Home Articles How much does it really cost to protect your intellectual property rights?

How much does it really cost to protect your intellectual property rights?

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Most people have a vague comprehension of the various types of intellectual property rights, but few know exactly which rights relate to them and even fewer know how much it will cost to protect them. This new series, written specifically for Australian knowledge-economy businesses, guides readers through the ins and outs of intellectual property rights protection as a solid platform for growth.

Intellectual Property is Your Most Valuable Asset

Intellectual Property Rights (“IPR”) come in many guises.

Be they confidential information, trade marks, copyright, designs or patents, they all form the most valuable economic assets of most of the leading corporations today.

Disney, Coca Cola and Vegemite are some of the most recognisable and valuable trade marks in the world.

We only need to remember how Bill Gates was able to use Microsoft’s IPR to build one of the largest and most profitable businesses in the world to recognise that if you do not protect your IPR, you will have no business – or at least not a business that strides the world stage.

Even back in the nineteenth century when Thomas Edison invented the first light bulb, protecting your IPR was important – right? Wrong. Edison didn’t invent the first light bulb – it was Humphry Davy in 1800. Edison was, however, the first to successfully patent the light bulb in 1880. It’s U.S. Patent No. 223,898.

Edison was in fact one of the most successful and prolific inventors and businessmen of his time, with 1,093 registered patents, which he used to effectively protect his business empire.

Get it?

If you want to be really successful instead of just so-so, you must think about the future.

Tony Kitchener of Cash Engineering Research Pty Ltd agrees. It’s worth remembering what he said: “Anyone can have an idea, but no one has ever made a cent from ‘an idea’. They have made money from being able to establish their idea as a reality. IP protection – a patent, for instance – is bricks and mortar.”

The True Cost of Not Protecting Your IPR

How many of us use powerboards to plug in all of our appliances?

In 1972, Kambrook invented the first electrical powerboard.

Unfortunately, Kambrook failed to patent the powerboard and ended up sharing the market with many low-cost competitors.

According to Frank Bannigan, the founder of Kambrook, “I’ve probably lost millions of dollars in royalties alone. Whenever I go into a department store and see the wide range of power-boards on offer, it always comes back to haunt me.”

Let’s make it simple.

Ideas, as such, are not protected.

That’s right ­- ideas are not protected!

The true cost of not protecting your IPR is the loss of market share (think Kambrook), while the costs associated with protecting your IPR should be factored into the benefit of market share (remember Edison and his light bulb).

But not all of us are Thomas Edison or Bill Gates.

How much does it cost to protect your intellectual property rights?

The suggestions made below are the minimum precautions you should take. Remember, this is a sophisticated area of law and it is important to get it right if you are going to properly protect your ideas as the foundation for a strong business. If you get it wrong, you may lose you IPR and have no business.

One of the most cost-effective methods of minimising the cost of protecting your IPR is a simple one.

Conduct an audit and create a comprehensive list of all your IPR. When you know what you possess, it is far simpler to determine what you need to do to protect those rights.

Trade Secrets

The most important IPR many businesses hold are their “trade secrets” or “confidential information”.

Coca Cola relies almost exclusively on protecting itself not by expensive “patents” but by protecting its trade secrets.

Trade secrets are most effectively protected by ensuring that all employees, contractors and business associates sign appropriate confidentiality agreements (sometimes called non-disclosure agreements or NDAs) either as part of their contract of employment or contractor services or a separate and specific confidentiality agreement.

The legal costs of preparing an appropriate agreement will vary depending on the details of the arrangements and will reflect the level of sophistication of the arrangements.

DIY contracts are available on the IP Australia website (www.iptoolbox.gov.au) but remember the DIY contracts are general in nature. Further, remember you are protecting a valuable right and once the secret is lost, you cannot recover it. So, if in doubt, seek legal advice from a patent / trade mark attorney or lawyer conversant with intellectual property law.

The legal cost of later seeking to enforce a trade secret may run into many tens of thousands of dollars and an unenforceable contract is not worth the paper it is written on.

Copyright

Copyright protects the original expression of ideas, not the ideas themselves. It applies to original works such as art, literature, music, films, sound recording, broadcasts and computer programs.

Copyright does not require formal registration on a central register nor does it require the use of © to claim copyright. Copyright protection is automatic.

As a precaution however, it is wise to use the copyright notation as it puts other parties on notice of your claim to ownership of the material. The most common way is to use the © symbol and the date.

One aspect frequently overlooked is the ownership of copyright in materials produced by employees and contractors. Copyright does not always reside in the employer or the business.

All employees and contractors should have agreements with the business that copyright in any work created by them as part of their services belongs to the business.

Trade Marks

Trade marks technically do not require registration for protection nor to claim that you own the trade mark. The original creator of the trade mark owns the right to use it because of its original creation.

Registration of a trade mark however gives the registered owner the exclusive right to use the trade mark for 10 years. It may be renewed indefinitely. Even though not technically necessary, it’s still a good idea to claim ownership of the trade mark by labelling your products. This may prevent inadvertent copying of your trade mark or discourage those that may wish to copy your trade mark.

If a rival business registers a trade mark the same or very similar to your trade mark, it may obtain the right to use it and in some cases even exclude you.

A business can, of course, always use its own mark without registering it, and hope a rival does not register the same mark. But this can prove an expensive risk.

Registration is usually not expensive.

A simple DIY trade mark registration could be completed by any business, with its own time as the main cost.

Fees for online applications to register a trade mark are currently $120 per class (http://www.ipaustralia.gov.au/patents/fees_index.shtml).

Fees for lawyers or trade mark attorneys to assist in the registration process again will vary, but will generally be in the vicinity of $1,000 for a relatively straight-forward application.

If you are looking at registration of your trade mark in other countries, the good news is that the application can be filed once through IP Australia with one filing fee. This consists of a handling fee of A$100 payable to IP Australia and basic fee of 653 Swiss francs and a further 100 Swiss francs for each individual country in which the trade mark is to be registered. The exchange rate as at the date of this article is A$1.00 is equivalent to approximately 0.89 Swiss francs.

Industrial Designs

Industrial Designs such as the shape of a chair or the pattern on a carpet require registration under the Designs Act to obtain protection. Registration gives you protection for five years. Registration is renewable, but remember: if you disclose the design before registration, you lose the right to register the design.

Fees for application and examination for registration of the Design in Australia are currently A$560.

If you desire protection in other countries, it is necessary to lodge an application for registration in those individual countries. You will not be able to lodge through IP Australia. This adds considerable cost to the registration process, as it may be necessary to engage patent attorneys or similar IP advisors in those individual countries. You would need to budget between A$5-$10,000 for patent attorney fees in Australia and a minimum of A$10,000 per country in which you wish to register the Design. Registration in the USA may be as high as US$20,000 or more.

Patents

Patents protect inventions. Registration of a patent provides the exclusive right to exploit the invention. Without registration, there is no protection. If the invention is “public knowledge”, subject to certain limited exceptions, there is no protection.

Fees for registration in Australia are for the initial application and annual fees thereafter. Application and examination fees are modest. For online applications, they are currently $520 for an innovation patent (simpler and less expensive than a standard patent, but it lasts for only eight years) and $710 for a standard patent (more complex and lasts for 20 years).

The main cost is the preparation of the compulsory detailed specifications setting out the background and the claims to the invention that must be filed with the application.

A fairly straight-forward patent in Australia would normally incur approximately $10,000 in patent attorney fees.

The good news is that an application to register a patent internationally may be made through IP Australia. On average filing, searching and examination fees are in the vicinity of $4,000.

As each country has its own rules, it is usual to seek the services of a patent attorney in each country in which the patent is to be filed.

This can be costly. As a rough guide, a patent attorney in the United States for a simple patent, and depending on the complexity of the patent application, would cost US$20,000 or more.

However, of all the forms of IPR, the need for expert assistance is probably greatest with patents.

Remember, obtaining a patent is only part of the challenge, albeit significant in its own right. But if your invention is valuable, you need to rely on your patent to give you the protection you need from your competitors in the various jurisdictions you intend to operate. If you believe that your invention will be successful in the United States, Europe, China, Japan, etc., then your invention needs to be registered in each of those countries. Only a well-drafted patent can afford you the comfort you require.

Your IPR is arguably your most valuable asset. Invest in its protection.

James Millea and Andrew Ireland are at Argyle Lawyers specialising in commercial and corporate law with a particular focus on private equity, renewable energy and commercialisation of intellectual property. For more information, contact: jmillea [at] argylelawyers [dot] com [dot] au or aireland [at] argylelawyers [dot] com [dot] au

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