This is written by Swayamsiddha Das, pursuing a Diploma in Intellectual Property, Media, and Entertainment laws from lawsikho. This article has been edited by Aatima Bhatia (associate, lawsikho) and by Dipshi Swara (senior associate, lawsikho).
The word “I” in business stands for “Innovation” and “Ideas”, we humans have been blessed with that in abundance. When we think of using those ideas for doing something innovative, creative and showcase some originality in our work the role of IP Rights becomes very relevant.
Start-ups are companies that run on innovative and unique ideas that aim to provide quality service at a cheaper and faster pace to the customers. In the case of start-ups that are set up in the European Union (EU), the only way they can establish and attain a trans-border reputation is by developing high-value goods and services, as well as powerful brands and innovations. Many EU start-ups, therefore, tend to work in an environment of intense intellectual property. Therefore, it is very important to understand if start-up ideas can be protected or not? What is the role of IP in start-ups? What are the essential IP rights associated while establishing a start-up in the European Union (EU)?
Can start-up ideas be protected?
Yes, one can protect their Start-up ideas. When you discuss your start-up concept/strategy with others before your product or service is ready for market, you can safeguard it by treating it as private (a trade secret) or by employing a non-disclosure agreement. Before you transform your concept into a product or service, you should ensure that only you have exclusive rights over the entire start-up. To protect the implementation of your concept and sections of your website, many forms of intellectual property (IP) rights are available, such as patents, trademarks, design rights, and copyright. Intellectual property assets are not to be underestimated. If you do not take measures on time, you may lose your rights or be held accountable for wrongdoing.
Essential IP rights that are associated with start-ups
Trademark plays a very important role in any business as it allows the consumer to identify and differentiate your products and services provided by you in the vast market. New start-up companies who are planning to get their brand name registered in the European Union (EU) should choose a name that is distinctive and not descriptive in Nature. Ex: If your start-up is all about selling hot chocolate in the European Union (EU) and you want a trademark for registration you simply can’t register “Hot Cocoa in Winters” as a trademark as it is very descriptive to what you are selling and not distinctive.
But then only having a good name for your start-up is not enough. The company registrations may offer limited protection to your brand but they have considered weak protection of trademarks is a very affordable method of protection against intellectual property, but failure to do so may cause names to be altered later. Hence it is very necessary to register your brand in those nations where you want to conduct business, trademarks should be safeguarded.
Apart from these there are few things that one needs to keep in mind while applying for trademark protection in the European Union (EU) and they are as follows:
- The apparent advantage of an EU mark is that 28 nations and a market of half a thousand billion customers may be covered by one registration. It is because there are no impediments to registration in any one of the nations to obtain a European Union (EU) trademark. A barrier to registrations can block EU registrations in a single small European Union (EU) nation, So the European Union (EU) trademark covers everything or nothing, and only some Member States cannot accept it in part.
- If you are a Start-up who is just venturing into the market with very little funding and is worried about the cost for trademark registration in the European Union (EU) then you don’t have to worry about it as the government fee for Trademark Registration varies from 850 to 1000 Euros which is very pocket friendly as your Start-up name would enjoy protection for 10 years in 28 countries. If you are unable to go to the EUIPO (European Union Intellectual Property Office) for trademark registration, you can apply for registration online.
- Another advantage of getting your trademark registered in the European Union is that they are incredibly fast. The European Union (EU) Trademark Office offers a “fast track” method that allows for very rapid scrutiny of the application, generally within less than a week. There are a few easy tasks to follow quickly but the best part is that there are no additional costs. The only thing is that not everyone can get a fast-track application, only the applicants who have to choose the goods and service from the EUIPO’s database of goods and services.
Patents are mainly a kind of intellectual property that forbids the replication, sale, use or import of a certain invention or revolutionary procedure by other people.
Patent filing should be considered as part of its product strategy by start-ups, especially in the first stage in which a product will be marketed. Patents offer a range of long-term advantages that justify expenses and time. The most convenient part of the process is to register a patent beforehand since the product is legally protected and the patent proprietor also has the right to prohibit others from duplicating the idea and design of the product.
No firm may then claim the innovation of its proprietor, and nobody can produce and sell it without the agreement of the proprietor. If, without due authorization of the owner, an entity imports or exports a patented invention, the latter shall take action against such violation. Until the patent period is ended, the patent proprietors have the only right to exploit the innovation as per their business plans.
The main plus of a patent is that it may be licensed or sold by the patent proprietor to others. It also helps to recoup the money spent on R&D and patent filing. It becomes a substantial source of revenue. In conjunction with a registered design and trademark, companies were founded only to collect the rights to a patent they licensed. Above all, a patent increases the value and potential of a product that promotes and helps attract investors’ trust. Risk capitalists are interested in working with or investing in start-ups that already hold a patent.
Many start-up ventures tend to ignore this IP right but they need to understand that the market is highly competitive, which might pose a major difficulty. Without a patent, successful goods are an easy victim to competitors who can exploit an innovation without getting a license to use or to sell it. Without a patent on its product, major businesses can exploit a small player by producing a comparable product and selling it at a better price. This is a dangerous technique that can destroy your product’s market worth or share. Even tiny companies can sell this product at a far cheaper price, as they are not pressured to repay the funds invested in R&D by the creator. Without a patent, litigation against infringers will be impossible since there is no specific evidence to support the claim that your innovation is a particular product.
Copyright protects the expression of ideas and not the ideas per se. They mainly grant protection to literary, artistic, musical works, etc. The main yardstick to determine if your ideas are eligible for copyright protection is “Originality”. The registration of copyright provides you with the protection of over 70 years. This exhibits that your IP is legally protected and authorises you to sue whoever copies your work.
Emerging start-up firms that trade or provide services via web channels must invest a significant amount of money in building a website that presents their products/services originally and creatively. Similarly, start-ups developing unique computer software and programs cannot allow any rival to utilise their original input or programming for their firm.
Start-ups, therefore, need to assess if their work can be infringed and how long work needs to be protected. Once these questions are assessed, the start-up can decide whether or not it requires copyright. Your registration will for a considerable duration prevent the threat of commercial abuse of your work.
If you are trying to set up your Start-up in the European Union (EU) then you have to comply with Article-17 of the EU Copyright Directive if you are providing a platform to users for content sharing. This compliance can be done by ensuring the following things:
- Considering how the laws the going to be applied in your business
- Set up a forum specifically for Takedown notices in your platform
- Ensure that the terms and conditions in your website include clauses about copyright violation and exempted content.
- Think about the ways where you can obtain authorisation from the author to display content and prevent any kind of unauthorised sharing in your platform.
Designs are regarded as one of the most important components of a business. Design rights are a type of intellectual property protection that protects distinctive designs against imitation and infringement. Design rights have become more essential for designers and businesses all around the world in this regard. The key elements for design protection in Europe are “novelty” and “individual character,” as established in Articles 5 and 6 of the CDR, as well as in the Designs directive’s parallel provisions. The proprietor of a Community design has the sole right to prevent any third party from utilizing an infringing design anywhere in the European Union. A single application provides five years of protection, which may be renewed for an additional five years up to a maximum of 25 years. Unregistered Community designs are protected for three years from the date of public exposure inside the European Union. Community design protection is a popular means of getting protection in Europe since it is simple to obtain, relatively affordable, gives unitary protection across Europe, and may be enforced in specially established Community design courts.
A start-up emerges from an inventive and creative effort, with design being one of the most important components. To stay ahead of the competition, a start-up must be innovative. In this case, it is absolutely important to safeguard such inventions through possible intellectual property rights. The field of preliminary design protection assists start-ups in restricting large multinational corporations from exploiting innovative designs to gain a competitive edge in the market. Owning design rights to a good design enables start-ups to increase their value and revenues, perhaps leading to successful franchising. In essence, it is strongly advised that earlier protection of design rights would increase a company’s economic worth and reliability in the market, as well as aid in the establishment of a solid platform, particularly for start-ups.
The purpose of a trade secret is to gain a competitive advantage. It is the knowledge that is not widely known to the general public, has economic worth, and is kept secret via reasonable measures. Formulas, patterns, compilations, programs, gadgets, procedures, techniques, processes, and the like are all examples of trade secrets. Whether you’re employing a full-time employee for your business or collaborating with a third-party supplier for a specific service, make sure you do your research. Perform background checks on recruits, clarify any restrictions, and underline the significance of signing trade secret protection agreements. You want to avoid inadvertent exposure just as much as you want to avoid intentional theft. During the actual onboarding process, educate workers on the repercussions of exposing trade secrets and document every conversation and educational training program you perform.
Intellectual property plays a very important role for startups. The major mistake that start-ups make is not protecting their IP rights. Before venturing into the highly competitive market one must try to secure his entire idea by owing complete ownership over them. Start-ups must safeguard their technology and build the groundwork for future success to prevent problems with intellectual property resources. In the long term, IP rights improve start-up integrity and create additional possibilities to innovate and redefine.
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