SMEs — FIVE things you MUST do to protect your intellectual property rights

UK SMEs are running the risk of their rights being infringed, products copied and even costly rebrands due to a failure to protect and register their intellectual property (IP) rights.

According to GovGrant, just 9% of small- to medium-sized businesses (SMEs) have registered IP rights, compared to 40% of large companies.

Here, Partner Sara Ludlam and Trainee Solicitor Scott Reynolds outline what smaller businesses must do to protect their IP.

Why do smaller businesses fail to register their IP?

Many smaller businesses may avoid registering their IP rights due to a lack of knowledge about the benefits this brings. Yet by failing to register, SMEs leave themselves open to even more costly consequences down the line, such as extensive litigation proceedings.

While it isn’t necessary to register all of your IP — as some ‘free’ protection can exist automatically — defending unregistered trade marks is more difficult (and therefore more expensive) than defending registered ones. If you’re in a dispute manged at the UK Intellectual Property Office, you can expect to spend over £10k with solicitors — and in the courts, the costs are north of £85k.

Comparatively, the cost of filing a trade mark in the UK can be as little as £170.

It’s commercially sensible for every business to identify the strengths and weakness of its IP portfolio to understand how rights can be harnessed to ensure protection and open up new revenue streams.

Financial support available for SMEs

As part of our efforts to raise awareness of IP rights among SMEs, we recently joined forces with Innovate UK Edge for an event at the Business & IP Centre Leeds. Here, businesses from across Yorkshire (both north and south) learned how to identify, understand and exploit their IP.

Innovate UK Edge offers advice and support for growing businesses and offers grants of up to £2,500 to help fund IP audits.

What MUST be protected?

1. Brand identity and market recognition

Company names, brand names, logos and slogans are all essential parts of what makes your business stand out. They can all be safeguarded through trade mark law.

If your use of a trade mark meets certain criteria, you could be awarded free trade mark rights in the UK (known as passing-off rights). For example, if you can prove that you have established goodwill and a reputation by using a mark, this could make it illegal for a competitor to use the same mark for similar goods or services in the territory where you trade.

However — given that your names, logos and slogans are valuable assets that can significantly increase your company value and its attractiveness to potential investors — securing a registered trade mark is even more valuable and makes it much harder for you to be copied. This can greatly reduce future legal costs in the event of your rights being infringed and will help you to avoid being accused of infringement by others.

Always apply the ™ symbol when using an unregistered trade mark and ® when using a registered trade mark.

Filing a trade mark online can cost as little as £170, but trying to stop a third party from using your unregistered trade mark will cost you thousands.

2. Creative works and content

The protection of creative works and content — such as books, music, films, software, website content, product descriptions and images — can be achieved through copyright. This subsists automatically when an original work is created and doesn’t require registration in the UK.

While copyright prevents others from copying, reproducing or distributing the works without first seeking permission, you must be sure to mark your work with the copyright symbol ©, the date the work was created and the name of the copyright owner.

If you fail to use the copyright symbol, you could let your competitors get away without paying you damages for infringing use.

Some other countries do have a copyright register. If your copyright works are to be exploited in the US or China, for example, you should register them there.

3. Inventions and discoveries with commercial potential

If you’re an innovative business, you’ll want to protect yourself from losing sales to competitors who simply copy your work and use your R&D for free. When you invent something new, consider filing a patent application before disclosing it to anyone. Once registered, this will provide you with a monopoly right for up to 20 years.

If you disclose your invention before filing a patent application, your opportunity to get the monopoly rights granted by a patent will be lost. Make sure to use confidentiality agreements where disclosure is required.

4. Product designs and visual aesthetics

Registered designs are a comparatively quick and low-cost form of IP protection. They protect the visual appearance of a product or its packaging — such as a configuration, pattern or ornamentation. Securing these rights will further differentiate your product from those of your competitors and make it much harder to copy you. If you pay the renewal fees, your registered designs can give you monopoly rights for up to 25 years.

Since you won’t always know whether a particular design will be a commercial success, you’re allowed to take up to 12 months to file a new design registration in the UK. This is useful where your business involves the creation of many new designs — not all of which will go to market or remain on sale.

There are also unregistered design rights, which don’t require registration. These will arise automatically and last for either 15 years from the date of creation or ten years from the date the product was first sold. However, be aware that in the last five years that an unregistered design right is valid, you must grant a licence if a competitor (or infringer) asks for it.

Again, the value of investing a few hundred pounds on design registrations to prevent competitors from stealing your designs is a drop in the ocean compared to the investment you would have to make to stop them without those registrations.

5. Trade secrets and proprietary information

According to a survey commissioned by the UK Intellectual Property Office, only 15% of small businesses rated secrecy as important in protecting revenue streams generated from IP.

However, non-disclosure agreements (NDAs) should be used more commonly than you might think. It’s recommended that confidentiality measures are signed prior to entering into business dealings or talks where any important commercial information is being discussed.

Your crown jewels — whether it’s a formula, manufacturing process or even a customer list — must be protected at all costs and prevented from being copied or entering into competitors’ hands.

An effective NDA needs the right definitions incorporated, so legal assistance is advised. However, there are templates available both online and at the Post Office. You should also take some basic, practical steps to safeguard your confidential information, including not sending information by email and only sharing information with those who need to see it.

Keep records when using unregistered rights

When using an unregistered IP right, you must collect and update the following records:

• Date of creation.
• Details of who created the work.
• The creator’s contract of employment, subcontract or an assignment that confirms the transfer of the IP right to you or your business.
• Details (including dates, if possible) of how the work was created (early design drawings, prototypes, etc.).
• Copies of invoices, orders and dated webpages that show the mark being used.

Talk to us

Always take legal advice before trying to secure registered rights. Timing is critical and many forms of IP can work cohesively to provide stronger protection.

A qualified IP attorney will be able to advise you on the best course of action and give your applications the best chance of success.

Need help or want to learn more about IP protection? Talk to us by completing our contact form below.