Intellectual capital, intellectual property, trade marks, company names, domain names, clearance searches, licensing, patents, designs, trade secrets, copyright ... These words or phrases may sound like buzzwords to entrepreneurs, but these words and phrases are keywords for the long-term success of any enterprise.
Intellectual property comprises intangible assets which should be protected and leveraged to contribute to the strength and growth of any emerging enterprise. Intellectual property includes, among other things, intellectual creations, inventions, designs, brands. It is often creations of the mind or inventions that drive entrepreneurship, and a startup's intellectual property may be the very reason for its coming into existence.
Before commencing with marketing or trading activities, startups should be proactive and decide on a strategy for the use and protection of their intellectual property. With this in mind, what should a startup consider to build a strong intellectual property portfolio, capable of being monetised?
Trade Marks, Company Names, Domain Names and Licensing
Of course, any enterprise requires a name, before it can commence with trading activities. Choosing a name for a new enterprise may prove to be an intimidating task, as entrepreneurs typically feel pressure to choose a name that will resonate with the relevant target market.
A creative or unique name generally affords a new enterprise with a competitive advantage, as it draws attention to, and enables consumers to recognise, the enterprise's goods or services.
As soon as an enterprise name has been elected, entrepreneurs often believe that the next step is simply to register an entity with the chosen enterprise name at the Companies and Intellectual Property Commission ("CIPC"). In practice, entrepreneurs sometimes incorrectly believe that the incorporation of an entity or the approval of an enterprise name by the CIPC means that the specific enterprise name has been protected as a trade mark affording it with trade marks rights, being the exclusive right to use the enterprise name. This is not the case as the companies and trade mark registers operate independently.
Before incorporating an entity, the name should be considered from a trade mark perspective and ideally the input of a trade mark attorney should be sought to conduct trade mark clearance searches to assess if the name is, in fact, capable of functioning as a trade mark and to determine any risks, such as the risk of infringing a third party' existing trade mark rights. As soon as the proposed name has been "cleared", an enterprise should file an application to register a trade mark for the proposed name, as well as reserving the name on the separate companies register.
With a view to informing members of the public and other players in the industry that the enterprise is invested in its brand and has filed trade mark applications to protect the brand, it is advisable to use the " or ® symbols in relation to the enterprise name. The " symbol may be used in relation to the enterprise name while the trade mark application is pending. The ® symbol may only be used in conjunction with the enterprise name once it has proceeded to registration as a trade mark.
Even if an enterprise does not intend to trade online or have an online presence, it is advisable to secure a domain name consisting of the enterprise name, which is a valuable asset in any intellectual property portfolio. This is to avoid cybersquatting, which involves an unrelated party registering another person or entity's name or trade mark as a domain name for the purpose of extortion.
Entrepreneurs should also always be mindful that trade marks can be licensed to third parties for financial gain.
Patents, Trade Secrets and Designs
A startup can monopolise new inventions by way of securing patent protection to prevent third parties from exploiting the patented invention for 20 years. A registered patent for an invention is typically of great commercial value and can assist a startup with deriving maximum financial benefit from an invention.
It is very important for startups to bear in mind that a new invention should be kept absolutely secret until a patent attorney is consulted and the necessary protection has been secured. As soon as the invention forms part of the public domain, a startup will not be able to secure protection in the invention in the form of a patent.
As soon as an invention is protected by a registered patent, the word "patented" with the patent number should be used in relation to the invention, to inform third parties of the startup's monopoly in the invention.
While patents are valuable IP assets, it is sometimes more appropriate to protect subject matter as a trade secret. Patent rights will only be granted if a startup discloses its invention, which means that third parties will become privy to the "mechanics" or substance of the invention and the right to exclude third parties from exploiting the patented invention will only endure for 20 years. Trade secrets can be kept confidential in perpetuity, and it is not necessary to make a public disclosure. Although trade secrets cannot be registered, startups should be mindful, from the get-go, as to whether it would perhaps be appropriate to use contractual instruments (for example, entering non-disclosure agreements with employees) to ensure that secret information that is of commercial value remains confidential.
Securing protection for a design may also be relevant to startups. Design registrations essentially protect the appearance or function of features as applied to articles.
Copyright
While an idea is in itself not protectable, once it has been reduced to a material form then that can be protected under copyright. This means that a startup's literary, musical or artistic works, broadcasts or even computer programs may be protectable in terms of copyright. Fortunately, copyright vests automatically and it is not necessary for startups to register copyright in South Africa.
However, it is important to keep record of any protectable work, and to ensure that the startup owns of the copyright. For example, the design of a logo is often commissioned to a design agency, in which case the design agency will be the owner of the copyright in the logo. The startup should, therefore, sign an agreement with it to ensure that the copyright is assigned to it.
Intangible assets are as important as tangible assets (if not more than) in the ongoing digital age, and it is imperative for startups to be proactive in protecting and leveraging its intellectual property, before third parties exploit it. Although the protection of intellectual property may not necessarily be on a startup's priority list (specifically from a budgetary point of view), proactively protecting intellectual property is a wise investment in the startup's intellectual capital.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.