Picture this – you’ve got an innovative business idea that you think could take off internationally and you ask one of your loyal friends for help to implement it. Your idea hits the big time with swathes of people lining up to get a piece of the action. But when the money starts rolling in your realize that none of it is going to bolster your bank account. Instead it will be lining the pockets of that loyal friend who has now become your rival.
Sound familiar? There are elements of the legal maelstrom that blighted billionaire Mark Zuckerberg after his former student employers at ConnectU filed a lawsuit against Facebook alleging that Zuckerberg had breached an oral contract by using their source code and idea. But there are thousands of similar sob stories doing the rounds of how seemingly faithful friends or employees have turned to bite the hand that fed them in order to gobble up all the gold and glory for themselves.
So how do you protect yourself as a business owner? And how do you protect yourself on an international level? With intellectual property laws differing from country to country you need to make sure you won’t spend the rest of your career bitterly kicking yourself for not taking the proper precautions.
1. Think Ahead
Sonia Hadjadj, a French lawyer who helps entrepreneurs handle intellectual property (IP) has this advice: “If you’re going to do business in another country you need to do your due diligence before you set up. If you don’t take care of it at the beginning then you’re going to run into difficulties which will always affect the money side of your business.”
According to Sonia, the companies most at risk are tech startups. The tech community is a hive of original ideas aiming to improve the way we live and communicate, but by its very nature it leaves itself open to IP theft.
She elaborates: “Tech companies are in a very competitive area. Considering the amount of energy they spend building their brand, their reputation, their clients and customers, it is crucial to secure their IP rights upfront. If they haven’t done the basics there may come a time when they look around and think: ‘Hang on a minute, that’s mine!’ Tech companies are most at risk but really any type of company that doesn’t protect itself is putting itself in danger.”
2. Know Your IP Types
The three main types of IP are:
Trademarks – this is what is more commonly known as a ‘brand’. It’s the sign that differentiates one product or company from another.
Copyright – this applies to artistic or intellectual work such as written material or design. Copyright can be very different from country to country. For instance in France there is only the droit d’auteur or “right of the author” which splits the rights into two sections – proprietary rights and moral rights. This is not the case for other countries so you need to make sure you are aware of the copyright laws in the country in which you are planning to do business.
Patents – these give exclusive rights to an inventor to make, sell use and import their invention. However, each country has its own patent laws. For instance, in France you cannot protect an idea – it has to be a concrete product before it can be protected under the IP laws.
Sonia Hadjadj explains: “IP protection can only be awarded to something that is original. There is a fine line between innovation and something that already exists. In France the judges appreciate originality subjectively. Originality does not mean new, but a work which shows the creativity of its author.”
There are other forms of IP that include industrial design rights and software – all of which need to be kept in mind when starting a business.
3. Check IP databases
Large companies have the edge over small businesses in IP protection as they usually have a legal team who closely follow any IP infringements and can clamp down on any threats as soon as they are alerted. However, small businesses that don’t have the advantage of having big-shot lawyers on the payroll can still cover their business backsides by checking the IP office websites and patent status databases regularly, or by seeking a little legal advice at the company creation stage.
4. Register Your Company
The very process of starting your business officially can go some way to protecting it. By registering your company and filing the documents and by-laws at the government offices, you have already placed your business, its functions and intentions within the realm of the law. If you are able to produce the rubber-stamped documents that prove you own the business, stating the products or the inventions that you use, then you have some official back-up on your side.
5. Don’t Let Risk Turn Into Regret
The surge of new products and startups in recent years has put IP issues very much in the spotlight, but an IP backlash has been brewing. Critics of the legal system believe that the growing importance of IP has led to a stunting of ideas. They state the heavy hand of the law bearing down on creatives and innovators only encourages a climate of fear, making them feel that collaboration is a risky venture instead of one that could generate progress.
However, these libertarian views are not new. As the third president of the United States, Thomas Jefferson, wrote back in 1813: “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”
Two hundred years later such a generous attitude is unfortunately sidelined in a world where pharmaceutical companies battle each other over drug patents and tech companies squabble over the latest digital gadgets. Perhaps that generosity could have come in handy during the costly and convoluted legal battles between Facebook and ConnectU? Or perhaps if they had understood a little about IP protection in the first place Facebook would now be an entirely different company?
Speculation and regret can never turn back time, but their mistakes have afforded the rest of the business community with a very valuable lesson: protect your IP.
This post does not serve as official legal advice or substitute speaking with a lawyer regarding your startup.