Protecting Your Ideas and Assets
Did you know? Your company’s name is actually the first Intellectual Property (IP) that you purchased when starting a business. Beyond that, many business owners do not take the initiative to protect their other forms of IP, which may lead to undesirable consequences.
Entrepreneur Insight has reached out to Mr Tee Lin Yik, an IP consultant, to get his thoughts on the subject matter.
What Is Intellectual Property (IP)?
“To summarise, an IP is a creation of the mind that is also an asset. IP is expressed in multiple forms such as inventions, product design, texts, images, videos, blueprints, logos etc. Like any asset, it can be bought, sold or rented out. For example, a franchiser essentially rents out their trademark, brand and business model to a franchisee,” says Tee. “IP is a huge, encompassing umbrella that includes sub-divisions like patents, trademarks, copyright, industrial designs, etc., each with their own set of laws and regulations. Trademarks, Patents & Industrial Designs are also territorial. You may need to apply or register the same trademark in different countries if your company has plans on going international.”
Why Is IP Important?
Tee warns that: “When starting a new company, it is important to verify and confirm that your business is not infringing on someone else’s IP. It is shockingly common for companies to spend years and hundreds of thousands of ringgits on marketing and branding, later realising that the IP rights belong to someone else. In that case, your options are limited to spending even more money to buy out the IP or starting from scratch through re-branding.”
Tee expresses: “The larger your company, the more significant IP protection is. Having the necessary protection lowers your legal risk, which is an important step in attracting investors and also transiting to a public listed company. IP protection is all about speed, a first-come-first-serve basis system. If you’re too late, somebody else may claim the rights to your trademark before you.”
IP protection is still entirely foreign to new entrepreneurs. Thus certain misconceptions should be addressed directly.
People are under the impression that IP protection costs a lot of money. In reality, it only costs RM3000 to register a trademark that, once approved, will last for ten years. Trade Mark is like a Diamond; it lasts forever as long as you renew it every ten years. Considering the amount of money needed in settling lawsuits, RM3000 would seem like spare change.
● Is Only Meant for Large Corporations
One of the common resistance faced by business owners is that they do not feel that “they are ready” for IP protection yet. The amount of IP protection needed seems to correlate with the scale of the business. However, there is no “best” time to purchase IP protection. You only have to secure it before anyone else does. In the end, IP protections matter just as much to both small and large corporations.
● Patent Agents Are Lawyers
Patent agents do have a background in law education, but they are not lawyers, as they do not act on behalf of clients in court. They do, however, work alongside lawyers to help settle IP disputes. They can be called professionals or consultants, and just like lawyers, they are required to be qualified and approved by relevant agencies before advising and representing clients IP matters before the proper authorities.
What Steps Can I Take To Protect My IP?
“The most crucial step is to first educate yourself on the basics of IP and its importance, which will take only an hour of research. You can then choose to hire a professional patent agent to smoothen the process, or do it yourself, which will save costs, but lengthen the process,” says Tee. “The key point is to ensure that you do not infringe on other people’s rights and register the IP as early as possible.”
The IP Industry
“I have been in this industry for 12 years, and my observation shows that our industry has slowly gained awareness recently. Statistics by the Intellectual Property Corporation of Malaysia (MYIPO) shows that the number of applications has steadily increased each year.” Tee further explains, “The biggest problem the industry is facing right now would be the small number of patent agents. There are only 200 registered patent agents in Malaysia while there are close to 2000 in Thailand. We hope that the industry will gain awareness and expand further in the near future. If needed, my company offers a Patent Agent Professional Preparatory Course to help candidates to better prepare for the professional examination.”
Some individuals set up companies for the sole purpose of registering trademarks which are not intended to be used as genuine trademarks but re-selling them at a higher cost. This practice is called ghost marks. Although considered an unethical practice, it is legal to do so, as long as the trademark is being put to use. To appeal for a trademark that has not been used in good faith for more than three years after registration, you may use a lawyer to file a cancellation action in court and probably stand a chance to register it as your own.
Extreme Case Study
Tee recalls, “I am currently handling a serious, but common case, let’s call them Company X. The Malaysian government is currently running a program that aims to centralise certain medical information into a single database. This is considered a massive project as most government clinics or hospitals are required to install specific devices and software, and Company X is contracted to provide the necessary devices and software.”
“Company X has been operating for five years now and is very well established, but they have not registered the necessary IP protection yet. An outsourced ex-staff of the company quickly registered the IP and is currently suing Company X for large sums of money. But even worse, the company has to divert plenty of unnecessary attention to this issue instead of focusing on running the business,” warns Tee.
Tee shares his final thoughts, “The time to act is now. It is essential that you keep legal risks low when you start a business, for you and your investors’ sake. Building a business requires a step at a time, and it is unwise to rush ahead only by looking at profits while neglecting the groundwork needed to operate a stable business. IP is a necessity, not a luxury.”