Start Ups and Intellectual Property
18 December, 2008
Companies and entrepreneurs have a lot of business issues to contend with at the start up phase of a new enterprise, and with time and money as factors, not all of these issues can be prioritized.
But it is crucial that such companies and entrepreneurs are aware of intellectual property issues and how intellectual property might apply to them. Because undoing mistakes or repairing oversights made at an early stage can be costly later on.
What is Intellectual Property?
Intellectual property is a collective term for a number of specific legal rights. These are patents, trade marks, designs and copyright.
If an invention is new, involves an inventive step and is susceptible of industrial application, it can generally be registered as a patent subject to certain exceptions. There are two types of patents available in Ireland – the long term patent which lasts for twenty years and the short term patent which lasts for ten years. There are differences between the two so always seek advice and remember the general rule never to divulge the details of a patentable invention before filing for patent protection.
Generally speaking, trade marks are any sign used in trade to distinguish the goods or services of one business from that of another. They take many forms and can be word marks or logos and sometimes even colours or slogans. Trade marks can be registered under the Trade Marks Act 1996. Unregistered trade marks can sometimes be protected under the law of passing off, but it can take years to build up sufficient goodwill to successfully use this remedy.
A design that is new and has individual character can be registered under the Industrial Designs Act 2001. A design is the appearance of the whole or a part of a product resulting from the features of the lines, contours, colour, shape, texture or materials of the product itself or its ornamentation. A design can be unregistered, but the rights granted to unregistered designs are relatively limited compared to registered rights.
Copyright protects certain works against copying such original literary, dramatic, musical or artistic works, sound recordings, films, original databases and the like. Copyright cannot be registered in Ireland but can be registered in certain other countries such as the United States.
As noted above, it is possible to register designs, inventions (patents) and trade marks in Ireland. However, these registrations are territorial so it is important to ensure that you register your rights in all appropriate countries. There are international registration systems that make this process easier. You need to carefully consider your budget for this, as applications for registered rights and subsequent renewals can be expense if not focused on key jurisdictions.
How is Intellectual Property relevant to you?
As can be seen, intellectual property covers a broad range of rights. Therefore, if your new venture is in software, copyright and patents may be relevant. If you are in the visual arts, copyright and designs may be relevant. For more technology focused start ups, patents will be relevant. Trade marks are almost always relevant. It is often the case that start-ups believe that getting a business name will protect their name. It does not as many young businesses have found to their cost.
Are there any tax advantages?
There is a tax incentive to encourage inventions and to invest in and commercialise patents. This applies where an inventor or company develops and registers a patent and then licences it. Provided the rules are met the royalty income from the qualifying patent is tax free for the recipient.
In general terms, a company or business will be entitled to a tax deduction for money spent on developing or acquiring intellectual property. This would include costs of registering a trade mark, developing a patent or know how. Where a patent is acquired from a third party it is possible to write off this cost over the life of the patent.
Conclusion
It is likely that intellectual property will be relevant to most start-ups to a greater or lesser extent but it pays to know how intellectual property applies to you.
Peter Bolger is a senior associate in the Commercial Department of Mason Hayes+Curran. For more information, please contact Peter at pbolger@mhc.ie or + 353 1 614 5000. The content of this article is provided for information purposes only and does not constitute legal or other advice. Mason Hayes+Curran (www.mhc.ie) is a leading business law firm with offices in Dublin, London and New York
Source: 'First Edition The Newsletter for First Tuesday Network' www.firsttuesday.ie