The players in the online businesses depend on theseintangible assets – known to lawyers as 'IntellectualProperty Rights'. It is in these rights that many businessesfind their value and nowadays it is the intellectual capital ofa company that will often determine whether it represents a goodinvestment and viable business partner. This is particularlyimportant now that the inability to secure additional funding isforcing many companies to fold.
In contrast businesses that are conscious of their propertiesand rights are flourishing. This is not a difficultposition to achieve but to do so you need to identify what theserights are, where they exist and how the arise.
These rights take a number of different forms, the mostimportant of which (from the point of view of creative business)is copyright.
What Rights? – Copyright
An initial idea is not rich in intellectual property – it isdifficult to protect and difficult to value. However as soon itis translated into a physical form – either by way ofstoryboard, written design specification or hard code – the mostbasic intellectual property right exists, that beingcopyright.
As a rule of the thumb, copyright exists in all originalcreative works – hence copyright existing in original designs,video footage, the sequence of a story board, software code,in-game text, music and so on.
Where? – Copyright
Copyright works are everywhere. All artistic, literary andmusical works attract protection so long as they are original.Copyright cannot however exist in the following:
1. single words and names
2. a process, e.g. means of making something
3. an idea, unless expresses a tangible form and thattangible form has copyright.
How and Who – Copyright
Copyright arises on the creation of the work. It is instantand does not require registration or any additional formality.The more important question is who created the work and who ownsit. This is of fundamental importance for businesses and thedevelopment of their assets.
The general rule is that the creator is the first owner -though there are a few exceptions. The first is that employeesdo not own the copyright in work they create in the course oftheir employment. This is of crucial importance to the gamesindustry and must be distinguished from the frightening realitythat works created by a person who is not an actual employeewill belong to that person NOT the person paying for the work.If that is the case for some of your works you are unlikely toown the copyright in them but may have an implied licence to usefor a limited purpose.
This is alarming and can only be circumvented by somethingexpressed in writing to the contrary and signed by the creatorbefore or after the work is done. All freelancers working fordevelopers should therefore have written agreements transferringrights to the commissioner. If you have these – or get them -then you will have built (or will build) your asset base.
Identification of rights doesn’t end with copyright. The other areas to look out for are:
1. Trade Mark Rights
2. Patent Rights
3. Database Rights
4. Image and Personality Rights
5. 3rd Party Licences
6. Know-how and Confidential Information
The golden rule with these, like copyright, is to record in asingle location which of these rights you own.
Investors like to see what you own. They are interested inmodels, business plans and projections etc but they need to knowwhat it is they are actually investing in and what the companyhas and what the company will have. For creative businessesthese rights are its assets and when due diligence is conductedon companies it is vital look principally to see what theserights are – because it is on these foundations that allcreative business rest.
Taking the above in turn:
1. Trademarks There is no copyright ina name or word. There are, however, trademark rights bothregistered and unregistered in words, logos and various otherdevices 'capable of graphic representation'. Such rightsprotect the goodwill and reputation in your business.
Unregistered rights are not easily enforceable but they havevalue, as they may give rise to claims in 'passing off'- for example if a third party does something the same orsimilar and in doing so misrepresents itself, creates confusionand causes damage. The value in unregistered marks lies in theserights.
Registered marks are more easily enforceable and thereforeinstantly more valuable. So every work, slogan, device, logo,name etc you have used in the course of your business haspotential trademark rights. Protecting these rights isdealt with in the next issue but by identifying them now youwill be identifying assets with value. Once you know what youhave you can then decide whether they are worth protectingfurther.
2. Patent Rights If you havesomething that is inventive and not in the public domain butcapable of industrial application, then you may be entitled toapply for a patent. These are not cheap with world-wideprogrammes costing around £100,000. However to preserve theserights prior to your application, you must keep the detailsconfidential – and if you haven’t done so already the chancesare you will have lost them.
3. Database Right This right is similarto copyright but exists in relation to the compilation ofdata. Collections of data such as directories orperformance statistics have value that may be licensed toothers. Accordingly, databases need protection against wholesalecopying by others. This right isn’t lost just because it ispublished and anyone using that database for a commercialpurpose should pay a licence fee to the owner.
Identifying where this right exists gives you the opportunityto identify another source of revenue. It is however importantto make sure that the collected data is accurate with thenecessary data protection consents.
4. Personality Rights Personality rightspresent a number of problems for media businesses wishing to useor make reference to individuals as part of their product. Theyare unlikely to be an asset to a business unless a third partylicence can be established (see below).
The other area where personality rights may exist is withinthe industry itself. Bill Gates, for example, has value in hisname and face adding value to the balance sheet of Microsoft andif the CEO or lead programmer of your business is such a personthere may be some justification in adding that to theintellectual capital of the business.
5. 3rd Party Licences Licences in andout represent valuable uses of intellectual property. They arecommon place particularly as they have a calculable revenuestream. They may also represent intellectual capital and shouldbe valued as such. 3rd party licences in characters, existingfranchises and similar contracts add value to a company now andprovide further opportunities for the future.
6. Confidential information, Trade Secrets andKnow How Confidential information and Trade Secrets canhave huge value and should not be underestimated. Theconfidential information can be a business method, process or aformula – for example the Coca-Cola and KFC recipes. These addstructure and value to your business.
Setting them out and co-ordinating them adds value and givesyou opportunity to licence that know how. That is howfranchises are built.
Identifying a business’s intellectual property rights isfundamental to realising its value. Businesses shouldtherefore:
· Conduct an audit of all your creative works, know how,marks, and properties as described above.
· Establish who created them, when and on what terms.
· Catalogue all rights you now own.
· Continue the cataloguing process in future.
About the author: Briffa is a modernlegal practice specialising in intellectual property – theprotection of copyright, designs, patents, trade marks, tradesecrets and information technology. Our lawyers all haveexcellent legal backgrounds and are experts in this field. http://www.briffa.com