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Intellectual Property
Protect Your Intellectual Property --- Tips for Start-ups
Vera Sung, Partner
and Wendy Fu
For many start-ups, especially high tech start-ups, intellectual property (“IP”) is one of their most valuable and important assets in their companies. However, in a real world, it is not uncommon for founders of start-ups to find their key technology being stolen and used by other competitors.
Indeed, protecting intellectual property is an expensive growing pain for most of start-ups. Every start-up still needs to plan for success. In order to maximize future value and avoid potential disputes, founders of start-ups shall build a solid IP protection shield for their start-ups. Here are a few tips for start-ups on how to protect their own IP.
1. Knowing basics of IP and getting protection
IP gives you rights to stop others from using your creativity. For founders of start-ups, it is worth spending some time in educating yourselves and your team on the basics of IP, including trademarks, copyrights, patents and trade secrets. A little basic IP terminology is introduced below:
Trademark
A trademark is a sign that distinguishes the goods and services of one trader from those of others. Typically a trademark can be words (including personal names), indications, designs, letters, characters, numerals, figurative elements, colours, sounds, smells, the shape of the goods or their packaging or any combination of these.
Patent
A patent protects your invention by giving the patent owner a legal right to prevent others from manufacturing, using, selling or importing your patented invention.
Design
Designs can be registered for a wide range of products, including computers, telephones, CD-players, textiles, jewelry and watches.
Registered designs protect only the appearance of products, for example the look of a computer monitor. Registered design owners have the right to prevent others from manufacturing, importing, using, selling or hiring the design product.
Copyright
Copyright is the right given to the owner of an original work. Typically, this right can subsist in literary works, computer software, musical works, dramatic works, artistic works, films, photos etc. Unlike other intellectual property rights such as patents, trademarks and industrial designs, it is an automatic right and there is no need to register a copyright in Hong Kong in order to get protection under the Hong Kong law.
Trade Secret
Trade secrets and undisclosed commercial information are confidential information in a commercial setting, such as formulaes, methods, technologies, designs, product specifications, business plans and client lists, that have commercial value. Protection of trade secrets and undisclosed commercial information is of particular importance when the IP is not registrable or the right owner does not want to disclose such information to the public.
For the same product, sometimes many different types of protection may be available. For example, if your product is a new tech cordless vacuum cleaner, the relevant IP might include patents, trademarks, trade secrets and design. Understanding the basics of IP will definitely help founders of start-ups to establish their own IP protection strategy.
Once the strategy is made, start-ups shall file applications to the relevant institution as fast as they can in order to maximize the protection.
2. Having key documents in place
Many start-ups believe that if they have registered a patent for the company’s key technologies and a trademark for the product name, their IP will be protected. While these are some of the essential steps that should be taken, alone they are not sufficient.
For employee part, it need to be careful when bring new employees into the company, especially when their work is directly related to your key technology. A well-written non-disclosure agreement is a must-have document for start-ups. It will protect start-ups’ IP from unauthorized disclosure by employee. Meanwhile, in case the key staff is later solicited to join the competitor, it is also recommended to have a non-compete clause in employment contracts, which restricts staff from taking jobs with rival companies for a period of time after their leaving.
Further, a clear ownership of the Company’s IP is also important. It is critical for the start-ups to ensure that the proper assignment agreements are in place for employee, consultants and business partner. No start-ups want to see in the future that they have to struggle in the ownership dispute for their key technologies or share half of license fee with consultants they hire for developing technologies for them.
Equally important, especially in the case of a trade secret, start-ups can follow the classical coke recipe example by strictly controlling the employee’s access to IP and keeping the secret only among a few key staff.
3. Global IP protection
Start-ups shall think hard about the future. It is vital for starts-ups to keep in mind that except copyright, most of IP which need to be registered, i.e. trade mark and patent etc., is country/region-specific and is limited to the borders of the issuing country/region. For example, Company A has registered its trade mark and patent in France. If later Company A finds that knock-offs are sold in Korea, Company A will not be able to protect its products against infringers in Korea based on its IP registration in France. It is because such protection does not extend to the places out of France. In order to avoid such awkward scenario, start-ups need to take a hard look at their business plan and devise a global strategy for entering countries, where their products will be potentially be sold and where they can be made in the future.
4. Seeking remedy from local customs
Start-ups usually have limited financial resources. Sometimes, even start-ups know that there are knock-offs of their products sold in the markets, they have to choose to take no action on such infringement. In the view of those start-ups’ founders, it is not worth their taking action to stop it when considering the high cost of litigation.
In Hong Kong, the Customs and Exercise Department has the power to take criminal sanctions against copyright and trademark infringement. If start-ups find such infringement, it will be cost-efficient for start-ups to report to the Customs and Exercise Department. The officers of the Customs and Exercise Department can help stop such infringement and protect the interest of start-ups.
How can OLN assist?
OLN and our Intellectual Property team in Hong Kong and Shanghai can assist start-ups with all intellectual property issues and in particular, devising tailor-made IP protection strategy for start-ups and helping start-ups register their trademarks, patents etc. around the world.
Domain Name and Trade Mark Scams in China - How Not To Fall For It?
Domain Names
Over the recent years, many domain owners have received spam emails claiming that some other company has applied for their domain names in Asia with various country-code specific domain names (“.asia”, “.cn”, “.hk”, “.in”, etc.). The domain owners were usually given a seven-day window to reply and stake their claim over the domains before the same are handed over to fictitious companies. The purpose of these spam messages is to create a sense of urgency for the domain owners to leap on the offer in an attempt to solicit business. Don’t fall for scams!
Individuals behind the scams have been successfully running it for years now. First, they harvest email addresses from WHOIS records or collect them directly from the websites associated with the targeted domain names in concern. They then fire off the abovementioned bogus emails.
Certainly, these emails could trigger you to be aggressive in protecting your intellectual property. Before doing so, it is worth thinking twice about the value of the domain names and the costs for doing so. A lot of times, not all of the domain names may appear to be important to you. In the event that you are actually interested in taking up certain domains to protect your intellectual property rights, it is recommended that you obtain professional advice or engage a reputable registrar to purchase the domains. Don’t fall for scams by replying to their emails!
Trade Marks
Another type of scam in China which appears to be just as serious as domain name scams are trade mark scams. A lot of trade mark owners are contacted by entities through emails or facsimiles, claiming themselves to be trade mark agents in China, of the fact that someone has just applied for trade marks which are identical to the trade marks of the recipient but in respect of non-identical goods or services. They then suggest that if the recipients act timely, a pre-application opposition procedure would be available to stop the applicants from successfully applying these trade marks.
In reality, there is no such pre-application opposition procedure in China for blocking a trade mark application. The general rule is that whomever files an application first for a trade mark gets the right. This is true so long as the China Trade Mark Office is convinced that the applied-for trade mark has not previously been registered and does not violate Chinese law. The application will then be preliminarily approved for publication in the PRC Trade Mark Gazette. If there is no opposition to the mark within three months of it being listed in the Gazette, it will proceed to registration and will eventually become a registered trade mark.
Only the China Trade Mark Office has the authority or the ability to determine priority rights and whether a trade mark application should or should not be registered. If you have a trade mark in which you wish to stop others from using it in China, you may consider acting as quickly as possible to prevent others from doing so.
OLN and our Intellectual Property team in Hong Kong and Shanghai can assist you with all your intellectual property issues and in particular, registering your domain names and trade marks in China.
December 2012
China’s General Administration of Customs issues announcement on cancellation of Customs record of IPRs
On 25 September 2011, the General Administration of Customs (“GAC”) issued an announcement “No. 59 Notice on Cancellation of Customs Record of IPRs” (“Announcement”) specifying two circumstances that may result in cancellation of Customs record of IPRs.
The Announcement is issued based on Articles 9 and 11 of the Regulations on Customs Protection for IPRs (“Regulations”) which stipulate that:-
Article 9
The GAC may cancel a Customs record of IPRs where the Customs finds that the IPR owner has not bona fide provided the relevant information or documents in the course of applying for the recordation of the IPR.
Article 11
(1) In case of any changes in respect of an IPR under recordation, the IPR owner shall modify or withdraw the recordation with the GAC within 30 working days from the date of such changes.
(2) If the IPR owner fails to modify or withdraw such recordation in accordance with sub-section (1) above, and thus seriously affecting the lawfulness of other parties’ legal import and export business or the Customs’ exercise of regulatory duties, the GAC may cancel the relevant record filing at the request of any interested party or may do so on its own initiatives.
In short, if an IPR owner fails to comply with Articles 9 and 11(2) above, the relevant Customs record of IPR that had been approved by the Customs may be cancelled by the GAC, or at the request of any interested party.
Before the GAC makes the decision to cancel or maintain the Customs record filing, the GAC will conduct investigation of the case and will request the IPR owner to submit written statement of defence within a prescribed time limit. The GAC will then notify the IPR owner and the relevant applicant of its decision in writing.
If the Customs recordation is cancelled and the IPR owner re-applies to the Customs for IPR recordal in less than one year after the cancellation, the GAC has the discretion to refuse such application.
How can OLN assist?
OLN can advise on the procedures and the required documents for modification or cancellation of PRC Customs record of IPRs as well as how to defend in cancellation of IPR recordal by the Customs.
Vera Sung
Oldham, Li & Nie
23rd August 2012
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.
OLN is a Hong Kong Law Firm, rated one of the top law firms in Asia. Solicitors provide legal advice in Corporate & Commercial Law, Dispute Resolution, Intellectual Property, Employment & Business Immigration, Divorce & Family Law, Insolvency and Restructuring, Personal Injury Law, Probate and Estate Planning, China Practice, French Practice.
International Classification of Goods and Services for the Purposes of the Registration of Marks – Tenth Edition
Article by Vera Sung, Partner
The Tenth Edition of the International Classification of Goods and Services, published by the World Intellectual Property Organization in June 2011 will be used in the classification of goods and services for the purposes of registration of trade marks in Hong Kong starting from 1 January 2012.
What Changes?
The WIPO revises the International Classification of Goods and Services every 5 years to keep it up to date. Under the Tenth Edition, there are significant changes to the classification of goods and services to ensure that goods and services are properly classified in accordance with its function or purpose.
Some of the major changes to the classification of goods and services in the Tenth Edition include:
- Game and amusement apparatus:
- “Games and amusement apparatus adapted for use with an external display screen or monitor” and “game and amusement apparatus other than those adapted for use with an external display screen or monitor”, which were formerly in Class 9, are now reclassified to Class 28.
- In Class 28, “games other than those adapted for use with an external display screen or monitor” is now deleted and “apparatus for games other than those adapted for use with an external display screen or monitor” is now changed to “apparatus for games”.
- “Video game machines”, “portable games with liquid crystal displays” and “arcade video game machines” are now added into Class 28.
- Dietary supplements, food additives and certain foodstuffs:
There are additions and changes to some of the indications in Classes 5, 29, 30 and 31. For example, “enzyme dietary supplements” is now added into Class 5 and “yeast of animals” in Class 31 is now changed to “yeast for animal consumption”.
- Additions and deletions of indications in various classes:
For example, “portable media players” is now added into Class 9 and “digital imaging services” is deleted from Class 41.
- Changes and transfers of goods/services from one class to another:
For example, “deodorants, other than personal use” in Class 5 is now changed to “deodorants, other than for human beings or for animals”. An example of transfer of goods is “drinking straws” in Class 20 which is now transferred to Class 21.
Apart from the above, there are also minor changes to other items across other classes such as the class headings, explanatory notes and general remarks etc.
Impact on trade mark applications and registrations
Trade mark applications and priority claims filed with the Trade Marks Registry on or after 1 January 2012 should classify their concerned goods/services in accordance with the Tenth Edition. To ensure registrability of the trade marks, cross-class clearance searches might be needed. On the other hand, owners of registered trade marks may be required by the Trade Mark Registry to reclassify their registrations so that they are consistent with the Tenth Edition.
How can OLN assist?
OLN can advise on the reclassification of trade marks and how the Tenth Edition may impact on your trade mark applications/registrations.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.
Investing in an Idea
By Jade Tang
A friend tells you that he has had a “brilliant idea” that will make him “millions. You wonder whether this idea could be commercialized and if so, how you can invest in it?
An idea by itself is rarely protectable but as soon as that idea can be transformed into intellectual property, that intellectual property can be protected.
The standard way of investing in an idea is for the related intellectual property to be transferred to a limited liability company which would then act as the joint venture vehicle between the creator of the intellectual property and any investors (“JV Co”).