How intellectual property rights - copyrights, trademarks, trade secrets, and patents - can help you increase your company's valuation? Start with understanding the subtle differences and implications for your business.

With the prominence of knowledge and information technology in the global economy, Intellectual Property has become precious commodities and are fiercely protected.

Since Intellectual Property Rights are country-specific, it’s essential for companies to understand and ascertain the nature of protection in each country.

Indian has signed the Trade-Related Intellectual Priority Rights (TRIPS) agreement and the Paris Convention and has enacted/amended necessary laws for compliance.

As a common law jurisdiction, India also protects business goodwill and and reputation represented by a mark, name or get-up under the law of passing off. In addition, the Indian law also offers remedies for breach of confidentiality.

Passing off is a common law tort, which can be used to enforce unregistered trademark rights. The law of passing off prevents one person from misrepresenting his goods or services as that of another.

In recent times, well-known global brands and software from Facebook, Apple, and Google have been protected under IP laws in India to curtail piracy.

Copyrights, trademarks, designs, patents, and confidential information & trade secrets are each a different form of Intellectual Property (IP) rights recognized by the Indian law.

The distinctions among them can be subtle. Many times the same product or service may involve more than one of these Intellectual Property rights.

How can you tell them apart when deciding how to protect your company’s IP assets?

I am going to summarise each of the IP rights so that you can take an informed decision.

The best part?

You only need to know what matters to you as a decision-maker and leave the rest to a lawyer to complete the intellectual property registration for you.

Let’s dive right in.

Copyright

Copyright protects the rights of “authors” in their original creative works.

Copyrightable works include:

  1. artistic creations such as drama, novels, paintings, photographs, films and songs
  2. business-related works such as software code, website designs, architectural drawings, marketing reports, and product manuals.

The author of a copyrighted work has the exclusive right to perform the following actions:

  1. Reproduce the work in any form including print, video, copy, etc
  2. Use the work for public performance such as a play or musical performance
  3. Broadcast the work in the various format
  4. Translate the work into different languages
  5. Create derivate work such as revisions, updates, adaptations and summaries

The author can also prohibit anyone from copying or reproducing the copyrighted work.

Registration of a copyrighted work is optional but is highly recommended. In infringement cases, copyright registration is accepted as evidence of the rightful ownership in all Indian courts.

Infringement of a copyrighted work may lead to imprisonment for seven days to 3 years and a fine of Rs 50,000 to Rs 2,00,000.

You can display © symbol with your copyrighted work as a notice that your work is protected by copyright.

The term of copyright is equal to the life of the author plus 70 years.

Computer software, programs and database are protected as literary works under Copyright Act. As the owner of computer software, you are protected against unauthorized use of your software program and obtain relief from a court of law including injunction, damages as well as criminal remedies against misuse.

Trademark

A trademark is a symbol, word, letter, slogan, signature, numeral, design, brand, color, or logo that identifies the rightful owner of a product or service, and distinguishes it from those made or provided by others.

Trademarks can represent any of the following:

  1. The product or service itself (ex. Echo)
  2. Some specific feature or element of the product or service (ex. Alexa)
  3. The manufacturer the product or provider of the service (ex. Amazon).

Indian Courts treat domain names as a trademark and have been proactive in granting orders against the use of infringing domain names.

The Indian law also recognises issues such as comparative advertising, misuse on advertisements and unfair and dishonest commercial practices.

The law also offers protection of goodwill and reputation to foreign brands who may not have business presence in India.

A “service mark” identifies a service instead of a tangible product.

The registration of a trademark, although not required by law, gives the trademark owner the exclusive right to use the trademark for the product or service for which it is registered.

The owner of a registered trademark has the right to prevent infringers from unfairly competing with the owner by using marks that are identical or deceptively similar to the registered trademark.

In case of trademark infringement, the court may order an injunction (i.e., prevent the infringes from using identical/similar mark) or award damages. Also, there could be stringent criminal provisions under the Trademark Act.

You can use the unregistered trademark with ™ symbol and service mark with ℠ symbol. You can use ® symbol for a registered trademark.

The term of a trademark is ten years and can be renewed for ten more years.

Click here to learn how trademark symbols ™ and ® can help you promote your product or service, communicate a certain quality standards to your customers, differentiate against competitors and protect from unlawful infringements.

Patents

Patents protect an invention that is defined as a new product or process involving an inventive step and could have an industrial application.

The patent application must be filed before any publication or public use of the invention.

Business methods are novel ways of doing business. For example 1-Click system of Amazon.com that allows purchasing online without entering payment and contact details every time while buying. Business methods are considered as abstract and, hence, not patentable in India.

Computer programs/software are not considered as patentable, though there is ambiguity about it. Recently software patents have been granted to Facebook, Apple, and Google for showing that their invention includes a computer program along with novel hardware.

Facebook was granted a patent on a method for generating dynamic relationship-based content, personalized for members of the web-based social network. Facebook argued that its invention implements a technical process and has a technical effect.

Apple was granted a patent on a method for browsing data items with respect to a display screen associated with a comping device and an electronic device. Apple claimed that its invention brings about an improved technical effect and therefore should be patentable.

Google was granted a patent on phrase identification in an information retrieval system. Google claimed that its invention is not an algorithm or a computer program per se but provides a technical solution to a technical problem of how to automatically identify phrases in a document collection.

Product patents for pharmaceutical substances and micro-organisms, which satisfy the patentability criteria, may be patented in India.

In the case of patent infringement, by unauthorized making, importing, using, offering for sale or selling of any patented invention within India, a civil suit can be filed in a Court of Law.

The term of a patent is 20 years from the date of filing the patent application.

The Office of Controller General of patents, designs & Trademarks, a Government of India body, administers Patents, Designs, and Trademarks in India. Patent Offices is based out of Kolkata with branches in Chennai, New Delhi, and Mumbai.

Click here to learn everything you need to know about how patent works, how to submit patent applications, and what you can do in case of infringements

Designs

An industrial design means a feature of shape, configuration, pattern or composition of lines/colors that are applied to an article in 2D / 3D by any industrial process.

It doesn’t include which is just a mechanical device or is any trademark or artistic work.

You can register an industrial design under Design Act 2000 to get copyright over the design.

In case of infringement of a design, you can file a lawsuit in a Court of Law for civil remedies including injunctions, damages or delivery-up of the infringing articles.

The term of design is ten years and can be renewed for an additional five years.

Confidential Information & Trade Secrets

Confidential information and trade secrets include product, technology, business process, customer list, business plan, etc.

There are no specific laws to protect confidential information and trade secrets.

Hence, to protect your confidential information and trade secrets, you should have watertight agreements. In the case of a breach, you can take legal remedies under common law rights and contractual obligations.

Non-disclosure agreements with the employees, complemented with strong internal control and processes, will help you protect your confidential information and trade secrets. It would help if you educated your employees about their responsibilities to protect confidential matter on an on-going basis and as an integral part of their work.

During an exit interview, an employee should be reminded of his obligations concerning the company’s confidential information and trade secrets. The employee should be given a signed copy of the exit-interview form, including the employment agreement, if it was signed, to reaffirm his obligations.

When you are signing any contract with any third-party such as customers, vendors or suppliers, as appropriate, your agreements should define confidential information and the exceptions to confidentiality. Also, your agreement should have a clause for restriction on disclosure, use and copy; restriction on the use of confidential information upon termination and clauses negating grant of an implied license.

If you take legal remedies for the breach of confidential information and trade secrets, you would be expected to produce satisfactory evidence to prove which information is confidential and why show act of disclosure by the defendant and a reasonable estimate of the damages that you incurred.

IP Checklist for Valuation

Your company’s IP can play a big role in the valuation of your company. Hence, you should fully leverage intellectual property developed by your company as you scale.

Here is a quick check-list to assess and manage IP for your company:

  • Establish a system to record, register, protect and enforce intellectual property
  • Conduct IP audits to ensure that any intellectual property is not going unnoticed or unprotected
  • Ensure your employees knowingly or unknowingly do not violate any third party IR rights
  • Take measures to ensure that your IP rights are not only protected in India but also in countries where you carry-out your business, export your goods or services and anticipate competition from

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