4.1 Protect your intellectual property
Entrepreneurs have the insight to unlock the value of their creativity by effectively managing their intellectual property.
They know that, if they don’t, an obstacle could come between them and their VISION.
They also know to use their VISION to see the bigger picture in terms of the Intellectual Property they own.
For example, as an entrepreneur, you must always file for a patent and/or apply to register a trade mark or registered design rights before:
- Exhibiting your work
- Approaching investors
- Sharing your idea
If you’ve applied for a patent against your specific idea and have put something together that allows you to have the intellectual property rights, even though you may not have had this confirmed, you are already protected. This is called patent-pending. The point and date of patent application is vital to ensure this protection.
One frequent mistake that entrepreneurs make is to create some fantastic ideas, but protect just the one idea, or just part of an idea.
Ring-fencing an idea is very important. It could take more than just one application against a patent, it could be several. Think of the bigger picture.
On Dragons’ Den, people will stand in front of us to pitch their idea and then realise they’ve missed out some key components. The Dragons will see the opportunity, but not in its current form. Ring-fencing that idea is very important. It could take more than just one application against a patent, it could be several. Think of the bigger picture before you walk in to see investors.
- Don’t enter the Dragons’ Den or an investor's office until you’ve filed your patent/trade mark but also researched the market, spoken to people, and tested the idea in the real world first (once applications have been filed).
- Do ensure you’ve put adjustments to patents or adjusted your next submission against patent to reflect any additional components, those uncovered while gathering feedback.
Enforce Your Intellectual Property
IP litigation can be an expensive business, so settling for a reasonable amount may be the best option if someone does infringe yours. However, if your IP rights are infringed (by someone using, or producing your IP without your permission, you can take legal action. The first course of action is to send a cease and desist letter to the infringer.
If you are able to prove infringement of your copyright or design rights, your trade mark or patent at trial, you are entitled to damages by way of a licence fee and, in some instances, a portion of profits the infringer may have made.
Alternative actions include the ability to seize infringing items or obtaining an injunction to prevent unauthorized use of your IP.
Be mindful of what else is out there in the market. Pay attention and take the appropriate ACTION to enforce your intellectual property when necessary.
4.2 Find out what can be protected
Truly original ideas hold great value. Protecting those ideas adequately is vital. Making sure an idea is protected is one of the first ACTIONS towards an entrepreneur’s VISION. It shows COMMITMENT to taking that idea forward to fruition.
Vision, Action and Commitment are three of My 10 Golden Rules, the critical success factors I believe are required for true entrepreneurial brilliance. Committing to take action towards your vision by protecting your creative output is one of the first steps to take before starting up in business.
Fortunately, human creativity can be protected and managed to benefit the creator. Entrepreneurs harness the power of their imagination to create great ideas. But it is only once those ideas have been expressed that they become intellectual property.
Those creative ‘outputs’ can be transformed into tangible ‘commodities’. This means you can licence, sell, trade, divide or retain your rights to those ‘commodities’.
Intellectual Property is a hugely valuable commodity and a vital business asset. It enables the owner to control the product in the marketplace and exclude others from producing, using or selling without the owner’s permission.
Consequently, in the competitive business landscape, your brand name, logo, product designs, manufacturing processes, software, literary works, sounds and even fragrances, need protecting. The ‘smell of freshly cut grass’ has even been trade marked by a Dutch perfume company that uses it to give tennis balls their aroma!
Committing to take action towards your vision by protecting your creative outputs is one of the first steps to take before starting up in business.
Ensuring you have your IP rights protected makes your idea far more investor-friendly and prevents others from trading off your creative efforts. As well as registering your company name with Companies House and buying the domain name for your business/brands, there are other methods of protection, as follows:
- Patents protect inventions. Owners of a patented product, design or process essentially have a monopoly on the production, use and distribution of the patented item. This patent protection lasts for 20 years. To check an idea is a novel one, visit www.patent.gov.uk and view the patent database. All UK patents are filed via The Patent Office.
- Copyright protects dramatic, artistic, literary and musical works. From books, paintings and films, to choreography, sound recordings and computer code, software, graphics and other digital media. Copyright owners can authorize others to use their work by granting them rights to do so and can prevent the copying, publication, broadcasting, or distribution, without permission. Copyright exists automatically, so there is no need to register it. Just add the universal © symbol, followed by the author/company name and year of creation. Copyright lasts between 50-70 years, depending on the type of creative work. As an employer, you own copyright to work employees have created in accordance with their employment.
- Trademarks. Just by using your brand or product name, you automatically have unregistered trademark rights and are able to use the TM symbol. However, this is not enforceable under trademark law. For full protection you need a registered trademark, enabling use of the ® symbol. A registerable trademark must be distinctive and can consist of words, letters, numbers, images, drawings, symbols, smells and sounds, or a combination of these. Owners of a trademark have the exclusive right to use it and authorize others to do so. Protection lasts for 7-10 years and is renewable. To search to see if a potential trademark is already being used, visit www.patent.gov.uk. Trademarks are applied for via The Patent Office.
- Design Rights. Designers can protect unique 2D and 3D designs, although the functionality of a design does not come under design right protection. Design rights protect the appearance of a product resulting from its features, lines, contours, colours, shape, texture, materials or ornamentation. Protection can last up to 25 years, renewable every five years. Unregistered design rights exist automatically, as with copyright, and this lasts for 15 years.
- Moral Rights. These give you the right to be identified as an author or creator of intellectual property. Moral rights can be waived via a release form.
4.3 Reality check: safeguarding your idea?
Your business ideas have commercial value. You need to protect them. Here is my checklist of actions you should take:
- Have you registered or applied to register the company name with Companies House?
- Have you secured your domain name to safeguard your brand?
- Are you happy with your prototype?
- Have you checked that nobody else has got there before you via www.patent.gov.uk? Is your idea genuinely novel?
- Have you asked potential manufacturers to sign a simple confidentiality agreement and applied for a trade mark or patent before starting negotiations?
- Do you have everything in writing with partners, manufacturers, suppliers?
- Have you catalogued everything? Including notes, sketches, diagrams, contracts, letters and e-mails?
- Have you marked the copyright symbol, name of copyright owner and year of creation on all written, literary or artistic work?
- Do you know when your domain name will be up for renewal?
- Have you looked into licensing your rights wholly or in part to generate income from your IP assets?
- Have you researched competitors and market entrants? Are you paying attention to new trade marks being advertised?
If you set up as a sole trader, you need to inform the Inland Revenue and register as self-employed. (The telephone helpline for the newly self-employed is 08459 154515.)
Setting up in business as a sole trader is a viable option to test the market, before incorporating as a limited company, once the idea has proved viable. Once tested, you can invest in creating a company. Record keeping is simpler with no PAYE and there’s no corporation tax to pay, so sole traders retain all profit after tax.
By registering as self-employed with HM Revenue & Customs you can claim many pre-trading costs (except training) as allowable business expenses in your first year of trading.
The personal risk, however, is higher. If the business fails, a sole trader is liable to pay for business failure from their own pocket.
Limited Company
Setting up a Limited Company from the outset, gives entrepreneurs a shareholding director position within the company. Despite increased paperwork and corporation tax liability (a director pays income tax as an employee of the company; the company pays corporation tax on its net profit), you and your business are viewed as separate entities, so the liability for business debts is reduced.
It can be easier to borrow money as a director of a Limited Company and entrepreneurs can establish improved credibility within their marketplace by operating as a company.
If setting up a Limited Company, you need to register the company with Companies House and pay a registration fee. You must also notify the Inland Revenue.
www.companieshouse.gov.uk
www.inlandrevenue.gov.uk
Partnership
A partnership can also be set up with one or two others, giving each partner a percentage of the return of the business, depending on how much time and money they’ve invested. Partners are classed as self-employed. Each partner is personally liable for debts incurred by the business. Partners share the profits, but also the burden and risks involved, so, if one partner incurs business debts, other partners are liable for them as well.