mark with one application across a number of different countries that are signatories to the protocol. It means you don’t have to do individual applications for every country. For more information visit international trade marks FAQ.
The SourceBottle® Experience
SourceBottle® founder Bec Derrington found herself on a steep learning curve when she started her web-based business, which connects journalists with potential sources for stories.
‘When I first started I thought registering my domain name would be enough, but I soon realised that would not protect me if someone else wanted to use the name SourceBottle®. All I’d done was ensure they just couldn’t use the same domain address. This meant I needed to register the trade mark for my business, SourceBottle®. I used a trade mark attorney to manage the process, who was able to determine the right classes under which to register the mark,’ she says.
Soon after Derrington launched the business in Australia she realised she wanted to expand it globally. But she discovered that a martial arts studio owned the ‘sourcebottle.com’ domain name (she had sourcebottle.com.au). Thankfully, they had not sought to register the trade mark in any international markets, so she could register the trade mark internationally without any opposition, and managed to buy the ‘sourcebottle.com’ domain from the studio as well.
‘My attorney went through a Madrid Protocol filing to register our trade marks in the US and UK, which was a really simple process because we had a good attorney. While it does cost money to retain a trade mark attorney, it saved me lots of running around and gave me peace of mind. I would highly recommend you seek the services of a professional if you plan to register a trade mark around the world,’ she advises.
EXPORTING YOUR GREAT IDEA
Export markets present exciting opportunities for small businesses. This is thanks in large part to the proliferation of the internet and growing globalisation.
This is something many Australian businesses already appreciate, given how many intellectual property (IP) registrations our businesses make overseas. According to the Australian Intellectual Property Report 2014, over the past ten years Australian residents have, on average, filed three times as many patents overseas as they have at home.
This is demonstrated in the most recent statistics on overseas filings. Australian residents filed 8287 patent applications abroad in 2012, compared to 2627 locally. The US, Europe and China are the top three destinations for Australian residents filing patents overseas.
There are a multitude of factors enterprises need to take into account when expanding internationally and there’s help available for business owners who wish to do business abroad.
Peter Mace, General Manager of the Australian Institute of Export, says protecting your IP in the markets you intend to do business in should be a top priority for those who are exploring their export potential.
‘Even if your IP is registered here, it’s important to also register it in the markets you are going into. You also need to be aware of the ‘first to file’ rule that operates in markets like China and Japan, because if you don’t protect your IP in those markets then someone could get in ahead of you and register your name or design.’
IP rights granted by IP Australia are only valid in Australia. Although you might not plan to expand to another country for some time, you should develop your international IP strategy early to make sure you can secure the IP rights you’ll need to protect your business overseas. He also advises making sure you register your IP in the local language as well as English to ensure you have all bases covered.
Treasury Wines, the makers of well-known Australian wine brand Penfolds, knows what it’s like when you can’t secure a trade mark in a desired export market. A rival wine company filed a trade mark application for Penfolds’ Chinese name, Ben Fu, effectively stopping Treasury Wines from using the name in China. It also allows the rival to sell wines using the name, potentially trading off the reputation of Treasury Wines.
The Department of Industry’s single business service streamlines access to information for Australian businesses such as how to plan, start and run a business and access government programmes like the Entrepreneurs’ Infrastructure Programme, R&D Tax Incentive and Industry Skills Fund.
Find out more at business.gov.au.
There is no such thing as a worldwide trade mark or patent. Filing for a trade mark or patent overseas can feel like a big task, and it is if you file with each country individually. Fortunately there are two international filing systems to make the task easier. By filing an application with IP Australia under the Madrid System (for trade marks) or the Patent Cooperation Treaty (for patents), you can apply in several countries at once. Find out more information about the international application process.
The next step, says Mace, is to study the markets in which you intend to operate. ‘Find a niche then do your research and find entry opportunities. You can do a substantial amount of secondary research on the internet to find out whether similar products are also available in those markets. It’s also an idea to talk to Austrade and state government trade agencies as they can help assess if there’s interest in your product or service.’
Mace says building relationships with bilateral chambers — for instance the American Chamber of Commerce or Australia China Business Council in Australia — is a great idea.
Philippa Dawson, General Manager, Trade, from Austrade’s Australian operations group, says market research should start with identifying the growth drivers for your business and finding overseas markets where those drivers exist. ‘For instance, if you operate in aged care, it’s about finding markets that have an aging population,’ she says.
Austrade offers a wealth of different resources emerging exporters can use to help them gain an understanding about potential export markets. ‘We have market profiles available and can provide advice about operating in particular markets and on aspects of doing business such as making sure packaging complies with local requirements. In fact, meeting regulatory hurdles is a major factor exporters need to keep in mind,’ Dawson says.
After you have conducted initial due diligence, it’s an idea to visit the market you wish to export to. Before setting off, it’s worth exploring whether you can apply for an Export Market Development Grant, which reimburses up to 50 per cent of eligible export promotion expenses above $5000, provided total expenses are at least $15 000. These grants allow you to get a first-hand understanding of your market and you can claim IP expenses under the scheme.
AVOID DISCLOSING YOUR INVENTION BEFORE APPLYING FOR A PATENT
According to Mace, it’s also essential to develop an understanding of the constraints of the various markets. For instance, in many places in Asia, dwellings are much smaller than in Australia, and residences have smaller kitchens and pantries. This means people prefer smaller package sizes, in contrast to Australia, where there is a tendency to buy in bulk given there is often space to accommodate this practice.
Also think about how the words in your brand translate and whether your colour scheme is appropriate for the market. Ingredients and use-by dates may also need to be listed in the local language. You also need to explore the logistics of getting your product to market, and then to the end buyer, in another country.’
As such, your distribution model should be part of your research. Some people decide to go through consolidators, who sell a large number of products into a particular market. Others go through distribution agents.
Importantly, says Mace, work out what your unique selling point (USP) is in that market, because it could be quite different to your local USP. ‘You may need to reconsider your key messages and how you promote your business,’ he says. Also review whether your web site is suitable for a global audience. It’s good to list the countries to which you are currently selling on your site, to give foreign buyers confidence in your business and your ability to supply overseas.
It’s also critical to work out how and when you are going to receive payment in the markets you are going into. Importantly, make sure you don’t have any issues with currencies moving against you. If that could be a problem, talk to your bank about how you could hedge your exposure to ensure currency fluctuations won’t adversely affect your profits. ‘Talk to your bank about payment options and foreign exchange hedging products before you sign the deal,’ he says.
But above all, says Mace, it’s imperative to put together an export plan to guide your journey. ‘And if you’re export ready, think about becoming part of Austrade’s free Tradestart program to find potential buyers.’
Import duties, regulations and distribution channels are also important factors to consider.
FIND A NICHE THEN DO YOUR RESEARCH
Dawson says although Austrade is always impressed as to the vast array of different countries in which Australian businesses operate, most exporters start out by focusing on one market, and might increase their footprint over time after successfully embedding the business in one location first.
Seek and ye shall find
WHETHER YOU’RE LOOKING FOR A BUSINESS OR RESEARCH PARTNER, OR LOOKING FOR AN INNOVATION HOTSPOT...
...this data can help.
IP Government Open Data:
- Over 100 years of data
- Downloadable for analysis
- Updated annually.
Visit data.gov.au to start exploring.
‘It can take three to four years to do your initial research and become established in a market. Given the cost of researching and identifying potential business partners and building relationships, our advice for small businesses is to spend time on market selection and start with one or two markets, if they are in close proximity, such as Singapore and Malaysia,’ she says.
One of the essential things to get right when you start operating overseas is to choose a partner in the local market who can help the business grow. Dawson says it’s an idea to create a short list of potential partners
- be they financial partners or distributors
- and ensure you do proper background checks on them, including reference and credit checks
Then it’s smart to spend two or three weeks in country with any potential local partners so you can feel comfortable they have the right skills and contacts to help move your business forward.
According to Dawson, the major challenges businesses experience when exploring export opportunities are gaining an understanding of the local culture, business practices and local regulations. She says making sure you do proper research to understand these factors is critical to overcoming any barriers.
‘Austrade can also help by providing market briefings, as well as referrals to legal and other specialists in various markets. We are also able to tap into our local networks to help Australian businesses including through the provision of tailored services such as potential partner and customer identification, help with identifying local contacts in international markets that can import, distribute or support your product and arranging appointments during market visits,’ she says.
CHOOSE A PARTNER IN THE LOCAL MARKET WHO CAN HELP
Information about doing business overseas is also available here. You can find tips on how to protect your IP overseas and to help establish your market position, plus export information specific to particular countries.
Be vigilant, don't get ripped off
INFORMATION, INCLUDING CONTACT DETAILS, ABOUT PATENT, TRADE MARK, DESIGN OR PBR APPLICATIONS AND REGISTRATIONS IS AVAILABLE ONLINE.
Some people may use this information to send letters and invoices to you requesting payment for IP services that you have not requested.
Before paying a fee for any IP-related service, IP Australia recommends that you carefully consider what, if any, value the service will provide.
Warning: These companies are not associated with IP Australia, or WIPO or the International Bureau (IB). The services offered by these companies do not provide official patent registration or patent rights in Australia or overseas.
PRONAMICS:estimating across the globe
John Christophersen, is the general manager of Pronamics, which makes estimating software for the mining and engineering industries. The business currently exports to 13 different markets around the world, including South America, the United Arab Emirates, Singapore and Thailand. By and large its growth overseas has been organic.
Its international base is Malaysia, where it has accredited agents that can provide training and support services to customers. The business model is such that Pronamics pays a royalty for every software license sold. It’s up to the agents to canvass opportunities and the business also pays the agents a retainer.
As Pronamics’ experience demonstrates, finding the right people to act as agents is essential for the success of the business in export markets. When the business first established its base in Malaysia, an expatriate Australian approached Pronamics with a potential opportunity. This led to an introduction to a Malaysian estimator for an Australian business.
‘He’s now our primary contact. He has a solid knowledge of what estimators do and he can also help us navigate any cultural differences,’ Christophersen explains.
Ensuring the business abides by cultural norms is especially important. Before entering any overseas market, Pronamics does extensive research to make sure it understands the market it is pursuing.
DO YOUR HOMEWORK ABOUT LOCAL REQUIREMENTS
When it comes to protecting its intellectual property in overseas markets, Pronamics retains a specialist trade marks attorney and other IP specialists. The IP team manages registration and protection of Pronamics’ IP around the world.
Christophersen’s advice for other businesses considering entering overseas markets is to ensure there is an identified need for the product or service in that market, before investing substantial resources.
‘Do your homework about local requirements, especially as there are different rules around protecting IP in different countries. Make sure you do your research thoroughly before committing huge amounts of capital,’ he says.
IP POLICING: ENFORCING YOUR IP RIGHTS
Once you have developed intellectual property in your business, for instance by developing a trade mark, it’s important to protect it by registering and monitoring it. This involves surveying the market to ensure no-one’s using your trade mark without your authority, as well as a number of other techniques that will help protect your IP.
Monitoring your IP and enforcing your rights is, however, not always straightforward. This was a lesson Graham Hill discovered when he learnt that another, much larger, business wanted to use a trade mark his business, Metisc, has owned for many years.
Metisc had only registered the trade mark in Australia, for a product called iScore. The software allows users to register scores for sports games, as well as manage competitions and fixtures.
‘We licensed the product to a number of clients including Telstra, who used it in an online community sports portal. I had originally wanted to call the product iSport, but that had already been trademarked,’ explains Hill.
Although the relationship with Telstra ended, Metisc continued to provide the system to a number of sports. In 2009 Hill was advised by an international gaming company that it intended to use a similar trade mark, claiming Metisc wasn’t using iScore anymore.
Under intellectual property legislation, if a trade mark is not used another party can seek to have the mark removed from the register so they can use it.
‘We still had clients using iScore, so I briefed my lawyers. But we didn’t really have a huge problem with the gaming company using the similar name given they worked in a separate area.’
So Hill and his legal team came up with a win-win solution. ‘They had trade marked the name i-Score in the US and Canada, and we had obtained the registered trade mark in Australia. So we came up with a plan under which we would allow them to use it in Australia as long as we had reciprocal rights to it in other jurisdictions,’ he explains. It was a satisfactory solution for both parties.
More recently, Hill discovered an international sports company had started using the phrase iScore. He is assessing his options to continue to protect his interest in the trade mark.
I’M NOW MUCH MORE PROACTIVE ABOUT MONITORING MY TRADE MARKS
Hill says his experience is a lesson for anyone who has a trade mark to monitor the market to ensure their IP rights are not being infringed. He also advises anyone who owns a trade mark, and who finds an unauthorised party using it, to contact the major search engines and request the removal of the unauthorised party’s listing from internet search engine lists.
‘I’m now much more proactive about monitoring my trade marks to ensure no-one uses them without my authority,’ he says
From fat duck to loose goose
Late in 2013, a small Melbourne café discovered what happens when a company enforces their registered IP rights. The owners of the café ‘The Fat Duck’ received a letter from lawyers of well-known international chef, Heston Blumenthal, requiring they change the name of their café.
Blumenthal’s three-Michelin-star restaurant, ‘The Fat Duck’, in the UK had previously trade marked the name in other countries, including Australia. By monitoring the industry, the owners of the trade mark were able to see when another business started to use the name.
The Melbourne café was forced to change their name because they had infringed Blumenthal’s registered right to the name. This meant paying for new signage, advertising and marketing collateral. The newly named ‘The Loose Goose’ is still operating in Melbourne.
Tip: always include a search of IP Australia’s trade mark database, ATMOSS, before investing in a name for your business or product.
Australian Trade Marks Online Seach System
Whether you want to find out if a name or logo is already in use, browse similar trade marks in your field or see if your new product name can be protected by a trade mark — this is the place to search.
Visit ATMOSS to search registered trade marks.
WASH BAGS AND SOFTWARE: COMMERCIALISING YOUR INTELLECTUAL PROPERTY
Taking an idea from a concept to a commercial reality will be different for every business. The process will depend on what you are trying to commercialise, the industry in which you operate and how complex your idea is. Here, we explore how different businesses approached the commercialisation process. As you will see, each entity followed a different path.
Scrubba wash bags
Ashley Newland has first-hand experience taking an idea from a concept to a commercial reality. He’s the inventor of the Scrubba wash bag, billed as the world’s smallest washing machine. It’s a pocket-sized gadget for washing clothes that people can use when they go camping or travelling.
Newland had a big advantage when commercialising his idea: he’s an experienced patent attorney, so knew how important it was to protect his IP once he’d come up with the idea and the design for a prototype.
He had the idea for the Scrubba one evening when he was preparing to go travelling and climb Mt Kilimanjaro in Africa. ‘We could only take a few clothes and we didn’t have access to a sink. I thought there must be a way to wash our clothes in a zip lock bag. A few weeks later I had a revelation. Washboards had been around for centuries. So I thought there must be a way to make a flexible washboard stored in a waterproof, sealable bag people could take away when they are travelling,’ he says.
While working on an early prototype, he spent his evenings completing a provisional patent application, which he filed the day before he left on his travels. By filing the provisional patent application first, Newland didn’t need to worry about his public use of the Scrubba wash bag prototype becoming ‘prior art’ that could later prevent him from obtaining a patent on his invention.
‘The first time I tried the prototype in Tanzania I was amazed how dirty the water was. I realised I had a good product on my hands,’ he says.
Newland subsequently approached a number of businesses about licensing his invention, including big multinational camping businesses, but found most companies were unwilling to put the time or money into developing a brand new product in an untested market. ‘I realised that unless I proved there was a market for it, I wouldn’t be able to get anywhere with it. Plus without a positive cash flow, I wouldn’t have been able to protect the invention internationally. So I realised I had to take the leap and start producing the Scrubba wash bag myself.’
AVOID DISCLOSING YOUR INVENTION BEFORE APPLYING FOR A PATENT
Although he still didn’t have the manufacturing process finalised, he decided to crowdfund a first batch through a web site called Indiegogo. Then he sent media releases to two gadget web sites, Gizmodo and Gizmag, which published it, and which was then picked up by numerous other gadget web sites.
‘I woke up the next day to an inbox full of orders,which eventually added up to $22 525 of pre-orders, enough to get the manufacturing process going. I was able to fulfil the orders I received through crowdfunding by June 2012 and then released the Scrubba to general sale.’
Newland says one of the benefits of using crowdfunding was that he was able to take the business international from the outset. ‘This is a big change in mind set for entrepreneurs as the old mentality was to start in your local market and then scale internationally. While it was initially daunting and took time sorting out warehousing and taxation internationally, it allowed for rapid expansion. Within just two years, we have distributors in more than 14 countries.’
During the development stage, Newland even came up with a new manufacturing process, which resulted in a second patent application. He’s also showed the product at various trade shows around the world and now he’s being approached by Australian and US retailers.
‘I’ve been really lucky with pre-publicity. I did try ads on Facebook and Google, but the driving force has been the media. I really haven’t had to approach retailers and distributors. They have come to us.’
As for his advice for aspiring inventors wishing to commercialise their product, Newland says he’s a big fan of crowdfunding as a way to raise initial capital and test the market. And make sure you know how you’re going to manufacture the product early on.
He also says to avoid disclosing your invention before applying for a patent. ‘As soon as you disclose your invention you potentially limit your future rights. You might think spending $4000 on a patent attorney as a start-up is a lot of money, but if someone copies your idea you won’t regret spending this money.’
Newland explains that while Australia and the US do have a one year grace period for filing a patent application on an invention following its public disclosure, the regulations can be quite strict and so relying on the grace period isn’t recommended. As most other countries lack a grace period, you will be severely restricting your international market coverage if you disclose your invention before filing.
He also advises thoroughly researching the trade mark databases in Australia, the EU and the US before settling on a particular trade mark, and looking into whether design registrations have been filed that are similar to your product.
‘Entrepreneurs often want descriptive words to be part of the trade mark, the best words to trade mark are made up words. But even if you think you’ve made up a word put it into Google to check someone else hasn’t already come up with it for similar goods or services.’
Essentially, says Newland, the idea is to conduct a thorough pre-IP audit before going public with your idea and moving into the commercialisation phase. ‘If you obtain publicity for your invention, your trade mark becomes a very valuable asset as this allows people to find your product. If you lose your trade mark because someone else actually owns it or you cannot get it registered, you may lose all the followers from the publicity.’
He also says it’s vitally important to have a plan in place if you intend expanding beyond Australia. Be aware of the difference between jurisdictions like Australia which have a ‘first to use’ rule for trade marks, compared with jurisdictions such as China, where there is a ‘first to file’ rule regarding rights to trade marks.
‘Speak to as many people as possible and if you have no money, find friends or crowdfunders who are willing to help you. And remember, in the internet age, you can definitely have a global business right from the start'.
XP Solutions software
One business that takes a fascinating approach to commercialisation is Cardno’s software arm, XP Solutions. Division manager Colby Manwaring explains this is the main vehicle for commercialising intellectual property in the enterprise.
‘We have a process to commercialise IP, especially software, that goes back to the 1990s,’ says Manwaring.’Day-to-day across our operations, a variety of commercialisation possibilities can arise. We have a system whereby business unit managers can submit an idea in the form of a business plan. Then we discuss the market and the opportunities and do intensive market research,’ he explains.
A key part of the process is what Manwaring calls ‘getting the baby away from its parent’. This involves a group of people who did not come up with the idea exploring its potential. ‘We have a network of offices around the world and we can look at potential market size and commercialisation paths,’ he says.
There’s a subsequent qualification process that involves construction of another business plan. Both plans are compared and if there’s alignment between them, the team has a ‘go or no’ discussion.
‘But this whole process depends on someone coming up with an idea. We also search for ideas, but those that have the most success are the ones people are passionate about,’ says Manwaring.
WE HAVE A PROCESS TO COMMERCIALISE IP
An example is a tool the business had developed for military applications that had other uses. ‘We felt it had potential across a number of industries and geographies. This idea was brought forward and we went through a procedure that determined the technology could be rolled out across the building owners market in the US,’ says Manwaring.
This took about three years, including development of the software and building a market for the product even before it was finalised.
‘Then we did a commercial software launch. Now XP Paragon is for sale in the US and being used by more than 35 businesses, with more to come,’ he says.
When it comes to successfully commercialising an idea, Manwaring says it’s important to have an internal champion. ‘Someone outside might think something can be commercialised. But that can be hard unless someone is really passionate about the concept.’
He also stresses that it is essential thorough market research is conducted to identify a defined target market. ‘There are lots of great ideas out there, but people might not be willing to pay for them. So it’s about developing a realistic view of a market.’
Of course, proper IP protection is an important part of the commercialisation process for Cardno.
‘Ensuring we have absolute free and clear ownership of the IP is critical before we go down a path of commercialisation. This often starts with employee contracts and terms of employment — spelling out that all IP developed while in our employ is the property of the company,’ says Manwaring.
‘This takes care of internal ownership issues. External ownership issues are fairly straightforward, with copyright, trade mark and patent registration essential in securing our IP in the territories in which we operate. Depending on the technology, a patent is not always possible. Copyright and registered trade marks are often the most practical way to secure our protection in the market,’ he explains.
Once IP is protected, one pathway to commercialisation for Cardno is to license their IP to third parties — either for reselling directly or for inclusion in bundled offerings.
Manwaring noted that ‘as our IP is typically deployed as software, we use software licensing and locking technology to prevent piracy. We also find that deploying software-as-a-service (SaaS) provides a much greater level of protection and control over our software IP’.
VITAMAN: TAKING NATURAL AUSTRALIAN SKIN CARE GLOBAL
One Australian entrepreneur is taking the world by storm with her range of therapeutic skin care products for men. VitaMan is Australia’s first comprehensive male skin care range and director and co-founder Clare Matthews has found there is huge appetite for her award winning products right around the world.
The VitaMan range, which includes indigenous plants, fruits and herbal extracts, is currently distributed in more than 30 countries across North America, Europe, Asia, the Middle East and India.
Protecting intellectual property in those markets was a priority from the outset, and the business has registered trade marks in all the markets in which it operates, as well as registered domain names.
One of the catalysts for VitaMan’s expansion overseas was a global contract with one of the world’s largest hotel chains, which helped it cement its distribution network.
‘Having a global deal with Hilton gave us a forward pipeline. But we needed to source distributors in some countries to service the contract. So we researched similar, non-competing brands and reached out to their distributors,’ explains Matthews.
Matthews was also able to build a network of distributors through recommendations, networking and tradeshows. In addition, VitaMan was also approached by distributors, which helped fast track its global growth.
She says assistance from government agencies was instrumental in helping to support its international expansion. ‘We worked really closely with Austrade and developed excellent relationships in various offices around the world. For the first eight years we also received Export Market Development Grants. Thanks to Austrade we were able to launch the business in Paris at the Australian Embassy,’ Matthews says.
VitaMan has more recently been the recipient of government research and development grants, and throughout its push overseas has worked closely with the Australian Chamber of Commerce and the Export Council of Australia.
But its export journey has not been without its challenges. Matthews says one speed bump the business hit was dealing with the Chinese Food and Drug Administration to register its products in that market.
She says an administrative error resulted in cancellation of a registration application of nine products. ‘We drew on all our official contacts but still got rejected,’ she says.
Matthews says she’s also found it challenging to export to places like Thailand ‘We’ve had Certificates of Origin rejected even if dates are just one day out — if the goods go on a flight a day after the dates on the documentation they’ll reject them. And in Vietnam nothing can be sent without product registration - not even samples to try and start negotiations with distributors, which makes it very hard.’
PROTECTING IP IN THOSE MARKETS WAS A PRIORITY
She says restrictions are also tight in Europe. ‘With new EU cosmetic regulations, outer packaging must have a Responsible Person printed on it for entry into the entire EU. Plus all products now have to be registered on the EU Cosmetic Portal. And in Dubai all documents must be stamped with red ink and signed with blue pen only.’
The business has also had to modify its products for certain markets. For instance, China doesn’t recognise many of VitaMan’s native ingredients as they are not on the FDA cosmetic standards approved list, which has required the alteration of some formulas. ‘For Japan we had to alter a product that contained wheat protein varying the formula specifically for this market.’
Matthews’ advice for would-be exporters is to connect with government agencies, attend seminars, webinars and networking events and find out all you can about grants.
‘Try to trade in Australian dollars to be guaranteed the exact price you need and ask distributors to fill out a due diligence questionnaire to make sure they have the right infrastructure and experience. You’ll also need an experienced legal team to prepare international distribution agreements that include key performance indicators for distributors,’ she says.
Find out more about protecting your IP overseas in doing business overseas.
SOMETHING FISHY? IT’S A TRADE SECRET
Boris Musa is the managing director and CEO of Mainstream Aquaculture, a business that aims to become a leader in the provision of recirculating aquaculture food products.
Musa explained there are two key components to the business’s IP assets: its selective breeding program and genetics, and the technology it uses to farm the fish. ‘What we’re really doing is managing an assembly line with a biological output. You don’t want variability in the fish; you want to be moving the same type of product through the system in a systematic manner so that the facility is continuously operated at capacity,’ says Musa.
‘In terms of the biological elements, the IP resides with the brood stock. It’s not a simple case of a client taking the fingerlings, turning them into brood stock and replicating the performance of our fish,’ he says.
The business chose to protect its IP as trade secrets rather than through patent protection. Trade secrets include manufacturing or industrial secrets and commercial secrets.
They may be appropriate where a product or process is difficult for competitors to copy, for example, the formula of Coca-Cola.
Trade secrets exist for as long as the information remains confidential. So, compared with a patent, the advantage of a trade secret is that it can, in principle, extend indefinitely. The disadvantage is that there are no exclusive rights to the invention, and consequently no legal protection if competitors discover the information or invent the same product or process independently.
Trade secrets may work well for processes or products that are very difficult to reverse engineer, but are not suitable for every situation. Use confidentiality agreements where trade secrets and other confidential information represent a risk for your business. If you rely on trade secrets to protect your IP, make sure you set up legally binding confidentiality agreements with your employees.
Learn more about trade secrets and confidentiality agreements in types of IP.
NEED INVESTORS? VALUE YOUR IP
Intellectual property is a valuable asset that needs to be protected, especially if you intend to appeal to investors or sell your business. It’s worth understanding how to make your IP as attractive as possible to potential business partners, and gain an appreciation of the different ways to value it.
Mark Vincent, a partner with Shelston IP Lawyers, explains that your IP is an important way to differentiate your business and stop competitors from encroaching on your territory.
‘Registering your IP is a way of ensuring you can defend it should a dispute arise,’ says Vincent. ‘Registering your IP is also a way of making your business more desirable to potential investors, who will want to do due diligence on your IP assets in any potential acquisition,’ he says.
Vincent’s colleague, Chris Bevitt, also a partner with Shelston, says investors are primarily interested in the cash flow a business produces and that the IP associated with the source of that cash flow is appropriately protected. ‘It gives them confidence the business can defend its space against copy cats,’ Bevitt explains.
He says protected IP serves to attract two sorts of investors: those who are immediately interested in buying into an early-stage venture with good prospects of success in the medium to longer term, and larger competitor businesses who want to acquire the IP of the new enterprise and take them out of the market.
MAKE YOUR BUSINESS MORE DESIRABLE TO INVESTORS
No matter what type of investors the business attracts, they will want to know the IP has been safeguarded. Among other things, this means registering trade marks and applying for patents to protect inventions in all the relevant markets.
‘It’s essential to keep proper records of inventions and who created them, and record whether the IP has been assigned to the business,’ says Vincent.
He says not properly recording IP assets is a common problem with software companies and IT firms. ‘You often find contractors working for the business have not assigned IP to it, or there has been no due diligence done on whether the code contractors have created was original or drawn from open source material. These problems detract from company value and can be difficult to fix after the event.’
So how do you get investors interested in acquiring your intellectual property? Bevitt says it’s important to develop a realistic business case that sets out how management will go about gaining market share, which stands up to external scrutiny.
‘It’s a good idea to enter design and creativity awards, but before you do, make sure you apply to register your patents or designs. We’ve had people come to us who have done great work in exposing their business to the world but without protecting their IP first. In some jurisdictions, this is the kiss of death for the enterprise in terms of protecting its IP,’ he adds.
Other ways to get in front of potential investors include attending trade shows, seeking exposure in relevant trade publications and having a professionally designed web site. Another tip, says Bevitt, is to consider connecting with the Australian Small Scale Offerings Board (ASSOB), which has so far raised $138 million for smaller enterprises. It’s a forum for showcasing new businesses and connecting them with potential investors. It’s not for everyone but can be a pathway for the right business.
‘It can also be useful to talk to commercialisation consultants, who can put businesses in touch with investors,’ advises Vincent.
In terms of the different methods to value IP, the deciding factor will be whether the business has a cash flow. ‘IP is an asset like any other and the same valuation methods apply to it as to anything else,’ says Bevitt.
If the IP is generating cash flow, then normal accounting treatments such as discounted cash flow is an appropriate valuation method. This is a technique that takes into account factors such as existing and projected revenues and market share to value an asset.
If there’s no cash flow, valuations become more complex. Bevitt says one technique that can be used is to value the asset by how much it cost to create it. He says that cost doesn’t necessarily equal value, but it is one approach when there is no cash flow.
Other methods to value assets when there’s no revenue include replacement cost and using similar transactions to make an estimation of their worth. ‘But ultimately, IP is worth what someone is prepared to pay for it. Often it’s hard to value IP based on similar transactions because there might be nothing to compare it to,’ says Bevitt. There are specialist IP valuers who you can engage to provide an opinion on the valuation of the IP.
If you’re in the process of valuing your IP and trying to attract investors, firstly, know your business and the competitive environment, including future threats. Then, do as much research as possible, talk to as many people as you can, and make your decision taking into consideration feedback, advice and the experience of others. For more information of valuing your IP, visit auditing your IP.
Disclaimer: This publication is designed to help you understand intellectual property issues. You should not regard this publication as an authoritative statement on the relevant law and procedure. You should also note requirements and fees may change from time to time. While we make every effort to ensure the information presented is accurate, you should check our website before making any application. While we can’t give you advice about your particular circumstances, we can provide general information and answer questions about our processes and fees. Commercial legal advice is best sought from a registered patent or trade mark attorney or experienced IP professional.
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