An Exporters guide to IP - Intellectual Property

Ideas may be free, but intellectual property should be valued and protected. Here's a guide to what to expect when you're trading in IP around the world.

Protecting intellectual property (IP) is hard to get right. In a lot of cases there are businesses that never register trademarks or patent their great invention, only to find themselves without a leg to stand on when someone else comes along and steals their design.

Even worse, there are cases where businesses have failed to check the register for existing businesses that may be too similar. This leads to the business investing time and money establishing a brand, only to find that they are infringing on another business' IP. Former fashion label Tsubi famously had to change their brand to Ksubi when they went global. The high profile case involved a Californian shoe brand called Tsubo, established years before Tsubi. Tsubo successfully challenged Tsubi on the grounds that the two names were too similar and that they were both trading in fashionable street wear.

On the other end of the scale there are businesses that protect their IP in plenty of countries but spend too much time and capital doing so and don't have enough left over to move the business forward. Overcommitting to IP can sap as much from a business as underdoing it. Of course it all comes down to balance, but what can a business do to protect their IP adequately without being excessive?

Tal Williams, partner at Australian Business Lawyers, says businesses first need to define their IP and identify which parts are assets they should value and protect. He cites a case where an online business went to sell their website and saw a good offer significantly decline in value when it was discovered that the website designer had retained most of the worthwhile IP. "The business actually had nothing to sell because the real asset was the IP, the design and the coding that the web person had done," explains Williams. "You'll get into trouble if you don't identify the IP early on."

Williams lists trade secrets, copyright, trademarks, designs, circuit layouts, and patents as IP that can be protected. If you're in the agriculture or horticulture sector, plant breeder's rights will probably also apply to you. Once you have defined your business' IP, you can start to employ various strategies, and not all of them involve registration fees and bureaucracy.

Copyright is automatic, for example, and trade secrets are best kept, well, secret. Williams says this means businesses can avoid revealing key parts of their products or processes that would otherwise be available for anyone to see, had they filed a patent. He recommends dealing with people that you trust and using legal confidentiality, such as non-disclosure agreements with the consequences of disclosure spelt out. "If you have people that you can trust and you haven't got a product that's easily reverse engineered, that's a pretty good way of protecting IP because no one knows," notes Williams. "Sometimes in that scenario there are 'poison chalices' put in place where if even if you get three [necessary components] together you still can't get it working because there's a fourth party that knows what you have to tweak in each of them to make it work."

Companies with short-term innovations may find that adding restraint clauses in employment contracts is the best and most cost-effective way to keep ahead of the competition. Restraint clauses prevent former employees from passing on your IP to competitors for a specified period after ceasing employment at your business. Some restraint clauses may also state that former employees cannot work for competitors for that specified period.

Keeping IP secret becomes especially important if you decide to take the next step and apply for a patent. "If you do make it public and it does get out before you apply for your patent, you lose your ability to apply for one," warns Williams. "So the first step is to keep it secret. There are many, many business that operate on that basis, particularly ones that are difficult to reverse engineer or ones that require various expertise in order to provide the service."