If you watch Dragons’ Den, you’ll have seen those hopeful entrepreneurs seeking investment being asked whether they own the rights or have the patent for their product or invention, but what exactly is a patent or a trademark?
In this episode
In this 30-minute episode of Essential Business Radio, first broadcast in 2012 but still very relevant, Matthew Searle, founder of Adams and Remers LLP (now with Gunner Cooke), Penina Shepherd, founder of Acumen Business Law, and Philip Towler, partner at Dehns, discuss how to protect your intellectual property. Listen now:
Note: This show was recorded in 2012. In 2014, there were significant changes to the UK’s Intellectual Property Act 2014 for design law. See the bottom of the transcript below, for more details.
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What’s the difference between patent, trademark, copyright and design registration?
Julie Stanford: Hello, this is Julie Stanford of Essential Business Radio. A number of years ago I was very lucky and able to present a show called Radio Reverb in Brighton. Many of those shows are still very useful for businesses today, including this episode.
If you watch Dragons’ Den, you’ll have seen those hopeful entrepreneurs seeking investment, being asked whether they own the rights, or have the patent for their product or invention, but what exactly is a patent or a trademark? In this show I asked my expert guests, Penina Shepherd, Philip Towler, and Matthew Searle, about protecting your intellectual property.
Welcome again to the three of you. Philip you are going to be the first person I’m going to ask a question of as well today, because of that experience and knowledge that you have.
We’re here today to talk about protecting your assets. Really what I wanted you to do, if you don’t mind, is to start out by explaining to us the difference between patent, trademark, copyright, and design registration. Clearly there are differences but a lot of us don’t know what they are.
Do you mind explaining them? Then we’ll go into those in more depth during the rest of the show.
Philip Towler: Of course, yes. Essentially there are four different types of intellectual property as it’s known in general. Let’s take patents first. A patent would normally apply to an invention, so that would be something technical. It need not be a completely new product, it could be just an improvement to an existing product or it could be a process. For example, working out how to make steel with stronger properties. All of those things are protectable.
Important thing about that is that the invention to be protectable, where the patent needs to be novel, in other words it mustn’t have been disclosed to the public before an application is filed. Also, if you’re going to get a patent, you’ll need to show that it’s inventive. There’s a particular legal hurdle. Basically it must have not been obvious to a person skilled in the art, which is somebody working in the field, on the relevant day that you apply.
The third requirement, which is normally relatively simple to overcome, is it has to be industrial applicable. For example, just a new way of painting is not going to be protectable by a patent, whereas in medicine, a new medicine, the active ingredient may well be protectable. It’s a monopoly right, which means that once you have a patent, you can stop other people from working the same invention you’ve protected.
Julie Stanford: If you tell me then about it, because I’m going to ask you to talk in much more detail about this in a minute. A trademark then, how would that be different from a patent?
Philip Towler: A trademark is basically an identifier for a business. It can be any kind of sign. It could be often a word, or it could be a logo. Sometimes both. For example, Coca-Cola is probably the best known trademark in the world, and it’s a very important asset for the business. If you take the name away from the Coca-Cola company, then it’s worth a lot less.
Trademarks can be protected, essentially, forever as long as they meet the relevant requirements and you keep paying the renewal fees, usually every 10 years, then you can protect the trademark to the end of the world.
Julie Stanford: I was going to ask Matthew to talk more about copyright in a little while, but just briefly, the difference with copyright. Define that.
Philip Towler: Copyright generally applies to an original work of some kind. It could be a work of literature, or it could be a graphic work, painting for example. Some other kinds of works as well, like sound recordings and such like. They have different terms of protection.
They don’t need to be novel. They just have to be original. Effectively a copyright will allow you to stop somebody from copying what you’ve done, but it won’t allow you to prevent somebody from doing what they’ve independently come up with. It’s quite an important difference from the monopoly right I was talking about earlier.
Copyright can last for quite a long time. For example, in the case of literary or musical work it will last from 70 years from the death of the originator. Potentially quite a large royalty income can be obtained from a copyright if it becomes successful, in terms of exploitation commercially.
Julie Stanford: So I’m confused now, because design registration seems as if that would come under the idea of copyright, but it’s deemed to be a separate thing isn’t it?
Philip Towler: Yes.
Julie Stanford: So how would you define that?
Philip Towler: It’s quite a complicated legal scenario, but in some legal systems there’s a certain amount of overlap. Essentially a design will allow you to protect the aesthetic qualities of an object that you might want to sell commercially. For example, say a pen or a mug. If it’s got a special shape then you may be able to protect that if it’s new.
That can be a monopoly right. You then will try to register that before the relevant authorities, and that could give you protection of up to 25 years in Europe.
Julie Stanford: Right, so clearly very important that people are aware of this.
Philip Towler: Yeah.
Talking more about copyright
Julie Stanford: Business owners need to be aware of protecting these assets. They are assets aren’t they? I just want to try and bring in Penina and Matthew as well. Matthew do you mind talking a bit more, then, about copyright because that’s one area where, it seems to me, to be a little bit easier to deal with because patents and trademarks is more complex, isn’t it? Do you mind telling us in a bit more detail about copyright and why it’s important that a business owner should be aware of it?
Matthew Searle: You’re absolutely right Julie. It’s important they’re aware of this. It is more simple than those trademarks and patents that Philip talked about. The first thing to remember is, it’s not register-able. Copyright arises in the literary, or musical, or other work automatically upon creation. As soon as it’s created, bang, copyright exists. The owner of the copyright can stop somebody else using it.
As you understand, therefore, in any business there’s going to be loads of copyright materials. Your website, your brochures, your terms and conditions, databases, lists of customers and suppliers, there’s copyright in all those things. Copyright exists and is useful and valuable to every business. But, as I say, it’s not registerable. You just can stop other people using, or abusing, your copyright.
Julie Stanford: So how would you determine that it’s yours? For instance, I was always under the impression, as a publisher, that if I have a copyright statement in the front of my books, but then any item, like a worksheet, that someone might take out and photocopy, I put a copyright statement at the bottom of the page. I’m probably misunderstanding this, but it seems that I don’t actually need to do that to say it’s our copyright.
Matthew Searle: Correct.
Julie Stanford: Then how do you know whose copyright it is? Probably a stupid question.
Matthew Searle: No, no, no. It’s not a stupid question. It’s very relevant. It does illustrate the issues, and what you should be doing in business, which is yes, putting those copyright statements on. The C in a circle with your name and the date. That’s good practice. All it is, is evidential.
So, two things. Firstly it’ll let other people know, if they’re thinking of copying your materials, that you are aware that you own it and that you’re probably prepared to protect your copyright and sue them if they abuse it. That’s probably the most valuable thing. It alerts people.
The second point is that you’ll need, in court, to prove that you own the copyright at the relevant date. That’s why people send versions of their copyright work to themselves in the post and don’t open it when they receive it. The postmark on the envelope will illustrate, and prove, that the copyright work was in existence at the date, or prior to the date, that someone subsequently, you allege, has copied it.
Julie Stanford: So for instance, in my business, where I have got a number of books and workbooks, all of which are my copyright I should, strictly speaking, send all of those to myself to prove it. I mean, I’d be there forever.
Matthew Searle: Yeah, you’re absolutely right.
Julie Stanford: Give the postman a hernia.
Matthew Searle: Absolutely. We don’t want that.
Julie Stanford: No.
Matthew Searle: You’d be sued.
Julie Stanford: Well, I’ll be coming to you three to get help. I know that.
Matthew Searle: No, of course you’re absolutely right. Sending the thing to yourself in the post is really for sort of budding authors and that sort of thing. Nowadays, in a modern business, you just keep copies or you back it up on the computer and that will be date recorded. You’ve got those.
Julie Stanford: But when I do my tell-all autobiography, that’s when I send it to myself in an envelope.
Matthew Searle: That’s the one, yeah.
Julie Stanford: I’m there now. I was a bit slow on the uptake there.
Matthew Searle: No, no. You’re absolutely right. That’s the unique thing about copyright is that it’s not registerable. It is therefore a little bit more difficult to litigate. Penina and Philip will probably talk about this later. If you’ve got a trademark, it’s a nuclear bomb. Once you’ve got it registered, you can knock out, very very easily, anyone who tries to copy, whereas copyright there’s more evidential hurdles you’ve got to get over. That’s why it’s sensible to put the copyright sign, symbol, on it because it just let’s people know that you’re likely to sue them.
Julie Stanford: Well, that moves very elegantly then into this idea of copyright in business. Penina, tell us a bit more about that and how it all works.
Protecting the intellectual property in your business
Penina Shepherd: Copyright, or intellectual property rights, in business is fundamental to the business in this day and age. In the old days, the biggest asset of the business was the premises or the machinery, or the desks, the computers, or whatever it was. Today it’s primarily intellectual property. That is the biggest asset of the business.
If you think of any business that you know, it could be a business that is publicly known, or a business that you personally know. If you were thinking of buying it, what you’re really interested in is the intellectual property. That’s the name, the brand, the database and so forth.
Now, one thing, which is important to remember in relation to intellectual property rights within a business, when an employee comes up with a design or an invention which relates to the employment, the employer automatically owns the right, the intellectual property rights, in that design.
If we run a company here of website designer, and I’m your employee and I came up with a really clever idea as to how to design website, you, as my employer, own the intellectual property right and that idea not me personally, unlike freelancers as we touched upon briefly last week. Freelancers, they own the intellectual property rights unless it is specifically assigned to you in an assignment agreement. This is when it comes to employment.
However, there could be a scenario, as we were saying about me working in your company, which is a website design company. I can come up with an invention which is completely not related. I could write, I don’t know. A cooking book, which is completely not related to what we do in the business, and that’s different. This is not something that the employer will automatically own.
The other point about intellectual property right in a business is non-disclosure agreement. This is a very simple agreement. It’s a one page agreement. It’s not complicated, but it’s very important. The two extreme examples I give my clients when we talk about NDA [non-disclosure agreement] is, think of the scenario whereby I come to you and I say, “Right. I’d like to buy your business.” So you’re going to show me a copy of your accounts. You’re going to show me your business strategy, your marketing plan, the employees, the ideas that you have for the future.
Then I walk away and say, “Well, thanks very much Julie. It’s not quite right for me. I’m not going to buy it.” You’ve got this horrible feeling in your tummy that she’s walking away with all that knowledge. If you have that feeling in your tummy, you need an NDA, but before you disclose all that information to me obviously.
Now, of course, if I do then go ahead and disclose that information, to enforce it you’d need to take me to court and prove that I did that, but most people don’t like being in breach of contract. If they signed up to an NDA, a lot of people will make sure that they adhere to it.
Julie Stanford: It will make them think twice before disclosing any of the information.
Penina Shepherd: Exactly, exactly. The other extreme example. If you’re interviewing a receptionist and you tell them about the business and they don’t take up the job, so what. Obviously this is two extreme examples, but an NDA here is completely irrelevant.
Of course, there’s a lot of grey area in the middle, but you have to make the judgment if you are disclosing information that you wouldn’t like that person to walk away with if the reason you’re disclosing it for is not going to happen. Make sure you give them an NDA. I think it also really shows that you’ve got something of value as well.
When you say to that person, “Fantastic. I really look forward to meeting with you next week to discuss all these things, but please see attach an NDA which I will need to see a signed copy before our meeting.” I think you will come across as professional, and it shows that that person has actually valuable information that they want to protect by using an NDA. There is the commercial element to it as well as the legal.
The other thing, which Matthew touched upon in the show last week, is to do when you come to sell the business. In order to make sure that when you come and sell the business, as I said before, the biggest asset is your intellectual property right, and that is what you’re selling. This is a big chunk, often, of the price of what you’re selling.
If I, as the buyer, come to find out that you actually don’t own it, it’s all your various freelancers or subcontractors, then that makes it a lot less attractive for me to buy it. I’m either going to walk away, or I’m going to ask for a serious deduction in the price because what I’m buying you can’t actually sell to me.
Julie Stanford: Because you don’t own it.
Penina Shepherd: Because you don’t own it. Also, with trademark, strictly speaking, yes you could go in and register a trademark tomorrow. However, if it is disputed, and it actually shows that you never actually owned it yourself, there is an issue because you wouldn’t trademark a name which you don’t legally own.
The last thing, which just a small example about the competitors culprit, if you like. We had a really interesting case. It was absolutely amazing. A client of ours phoned us completely distraught.
He said, “Right. Obviously you’re opposite your computer.” “Well, yes. We are.” He gave us a website address which was absolutely identical to his website. A competitor literally did a copy and paste job on it. Even the name that they chose was quite similar. Not identical, but quite similar.
Again, as Matthew said, by creating that website it was our client’s intellectual property right in law. That person was obviously in breach of it. All that was needed, we did a very strong letter. Again, this is not particularly expensive process. Just a very strong letter. Within a day that website was done and a letter of apology came with it.
As far as our client is concerned yes, they could have taken them to court, but what’s the point? It doesn’t make any commercial sense. All they wanted is this website to be out and that was achieveable. I thought that was a good anecdote, if you like, of how you can protect your intellectual property right relatively cheaply without necessarily being dragged into court litigations for years and years.
More about trademarks
Julie Stanford: You brought up there about trademark. Philip, as a trademark attorney, will you tell us more about the importance of it, and the practical application of it because it’s, we talked before I came on air that I had tried to trademark my own business, and of course you can’t because they’re words that are in general use.
Just tell us more about it, would you please?
Philip Towler: Yes. Of course Julie. Just because a word’s in general use of course doesn’t mean that you can’t obtain a trademark registration for it.
Julie Stanford: Well, maybe I’ll come see you later then.
Philip Towler: Please do. The question really is whether or not it’s descriptive or lacking in distinctiveness in relation to the goods or services for which you wish to register it.
Julie Stanford: Right.
Philip Towler: There are many dictionary words. For example, the word Polo is registered. Moreover, it’s registered to different people for different goods or services. I’m sure you’re familiar with Volkswagen’s very famous car, and equally the mint with the hole.
Julie Stanford: The mint, yes.
Philip Towler: So there’s an example, really, of two trademarks coexisting in the marketplace, but for different goods and services. It’s quite a simple, and not very expensive, process to register a trademark so long as it’s free for you to adopt, and that’s something that can be found out, for example, by searching existing registers.
Once you’ve done that and established that it’s free, then you’ll be able to file an application. This is something you could do yourself or you can employ a professional like myself to do. Essentially you file an application with the government agency called the Patent Office, or now the Intellectual Property Office.
They will do a search to see if there are similar, or identical, marks registered or applied for already, and they’ll tell you about those if they think there’s a conflict there. If they agree that the mark is distinctive enough, then they’ll advertise it. Anyone can oppose within two months of the advertisement. Assuming that nobody opposes, then you’ll have a registration.
In the UK the whole process can easily be over within six months, which may sound quite a long time, but in fact, in global terms, is extremely quick. There’s also a European-wide system now which allows you to file one application. You could file it in the UK, and they will send it to the European Trademark Office, which is in Alicante, in Spain. It gets a little bit more expensive than the UK, but it gives you coverage in all 27 EU countries. It’s really quite a simple procedure now.
Julie Stanford: Now, I want to ask you a question and I’m trying to think how best to phrase it. Do you genuinely believe that it’s always crucial to apply for a trademark or a patent for a product, or service, or logo, whatever we’re talking about? When I watch Dragons’ Den and I see those people who spent thousands and thousands of pounds on a patent for instance, then you realise that maybe that was not the best use of their money at that time. But at the same time, if they didn’t have it then they’re uninvestable.
How do you balance that? The expenditure with the legal need? What would you advise your clients?
Balancing the cost and the business value
Philip Towler: It’s always a difficult one. I think really the advisor has to have some knowledge of the commercial reality in which the clients operating. That’s something that we always try to do, to understand what their commercial aims are. Then we’ll be in a better position to advise them about whether it might be worthwhile for them to spend the money getting potential benefits.
If your entire business, for example, is founded upon having an invention, in other words your business is effected, it was formed because you had this great invention, then obviously that’s core to you and you want to really protect it.
There’s a difference between patents and trademarks in this respect, I think. Very often you’ll see onDragons’ Den somebody will come up with a new invention and then one of the Dragons will ask, “Do you have a patent at least applied for?” The answer to that question is really often very critical because they’re looking for funding based upon their idea, and only by having a patent will they be able to potentially prevent somebody else from exploiting that invention.
It’s always important, and I mentioned last week, to ensure that before you apply for a patent you don’t disclose the invention out of confidence. If the answer to the Dragon’s question is, “No”, then it’s probably already too late because they’ve disclosed it in the course of the program.
Julie Stanford: On television. Couldn’t be more public could you?
Philip Towler: That’s absolutely right. It can be quite an expensive process to get patent protection throughout the world, but it’s not necessarily prohibitively expensive initially. In fact there’s a 12 month time lag built into the system.
What happens is you apply in one country, for example the UK, first with a patent application. Then you have 12 months after that to apply anywhere else in the world. You’ll still have the benefits of your original UK filing date. You can, to some extent, stagger the costs of protection.
You do need to have a professional draft the patent for you because it’s a legal document. I’ve had people come to me who have done it themselves and asked me to help them at that stage because they’ve had objections from the patent office. Often by then it’s too late to help them because there’s a limit to what you can do in terms of changing the protection you’re looking for after the application’s been filed.
You do need professional advice at that initial stage. It will cost, typically, from £2,000–5,000 pounds to have that application on file.
Julie Stanford: Okay, now again, a big subject. Lots we could be talking about. Unfortunately we’ve come to the end of this part of the show. I do ask you, just to give me one last quick thought about what would you say to businesses to be aware of? Intellectual property is so important.
Closing tips from our experts
We’re all more aware of it now than we were before, but what would you advise your clients just to remember? What would you be saying? Matthew I’m going to come to you first.
Matthew Searle: The most important is what Penina’s already covered, which is that it’s essential to get a written assignment of copyright to your business from someone who isn’t an employee, a freelancer or web designer.
Actually my tip, just to leave you with, I’m seeing more and more recently clients of mine who’ve got websites which incorporate images that perhaps their own web designer has put on the site for them. Then they’re getting rude letters from lawyers on behalf of Getty, or another image bank, saying, “This is our copyright. You’re infringing it. Give us some money and pay our costs and stop immediately.”
Getty, and the like, have sort of banks of lawyers and trainees. I’m sure they have sophisticated software. They can surf the Net and find, quickly, versions of infringing materials. They’ll be onto you like a rocket. Please check what goes on your website, and if it’s been produced by you for a third party, by a web designer, then get them to tell you, and confirm to you, even indemnify you, that it’s their own original materials or you’ve got the right to have it on your website.
Julie Stanford: Excellent. That’s a very good tip. Penina, can I ask what you would like business owners who are listening to think about and be aware about?
Penina Shepherd: My tip would be don’t be like the Dr. Martens case, the famous shoes. This is a case whereby the designer of these famous shoes manufacturer actually designed quite a few design element in what they were doing, but they never bothered to actually get him to assign the rights to them. I know. It’s just incredible.
He actually sought to exploit it and get money for it. It was a lengthy case and in the end Dr. Martens won in a loophole in the law and the freelancer didn’t get away with it.
This is always my little tip. Make sure that you own the intellectual property rights. If someone does a job for you, make sure they assign the rights to you, and spot on what Matthew said. If somebody else does design for you using other people’s materials, make sure that the assignment agreement actually stipulates that the designer declares that they own the right in what they’ve created, and therefore able to pass it on to you. If they can’t they will have to indemnify you if you get nasty letters.
Julie Stanford: Okay, and the final thought to patent and trademark attorney sitting here at the table. Philip just a brief thought if you don’t mind.
Philip Towler: Yeah. Just a quick one really. Remember that intellectual property is sometimes called the “negative right”. It doesn’t give you the right to do anything yourself, but it gives you the right to stop other people from doing something.
Julie Stanford: Right, which is a good point.
Philip Towler: What I often find is that people will come to me and say, “I’ve registered my company name. Now I’m okay aren’t I?” The answer to that is, “No, you’re not. Try and register your company name or product name as a trademark. That will give you the right to stop other people from doing something.”
Julie Stanford: Excellent. That’s a great piece of advice. Fascinating. Really, really enjoyed the show. Thank you very much for coming along.
This show was originally recorded for Business as Usual on Radio Reverb. I’m Julie Stanford. Thank you for listening to Essential Business Radio.
In 2014, there were changes to the Intellectual Property Act 2014 for design law, including:
- the intentional copying of registered designs is now a criminal offence
- the owner of commissioned designs is now the designer not the commissioner
- an unregistered design is considered original if it is not ‘commonplace’, now defined as “commonplace in a specific area” – UK, EU and other specific countries
- a ‘trivial’ section of a design (that is, “part of a part”) is not protected in the same ways as a design or cropped section is.
For patent law:
- patented products can be marked with a web address instead of patent number and country
- Patent Opinions Service has been expanded
- patents worksharing now applies to unpublished patent applications as well as published.
For more information about these changes, go to: https://www.gov.uk/government/publications/changes-to-design-law-business-guidance.