Intellectual Property or IP creates the right to legal monopolies over certain objects or inventions of the mind, usually expressed in patents, copyright and trademarks. They are important in business, because the owner of IP in a particular item has legal rights which prevent other people from taking that item and using it themselves. Essentially IP enables people to invent and then develop, manufacture and market that invention without competition from others.
In New Zealand, the three main components of IP are Trademarks, Copyright and Patents. There are others, including common law rights such as “passing off”, which protect Person A from Person B packaging or representing a product to look similar to Person A’s existing product, and therefore confusing or misleading the public. This type of protection is now embodied in the Fair Trading Act 1986, particularly in section 9, which says:
"Misleading and deceptive conduct generally---No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
This is a very important addition to IP laws, and has been much applied, and litigated.
The Trademark Act 2002 defines a trademark as any sign capable of being represented graphically and distinguishing the goods or serves of one person from those of another person. (Think “McDonalds” or “Cadbury’s” or “Placemakers” or “Burger King” and you get the idea.)
A sign is defined in the Act as including "a brand, colour, device, heading, label, letter, name, numeral, shape, signature, smell, sound, taste, ticket, or word; and any combination of signs". A trade mark is often referred to as a "logo", "brand" or "brand name". In other words, pretty much anything, although there are some words and phrases that cannot be registered eg surnames, unless they are presented in a unique or unusual way, marks that are the same as or are similar to trade marks already on the Register of Trade Marks, names that are likely to mislead, confuse or are offensive, generic terms, superlatives, descriptive terms or geographical locations associated with the good or service.
Trademarks are classified under international classes: 1 – 34 for Goods and 35 – 45 for Services. To gain protection under the Trademarks Act, a name or phrase must be registered in one or more of those classes. In other words, a name or phrase does not have protection for all goods or services but only those for which it is registered.
It is important, if you wish to use a word or phrase for your business, that you do not infringe someone’s existing trademark. You are able to search the Trademark register, and apply to register a trademark, yourself at www.iponz.govt.nz or have an experienced trademark person or firm do it for you. It is a highly specialised field and it is recommended that you get a professional to do the searching for you and, if you wish to register a trademark, do that as well. The penalties for infringing someone’s trademark can be severe.
Everyone will recognise the copyright symbol ©, but not too many will understand exactly what it means, the protections copyright afford, and the penalties for breach.
Copyright is a form of IP that gives the author of an original work exclusive right for a certain time period (in New Zealand, the life of the author plus 50 years for literary, dramatic, musical and artistic works – see below) in relation to that work, including its publication, distribution and adaptation.
Perhaps the most significant point about copyright, unlike a trademark or patent, is that it is automatic unregistered right in an original work ie it arises by the fact of the work, not by registration.
There are many different types of works afforded protection by copyright, but for business purposes, a “literary work” is the most important, because this definition includes text like emails, training manuals, novels and song lyrics; tables and compilations including multimedia works, and computer programs. “Artistic works” are also significant, including paintings, drawings, diagrams, maps, models, photographs and sculptures.
It is not necessary to label an original work with the symbol © to get protection, although many people do. The protection arises whether the symbol is present or not, so it is not safe to assume that, simply because © is not endorsed on something, that it not protected by copyright.
Penalties for breach of copyright can be severe: damages can be awarded against you, and fines of up to $150,000, or even imprisonment.
A patent is a right giving exclusive use of an invention for up to 20 years. It is a monopoly right. A patent, like a trademark or copyright, can be a valuable business asset that can be bought, sold, transferred or licensed like any other property. In fact, many businesses have no traditional “bricks and mortar” assets but are built solely in the value of their IP.
To be patentable, an invention must be able to be applied in industry, contain a non-obvious innovative component and be new or novel. This last point is why it is important, if you do wish to apply for a patent, to do so before the invention is made public.
Patents cover a whole range of inventions, such as for new products, a new manufacturing process, an improvement on an existing process etc.
More information can be accessed freely on the www.iponz.govt.nz website linked above.
The actual business of drafting a patent application is often complex and specialised. It is highly recommended that you consult a patent attorney, if you have an invention you wish to patent.
Understand that it some cases the various components of IP can overlap. For example, if you have invented a new type of reclining chair that has features that are patentable, there will also be copyright in the drawings you have prepared, provided they are original.
IP as a Business Asset
As mentioned above, IP can be a valuable business asset. In fact in many cases, IP may be the only significant asset a company holds. This is particularly true, for example, in the modern information age with software. Microsoft is a software company, and its value is built around its IP assets. McDonalds or Coca Cola are instantly recognisable names worldwide, and are of immense value.
If you have a new product or invention, it is recommended that you consult a lawyer before any dealings with third parties. Remember that although IP is an item of personal, as opposed to real, property, nevertheless it is a transferable asset. If you enter into an arrangement or agreement transferring that asset to someone else, that person will acquire good title to the asset in your place. Generally speaking, it is too late to do anything about that if the person who has bought the asset from you makes a real success of it and, consequently, far more money than you.
In short, you need to protect IP assets as much as you do any property you own.
Legal and specialist advice is always better taken before rather that after, when the horse may already have bolted.