Business Law

The importance of having an IP management system

B2B Editor23 December 2014

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For most businesses their intellectual property (IP) make up a significant proportion of their goodwill and ultimate value. It is therefore imperative that proper safeguards are in place to allow you to identify what IP is yours and to protect it.

Every business should have an IP management system to ensure that any (relevant) IP relating to / created in the course of running the business remains protected. Such a system should be founded on three basic principles:

1. a policy of recognising, and where appropriate, registering IP on creation;

2. having IP provisions in your contracts of employment and contracts for services; and

3. ensuring those privy to your business’s confidential information are bound by non-disclosure agreements.

As a matter of priority, make sure that you register your business’ patents, designs, and trademarks as soon as they are created. Registration of patents and designs should occur before you disclose them to the public. That registration allows you to exploit your registrable rights without losing protection. In the case of trade marks, registration allows for a much cheaper and more efficient means to prevent others from using or taking advantage of your branding and goodwill. In any event, always keep comprehensive notes of your process in developing any inventions, designs, or copyright works – it may prove very useful if an IP-related dispute should eventuate.

In relation to any contract for services, IP created by a contractor usually belongs to the contractor unless specifically agreed (in writing) otherwise. However take the situation where a business uses its existing IP in the course of providing its services, and during the process the IP is altered for or by the client. Can the client use the base IP after the services have ended? Can the business continue to use the new IP with other clients? What if both parties’ contributions to the IP have blended to the extent that you can no longer distinguish them? Without a robust contract in place, those questions have the potential to become extremely contentious, and their resolution could require unnecessary and exorbitant expenditure.

Finally, make sure anyone (including employees and contractors) who has access to your trade secrets and confidential information signs a strong confidentiality agreement. That will provide a deterrent to any undue disclosure, and if they do so, it will be a solid foundation on which to base a claim for damages