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Intellectual Property Issues for Corporate Innovators

by Malcolm Burrows, Nov 10, 2017

The Australian innovation agenda has created somewhat of a boom in the creation of intellectual property (IP).   Corporate innovators have more to consider than trademarks, patents and copyright if they are to fully protect their rights.  They also need to consider, trade secrets and confidential information.  For those innovators launching new software there are two distinct aspects to be considered regarding IP, firstly identifying how its created and subsequently protecting it.
IP is increasingly being valued as an intangible asset on the balance sheets of many organisations. It can be important in assisting in the creation of a competitive advantage in the innovation age.
IP rights arise at both common law and statute and aims to protect a broad range of the fruits of intellectual efforts. These rights fall into two (2) distinct categories, those that are registerable and those that are not:
Two (2) registrable IP rights (in Australia) that may impact on software development projects include:
  • Trade Marks; 
  • and Patents.
Three (3) non-registrable IP rights (in Australia) that impact on software development include:
  • Copyright;
  • Trade secrets; and
  • Confidential information.

Identifying the IP rights in innovation projects

Trade marks

Registering a trademark under the Trade Marks Act 1995 (Cth) is a way of protecting a brand to ensure that it can be promoted with less likelihood of being confused with other brands.  A registered trademark is a vital component of an effective marketing strategy to ensure that the brand is more capable of being protected.  A trademark can be a letter, number, word, phrase, sound, smell, shape, logo, picture or aspect of packaging or any combination of these.
Too often innovators launch new products without conducting any searches of the trademarks register only to receive a cease and desist letter from the registrant of an ‘allegedly similar' trademark. Subsequently, the choice is to rebrand and apologise profusely or defending trademark infringement proceedings, either way, prevention would have been preferable.

Patents

A patent, registered under the Patents Act 1990 (Cth), grants exclusive rights, to the holder, in possession or control over a new invention in return for its public disclosure.  This provides protection over the patent owner's intellectual property while:

  • the invention is further researched and developed; or 
  • the patent owner commercialises and obtains the economic benefit from the invention.  

During the patent period, the owner is entitled to defend the invention against infringement.
The Patents Act 1990 (Cth) recognises two types of patents, standard patents granted under section 61 Patents Act 1990 (Cth) and innovation patents granted under s 62 Patents Act 1990 (Cth)
Software patents are possible however they are rare in Australia.  That said before launching a new product based on a new technology, it may pay to ask the question of a Patent Attorney whether what's been created is patentable subject matter.

Copyright

Copyright is a suite of rights, referred to in the Copyright Act 1968 (Cth), which is intended to protect the expression of an idea such as literary works, films, music, pieces of arts and computer software.  Where copyright subsists it prevents other parties from reproducing that work.  Copyright automatically protects the results of the owner's skill and effort in producing and recording the work in a material form.
Copyright provides the owner with certain rights including the right to publish, present or performs the works, adapt them or grant a right to use them to some other person.  The classes of copyright which usually apply to IT projects include:

Literary works

Section 10 of the Copyright Act 1968 (Cth) provides that the term ‘literary work' includes tables, compilations, figures and symbols expressed in words, as well as computer programs whether or not they are compiled.  Literary works can be as little as paragraphs of text written for a website to entire books. 

Computer code

Section 10 of the Copyright Act 1968 (Cth) defines a "computer program" as a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result. As indicated above, Computer code is a literary work. Recent case law has placed particular emphasis on the terms ‘set of statements' and ‘to bring about a certain result' when interpreting this definition.  That is, if code does not consist of a set of statements which relate to each other, (Data Access v Powerflex Services [1999] HCA 49 [53]) or that set of statements does not bring about a certain result then what is written may not constitute computer code within the meaning of the Copyright Act 1968 (Cth).

Artistic works

Section 10 of the Copyright Act 1968 (Cth) defines ‘artistic work,' regardless of its artistic quality, as any of the following:
  • Painting, sculptures, drawings, engraving or photographs;
  • Building or model of a building; and
  • Any work of artistic craftsmanship not previously mentioned;
  • but does not include a circuit layout.

Chain of custody to IP

Because there are usually many individuals involved in innovation projects it's usual to have to ‘trace the chain of custody' (as we refer to it) to establish that the respective IP right vests where they should.  One of the most overlooked aspects in this regard is failure to recognise the contractors that are engaged to produce artistic works and computer code own the IP unless it is expressly assigned in writing. 

Trade secrets

In simple terms, a trade secret is any secret commercial information that provides one business with an advantage over another.  For example, trade secrets have been used by Coca-Cola for decades to ensure that its formula remains secret. 
Despite the lack of a settled, legal definition of a "trade secret", their value is recognised both at law, and in equity.  At law, restraints of trade can be legitimately used in order to prevent the disclosure of trade secrets, or to prevent the use of trade secrets by employees in any subsequent business or employment.  Trade secrets are protected in equity by way of an action for breach of confidence even in the absence of contractual agreements restraining their use.  Whilst its unusual, trade secrets can arise in software development projects.

Confidential Information

When a party usually referred to as the (Discloser) communicates the information to another generally referred to as the (Recipient) it is considered confidential if that information:
  • has the necessary quality of confidence; and 
  • has been communicated in circumstances importing an obligation of confidence. 
For information to be confidential, it must not be public property, in the public domain, or common knowledge.  Ultimately, there are no formal standards in which information must adhere to in order to be confidential. Different types of information may be subject to different requirements.  In regard to information disclosed in person, whether a court will protect personal confidences depends on:
  • the nature of the communication;
  • the relationship between the discloser and the recipient; and
  • prevailing notions of public policy.
Perhaps the biggest myth that needs to be debunked in this area is that "Confidentiality agreements aren't worth the paper they are written on".  This is just not true, provided of course that their terms are carefully and professionally drafted.

Take away's

Identifying, registering, monitoring and enforcing your organisation's intellectual property rights is an essential part of any business strategy. Intellectual property rights should not be ignored.  Whether it is a result of research and development, your marketing efforts or the fruits of your intellectual endeavours, executives and entrepreneurs must turn their mind to ensuring the appropriate protections are in place and act swiftly when infringements are discovered.

Further information

If you need assistance identifying, managing or protecting your intellectual property rights please telephone me for an obligation free and confidential discussion.
Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Dundas Lawyers
Telephone: (07) 3221 0013 | Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au
Disclaimer
This article is not legal advice. It is general comment only.  You are instructed not to rely on the commentary unless you have consulted one of our Lawyers to ascertain how the law applies to your particular circumstances.