How Knowing About Intellectual Property Limitations Increases Your Commercial Savviness

Google is an example of a company that has built itself into one of the largest brands on earth thanks in many ways to its intellectual property. Its brand was worth $100 billion dollars in 2017.

Google’s IP includes its search algorithm, know-how, patents, copyrights and its trademarks. A highly important component of its IP will be Google’s know-how which is kept confidential, so users have difficulty gaming the system.

Otherwise, Google’s reliability as a search engine would be damaged if inappropriate websites could readily appear prominently in search results.  The less relevant a search result is when a user searches for something, the less likely they would be to turn to Google next time they needed to search for something. So, a lot hangs on keeping its methodology and other secrets to itself, and even making changes every so often to keep the algorithm fresh and unknown to the world at large.

Confidentiality and other intellectual property rights play a vital part in Google’s business, as they do in every one of our businesses.

So, IP rights need to be considered carefully when starting, growing or exiting a business. It helps to understand the limitations of IP rights as well.  So, let’s consider this now.

Protection of ideas

As mentioned before, the only way in which intellectual property rights protect ideas is if they are kept secret or revealed to others under a context of confidentiality, such as by having someone sign a confidentiality agreement before you disclose your ideas to them.

Once you let the world know your ideas; such as by publishing them, then the law will protect the way you have expressed your idea, rather than the idea itself. What this means is that third parties can learn from you, and write their own articles using your ideas. Your copyright wouldn’t be infringed unless they copied and pasted your writing. But they can freely use your ideas, and don’t even need to credit you with having had those ideas first.

We live in a world where the prevailing philosophy is to publish and spread your ideas to profit from them. It’s important to be aware that by sharing your ideas you do increase the risk of others pinching what’s yours, be it an invention, a product idea, your business model or simply your insights, and profiting from them, possibly at your expense.

Business is a long journey of learning. Intellectual property IS a business. Understanding it helps you to better assess how, when and whether to reveal your ideas, or tell everyone about your processes. An important aspect of developing your commercial awareness involves understanding IP and its limitations.

So, when spreading your ideas, aim to get exposure without seriously disadvantaging yourself. Generally, this means allowing sufficient lead time to bring your ideas to fruition before revealing them.

This is so important to understand as a limitation of IP rights, because it will help you to protect your business and to realise that it’s often not possible to do anything about it, if someone copies the idea behind your business model.

Copying business models

Steven Smith and Dave Dodd have made a lot of money out of Poundland since it began operating in 1990, but they could not prevent Nadir Lalani from subsequently establishing his 99p Stores business.

Selling everything in store for 99p is fundamentally the same idea as selling everything in store for £1. But it’s a different expression of that idea.

(In fact, Poundland ultimately decided the best way to deal with the 99p Stores chain was to buy it and then close it down.)

The more lucrative a new service or sector proves to be, the more you should expect extreme competition to quickly follow if you are first to launch your product or service.

Uber quickly spawned dozens of copycat apps and services, as did Airbnb. It’s impossible for anyone to keep a profitable niche to themselves.

It’s the same in the low-cost air travel field. EasyJet was founded in 1995. It essentially operates the same model as Ryanair, which began its low-cost model three years earlier. And Ryanair has always been honest that it copied the model pioneered by Southwest Airlines in the United States.

Which leads me to another limitation of intellectual property rights: they are primarily limited by geography.

Territorial nature of IP rights

So, while you may have a patent or trade mark in one country, unless you’ve also registered it in another country it’s likely you couldn’t prevent someone from using that trade mark or patent in a different jurisdiction.  However, it is possible to register a trade mark that provides protection in a range of countries such as in all 28 EU countries.

There’s a lot of money to be made in exploiting these limitations.

Venture capitalists invest in start-ups which take an established business model and adapt it to an emerging market. Successful examples include Peixe Urbano (a Brazilian Groupon clone), Weibo (the Chinese Twitter-like microblogging platform), and Alibaba (a Chinese eBay). Alibaba is now one of the world’s largest online businesses.

Projects like this are particularly attractive to investors because the business model has already been proven – though the clones often refine the model based on the experiences of the original business and the local circumstances. That original business has little recourse even if it wanted to object legally.

However, against that is the powerful protection afforded by copyright thanks to the existence of international treaties such as the Berne Convention which most countries have signed up to. It means that writers, musicians, software developers, and many other creators of copyright works, including ordinary businesses like yours or mine, enjoy copyright protection worldwide, even without registering copyright in a particular country.

It’s possible to become too successful where intellectual property is concerned.

Genericity

When you clean the house, do you hoover the carpet? Do you write notes using a biro? How often have you used a cashpoint, or googled a query?

Not all vacuum cleaners are made by the Hoover Company. Not all ballpoint pens are Bic biros. Not every ATM is a Cashpoint® operated by Lloyds Bank, not every online search is on Google.

But vacuum cleaners became synonymous with Hoover. People talk of biros, regardless of who made any particular ballpoint pen. A cashpoint is what many people instinctively call a hole in the wall.

By becoming so closely associated with a widely popular product or service, a trade mark – which can only be registered at all if it’s distinctive enough – can lose that very distinctiveness, and hence cease to be registrable.  

Google has fallen victim to this problem and taken steps to avert it such as by using Google as a descriptor in its product names. This may explain why it abandoned Picassa in favour of Google Photos, and Blogger in favour of Google Blogs a few years ago. It also uses Google in front of all sorts of services, for example, Google News, Google Image search and so on.

People can’t use Google as a verb when it’s combined with those descriptors, so it helps Google to show that the word Google is used widely as a noun in this way. If Google couldn’t establish that people do use the name as a trade mark, then the fact that people regularly employ its name as a verb would endanger its trade mark. So, Google’s domination of search engine results has endangered its distinctiveness even though the word is a made-up term.  

So, for now, at least it seems Google is taking active steps to avoid genericity of its name.

The Benefit of Relying on a Range of IP rights

If you hold a wide portfolio of IP, your business model will be better protected against copying.

For example, a patent can sometimes protect the technology which is central to a product. Copyright can protect the expression of a concept (such as training and marketing materials, videos, source code and other key components of your IP). Designs can protect the aesthetic aspects of your products. And trade marks can protect your product names as well as your logo. So, the combination of all these IP rights all protecting elements provides stronger protection than focusing on a single one or two IP rights.

Each intellectual property right protects you in subtly different ways and situations making it more difficult for others to rip off what’s yours and copy your business model in its entirety.

So, don’t assume it’s enough to have secured a patent. You almost certainly still need to find a good name for your business or product and consider whether you have protected your copyright appropriately.

Sadly, it’s only when something happens in your business that you’ll know which of the IP rights will be most useful to rely on to address the situation. The only way to be well protected is to use all the available IP rights.

For example, if someone copies your logo but isn’t making commercial use of it, a registered trade mark will be of limited use. Copyright could help, but even better if you’ve registered your logo as a design. This would make it far easier for you to cost effectively address the situation.

Database and Other Rights

Many businesses are sitting on an important asset – namely their customer database. That database is protected through “database right” in the EU.

A quick and easy measure like adding a false name and address to your database could save you thousands of pounds should you ever need to prove that your database has been copied by someone.

It’s also important to put in place appropriate contracts – employment agreements, terms of business and confidentiality (or non-disclosure) agreements, to name a few.

Legal agreements supplement your IP protection and in some cases are the only way to protect your IP position

However, while non-disclosure agreements (NDAs) can protect you, don’t take too much comfort from the mere signing of a confidentiality agreement alone. Many of the reasons people choose to talk to others about their ideas involve projects such as to have a prototype built, so the NDA alone isn’t enough. There is a need for other contractual provisions too.

Various restrictions are appropriate to have in such agreements, not just a requirement to maintain confidentiality. For example, you may want to restrict your web designer from outsourcing or sub-contracting the work if the reason for the NDA is to start having a site built.

If you’ve written a document containing sensitive information, disclosing the document to a third party under an obligation of confidentiality certainly increases your protection. You potentially then have both copyright infringement and breach of confidence, depending on what happens in the future, to stop any undesirable use of your confidential information.

But if you have a potentially lucrative idea best to not tell anyone about it unless it’s essential to do so.

There are limits to what IP can achieve, but the law is there to protect you. If you understand the limitations of the legal process you will have a real advantage in commercial life.  Generally going to court is not a positive experience even for the winning party. Both parties in a court battle lose out on many levels, such as in the time it takes up.

So, it is generally better to avoid the need to sue or the risk of being sued, although sometimes it’s just not possible if you’re up against litigious, unreasonable people.

Conclusion

Aim to do proper due diligence before you claim an IP right, and once you’ve done so secure your rights, rather than relying on common law rights such as the use of a trade mark. Like that you’re more likely to deter copycat-ism because savvy businesspeople will take note of your rights, rather than infringe them.

Therefore, the common myth that it’s not worth securing IP rights if you can’t afford to go to court to defend them is wrong. IP protection has its limitations but never use this as a reason to justify not securing any IP protection at all.

I started by talking about Google and its IP. Google is unique, it’s true. It’s a unicorn and most us will never have businesses that come anywhere near the success that Google has enjoyed. But we’re all in this entrepreneurial journey for a reason. We may want to create a transformation, to effect a change in the world perhaps, in our own small ways.  So, developing an understanding of key IP concepts will help you in your aims. The knowledge and skills you’ll gain will enable you to be a more commercially savvy individual.

Find out how the Legally Branded Academy can help you to quickly develop the IP skills and resources you need in your business.