Intellectual property (IP) can be a valuable business asset. Regardless of what product a business makes or service it provides, it will encounter, create and use IP. To survive and grow, a business needs to know how to capture, protect and manage IP, and how to avoid conflict with someone else’s IP rights.
Investing in a strong IP portfolio is more than just a defensive act. A well-known trade mark or a market leading patent can generate a greater return on investment compared to physical property like buildings and equipment. Strategic IP management can maintain or increase your position in the marketplace.
IP protection can help with:
- preventing competitors copying or closely imitating products, technical processes and/or services
- avoiding wasteful investment in R & D and marketing
- creating a business identity through a branding strategy
- negotiating licensing, franchising, and other IP-based contractual agreements
- increasing market value, acquiring venture capital and attracting business partners
- accessing new markets.
Ideally, IP management strategies should be incorporated into your business plans. There is no one fits all management approach and often strategies will need to be put in place or revised in stages. Typical management milestones include:
Create a business culture that identifies and captures potential IP. Consider IP opportunities whenever you’re working on your business plan or researching a new project. Start an innovation journal to help keep track of developments, inventors, and copyright works like drawings and prototypes.
Secrecy can keep the IP protection options open. IP application filing strategies could affect the timing of market research, promotions and demonstrations.
Employment contracts can include confidentiality clauses to help prevent the release of commercially sensitive information and to clarify IP ownership. Tailored agreements can be prepared for outside developers and manufacturers.
One of the toughest commercial decisions to make is whether to apply to register IP. Every country has its own IP laws. Information retrieved from the online searches and your local library might not apply in New Zealand or could be out-dated. The best information about the IP application process can be found on IP office websites.
IP protection and enforcement can be expensive. Whether or not to protect or enforce IP rights is a commercial decision and there has to be a balance between the costs associated with achieving strong protection and potential commercial returns.
A successful entrepreneur learns from the experience of others. Assistance from an IP professional like a patent attorney and business mentor familiar with IP can be invaluable in developing a management plan. See the trans-Tasman patent attorney register and the New Zealand Law Society online directory.
IP assets like patent, trade mark and design applications and registrations can be bought, sold and licensed. How you use the IP assets in your business portfolio will depend on the range of IP you own, your business capabilities and market focus.
An assignment is a sales contract transferring ownership of IP rights in the listed IP assets, from the current owner (assignor) to the new owner (assignee). An assignment must be signed and dated by the parties and their witnesses.
A licence is a contract where the IP owner (licensor) gives permission to a licensee to use but not own the IP assets under agreed terms and conditions. Terms may include a time limitation and market territory restriction. Conditions may include quality testing and royalty payments. Terms and conditions need to be negotiated. There is no model licence and it is important for the two parties to get independent legal advice.
Business growth opportunities
An IP owner who has a high profile business (the franchiser) can team up with another enterprise (the franchisee) who will bring in expertise of their own or financial resources to provide goods or services directly to the consumer. The franchiser will ensure, through the supply of technical and management skills that the franchisee maintains the quality and other standards in relation to the use of the trade mark under which the franchise operates. The franchise agreement usually requires certain standardised features like a uniform trade dress.
Forming a joint venture
A joint venture is a business relationship that involves two or more enterprises pooling their resources for a common purpose. Often, one partner will contribute technology or know-how and the other partner contributes financially or brings expertise to the project. The joint venture can be registered as a limited liability (Ltd) company or operate under licensing and confidential disclosure agreements to ensure that use of one another’s IP rights is controlled and reciprocally compensated.
Clearance checks should be made before market launch to confirm that branding and advertising material like photographs, clipart, and music are available to be used. A competitor’s New Zealand patent or registered design could prevent you from manufacturing, selling or repairing products. Licences might be required or legal help to find out what is covered in the patent claims or registered design novelty statement. Also check any licensing terms and conditions.
Products, tags, labels, packaging and promotional can be marked with the appropriate IP indicators. This will let competitors and potential business partners know about the status of IP protection. If an application has been filed at IPONZ, the allocated number can be used to retrieve information from the New Zealand patent, trade mark or design registers.
Promotional material shouldn’t include any misleading or false statements, like the product is waterproof when it’s only water resistant. You can find out more about what’s allowed in advertising by visiting the Commerce Commission New Zealand website.
You should transfer ownership by executing an IP assignment before a company is wound up or merger occurs. IP assets that can be assigned include copyright works like drawings, instruction manuals and distributor databases, and confidential information like trade secrets and pricing margins.
- World Intellectual Property Organization online library — WIPO
- Introduction to business planning — Business.govt.nz
- Business planning tools — Business.govt.nz\
IPONZ previously worked with Chartered Accountants Australia and New Zealand (CAANZ) in 2015 to produce a comprehensive guide to intellectual property and how this applies to businesses.
- Business Briefing: Maximising the potential of Intellectual Property for your business [PDF, 512 KB]
- Chartered Accountants Australia and New Zealand website
In 2019, IPONZ along with representatives of the World Intellectual Property Organization (WIPO) hosted a number of roving seminars across New Zealand. The presentations from these sessions are available below.