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True cost of protecting your intellectual property

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True cost of protecting your intellectual propertyFifth in our series on ‘The True Cost of Exporting’ is the cost of protecting your intellectual property and how to avoid paying more than you need to. Intellectual property rights (IPR) such as confidential information, trade marks, copyright, designs and patents are some of the most valuable assets that many businesses possess. We only need think of icons such as Disney or Vegemite to recognise the importance of trade marks, Microsoft’s copyright in software, and many inventions protected by patents, to recognise the value of IPR. Thomas Edison invented the first light bulb, right? No, it was Humphry Davy in 1800. Edison was, however, the first to successfully patent the light bulb in 1880. Edison was a successful, prolific inventor and businessman with 1,093 registered patents that he used to effectively protect his business empire. Tony Kitchener of Cash Engineering Research shows a similar view of IPR when 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." In 1972 Frank Bannigan developed the Kambrook electrical powerboard. A successful invention, it formed the basis for Kambrook's growth to become a major producer of electrical appliances. The powerboard was not patented, however, and Kambrook ended up sharing the market with other manufacturers of similar products. According to Bannigan, "I've probably lost millions of dollars in royalties alone. Whenever I go into a department store and see the wide range of powerboards on offer, it always comes back to haunt me". The guiding principle is that ideas are not protected. Protection only arises where the law recognises IPR and will, as a last resort, protect that right by legal action through the courts. The true cost of not protecting IPR is the loss of market share, while costs associated with protecting your IPR should be factored into the benefit of market share. One of the most cost effective methods of minimising the cost of protection is a simple one. Know exactly what IPR your business possesses. It is surprising that many otherwise well-run businesses have not carried out an audit to create a comprehensive list of their IPR. For many businesses, the most important IPR 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. Protect trade secrets by ensuring that all employees, contractors and business associates sign appropriate confidentiality or non-disclosure agreements (NDA). The legal costs of preparing an NDA will vary depending on the details and level of sophistication of the arrangements. Do-it-yourself contracts are available on the IP Australia website, but remember, you are protecting a valuable right and once the secret is lost, you cannot recover it. If in doubt, seek legal advice. 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. The next most common IPR is copyright. Copyright protects the original expression of ideas, not the ideas themselves. It applies to original works, even original forgeries of original works, such as art and 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, even though it is not necessary to formally claim copyright, it is wise to do so as it puts other parties on notice of your claim to ownership. 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. It is wise to ensure that an employee and contractor NDAs stipulate that copyright in any work created by them resides with the business owner. This should include the immediate employer and any associated businesses. Trade marks technically do not require registration for protection. 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. Like copyright, it’s a good idea to claim ownership of the trade mark by labelling your products. This may prevent inadvertent copying. If a rival registers in its name your trade mark, it may obtain the right to use it and, in some cases, exclude you. A business can always use its own unregistered trade mark and hope a rival does not register the same mark. The business could complete a simple DIY trade mark registration with its own time as the main cost. Fees for online applications to register a trade mark are currently $120 per class. Cash register Fees for lawyers or trade mark attorneys to assist in the registration process will vary, but will generally be in the vicinity of $1,200 for a relatively straight forward application. If you seek to register your trade mark in other countries, the application can be filed through IP Australia with one filing fee: a handling fee of A$100 payable to IP Australia, and a basic fee of 653 Swiss francs, plus 100 Swiss francs for each country in which the trade mark is to be registered. Industrial designs such as the shape of a cup, pattern on a bedspread or chair require registration under the Designs Act to obtain protection, which will last for 10 years. Remember if you disclose the design before registration, you lose the right to register the design. Fees for application and examination of the design in Australia are currently A$560. If seeking protection in other countries it is necessary to lodge an application for registration in those 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 in those countries. You would need to budget between A$5-10,000 for patent attorney fees in Australia and a minimum 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. 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 and $710 for a standard patent. The main cost is the preparation of the specifications setting out the details of the invention that must be filed with the application. A straightforward patent in Australia could incur approximately $10,000 in fees. 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, seek the services of a patent attorney in each country in which the patent is to be registered. As a rough guide, a patent attorney in the US for a simple patent could cost US$20,000 or more with further costs dependent on the complexity of the patent application. The more you are able to do yourself, the more you familiarise yourself with the requirements to register your trade mark, design or patent, the more you will be able to assist your legal adviser, trade mark attorney or patent attorney and reduce costs. -James Millea is a senior associate with Argyle Lawyers (www.argylelawyers.com.au), a Sydney-based commercial law firm. He has more than 30 years experience as a commercial lawyer and business owner, and maintains a keen interest in international trade and intellectual property.

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