© Michael Woodhouse

The Federal Government has identified trade in intellectual property, including royalty payments, as a growing export earner, and set up IPAustralia to foster it.

The problem is, our culture doesn't place a primary value on anything "intellectual". Chances are, you're ignoring real IP values already existing within your business.

Your name. Your logo. Your products. The systems which are your business. Your knowledge of the market. Even your corporate style.

All of these are vital to your ongoing success, but easily copied.

They're intangibles, but they can have real value. Proven, documented operating systems are the main asset of most franchises, while many brands now have values estimated in the billions.

Sometimes their value is appreciated only when it is lost: when a founder dies and it's discovered that the business systems they managed were never written down, or a salesperson leaves not only with your client list but also full knowledge of things you did to secure each of them.

What can you do?

Audit

Start with an audit of intangible assets. Things like designs, techniques, services, goodwill, systems, knowledge, market information and client details.

The first issue is documentation. It's hard to protect something that isn't defined. It's very difficult to prove prior ownership if you can't show evidence that pre-dates the theft.

Define your intangible assets in writing, with details of how they were developed and how they are used. Aim for measurements, figures and concrete examples.

Defining ads value

Defining intangible assets makes it easy to assign value to them. As in one theory of physics, if it isn't measured, it doesn't exist. But documented procedures, techniques and designs can appear on balance sheets, in trade negotiations, on loan applications and in strengthened company profiles.

Defining ads value in other ways. Documented systems work better than in-the-head systems. They can be better accessed and understood by all and they are more readily open to systematic improvement. It's easier to assign responsibility for using and maintaining them. Documentation ads precision, reproducability and – well, reality.

Protection options

The main tools are:

• Trade marks
• Patents
• Registered names
• Registered deigns
• Trade secrets
• Copyright
• Confidentiality/non-disclosure agreements
• Non-competition agreements

There are also some very specialised tools, such as circuit layouts and plant breeders rights.

Unlike condoms, one size does not fit all – and not everything can be directly protected.

Trade marks

A trademark is something used to distinguish your product or services from others. It can be a symbol or logo, word or phrase, shape, picture, an aspect of packaging – even a sound or a smell!

Some things cannot be part of a trade mark (eg, the words "Olympic Champion") and of a new trademark cannot be too similar to an existing trademark. There is a searchable database (see the Help reference below).

A trademark does not have to be registered (it's still protected under trade practices legislation) but of course it's easier to protect if it's registered. If you're going to license your trademark for others to use it, registration is vital.

A trademark is usually an exclusive right, for the designated goods or services, within Australia.

Overseas registration has been country by country, but single registration with up to 50 countries paricipating in the Madrid Protocol is now being implemented.

You can register a trademark yourself, without legal help (I've done it). The trademark must be in use before you apply, it will cost as little as $450 to cover one class of goods or services, and the process will take six months or more but it's not arduous.

Trademarks can be renewed indefinitely provided they remain in use and subject to a renewal fee every 10 years

Trademarks are a very powerful form of protection that ad asset value because they can be sold and licensed. The relative ease of obtaining them makes them an under-used business tool.

If you sell a branded physical product you should certainly look at a trademark and the same applies for franchises and any services which use a system.

Patents

Patents mostly protect inventions. There is no protection until the patent is registered and the patent application must be lodged before any public disclosure. If you disclose details of your invention before it's registered, then it cannot be registered.

Generally a patent must be applied for in every relevant country, though international agreements are being implemented to simplify the process.

A patent application must be protected by very detailed information. You can do it yourself but it is not simple. If you're an inventor, you'll probably be willing to invest the time learning the ropes. If it's a one off, consider using a specialist patent attorney, preferably one with experience in your market. Ring around for experience and price.

(The database of registered patents includes a lot of detail of interest to the creators of new products, that can help guide them away from overworked areas and potential conflicts. Se the Help resource below.)

Getting a patent can easily take a year and longer if the application is disputed or if the complex paperwork demands are not met.

Actual fees for a patent can be under $1,000 plus annual fees (which start at $100 and increase each year to a maximum of $790 in the nineteenth year). If you're using a patent attorney, of course their fees will be extra.

A patent lasts for up to 20 years. It can be bought, sold and licensed. A patent may dramtically increase the commercial value of an invention.

Innovation patent

The innovation patent is a new Australian invention! It's designed to cover small or incremental advances in existing devices or processes. It's faster and cheaper than a full patent, but still effective.

Registered names

Registration of business names (either as a trading name or as the name of an incorporated company) is managed by the Australian Securities and Insurance Commission, in consultation with the states. See www.asic.gov.au.

Registration ensures that no-one else in Australia is using exactly the same name. It does not protect you from others using similar names. It does not even protect you from being sued by another party who thinks your name is too close to theirs.

Actions for similar names are usually under trade practices legislation. They can be messy and expensive.

Apart from being a legal requirement, registration of a business name ads some value (the name can be bought and sold), but it's of no great use as a protection.

Registered deigns

The visual appearance of a product can be registered as a design. This doesn't cover how the product works and it's not for single works (like buildings or art). The design must be "new" (in Australia).

A registered design can be bought, sold and licensed. It's useful if your product has a distinctive look or if you are producing a range of products with a unifying design (eg, a range of computers all in round pink cases).

Registration is for a year but can be extended year by year to 16 years. The initial fee is $95 for a turn-around time over six months, or double that for "expedited" assessment.

If you want protection in other countries you must do this individually and within six months of your Australian application.

A registered design is cost-effective protection. It's not as strong as a trademark, but cheaper and easier to achieve.

If the appearance of your product makes it distinctive, you should try for design registration.

Trade secrets

If you keep something a secret, then no-one can copy it. Prevention is better than cure.

This sounds self-evident at first, but it comes in to legal force if someone steals your secret. Industrial espionage may sound a little far fetched, but theft by departing employees who either disclose your secrets to new employers or use them in starting up their own business is not.

Trade secrets are a recognised legal form of protection for some technologies and other forms of intellectual property. They are especially useful when registration under some other system would take too long or might not succeed or would reveal too much. Of course, they will only work where it's hard to deduce the secret by examining the product.

To establish a trade secret you must treat it as a secret: restrict access to the knowledge on a "need to know" basis. Secure all documentation. Require employees, suppliers and trade partners who are exposed to the information to sign confidentiality agreements and non-competition agreements.

Secrets tend to out. Relying on trade secrets may work short term and with products with a short lifespan (common in some IT sectors) but longer term you should try for some kind of registration.

Legal enforcement of a trade secret can be a messy and costly affair. Action over a breach of confidentiality of non-competition agreement is likely to be easier and faster, that's why these are important adjuncts to the trade secret.

Copyright

Copyright protects the original expression of ideas (but not the ideas themselves). Sort of.

This means that a book is protected word by word (that's the expression) but not the plot (which is the idea). Anyone can rewrite the book (or brochure or speech) to the same plot but with different characters.

You don't have to register copyright, it's automatic – though you should take some action to establish the date of creation, for example by lodging a copy with a library, lawyer or other third party. There are no charges.

Copyright for film and radio lasts 50 years. Copyright for print lasts 50 years from the author's death.

Copyright isn't up to much outside the publishing world. Enforcing copyright is difficult, slow and not always effective. Even in the publishing world authors are trying to establish intellectual property rights rather than copyright

Confidentiality/non-disclosure agreements

Confidentiality and non-disclosure agreements became popular with the dot.com boom, when everyone thought they had an idea worth a billion or two.
Many of them contained outrageously unenforceable clauses and the main benefit was a deterrent effect with people unwilling to bear the cost of testing them.

Nevertheless, breach of a non-disclosure clause creates a distinct legal disadvantage that makes these instruments worthwhile. They can be used to support applications for injunctions against former employees and their new employers. They can support damages claims. They can trigger unfavourable publicity.
The only certainty in a courtroom is that costs will exceed expectations, but if you're going to court, better to go with one of these than without.

You can have a lawyer draw up a standard agreement (make sure they are actually experienced in that area). Apart from that, there are no costs. Most people "creatively adapt" the last one they signed.

Those who sign your confidentiality agreement must get a copy. File your copy securely, to ensure it's there should you need it.

Non-competition agreements

This is an agreement by an employee which may include not opening up in competition with you and not working for a competitor. Usually there is a specified time period and often a specified geographical area.

Employees cannot be forced to sign non-competition agreements, and in some cases a signed agreement may be disallowed if it unreasonably denies a person the right to earn an income, but they remain an important tool.

Most of their effect may be deterrent, but as with confidentiality agreements their existence gets you on the front foot should you have to go to court.

The best time to get these signed is of course when you take on a new employee. If you suspect an employee is working behind the scenes to open up in compeitition you're unlikely to get a signature – though you may get a confirmation of your suspicion, which enables you to take pre-emptive action.

Help

Sometimes governments do things right. IPAustralia is a great resource for intellectual property issues. Check them out at www.ipaustralia.gov.au, where you'll also get access to useful databases.

With offices in all state capitals, IPAustralia offers a useful range of free introductory material (used in compiling this article) including practical guides to various registrations and more advanced for-payment information including an "IP Toolbox". Phone 1300 65 10 10.

IPAustralia staff will help you prepare applications, but they can't give legal advice.

A good source of information about copyright is the Copyright Agency Limited (which administers licences to reproduce copyright material): phone 02 9394 7600 or visit www.copyright.com.au.

DISCLAIMER: This article is not legal advice. It looks at intellectual property from a business rather than a legal viewpoint and is intended for information purposes only. Consult your lawyer. Also see the help reference at the end.