No accountant, business lawyer or executive in business can afford to be clueless about intellectual property ("IP") law. Every business has some IP, eg its name. Yet few know the many benefits of intellectual property registers, or even what they are. Here's an introduction.
For real property there are central registers storing information useful for legal work. They are used for real estate transfers, leasing and other transactions.
For IP there is no one central register for all IP owned by a business or other organisation.
Yes, there are central government registers for patents, designs, plant varieties, and some trade marks. There are also registers for business names and domain names.
But for all of the above, there are many gaps in information in those registers. They do no list whether that IP has been used, has licensees, who are the original owners and who contributed to creation of the IP in say research work.
However, for copyright, confidential information and the get-up of products no registration is required. There are no central databases for these types of IP.
This information gap affects all IP, especially when a need arises for legal transactions, dispute resolution or litigation. The gap is filled with a document or file known as an Intellectual Property Register or IP Register. It becomes a directory for a larger IP repository.
An IP Register need only be a simple shell document or a software database. Into these key information is stored about identified intellectual property.
What data should go into the IP Register to start it off? For this it is definitely worthwhile to seek advice from an IP specialist lawyer or patent attorney. Call us for a conversation.
IP Registers should be in place for any individual, company, business group or public sector organisation which has more than just a little bit of IP.
Here are five reasons why an IP Register is essential for anyone with substantial IP or in a serious IP venture.
IP evidence for protection and dispute resolution. The Registry makes it easier for an IP owner or licensee to block infringement activity. A common case is when an ex-employee makes unauthorised used of IP. Those cases are more quickly resolved if a completed Registry can be supplied as evidence demonstrating the existence of IP to a court or lawyers acting for the ex-employee. This more economically secures acceptance of the employer's position for a pre-court undertaking or a court injunction.
IP identification for due diligence and IP valuation. The Registry is very useful for due diligence before an IP licensing or sale transaction or an initial public offering. It speeds up the work of lawyers, accountants, other advisers, and executives of all parties in a transaction. This is because it can be used as a record of critical dates and other data. Because it helps give confidence to buyers, in the business sale context we've used a Register often to make IP tangible and even sometimes to increase its perceived value in the eyes of purchasers.
Capital gains tax. Capital gains tax and other areas of tax law make it critical to have a proper database of information on IP. This is so when IP is held in a holding company in a jurisdiction which has no capital gains for IP. The Register can be evidence as to whether capital gains earned was from specific listed IP, or alternatively something else which has very different tax consequence (eg trading profits or sale of goodwill). Not having a Register weakens the evidence available to a business when tax offices audit tax returns. The problem gets worse with late payment penalties and interest.
IP source data for document and contract drafting. It is much more efficient to draft a contract when the IP is pre-defined in a Register. This applies to IP assignments; IP licences; employee contracts; contracts with consultants and independent contractors; and IP notices, consents, clearances, acknowledgements and disclaimers. We've seen numerous transactions fail because the parties carried out a great deal of costly contract drafting and advisory work only to later discover that the:
IP did not exist, it was not legally enforceable or recognised IP
IP registrations were not in the right countries
IP registrations were not as extensive in their coverage as assumed
IP was weak in its level of protection
IP was in someone else's name or in the name of a company now liquidated
IP was not fully owned by the party which assumes it has all legal rights.
Directory for an IP repository. The Register can be used as an index for a larger IP repository. This could be a box of items, a ring binder with items or an electronic database. It can contain items such as copies of registration certificates, contracts, brochures and other evidence of use of names, labels, brands, logos and other trade marks.
Once an IP Register is prepared, it becomes a living document. It has many valuable uses for a client and its in-house and external advisory team. Over time it should be updated as needed, eg adding or updating registrations or listings of new copyright work or confidential information.
As can be seen the above first benefit is that an IP Register makes money, while benefits 2, 3, 4 and 5 largely save money and time. Both are critical in legal transactions, dispute resolution and litigation.