Why is intellectual property important to all types of business?

This series of articles explores the themes of the autumn webinars. The first webinar reviewed the basics of IPR issues from a business perspective.

Intangible assets manage risks and boost value

All businesses have intangible assets. This is basically a matter of ensuring the ability to use the emblems and intellectual property rights that belong to a business. Intangible assets can also substantially boost the value of a business. A growing share of the value of business operations in many international groups depends specifically on intangible assets. These assets also affect the value of smaller businesses, as may become apparent in the course of mergers and acquisitions, negotiations with investors, or when preparing a business exit strategy.

There are various ways of increasing the value of intangible assets, and registering intellectual property rights is one way to safeguard this value. Examples of intellectual property rights include trademarks, design rights, patents, trade names and copyrights. We should also pay attention to such assets as domain names and trade secrets.

Intellectual property rights confer exclusive rights on the owner, such as the right to prohibit use and the right to issue licences. Registering a trademark makes it relatively safe to use the mark without fear of inadvertently infringing the rights of others. On the other hand, another party or competitor may be prohibited from entering the market with an overly similar emblem. Licensing may also enable new revenue streams.

Intellectual property rights protect the results of R&D investment and safeguard the competitive edge that they bring. Whenever something new is created or a new idea is conceived (whether this is a new name, expansion into a new market, new portraits for a website, a new brand image, or whatever) it is worthwhile making a point of identifying any intellectual property rights and contract law issues that may be associated with these ideas. It is vital to investigate the prospects for registration and to formulate protection plans before publishing new ideas.

Why is a trade name alone not enough?

The nature of a reliable protection strategy depends on the operating conditions of the business, its future plans, the industry concerned, and the targeted geographical market areas. Contracts and trade secrets are the most important aspect for some businesses, while licensing and patents are the paramount concern for others. Others again prioritise trademarks or design protection. The chosen protection measures must be consistent with and support the goals of the business and its other long-term operating strategies.

Only very rarely is a trade name alone sufficient to protect the emblems used. Even in Finland, to say nothing of registration as an EU trademark, a mere trade name does not necessarily prevent third parties from registering an identical or similar mark. Registration practices do not require as great a difference from prior trade names as is required in relation to prior trademarks. This means that a very similar trademark or trade name may be accepted for registration alongside an already registered trade name.

While a Finnish trademark alone provides significant additional protection for a Finnish business and prevents the worst problems, this protection is limited to the borders of Finland. Care should accordingly also be taken when expanding abroad to register trademarks in all relevant market areas, thereby ensuring that the same emblem can be used in all countries. EU trademark registration is an effective and sensible form of protection where a business intends to expand into other EU countries in coming years.

How should rights be exercised?

Registered rights must also be exercised in a correctly registered form, and as an emblem of products and services that are covered by the registration. The registration of a trademark or trade name that has not been used for 5 years may be revoked in certain circumstances. A trademark may also be diluted with loss of the associated exclusive rights if it is misused and becomes a generic word.

Intellectual property rights must also be considered when drafting contracts. For example, employment contracts and agreements with partners should include clauses on intellectual property rights that ensure such aspects as transferring copyrights to the business.

It is also important to monitor your own rights. It is better to learn sooner rather than later that someone is planning to enter the market with an overly similar trademark, and it can sometimes also be helpful to keep track of what your competitors are protecting. The availability of such monitoring services online has greatly reduced the time and expense required for highly efficient market surveillance.

Infringements should always be addressed promptly and individually in the most appropriate way.

The main rule of thumb for the morning webinar:

It is worthwhile identifying the aspects of your operations that distinguish your business from other operators, and that you do not want those other operators and competitors to use. Is a name sufficiently distinctive and memorable? Is the visual appearance unique, and do you want to ensure the exclusive right to use it? Whether you are concerned with visual aspects, technological innovation or the expertise of your staff, it is worthwhile identifying and considering the options that are available for protecting the distinguishing features of your operation. Businesses seldom succeed in effectively differentiating themselves from competitors through a trade name alone. The protection of intellectual property rights conferred by a trade name is insufficiently comprehensive in a growing range of circumstances.