If you own an item of property, you have the right to do certain things with it such as selling it to a third party for an agreed price. You also have the right to prevent other people from doing certain things with your property, such as using it without your permission. These ‘property rights’ are easy to understand in relation to tangible items such as houses, cars, clothes etc. However, the law also provides for similar rights in relation to intangible property like the software code used in an app or the design of a new logo. These rights in intangible property are known as ‘intellectual property rights’ (IPRs).
IPRs can be of great value to individuals, businesses and industry sectors, e.g. technology, music, artistic work and literature. This article provides an overview of the main IPRs that exist under English law and how their use can be commercialised and protected by businesses.
What are IPRs?
IPRs cover a range of legal rights which vest in ideas expressed in particular forms. The IPR is not enshrined in the idea itself, but instead in the particular form in which the IPR is expressed.
For example, you may develop a new and unique electronic consumer entertainment product and the software that it needs to perform its functions. The software and operating instructions you develop will be protected by copyright, the shape of the product may be registrable as a design, the product itself may be patentable if it is a novel invention and the logo you choose for the product may be registrable as a trademark. You would also need permission from the owners of the relevant IPRs to access and use any entertainment content owned by third parties on your product platform (e.g. streaming music or downloading films).
IPRs are also usually key to protecting the ‘brand’ of your business, including the reputation and goodwill you have developed, from being exploited by others. For example, your businesses’ trading name could be protected as a trademark, and any internet domain names incorporating your business name could also be registered.
Some IPRs are capable of registration, whilst others either do not require registration or are not capable of registration in the UK. The advantage of having a registered IPR is that it usually makes enforcement of the IPR against unauthorised use easier.
Copyright subsists in certain types of creative works including literary, dramatic, artistic and musical works. Software constitutes a ‘literary work’ for the purposes of copyright protection. Once the creative work is expressed in some way (e.g. by writing it on paper or by taking a photograph), copyright exists automatically. There is no need to register your copyright in the UK.
The author of the creative work will usually be the first owner of copyright in the work (e.g. the developer who writes the software code for an app, the photographer who takes a picture, or the composer who writes a piece of music). If the author creates the copyright work as part of their employment, the employer will usually be the first owner of copyright in the work.
Copyright lasts for the life of the author plus 70 years from the year in which the author dies.
The owner of copyright has a number of exclusive rights relating to how the work may be reproduced and disseminated. These rights enable the copyright owner to control how the work is used (e.g. by allowing a work to be reproduced in print or online under a licence granted to a publisher). This enables the copyright owner to earn a fee for use of the work, usually as a royalty payment. Copyright can also be sold outright. This is known as an ‘assignment’ of copyright and must be agreed in a written agreement which is signed by the author of the copyright work (known as the ‘assignor’) and the person to whom the copyright has been sold (known as the ‘assignee’).
Any unauthorised use of a copyright work will constitute an infringement of copyright unless an exception applies. Numerous exceptions to copyright are set out in English law, including for private research and study; reporting of news; and parody, caricature and pastiche. It is often complicated to determine whether an exception will apply to the use of a work and so we recommend seeking legal advice if you are dealing with a potential copyright exception. Exceptions to copyright in the UK are not applied as broadly as the equivalent exceptions in other jurisdictions, and this can lead to problems where the use of a copyright work online benefits from an exception in one jurisdiction, such as the USA, but not in the UK.
Moral rights are personal rights which are related to, but exist independently of, copyright. The author of a copyright work can also hold certain specific moral rights such as the right to be identified as the author and the right to object to derogatory treatment of their copyright work. Ownership of moral rights cannot be assigned, but authors are often requested to waive their moral rights so that a copyright work can be used without worrying about moral rights in future (e.g. where a record company has a song assigned to it by the composer and songwriter and then re-works the music and lyrics significantly).
Design rights essentially protect the shapes of things. They can apply to both functional and artistic designs (e.g. in the shape of luggage, electronic goods such as tablets and fashion items such as jewellery or clothing). It is possible for an item to have a design right for both functional and artistic features such as certain types of furniture or glassware.
An item may potentially be protected by both registered and unregistered design rights. You can apply for registration in the UK as long as your design meets certain criteria such as creating a different overall impression on an informed user when compared to the other designs which have already been made available to the public. Your registered design right can last for up to 25 years as long as you renew it every 5 years. Registered design rights at the EU level work in a very similar way, the main difference is that your design will be protected across all EU Member States. The registration will state the owner of the design.
An unregistered design right (UDR) in the UK is similar to copyright as it arises automatically on expression of the design (e.g. by drawing it on paper). The duration of UDR is 10-15 years from creation of the design. A community unregistered design right (CUDR) also arises automatically but it includes surface decorations which are not protected under UDR. This makes CUDR useful for designs which include surface decoration such as fashion items. CUDR lasts for 3 years from the creation of the design. It is important to document dates of creation as you may need to rely on either UDR or CUDR for your designs. Ownership of UDR and CUDR is similar to copyright in that the first owner is the author unless the author is employed to create designs.
Design rights can be commercialised through licensing or assignment. The owner of a design has the right to prevent third parties from using the design without their permission, typically by incorporating the design into their competing products.
Registered designs give stronger protection against infringement as you can enforce your registered design right by showing that a third party’s design infringes your registered design. If you are relying on UDR or CUDR you need to provide evidence:
- that your design is capable of protection under UDR or CUDR
- that you own the design and
- that it has been infringed.
If your design is infringed, you can apply for damages or an injunction to cease use of the infringing design. You can also apply for delivery-up of infringing items or an account of profits in relation to sales of infringing items.
A trademark is a sign which can be represented graphically (either as text or as an image) and is used to indicate the source of goods or services. A trademark is usually a name or logo, but colours, shapes and even the chemical formulae for perfume may also be registered if they meet the necessary criteria. For example, a trademark may be applied to products by a brand owner so that customers know where the products come from, who made them and what quality to expect from the products. A brand owner may also use a trademark to signify its social values to its customers such as carbon-neutral manufacturing or ethical sourcing of raw materials.
It is important to bear in mind that unlike copyright and design rights, trademarks do not necessarily have to be tied to a specific, individual product, and they are therefore arguably the most useful type of IPR for protecting the brand and reputation of your business as a whole. For example, a fast food chain may register a trademark for the name of its best-selling burger, but it will also register trademarks for its trading name and logo.
Registering a trademark is almost always worthwhile as it makes it far easier for you to protect your rights and enforce them if you need to. Any sign you choose to register must be distinctive and non-descriptive. The UK, EU and international trademark registers are divided into different classes of goods and services, and your application must specify which classes you want your trademark registered in. For example, a company may wish to register the name of its product and a related logo as trademarks. It will apply to register these trademarks in the classes of the register which are relevant to the product. However, the company may also see that there are potential spin-off opportunities for its brand in other classes such as clothing, food and sport, and so may wish to apply for registration of each trademark in several additional classes of the trademarks register. It is important that you only register trademarks in classes and jurisdictions where you envisage using them, as your registration can be revoked if you do not genuinely use the trademark in the course of trade for a period of 5 years.
The registration costs for trademarks depend on a variety of factors including the number of marks and classes you apply for and the countries designated in your application (such as the UK, the EU and/or specific countries worldwide). If you obtain a registered trademark, it lasts for a period of 10 years but this can be extended indefinitely if you continue to pay the renewal fees.
The owner of a trademark is recorded on the register. As an owner you have the right to prevent anyone from making use not only of your trademark, but also of any other mark which is similar to it, in relation to goods or services which are the same or similar to those in which you have obtained your registration. For example, if identical food items as those you sell are marketed using a name which is phonetically or visually similar to your trademark, then such use would constitute an infringement of your trademark. Your trademark is also infringed if a third party uses it without permission in the course of their trade in a way which damages or takes advantage of your reputation (e.g. if your luxury brand logo is affixed to items which you do not sell and which are advertised as being sold for 99p).
If you do not have a registered trademark, you may still be able to defend against infringement of your brand/mark in the UK by using the tort of ‘passing off’. However, the burden of proof on you is more onerous, and it is often more of a challenge to provide the necessary evidence for a successful ‘passing off’ claim, as you must show:
- that the infringing party misrepresented the origin of their goods as being your goods
- that this caused confusion on the part of the public and
- that you have suffered loss as a result.
This means that you would need to show what steps were taken by the third party to create this confusion, as well as evidence of confusion amongst customers, and evidence to quantify your losses.
There is clearly a contrast between this high evidential burden for a ‘passing off’ claim, and a claim for infringement of a registered trademark (where the infringing mark and its use is simply compared against your registration).
Domain names can be a valuable part of your brand and so are often discussed at the same time as trademarks. You need to ensure that you are not losing potential customers because web searches for your brand or product names are leading people to an unrelated website which could be operated by a competitor, selling counterfeit products, or even displaying obscene material. Ideally you want to own all of the domain names which your customers are likely to search for, given that using similar domain names to divert business away from yours is arguably the most common method used by competitors and counterfeiters to take advantage of the reputation and goodwill in your brand and products.
A patent is a registered IPR relating to inventions which provides a monopoly for up to 20 years. For patent protection to be capable of being granted, an invention must:
- be novel
- involve an inventive step
- be capable of industrial application and
- not be specifically excluded from patent protection under English law.
For example, an inventor may develop a unique device that uses new technology to cut manufacturing time by half. The device is novel in that there is nothing else that is available that does the same job, the technology involved is different to any prior technology and the invention is clearly capable of industrial application as it reduces manufacturing time and, most likely, cost. The device therefore appears to be a patentable invention.
It is essential that an invention is not disclosed before it is patented (e.g. through publication in a journal or at an exhibition) as, generally, once it has been disclosed or becomes public knowledge, an invention ceases to be patentable as it will no longer be ‘novel’. If you do not want competitors to know how your technology works, you should keep it confidential instead. If you do need to disclose information to a third party (e.g. in pre-contractual negotiations or to potential investors), it is important that you limit the extent of this disclosure to only those individuals who really do need the relevant information. It is important to have a robust confidentiality or non-disclosure agreement in place before you disclose any confidential information to a third party.
Patents are relatively expensive to register and maintain but can be highly valuable assets such that the revenues from commercial exploitation will heavily outweigh the registration costs.
Commercialisation of IPRs
Many IP owners will wish to maximise their revenues by ensuring their IPRs are fully exploited. Often, companies may have the expertise to exploit their IPRs in a given sector or market, but there may be broader applications which will involve the licensing of technology, copyright, brands and the like to other parties in order to exploit a particular market in return for a share of revenues. The licensing of IPRs needs to be carefully handled and appropriate documentation put in place that only grants the applicable rights within the specified territory for the necessary duration, sets relevant targets and addresses royalties, commissions and other payments.
If you are considering assignment of an IPR it can be difficult to determine what may be a fair price as you do not know what use the buying party will make of it or how successful it will become. You should consider whether a licence would be more appropriate for the use the buyer intends to make of the IPR as it is possible to draft a licence in a way which will give many exclusive rights to the licensee.
Protecting your IPRs needs careful thought and planning. There are differing rights and protections in different countries and jurisdictions across the globe and local advice will often be required where international protection is needed. For example, although there is no registration process for copyright works in the UK, the USA and some other countries do have procedures for copyright registration.
You should also consider whether your contracts give you the IPRs you require (e.g. if you commission a third party contractor you may need to include an assignment to you of any IPRs in the work of the contractor in your agreement with the contractor).
Enforcement of IPRs
There is arguably little point in owning IPRs if you aren’t then able to effectively enforce them, and so it is important that once you have gone to the effort and cost of protecting your IPRs, you then monitor the (potential) use of those IPRs by third parties and take appropriate action to enforce your IPRs if they are infringed.
Enforcement of IPRs can, however, be complex, and so we recommend that you seek expert legal advice before taking any action. For example, where multi-jurisdictional issues are involved, you will need legal advice which takes the local laws of the respective jurisdictions into account. You also need to be careful in how you communicate with potential infringers because you are potentially liable for making unjustified threats against third parties if you send a communication to them claiming that they have infringed your IPRs. You can justify your communication if you can prove that you own the relevant IPRs and that they have been infringed by the party you are communicating with, but you can avoid this hassle by limiting what you include in your communication, for example by just notifying the recipient that you own the relevant IPRs (e.g. by attaching a copy of your trade mark or design registration certificate).
How we can help
We can advise you on what IPRs you own and/or need permission to use, draft and negotiate licensing or assignment documents to enable you to commercialise your IPRs, draft contractual provisions to safeguard your ownership of IPRs, and draft confidentiality agreements where you want to limit the disclosure of your confidential information to a third party. For further information, please contact us.
Disclaimer: This article is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this article.