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What is IP?

Intellectual property (IP) refers to a range of different, legally enforceable rights that arise from the productive new ideas you create. It can be an invention, logo, design, brand, or the application of your idea.

IP rights exist in many forms. Each type of IP provides different competitive advantages. Some forms of IP require formal application and examination before you can claim a right to ownership. Others do not.

The following tables briefly summarise the key features of the different types of IP rights. Find out more about the different types of IP.

Protection you have to apply for


Type of IP protection

What's protected

What it means

Example

Length of protection

Patent

New or improved products and processes

A patent protects how an invention works or functions

Polymer bank notes, new pharmaceuticals

20 years (pharmaceutical patents 25 years maximum)

Registered trade mark

Logos, words, letters, numbers, colours, a phrase, sound, scent, shape, picture, aspect of packaging or branding - or any combination of these

A trade mark identifies the particular goods or services of a trader as distinct from those of other traders

Qantas, Lonely Planet

Indefinite as long as renewal fees are paid

Registered design

Product designs

The visual appearance of a product is protected, but not the way it works

Footwear, fashion items, kitchen appliances

10 years maximum

Plant breeder’s rights

New plant varieties

Plant breeder's rights protect the commercial rights of new plant varieties

Cotton plants with insect resistance and the pink iceberg rose

20 years for most plant species and 25 years for vines and trees

 

Protection you do not have to apply for


Type of IP protection

What's protected

What it means

Example

Length of protection

Copyright

Drawings, art, literature, music, film, broadcasts, computer programs

The owner's original expression of ideas is protected, but not the ideas themselves

Game of Thrones books and TV series

For literary, dramatic, musical and artistic works, generally 70 years following the death of the creator or the act of first publication following the creator’s death

Trade secrets or confidential information

Any confidential information, including secret formulas, processes, and methods used in production. Best suited to situations where the formula, process or product cannot be easily worked out independently

These types of IP rights give creators certain rights and privileges depending on the type of IP protection

Coca-Cola has used trade secrets to keep its formula from becoming public

Indefinite as long as confidentiality is maintained

Circuit layouts

Layout designs or plans of integrated circuits used in computer-generated designs

Similar to copyright, the owner’s original layout design is protected, but they have a unique form of protection

Computer chips or semi-conductor chip designs in pacemakers and PCs

20 years

 

Be careful about disclosing your idea

If you are thinking that your collaborative project might result in a patent, design or plant breeder’s right, be aware of publicity. Publishing or disclosing your idea in any form may jeopardise your ability to claim these rights.

If you do have to talk to others about your idea, use a confidentiality, or non-disclosure agreement (NDA), to prevent them from disclosing your idea without permission. NDAs and confidentiality agreements are legally binding contracts. If you disclose confidential information to another person under a confidentiality agreement, they are required to keep that information confidential and not misuse it.

View the IP Toolkit Model Confidentiality Agreement.

 

Existing and new IP

Background IP, Third Party IP and Project IP

Background IP, sometimes called Existing IP, refers to work created prior to or independently of the particular contract and may be used in the collaboration project.  Background IP may include registered IP rights, but as a business, you may also bring other background IP like trade-secrets, software and existing data to a collaboration.

If Background IP is owned by another party who is not involved in the project, it is referred to as Third Party IP, and you will need to obtain relevant permission to use this IP. Third party IP might include patents that you require a license for.  There are some circumstances that allow researchers to use third party patents for experimental activities. 

Project IP (sometimes referred to as Foreground IP or Contract IP) is the new IP created under the contract. Project IP might include documents, reports, recordings or inventions.  It might also include data gathered during the project.

Freedom to Operate

A Freedom to Operate search can be an important step to ascertain whether your activities will infringe on the rights of others. This type of analysis involves a search of pending and granted patents along with a legal opinion on whether your activities may infringe patents belonging to other parties. You can search the patents databases yourself, but you may need professional assistance to carry out a complete Freedom to Operate analysis. Many Australian IP firms can conduct this analysis for you. 

If the Freedom to Operate analysis brings up conflicts with other patents there are a number of options that you can consider, such as:

  • purchasing or licensing the patent from the other owner
  • cross-licensing or exchanging licences with the other owner so that you can both work on each other’s technology
  • ‘inventing around’ the other party’s patent so your activities will not infringe their rights.

Licensing of IP

Licensing of IP rights is a common step in the commercialisation process. Licensing involves the owner of the IP (the licensor) giving another party (the licensee) permission to use its IP in exchange for payment or other returns. 

The following are some key points to consider when licensing IP.

Exclusivity

  • An exclusive licence is one where the licensee is the only party that is permitted to work on and develop the IP. This type of licence also excludes the IP owner from continuing to exploit the patent and is suitable in situations where the IP owner has no intention of commercialising the IP and wants this activity limited to one operator. The Patents Act 1990 includes a number of provisions that relate to the rights of exclusive licensees.
  • A sole licence is like an exclusive licence in that it permits only one party to use the IP, but it also enables the the licensor to work with the technology.
  • A non-exclusive licence is used where the licensor allows more than one licensee to operate but wants the option to commercialise their own IP in-house.

Transferability

A licence can specify whether the licensee’s rights can be transferred to another party. If the licensor does not want it to be transferrable, it is best to avoid any doubt by clearly specifying in the licence agreement that the licence is ‘non-transferable’. Another option is to provide that the licensee may only transfer or assign its rights to another party with the consent of the licensor.

Termination

The licensor’s right to revoke, cancel or terminate the licence should be made clear. The licence can specify that this can only happen in certain circumstances, such as if the licensee breaches a term of the agreement or if the licensee agrees to the termination. The licence should also specify what each party must do if the licence is terminated, for example it might require that the licensee provide the licensor with all relevant data or documents. 

Term

A licence can be in force for any amount of time agreed by the parties, but the term of the relevant IP right that is being licensed should be considered. Trade marks and confidential information can be renewed or maintained indefinitely, but patents, copyright, designs, plant breeder’s rights and circuit layouts all have specific and limited terms set by the relevant legislation. Some of these IP rights also require the payment of periodic renewal fees and the right will cease if it is not renewed. Licensees should therefore confirm the remaining term of the IP right and the arrangements for maintaining or renewing the right.

It should be noted that section 145 of the Patents Act 1990 provides that either party to a licence may terminate it where the relevant patent is no longer in force.

Payments and royalties

Licensing fees can be paid in a variety of ways, including a lump sum payment on signing the licence, milestone payments during the term of the licence or royalties based on a percentage of sales or profits.

Valuation of IP

In order to determine the payments that should be charged for the licence, it may be necessary to undertake a valuation of the IP. The valuation of IP rights can be difficult, particularly when they relate to new technology that has not yet been commercialised. This is because the potential market value of the technology may be untested and the valuation will involve a number of assumptions around the costs and income that may be associated with the commercialisation of the technology. There are professional valuers that can carry out this work and many patent attorney and accounting firms employ appropriately qualified staff to conduct an IP valuation.

Sub-licensing

The licence may allow the licensee to sub-license its rights to a third party. If this is to be considered, the licensor may wish to impose restrictions on the terms of any sub-licensing arrangement and a specific clause should be included in the licence that describes these terms. For example, the licensee may need to seek the licensor’s consent to any sub-licence it issues, provide copies of any documentation the licensor requires and indemnify the licensor against any actions of the sub-licensee.