When the fidget-spinner craze swept playgrounds across the country two years ago, few could have imagined that its inventor had failed to protect the intellectual property (IP) behind her own creation. However, Florida-based Catherine Hettinger, despite owning the patent for eight years previously, decided to surrender it in 2005 because she could not afford the renewal fee. While tens of millions of the gadgets were being sold worldwide, she wasn’t making a penny.
Many small businesses can be complacent about protecting their IP, believing doing so only applies to big businesses or ‘innovators’ such as Dyson or Apple. “There’s a misconception that it’s a difficult process to follow and some businesses think ‘we’re so small, why would anyone care?’ But nowadays it’s so easy for someone to find you online and copy what you do,” explains Rianda Markram, Head of Content and Training at FSB Legal.
In 2018, FSB published its Spotlight on Innovation research, which revealed that the most common type of IP protection small organisations applied to their business was to protect confidential information (22 per cent), typically through non-disclosure agreements. Only 5 per cent registered patents, while 11 per cent had applied for trademarks and 7 per cent for design registration. And although copyright protection is generated automatically when you create something, only 15 per cent of businesses had chosen to make a record of that copyright in some way.
Most business owners know they need to set up a dedicated bank account and register with HMRC and Companies House, but there is limited information out there about protecting your IP. “As our business grew, people would ask whether we had trademarked our name,” says Sanjay Aggarwal, co-founder of Indian spice gift company Spice Kitchen.
“We started as a kitchen hobby and only came up with the brand when we needed to change to a business account on eBay.” Despite initial caution, he decided to register Spice Kitchen as a trademark, which proved useful when another company tried to use the name. “As soon as you think you’re in this for the long term, it’s important,” he adds.
While few businesses need to file patents (which apply to inventions and technological advances, for example patented technology in a car), most generate some form of intellectual property that would benefit from protection.
Anything from your business name to the words on your website are at risk of being copied – as Benjamin Houy, founder of French language education company French Together, discovered. Someone had created a website with an almost identical name and began posting articles under the same headings. “I was irritated but initially thought it was a coincidence, until I realised they were using the same headlines as me on almost all of their articles,” he explains.
He sent an email threatening legal action, giving them three months to transfer the domain name to him. “The threat of legal action was enough to make them stop,” he says. “The problem was that it created confusion, and that can cause problems, such as readers buying products from the wrong website or even being scammed.”
When it comes to protecting creative copyright such as website content or photographs, be clear on who owns it. If you’ve commissioned a photographer or a writer to create marketing material, for example, this copyright belongs to them unless stated otherwise.
“Unless it says otherwise in your terms and conditions, you can assume copyright for photos and such like belongs to the creator,” says Michelle Ward, a chartered trademark attorney with Indelible IP.
“If you fall out, they could remove your right to use that content. Or it might become an issue if you need to stop someone using it.” She adds that when businesses seek an exit strategy, investors will double-check they own all their intellectual property, so locking down copyright ownership in terms and conditions is essential.
Ms Ward urges businesses to think about IP protection early and to cover all potential bases. “New business owners often just look at web domain names and Companies House when they’re naming their business, but being registered doesn’t give you exclusive rights to that name,” she explains.
So two companies called Blogger Consulting and Blogger Consultancy, both doing the same thing, could co-exist.
Check social media handles to make sure you can secure them, she adds, and run a Google search on your chosen name. Even if you copy someone’s brand or name inadvertently, it could be costly and impact your reputation. Their first line of defence is likely to be a cease-and-desist letter, advises Ms Ward, but this could be followed by a formal demand to confirm destruction of any stock carrying that name. “So if you’ve paid for a website, branded materials or uniform, you’ll have to get rid of these in seven to 14 days,” she says. “Doing your research early can avoid these problems.”
If your IP has been stolen, the threat of reputational damage can often be enough to encourage the other party to stop. Children’s clothing label Scamp & Dude took to Instagram when supermarket giant Asda began selling a T-shirt with the slogan ‘a superhero has my back’ on it last year.
Scamp & Dude owner Jo Tutchener-Sharp had designed the slogan after undergoing brain surgery, and a portion of the profits goes to a charity that supports children who have lost parents. Her Instagram post gained thousands of likes and shares, and Asda agreed to remove the garments from sale.
Likewise, being savvy about protecting your IP can prove a useful marketing tool. Tom Lingard, a partner at law firm Stevens & Bolton, says: “Even if a company is not heavily reliant on its consumer-facing brand or patents, a carefully considered and well-implemented IP strategy can add commercial value to a business as it makes it more attractive to investors and prospective purchasers, and also demonstrates a level of professionalism and organisation that bestows confidence in the management.” While it can seem like “insurance you think you will never need”, according to Mr Lingard, it is time and money well spent.
Taking out IP insurance could be appropriate for some small businesses. FSB members can contact the FSBIS advice line on 020 3883 7976 to discuss their particular circumstances.
Hastings-based manufacturing company Focus SB produces high-end electrical accessories for hotels and public buildings. With the UK construction market uncertain, it decided to expand into China.
Focus SB was already sourcing components from China so had built strong relationships there and knew the market well. Having designed a product that would fit this market, registering trademarks was a priority. Chinese trademark law is stricter than in the UK – any company with the same name as one that already has a trademark, even if it does something completely different, can be blocked from selling there. “We had to apply to the Chinese equivalent of the British Standards Institute for approval, and were the first British company to get this accreditation,” says Managing Director Gary Stevens.
The firm decided to work with a patent lawyer that specialises in its sector, and some products are still being registered or are under appeal. Mr Stevens believes that the trademarking process will benefit the brand. “Someone could make cheap copies of our products, but if they can’t sell under our name it’s worthless for them,” he points out.
“Plus the Chinese are UK brand-hungry – they’ll do a lot of research to check the product they’re buying is not just a Chinese product with a British badge. So it’s a useful marketing tool as well.”