Unfortunately, for many good technology companies, it may be too late to file for patent protection. The current U.S. rule generally provides applicants with a 1-year grace period during which a patent application must be filed after certain public or private disclosure of the invention. Such disclosure may arise, for example, from a mere “offer for sale” of the technology, even if the product has not yet been built or prototyped. In comparison, the foreign rule, which applies to many industrialized jurisdictions, such as Japan and various European countries, do not give applicants the benefit of any grace period after a public disclosure has occurred. Thus, it is legally compelling for applicants to consider filing for patent protection sooner than later. Although in some situations, there may be some special exception, which still allows for late filings; it is not advisable for applicants to count on those exceptions.

2. TOO NARROW LEGAL SCOPE OF CLAIMING PATENTABLE INVENTIONS.

Many issued patents are not commercially valuable because the scope of their submitted claims are particularly narrow, and can be relatively easily avoided by determined competitors. Thus when submitting new patent claim language, applicants should broadly define novel concepts that include potential design-around by other parties. Although this legal blocking strategy sounds easy enough to state as an objective, in fact, the serious exercise of analyzing future competitive and industry directions can be an extremely difficult task, particularly because the analysis often requires sophisticated market understanding, as well as technical and engineering vision.

3. INTERNALLY MISMANAGED PATENT INFRINGEMENT “WILLFULNESS” EXPOSURE.

Under U.S. patent law, one’s awareness or willful state-of-mind about the existence and infringement of a competitor’s issued patent may significantly affect subsequent legal liability. Thus if a party is proven to be a willful infringer of a known patent, then for punitive policy reasons, economic damages may be awarded to the patent owner up to three times normal recovery amount. This treble-damage exposure is so substantial, that company management should be careful to avoid creating evidence of internal communications such as emails that may be construed later to indicate such willfulness state-of-mind. Additionally in many cases, it may be appropriate for companies as a matter of policy to discourage looking at issued patents owned by other entities. And when a suspect patent is already known, management must take careful steps to refer the matter to competent patent counsel for appropriate analysis and opinion.

4. RELYING SOLELY ON COPYRIGHTS FOR SOFTWARE PROTECTION.

Copyright protection in the U.S. and many other countries arises instantly and at virtually no cost to protect software technologies, such as computer programs, electronic databases, and graphical display screens and related media. In fact, copyright protection is often quite a suitable means to secure much digital media such as video and audio creative works, often even without compliance with copyright registration and notice requirements. Copyright protection, however, is legally vulnerable to reverse engineering efforts by competitors, during which no copyright infringement may arise when the reverse engineering results does not result in literal copying of the original code, but merely an understanding of the underlying ideas and functions. In this vulnerable scenario, perhaps patent protection may be more appropriate to secure any novel algorithm, methods, and computing apparatus.

5. INADVERTENTLY TAINTING I.P.R. WITH 3RD-PARTY CO-OWNERSHIP RIGHTS.

During the course typically of joint-development engineering projects, ideas may originate from many sources, such as advisors, consultant, employees, and even customers. This collaborative scenario sets the stage for creating intellectual property rights that may be co-owned by multiple parties. And unless the rights of such joint owners are specified up-front, for example by contract terms, then there is a problematic possibility that certain parties later may assert not just their partial ownership interest, but actually endeavor to offer licensing rights to other 3rd parties or even competitors.

6. IGNORING THE IMPACT OF NEW “FESTO” U.S. SUPREME COURT RULING RE PATENT AMENDMENTS.

On May 28, 2002, the U.S. Supreme Court (Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd) substantially changed the legal effect of amending patent claims, particularly upon the effective scope of amended claims. This judicial change cannot be ignored without possibly impairing commercial value of many issued U.S. patents, especially where applicants introduce explicit argument that distinguish various prior-art cited by the Patent Examiner. Without getting into the subtle legal and policy complexities associated with the so-called “Doctrine of Equivalents,” the Festo decision and related subsequent federal cases clearly narrow many patent claims scope whenever applicants propose routine amendments to distinguish the claimed invention against cited prior-art references.

7. UNDERESTIMATING THE IMPORTANCE OF TRADE SECRETS AND CONFIDENTIALITY.

Since patent protection may not arise for many years until after filing patent applications, and copyright protection may not be applicable to protect functional aspects of various technologies, trade secret protection may serve realistically as a solid backstop against competitive piracy or other misappropriation of company know-how. Thus the importance of diligent use of Non-Disclosure Agreements (NDA) and in-house policies and systems to secure confidential and proprietary information rises to a more significant level of management priority. Additionally early disclosures, for example through customer marketing presentations, may irreparably hurt company rights to file domestic or international patent applications.

8. OVERLOOKING LEGITIMATE OPPORTUNITY TO SET-UP OFFSHORE LICENSING TAX SHELTERS.

Often neglected by early-stage startup companies and entrepreneurs are offshore strategies for mitigating federal tax exposure. Such international tax strategies are especially relevant when foreign licensees of intellectual property rights are contemplated possibly in the company business plan. In many cases in fact, it is particularly beneficial to deploy one or more corporate entities offshore much sooner, rather than after licensees are identified, in order to minimize certain taxable valuation exposure associated with transferring such licensed rights.

9. RESPONDING SLOWLY TO U.S.P.T.O. OFFICE ACTIONS.

Because the U.S. patent rules now provide 20 years of enforcement patent protection, after the U.S. filing date, it is important to expedite the claim amendment and application prosecution process; otherwise applicant’s enforcement period is effectively eroded by unnecessary delays in the process. Accordingly, applicants should endeavor to respond in timely fashion, expediting all office action responses and facilitating, communications with patent counsel whenever possible. Additionally, the new patent rules actually apply a time penalty to deduct enforcement period against issued U.S. patents in certain situations where applicants contribute to delays during patent prosecution.

10. OVER/UNDER-SPENDING ON LEGAL FEES TO PROSECUTE PATENT APPLICATIONS.

In the realistic context of the current economic recession especially in Silicon Valley, startup companies and entrepreneurs who are strapped for cash may negotiate for substantial fee discounts from patent counsel to prepare and file patent applications. However, patent applicants should be careful to ensure that most qualified legal counsel in terms of technical and business experience are selected and engaged to work on critical company inventions, perhaps with bottom-line pricing being just one of a number of significant factors to consider.

Dennis has over twenty-years experience in Silicon Valley and High-Tech Industry, as a patent prosecutor and intellectual property litigator, a venture capitalist, and an engineering manager. He specializes in developing offensive and defensive patent strategies for start-up electronics, software and biotech companies and their investors.

Dennis serves as strategic advisor to leading venture capital firms. He is also on the Editorial Board of the Nanotechnology Law & Business Journal, the Board of Directors of the Association of Patent Law Firms, and the Science and Technology Advisory Council. Previously Dennis served on a consultancy with the United Nations Development Program on Asian economic development.

Dennis is also an inventor of several U.S. and international patents in the areas of digital television, sensor networks, and bioinformatics. He has an Electrical Engineering degree from Northwestern University, a law degree from Suffolk University Law School , and is a Registered U.S. Patent Attorney.

But legal and business groups are finding themselves at odds over the legislation, with some saying it would reduce patent litigation costs and improve patent quality while others say it would do just the opposite. Everyone, it seems, can find parts of the measure to love and others to hate.

In April, identical bills were filed in the Senate and House, each titled the Patent Reform Act of 2007. In the Senate, Leahy and Hatch introduced S. 1145, while in the House Representatives Howard Berman (D-California) and Lamar Smith (R-Texas) introduced H.R. 1908.

On May 16th, a House subcommittee approved the bill for further review by the full Judiciary Committee, which held hearings on it in June. The committee released a revised version of the bill June 21st.

In an effort to help make sense of this legislation, we offer this guide to its key provisions, together with summaries of the arguments being raised for and against.

CONVERT U.S. TO FIRST-TO-FILE

What it would do: In what would be a fundamental shift in U.S. patent law, the bill would bring the United States into conformity with the rest of the world by converting it from a first-to-invent to a first-inventor-to-file system.

Arguments for: Proponents maintain this would simplify the patent process, reduce legal costs, improve fairness, and enhance the opportunity to make progress toward a more harmonized international patent system. A first-to-file system, they say, provides a fixed and easy-to-determine date of priority of invention. This, in turn, would result in greater legal certainty within innovative industries.

Proponents also believe that this change would decrease the complexity, length, and expense associated with current USPTO interference proceedings. Rather than tie up inventors in lengthy proceedings seeking to prove dates of inventive activity that may have occurred many years earlier, inventors could continue to focus on inventing.

Finally, because this change would bring the U.S. into harmony with the patent laws of other countries, it would enable U.S. companies to organize and manage their portfolios in a consistent manner.

Proponents include: Biotechnology industry.

Arguments against: Opponents argue that adoption of a first-to-file system could promote a rush to the USPTO with premature and hastily prepared disclosure information, resulting in a decline in quality. Also, because many independent inventors and small entities lack sufficient resources and expertise, they would be unlikely to prevail in a “race to the patent office” against large, well-endowed entities.

Opponents include: The USPTO opposes immediate conversion to a first-to-file system, in part because this remains a bargaining point in its ongoing harmonization discussions with foreign patent offices. Inventors also oppose this.

APPORTIONMENT OF DAMAGES

What it would do: The bill would significantly change the apportionment of damages in patent cases. Under current law, a patentee is entitled to damages adequate to compensate for infringement but in no event less than a reasonable royalty. Section 5(a) of the bill would require a court to ensure that a reasonable royalty is applied only to the economic value attributed to the patented invention, as distinguished from the economic value attributable to other features added by the infringer.

The bill also provides that in order for the entire-market rule to apply, the patentee must establish that the patent’s specific improvement is the predominant basis for market demand.

Arguments for: Proponents say this measure is necessary to limit excessive royalty awards and bring them back in line with historical patent law and economic reality. By requiring the court to determine as a preliminary matter the “economic value properly attributable to the patent’s specific contribution over the prior art,” the bill would ensure that only the infringer’s gain attributable to the claimed invention’s contribution over the prior art will be subject to a reasonable royalty. The portion of that gain due to the patent holder in the form of a reasonable royalty can then be determined by reference to other relevant factors.

Complex products, the proponents contend, often rely on a number of features or processes, many of which may be unpatented. Even where the patented component is insignificant as compared to unpatented features, patentees base their damage calculations on the value of an entire end product. This standard defies common sense, distorts incentives, and encourages frivolous litigation.

Further, courts in recent years have applied the entire-market-value rule in entirely dissimilar situations, leaving the likely measure of damages applicable in any given case open to anyone’s guess.

Proponents include: Large technology companies and the financial services industry.

Arguments against: Opponents argue that Congress should not attempt to codify or prioritize the factors that a court may apply when determining reasonable royalty rates. The so-called Georgia-Pacific factors provide courts with adequate guidance to determine reasonable royalty rates. The amount of a reasonable royalty should turn on the facts of each particular case.

Although intended to guard against allegedly inflated damage awards, this mandatory apportionment test would represent a dramatic departure from the market-based principles that currently govern damages calculations, opponents say. Even worse, it would result in unpredictable and artificially low damages awards for the majority of patents, no matter how inherently valuable they might be.

Opponents further argue that this change would undermine existing licenses and encourage an increase in litigation. Existing and potential licensees would see little downside to “rolling the dice” in court before taking a license. Once in court, this measure would lengthen the damages phase of trials, further adding to the staggering cost of patent litigation and delays in the judicial system.

Opponents include: The USPTO, Federal Circuit Court of Appeals Chief Judge Paul Michel, the biotechnology industry, smaller technology companies, patent-holding companies, medical device manufacturers, university technology managers, the NanoBusiness Alliance and the Professional Inventors Alliance.

WILLFUL INFRINGEMENT

What it would do: Section 5(a) of the bill would limit a court’s authority to award enhanced damages for willful infringement. It would statutorily limit increased damages to instances of willful infringement, require a showing that the infringer intentionally copied the patented invention, require notice of infringement to be sufficiently specific so as to reduce the use of form letters, establish a good faith belief defense, require that determinations of willfulness be made after a finding of infringement, and require that determinations of willfulness be made by the judge, not the jury.

Arguments for: Proponents say that willfulness claims are raised too frequently in patent litigation – almost as a matter of course, given their relative ease of proof and potential for windfall damages. For defendants, this raises the cost of litigation and their potential exposure.

A codified standard with fair and meaningful notice provisions would restore balance to the system, proponents say, reserving the treble penalty to those who were truly intentional in their willfulness and ending unfair windfalls for mere knowledge of a patent.

Further, tightening the requirements for finding willful infringement would encourage innovative review of existing patents, something the current standard discourages for fear of helping to establish willfulness.

Proponents include: Large technology companies, the financial services industry, and the biotechnology industry.

Arguments against: Opponents argue that willfulness is already difficult to establish under existing law. The additional requirements, limitations, and conditions set forth in the bill would significantly reduce the ability of a patentee to obtain treble damages when willful conduct actually occurs. The possibility of treble damages under current law is an important deterrent to patent infringement that should be retained as is.

Opponents include: The USPTO, the Professional Inventors Alliance.

INTERLOCUTORY APPEALS

What it would do: Section 10(b) of the bill would permit an interlocutory appeal to the Federal Circuit Court of Appeals after a Markman hearing on claim construction, rather than waiting for a final judgment from the district court.

Arguments for: Proponents say these appeals would reduce the length and cost of litigation. Claim construction, they argue, is a fundamental predicate that goes to the heart of any patent infringement case. Until a claim is construed, it is impossible to establish whether infringement occurred and whether the patent is invalid. This process also serves to narrow discovery and motion practice and related expenses. Proponents assert that an interlocutory appeal would help to mitigate the judicial inefficiency that occurs when a full trial is conducted based on an incorrect interpretation of the patent, only to be reversed on appeal and sent back for a second trial. More than a third of all Markman rulings are overturned on appeal, meaning that many litigants end up paying the attorney fees and expenses for two trials.

Proponents include: Large technology companies and the financial services industry.

Arguments against: Opponents say interlocutory appeals from Markman hearings would increase litigation and court congestion and offer “another bite at the apple” because the reversal rate for claim construction is fairly high. The net result, they say, will be to significantly delay final judgments from the lower court, significantly delay potential settlements, and significantly increase litigations costs.

Opponents argue that the Federal Circuit would not be able to handle expeditiously the large numbers of Markman appeals, meaning that resolution of the underlying district court cases would be delayed for years.

If this provision is enacted, opponents say, it would result in an interlocutory appeal in virtually every patent infringement case as soon as a Markman order is issued. One study estimates this would double the number of appeals each year.

Opponents include: The USPTO, Federal Circuit Chief Judge Michel, the biotechnology industry, smaller technology companies, and smaller patent-holding companies.

POST-GRANT REVIEW

What it would do: The bill would expand the ability of third parties to challenge a patent after its issuance. In particular, it would allow any person to oppose a patent within 12 months after it is granted. More controversially, it would allow a challenge at any time if the petitioner “establishes a substantial reason to believe that the continued existence of the challenged claim in the petition causes or is likely to cause the petitioner significant economic harm.”

A newly designated Patent Trial and Appeal Board would be responsible for conducting the post-grant reviews. The presumption of validity that applies to patents during litigation would not apply to these post-grant review proceedings. Instead, a “preponderance of the evidence” standard would apply.

Arguments for: Proponents say these post-grant review procedures would be an improvement over existing reexamination procedures because they would allow consideration of evidence gleaned through depositions and interrogatories as well as from patents and other documents. Also, proceedings would be overseen by an administrative law judge rather than a patent examiner. These changes would allow for more meaningful review and that, in turn, would lead to better patent quality overall.

The so-called second window – the ability to challenge at any time – is necessary, proponents say, to allow for a meaningful and broadly available reevaluation of suspect patent claims before a firm is forced into prolonged and expensive litigation.

Proponents include: Large technology companies and the financial services industry.

Arguments against: While reexamination is an important component of the patent system, it must be structured in a manner that preserves the value and enforceability of the majority of patents, opponents say. This change would create an essentially limitless opportunity to challenge a patent at any time during its life. This would be a dramatic departure from the norm and cast a cloud of uncertainty over issued patents. If a patent can easily be challenged at any time under a low standard of proof, patents will have much less value and investment predicated upon them will inevitably be diminished. This, in turn, will likely result in less innovation.

Additionally, the resulting surge in complex, post-grant review proceedings would further strain an already overburdened and under-funded USPTO, thereby jeopardizing the agency’s ability to improve pre-grant patent quality.

Opponents include: The USPTO, the biotechnology industry, smaller technology companies, patent-holding companies, medical device manufacturers, university technology managers, the NanoBusiness Alliance and the Professional Inventors Alliance.
PRIOR USER DEFENSE

What it would do: Section 5(b) of the bill expands the prior-use defense, which presently applies only to business-methods patents, to cover all patents.

Arguments for: Proponents argue that this expansion is reasonable in a competitive economy and strikes a balance between trade secret and patent protection. They also say it goes hand-in-hand with U.S. adoption of a first-to-file rule. Prior-user rights benefit smaller businesses, which often lack the resources or know-how to pursue patent protection, proponents say. This measure would allow them to commercialize their inventions when they used the subject matter of the invention prior to the patent’s filing date, even when they did not pursue patent rights.

Some foreign countries presently allow prior-user rights, including Germany and Japan. This measure would help level the playing field for U.S. companies by putting them in the same competitive position as their overseas counterparts.

Proponents include: The financial services industry and the biotechnology industry.

Arguments against: Opponents contend that prior-user rights undermine the purpose of a patent system by creating a strong incentive to protect innovations as trade secrets. Under a prior-use defense regime, if inventors are able to protect their innovations as trade secrets, they are able to use them indefinitely, even if someone else obtains a patent on the invention.

Opponents also argue that this change would benefit larger corporations at the expense of smaller ones. They also contend that prior-user rights would reduce the value of patents and therefore make innovation less desirable.

Opponents include: The USPTO, the Professional Inventors Alliance.

VENUE

What it would do: Section 10(a) of the bill limits the places where corporations may be sued in patent cases by amending 28 U.S.C. § 1400(b) to provide that a corporation “resides” only where it has its principal place of business or in the state in which the corporation is incorporated. Current law presumes a corporation to reside wherever it is subject to personal jurisdiction. This change would not apply to declaratory judgment actions brought by alleged infringers.

Arguments for: Proponents argue that this change would discourage forum shopping. As the law now stands, any company whose products are sold nationwide is subject to patent litigation in any jurisdiction in the country. As a result, certain jurisdictions have become magnets for patent cases because of the disproportionately high number of cases they decide in favor of patentees.

This forum shopping imposes a costly burden on businesses which must collect evidence and witnesses and travel to remote jurisdictions to try complex patent cases over a period of weeks or months.

Proponents include: Large technology companies, the financial services industry, and the biotechnology industry.

Arguments against: Opponents argue that this change would be a substantial departure from established practice and may not result in the most appropriate and convenient venue for litigation. Certain district courts attract patent cases not because of favoritism, they say, but because of their expertise and timeliness. They also argue that the impact of forum shopping is minimized by the existence of a single appellate court for patent cases, the Federal Circuit.

Opponents include: Smaller patent-holding companies, smaller technology companies.

USPTO REGULATORY AUTHORITY

What it would do: The bill would authorize the USPTO to promulgate substantive – as opposed to procedural – rules and regulations for the first time in its history.

Arguments for: Proponents argue that giving the USPTO substantive rulemaking authority would be beneficial to the patent system and would help ensure an efficient and quality-based patent examination process.

Proponents include: The USPTO.

Arguments against: Opponents note that the U.S. Constitution expressly gives Congress the power to protect intellectual property and that delegating that authority to an administrative agency would be an ill-considered abdication of that Constitutional authority. Further, this grant of authority would create instability in the patent system, because the USPTO could make multiple changes to the law during the life of a patent. The job of defining substantive patent law is better left to Congress and the courts.

Opponents include: The biotechnology industry, smaller technology companies, patent-holding companies, university technology managers, medical device manufacturers, and the NanoBusiness Alliance.

INVENTOR’S OATH

What it would do: The bill would change the current practice of requiring the inventor to sign an application. It would allow the assignee of an invention to file a patent application in its own name. It would also allow substitutes for the inventor’s oath where the inventor is unable or unwilling to sign.

Arguments for: Proponents say this change would reduce unnecessary formalities in the patent application and simplify and streamline the process. They also say this change would go hand-in-hand with a U.S. shift to a first-to-file system.

Proponents include: The USPTO.

Arguments against: Opponents say that patent applications filed by assignees may lack the actual inventor’s personal guarantee that the application was properly prepared. In addition, assignee filing might derogate the right of natural persons to their inventions.

Opponents include: The Professional Inventors Alliance.

This article was originally published in BullsEye, a newsletter distributed by IMS ExpertServices. IMS ExpertServices is the premier expert witness and litigation consultant search firm in the legal industry, focused exclusively on providing custom expert witness searches to attorneys. We are proud to be the choice of 89 of the AmLaw Top 100. To read this and other legal industry BullsEye publications, please visit IMS ExpertServices’ recent articles. Call us at 877-838-8464 or visit us at http://www.ims-expertservices.com

Confidential Information
Confidential information is a well established area of law that that protects ideas and information regardless of its form (whether spoken, or in a recorded form such as electronically or on paper), provided that the confidentiality of the information is maintained. The law of confidentiality plays a part in other areas of law. For instance, that a disclosure of particular information at a relevant time completely dissolves the right to obtain patent protection.

There are traps for the unwary when dealing with business ideas. When entrepreneurs are looking to disclose sensitive information, they should enter into a non-disclosure agreement prior to any disclosure to at least enshrine the terms of the disclosure in writing. To be legally enforceable, the agreement must be properly drafted and ideally lay out some background to the circumstances of the disclosure, so that if worse comes to worst there is some documentary evidence of the disclosure and what it related to. This does not mean that the information itself should be disclosed in the non-disclosure agreement, but rather the circumstances and general subject matter of the disclosure. If the company or person to whom the idea is to be disclosed is reluctant to enter into a non-disclosure agreement, then the business idea should probably not be disclosed to them in the first place. It would not be the first time that a company says after the disclosure that they are “already working on something” similar. A well drafted NDA will cater for this contingency.

When a business idea has been implemented and trading commenced, it will of course lose its confidentiality and fall into the public domain. At this point (and in keeping with our comments about rival traders at the outset of this brochure) there is nothing preventing any other company from copying the essence of business idea and altering it or improving it and by doing so creating a competing product or service – subject to the following. If parts of the business idea can be protected by intellectual property rights, then competitors will not be able to copy the business idea to the extent that the intellectual property rights protect the idea.

Overview of intellectual property rights

Each of the different intellectual property rights serves a different purpose. They all apply independently – if subject matter qualifies for protection under more than one type of intellectual property protection, then the rights associated with the particular intellectual property right may be enforced independently of the others. No one IP rights serves all purposes, and the best right depends on what the business idea is and how the business wants to use it.

Loosely speaking, copyright protects written and recorded material from copying; registered trade mark law protects business names and logos from being used by other businesses; patent law protects truly innovative products and processes from being copied or offered for sale; the law of passing off protects established reputation in a business from being exploited by others; the law of confidential information and that of trade secrets protect information from disclosure or misuse provided it remains secret. Lastly, designs law primarily protects the aesthetic features of a design as it is applied to a product. There are different tests for infringement in each case.

So, if a logo is created that is intended to be used to identify a business, it may qualify for trade mark protection. It will also qualify for protection from passing off. If the logo is an artistic work, it will also qualify for copyright protection and protection as a registered design. Likewise, if a design has been created it may be registered as a design, the unregistered design right may also protect it, and if it is to be used as a trade mark, it may qualify for registered trade mark protection as a shape, and protection from passing off if it has accrued the requisite goodwill for the business.

It is important to realise the intellectual property rights are territorial. For instance, there is no such thing as a worldwide patent or trade mark. A reference to a worldwide patent usually means that registered patent protection has been obtained in many individual countries or ‘territories’. With trade marks, there is an important exception where a single trade mark may be obtained covering all of the countries in Europe (except Switzerland) with a single application.

Individual Areas of Intellectual Property Protection to Business Ideas
Copyright Law This area of Copyright law is said to protect the fine arts, whereas patent law protects the industrial arts. Copyright protects materials in their recorded form whether it be art, photographs, graphic works, music as a embodiment of a business idea. Copyright will not against someone reading the written work, extracting the concepts from it and implementing their own version of it, provided they do not copy the way it is expressed. It will protect against someone copying the materials that they read word for word. It does not protect against someone extracting the ideas from the document and using them for their own purposes.

Patent Protection and Business Ideas Some people say that patents protect ideas. They say this on the basis that at the time the patent application is filed you do not need an existing invention, because the patent invention only needs to be produced when the application proceeds to examination, about 9 months after the application is made. Strictly speaking, patents do not protect ideas – it protects products and processes that have been invented, that has not been seen before and contains an advance over what existed in the market at the date of the application.

The UK and Europe do not allow protection for pure business methods (amongst others). This contrasts with US patent protection that does allow for protection of methods of doing business. A good example is the “One-Click” purchasing method used at amazon.com – it is patentable in the US, but not in Europe.

Design Rights Design protects the appearance of a product brought about by its shape, contours, ornamentation and surface decoration. There are exceptions to these rules. Nevertheless if the design is new and has an individual character, it may be registered for protection. The unregistered design right applies automatically in the same way as copyright and has some similar characteristics.

Trade Marks If the business idea is the name of a business or a logo, it may be registered as a trade mark. A trade mark is simply a name or symbol that indicates that goods or services originate from a source associated with the trade mark. For instance, if Google were to produce a mobile telephone with word ‘Google’ applied to it, you know that the Google, Inc had a hand in producing it. Trade marks do play a role in the promotion of a business idea, because it allows the business to associate the business idea when it goes to market with a distinctive name, which is readily differentiated in the market.

Contracts Contracts, when properly prepared, are simply agreements in a legally binding form. Contracts may be verbal or they may be written. In a commercial context, there is real difficulty in proving what the terms of a verbal agreement are. It is commonly said that contracts are not required unless things go wrong. The problem with this approach is that when a value judgment is made at the outset of transaction that all will go well, there is no decisive written record of what was actually agreed, which makes enforcement of the contract more difficult and in our opinion, for most cases too risky to try.

When dealing with intellectual property rights, some transactions dealing with intellectual property must be in writing, such as transfers of ownership and grants of exclusive licenses.

Furthermore, contracts with employees may be drafted with a view to preventing competition from employees and freelancers when they leave finish their engagement with their employer

Conclusion
The focus of this article has been the application of intellectual property rights and contracts may used to protect a business idea and their limitations. Intellectual property rights and contracts may be tailored to maximise the level of protection that is available by law for a particular business idea in the circumstances that it is intended to be used. The way this is done for any particular business idea relies on the nature of the business idea and its origins.

By not taking measures at the outset, you run the risk of losing rights that may otherwise have been enforceable and in the process, compromising or losing a powerful negotiating position in the event of infringement of legal rights that you otherwise might have had.

Leigh Ellis is a business solicitor and contract lawyer providing legal advice on litigation & intellectual property disputes. He prepares contracts dealing with intellectual property, and advises his clients on protection of business ideas, contracts and intellectual property disputes.