Intellectual Property – how to maximise your intellectual assets

Intellectual Property (IP) rights protect creations of the mind, safeguarding the key identifiers of a business and often becoming one of an organisation’s most valuable assets. A carefully crafted and fiercely protected portfolio of IP rights has helped to make many of the world’s most well-known hotels, restaurants and shops what they are today.

Whether you operate your business wholly online, in a town or city centre, or in a more rural setting, it is vital to take stock of IP rights you already have, and to consider the steps you can take to protect the elements of your business that make it unique.

So, if you’re involved in the Scottish hospitality or retail sector, here are a few tips to maximise the value of your IP.

What are the main types of IP rights?

IP rights can be split into those which are unregistered, arising automatically when the thing protected is created, and those which are registered, arising following a successful application to the relevant registry (the Intellectual Property Office in the UK). Your business’ intangible assets may be protected through:

• Copyright – an unregistered IP right protecting original ‘works’, for example, a book or a painting. Copyright can also apply to works which may appear less obvious, such as photographs you use on your website, social media content and restaurant menus. Copyright does not protect an idea itself but protects the expression of an idea.
• Trade marks – badges of commercial origin which identify the source of a good or service. Trade marks are most used to safeguard names and logos but can also apply to colours, sounds and even scents. A registered trade mark lasts for 10 years in the UK, but there is no limit to how many times you can renew it.
• Design rights – can be registered or unregistered. Registered design rights protect the appearance of a product, including its shape, texture, and decoration.
• Patents – protect new inventions which are capable of industrial application. Technical innovation in fashion, for example a new fabric or a process for producing fabrics, could be patented. Patents must be applied for, and if granted can last for up to 20 years.
• Trade secrets – commercially valuable information which is kept secret, and is valuable because of its secrecy.

How can you commercialise your IP?

An IP right allows its owner the exclusive right to use their IP while preventing others from doing the same.

Now that you’ve identified and taken steps to identify your IP, how can you maximise its value?

• Sell it: You can sell your IP rights to another party by assigning them, which transfers ownership of the rights.
• Licence it: You can licence your IP to others on a non-exclusive, exclusive or sole basis, giving them the right to do things which would otherwise constitute IP infringement in exchange for payment, such as a licence fee, royalties, or both. Licensing limits the owner’s exclusive right but does not transfer ownership. This is typically done through a Licensing Agreement, which governs issues such as duration, rights, restrictions, payment, warranties, infringement by third parties, ongoing renewal of registered rights and how to deal with improvements.
• Use it yourself: You can exploit your intellectual creations by using them yourself. A strong and recognisable IP portfolio may help attract investment and can increase your commercial bargaining power.

Franchising

Franchising remains a popular method for expanding businesses and is most prominent in the restaurant and hotel industries. Franchising involves licensing your whole business model to a third party while the franchisor retains control of standards. IP sits at the heart of franchising, with the franchisee benefiting from an established brand name and proven business model, processes and technology. The franchisor, on the other hand, can scale up while offsetting some of the capital costs in doing so.

Consistency is key to a successful franchise, and the risk for franchisors lies in choice of partner – franchising involves sharing your IP, and poor-quality franchises can both harm the reputation of the business and lower the commercial value of your name and other brand identifiers.

A well drafted and considered Franchising Agreement is key, and requires expertise in contracts, negotiation, quality control, marketing and relevant sector knowledge.

Recommendations

• Take time to identify and protect your IP.
• Ensure that you do not infringe the IP of others – when choosing a brand name or logo (and before seeking to register any trade mark rights) care should be taken to undertake searches to make sure that your brand will not infringe others’ rights.
• While operating your business, you should also avoid infringing other IP rights such as copyright. If you’re using images from the internet, always make sure that you have the appropriate permission to use them before doing so.
• Monitor infringement and take steps to protect your IP.
• Consider the ways that you can commercialise your IP, including assignation, licensing or franchising.

And of course, we recommend taking legal advice on how best to achieve all of the above points. If you have questions on anything that we’ve covered above, please get in touch with Douglas McLachlan, Sophie Byrne, or your usual Anderson Strathern contact.

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