The two aspects of Intellectual Property EVERY business should know

Over many years working within the Intellectual Property (IP) Specialist Team at Scottish Enterprise, we have engaged with thousands of businesses. This got me thinking, what would we want every business to know about IP??Fundamentally, every business should learn about Confidentiality and IP Ownership.?By raising awareness of these two topics, it would significantly reduce the number of IP related challenges that may be faced in the future.

Confidentiality

Simply put, this relates to information would you not want to be made public, or more strategically what information would you not wish to be in the hands of competitors.?Such information may include ideas for new product development, customer databases and/or any competitive advantage you have over competitors.?

When considering what to keep confidential, I usually propose the following approach to disclosure:

• Tier 1 - Information that you would be willing to disclose publicly and for that to be in the hands of your competitors
• Tier 2 - Information that you be willing to pass on to a possible investor/interested party to provide additional confidence to establish a relationship
• Tier 3 - Information that you would not be willing to disclose with anyone outside the business without a Non-Disclosure Agreement in place
• Tier 4 - Information which provides competitive advantage (a trade secret) that you would not be willing to disclose with anyone outside the business

Where disclosure of commercially sensitive information is required, Non-Disclosure Agreements must be in place with a defined purpose of the disclosure stated. This should detail what the agreement covers so both parties understand what is confidential. This must be signed by the parties.

It is important to establish the bounds of what should and should not be disclosed at the start of any new relationship. This should be reassessed periodically. Consider what does the third-party need to know in order to undertake the tasks we work together on??

Employees must be informed and aware of what information is considered confidential to avoid any potential uncertainty of what they can discuss within a professional and private context outside of the business.

If you manage confidentiality accordingly, it provides greater confidence in the ability to protect trade secrets and ensure competitive advantage. This also allows you the ability to seek patent protection in the future. ?

IP Ownership

IP Ownership consists of understanding who owns the rights to what is created.?This can include understanding who owns the rights of a logo (the designer or your business) or understanding who owns the rights to a software system you have a third party develop (the developer or your business). Unless IP Ownership is considered and agreed early, it can be a challenge, expensive or impossible* to resolve at a later date.

* For example, if you assumed that a software system will be owned by your business, the developer may be utilising third-party or their own proprietary code which they utilise for a number of clients.?In that position, they may be unable to assign the copyright for the source code as it would preclude them from using it for other clients.?Hence, the need for a discussion about IP Ownership prior to work commencing.

At the beginning of any new relationship, consider what do I need to own as a result??Even if it is not a physical item, consider if the product is a hypothetical physical brick, do I need it in our possession to build our business??If so, have an open discussion regarding IP ownership at the outset.?If it is agreed IP can be assigned/transferred to you, ensure it is written within the contract.

One of the reasons why IP Ownership is important to understand is that typically (at least in the UK), IP is not transferred automatically even if a contract and payment is made. There needs to be an explicit IP assignation clause within a signed contract or separate IP assignation agreement to transfer any rights to your business.

If every business was provided training on Confidentiality and IP Ownership, it would likely reduce a number of contentious legal disputes in the future.?On a positive note, demonstrating an understanding and use of appropriate confidentially and IP assignation agreements can evidence your IP management strategy to others even if IP registration is not a need.

Lastly, also consider the reverse!?For example, if you are the person to which confidential information is being disclosed to or your business is creating works which a third-party may wish to own you will need to consider confidentiality and IP Ownership.

The management of confidentiality and IP Ownership is an important legal matter and professional advice should be sought to provide confidence you have the right measures and agreements in place.?The IP Specialist Team at Scottish Enterprise can discuss these matters with you and refer you to professional advice where appropriate.