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10 ways to protect your business ideas

Thursday, 21 October 2010 | By Oliver Milman

Intellectual property may feel like an abstract concern for time-poor start-ups, but the need to protect your business ideas are more pressing than ever, a lawyer claimed this week.

 

Paul Brennan, of Brennan Law, told StartupSmart.com.au that he’s seen a 100% increase in small firms approaching him over the past year for IP help. Brennan says that increased use of the internet has opened the floodgates to disputes over IP.

 

With this in mind, StartupSmart.com.au has put together 10 ways you can protect your business ideas and brand.

 

1. Get a trademark

 

As soon as you come up with a logo, slogan or brand name, make sure that it doesn’t clash with existing trademarks and apply to get it registered. This will help deter copycats.

 

The filing of a trademark costs around $1,600 and it will take seven months to come into effect, to allow others similar claims to emerge. Very descriptive words that are used generally by other firms make very bad trademarks, so try and be distinctive with your brand and logo.

 

Even if you don’t register a trademark, you still have rights if you used it first, although you aren’t on as sure a footing, according to Ida Pereira, associate trade mark attorney at HP firm Griffith Hack.

 

“It’s much easier to prove your trademark with certification,” she says. “Relying on common law of being first is a lot more expensive, relies on your reputation and requires you to gather evidence.”

 

2. Get a patent

 

Many people think of patents as being used for ground-breaking engineering feats involving widgets, but they can be used for a variety of innovations. This can include anything from software to your method of doing business – for example, Amazon’s ‘one click to buy’ concept.

 

Patents need to be based on something physical, rather than abstract ideas. You can file for a provisional patent, which gives you protection for 12 months while you develop your idea into a full patent. This will cost you between $5,000 and $10,000. The process then moves in stages, depending where you want your patent to apply. For example, a patent effective in 10 different countries can cost anywhere between $100,000 to $200,000.

 

3. Be careful who you discuss ideas with

 

When you concoct an idea for a start-up business, it’s natural to be excited and blurt out your concept to family and friends. Indeed, many successful businesses have been shaped by the early advice and support of people close to the founder. However, tread carefully.

 

“I’ve seen a few cases where someone has told friends and family an idea and the idea has found its way to a competitor,” says Joe Seisdedos, senior associate at Griffith Hack.

 

“You have to be careful even when talking to friends and family. Once an idea is out there, you can’t really draw it back in. Generally, the law says that if you disclose an invention to others, even if they are friends and family, your ability to get a patent may be seriously compromised.”

 

Seisdedos advises start-ups to talk to an attorney before discussing any innovative business idea and demand that non-disclosure agreements are signed by potential business partners. Even if they won’t sign NDAs, an agreement in principal, agreed over email for example, should be enough to protect you.

 

4. Use your protection properly

 

Even if you feel your business is protected, you can still slip up. Be aware that the name you registered your business under isn’t the same as trademark law – they are two separate processes you need to go through.

 

Once you have your trademark, make sure you use it properly. Don’t use it in plural form and make sure that you use it as a noun rather than a verb. Once you get a trademark, you have five years to start using it. If another business realises that you haven’t been using it in the way it was intended, they could get your trademark removed to their advantage.

 

5. Don’t let your brand become generic

 

Escalator. Hoover. Band-Aid. All are terms that were once brand names but are now used generically for the functions they perform. Make sure your brand remains unique, or others will be able to muscle in. Consider adding the function of your product along with the brand name to ensure consumers draw a difference between the two.

 

 

6. Don’t get swallowed up by a rival

 

Some start-ups can get sucked into the web of larger rivals that promise to expand their business. Without proper IP protection, the start-up can find that their ideas are stripped away without recourse. Even a patent won’t deter some rivals.

 

Paul Brennan says: "Some large companies say to a small firm 'come with us, we'll take you with us and franchise you.' You can get merged in and once you lose everything else, all you have is your IP."

 

According to Seisdedos, big business will usually attempt to get your product or idea under license rather than crush any patent entirely.

 

“Many larger companies would rather talk to you with a view to licensing the technology” he explains. “If they knock over the patent entirely, then it’s available to all of their competitors, so it’s in their best interests to work with you rather than against you.”

 

7. Think ahead with your trademark and patent

 

Your start-up may be currently operating out of a spare bedroom in the suburbs, but you probably have grand plans for your business. If so, you need to think ahead to safeguard your IP.

 

Rather than just getting trademark cover for your existing operations, think about areas you’ll soon be expanding into and get the same protection. With a five-year window for trademarks, this should give you the time to eventually take advantage.

8. Protect yourself overseas

 

Your planning should also include what will happen if you expand overseas. Establish your brand certification in other markets before taking the plunge, or the move could backfire.

 

“Trademarks are territorial by nature,” says Pereira. “Do a proper search before you expand because you don’t want to re-brand once you’ve launched in another country.”

 

9. Take action if others violate your brand

 

If your trademark or patent is being trampled upon, don’t be afraid to take action. By doing nothing, you will give other businesses an invitation to exploit your IP.

 

Talk to a lawyer about the situation and ask them to send a ‘cease and desist’ letter. This usually works, according to Seisdedos.

 

“A lot of cases are settled before they go to court due to the cost,” he says. “I’d say about 60 to 70% disputes settle outside court. It’s normally preferable to work it out this way.”

 

10. Don’t be intimidated by the cost and time

 

Establishing and protecting your IP may seem like a time-consuming and costly process, but it shouldn’t be overlooked as a priority when starting up.

 

“Many people think IP costs a lot of money and start-ups are usually time poor,” says Seisdedos. “But it often doesn’t end in litigation and start-ups should always keep their IP in mind.”