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Resources From shark bait to superheroes

  • Posted by Insight by Redchip Lawyers
  • Published Current as at 15 August 2017
  • Category Insights

Three life lessons for start-ups

There’s never been more buzz or support surrounding the start-up community, as Aussie entrepreneurs continue to drive innovation and growth. Many start-up businesses are benefitting from the numerous grants, tax incentives and accelerator programs on offer, and television programs, such as Shark Tank, are thrusting entrepreneurs into the limelight.

 All this excitement doesn’t come without its fair share of hurdles and the start-up landscape is fraught with legal pitfalls. For our money, it always pays to learn from those who have previously travelled – and potentially stumbled! – along the journey.

In each of the three local businesses we look at below there were a number of lessons learnt, many of which are pertinent to any start-up.

1. What next when the sharks stop circling?

In the course of chasing dreams and converting them into reality, it is commonplace for entrepreneurs to overlook one of the most important factors in the business journey – ownership of their idea or product. Founder of Over The Moo (a dairy-free ice cream company) and recent participant on Shark Tank, Alex Houseman, experienced firsthand the downfall of failing to properly secure intellectual property (IP) rights.

After impressing the Shark Tank panel with his pitch, Alex received offers from three of the celebrity investors. Difficulties soon arose, however, when it came to light that the IP for Over The Moo product recipes was jointly owned by Alex and a third party manufacturer. The uncertainty with regard to the IP resulted in the loss of two of the investment offers, and a difficult position from which to negotiate. Mr Houseman ended up walking away from the final investment offer.

Uncertainty in regards to IP ownership is a problem experienced far too often in all types of businesses. In view of the value of IP, it is a matter that requires careful attention and consideration.

How to protect your ideas

In Australia, IP rights arise at the time work is produced into a material form and usually vest in the person (or entity) that creates the work. An exception to the rule occurs where a person is an employee – IP created in the course of employment usually belongs to the employer. So when you engage the services of a third party or contractor, any IP created by that contractor will be owned by said contractor; even if you have paid for their services.

When engaging with third parties obtain a written IP assignment, signed by the third party, transferring ownership in all IP to you.

2. The Aussie STEM superhero battling Superman, Spider-Man and Wonder Woman

A trade mark is a badge of origin that distinguishes the goods and services offered by a business from those of its competitors. Registration grants the owner the exclusive right to use the trade mark throughout Australia, in respect of the goods and services for which it is registered.

Despite the value a trade mark offers, trade mark research and registration is far too often overlooked or deferred, which can lead to time consuming and expensive problems.

These difficulties are well illustrated by the plight of Australian tech entrepreneur and founder of Tech Girls Movement, Jenine Beekhuyzen. Jenine’s passion lies in addressing gender disparity in STEM fields, leading to the launch of a competition she dubbed “Tech Girls Are Superheroes”, plus the publication of two books under the same name.

Shortly after adopting the name, Jenine was contacted by the Australian lawyers for two gargantuan opponents: Marvel Characters and DC Comics Inc. They demanded that she cease use of the word “Superheroes” due to alleged trade mark infringement.

The battle for “Superheroes” is ongoing, with Jenine reluctant to give up the term after investing in her brand and seeing the impact this phrase has had on young women in technology. The costs of any legal dispute are onerous, however, and the fight has resulted in Jenine seeking donations to help fund her cause.

How to protect your brand

Conduct availability searches and secure registration of your trade mark/s prior to investing time and money in establishing your brand. The cost of searching and registering trade marks is minimal, particularly when compared to the potential fallout of failing to do so.

If you’ve already launched your business, secure your trade marks as soon as possible. Note that domain, company and business name registrations do not provide any rights to exclusivity or protection against infringement claims.

3. Standing guard over your IP rights

The value in securing IP rights lies in securing the exclusive entitlement to use and exploit that IP to gain an edge over competitors. If, however, you do not actively monitor your IP for infringement, then your efforts in securing your rights may be of little value.

Maintaining the value of IP does not necessarily mean you need to pursue time consuming and expensive legal actions. Early detection and action can minimise the need for protracted and costly litigation at a later time.

Redchip recently secured an excellent outcome for a client who, through active monitoring of their registered trade marks and intellectual property, became aware that a competitor was infringing on those rights.

The competitor was not only using our client’s name and logo (trade marks), but also promotional videos our client had produced to advertise its products (copyright).

By taking early action, Redchip’s dispute resolution team was able to enforce our client’s rights and protect our client’s brand integrity without costly litigation. If our client had not actively monitored its IP for infringement, the reputational damage to its brand could have been severe, and the legal fees associated with enforcing its rights significantly higher.

How to protect your rights

Monitor the status of your IP and take appropriate action to maintain the integrity of your rights. As a general principle, the longer infringement has occurred, the more difficult it can be to stop. This is particularly the case with trade marks. By monitoring for trade mark infringement and taking positive steps to enforce your rights you can protect your most valuable IP assets and avoid drawn-out and costly legal disputes.

Redchip’s IP and trade marks team supports businesses through every stage of creating, building and protecting their brands. Contact us to protect your business’s most valuable assets.