18 April 2024, 12:18

Neglecting the strategy for protecting IP rights - creating potential risks for the business

Liliia Goncharova
Liliia Goncharova head of corporate and intellectual property practice, Rezultat Law Firm

In today's world, where competition in the market is extremely high, having a strategy for protecting intellectual property rights is becoming a key factor in successful business, as intellectual property rights always have their value for both individuals and businesses.

Also read: "Нехтувати стратегією захисту об’єктів права ІВ — створювати потенційні ризики для бізнесу".

When setting up a business, the founder often does not think about the protection of intellectual property rights, as he or she does not consider this issue a priority at the beginning of the business. However, the availability of protected intellectual property is an important element in building a business strategy and attracting investments in the future.

Thinking about intellectual property "for the future" can really jeopardize your business, as your company name (not only the word, but also the graphic features of the logo that distinguish you from your competitors), potential developments, inventions, drawings, program codes, algorithms and anything unique and produced in the course of the company's activities is an asset that will grow with your business. Therefore, careful planning and protection of intellectual property at the stage of business formation is important for its further success, ensuring the sustainability and competitiveness of the business in both national and international markets. Neglecting these aspects can lead to serious losses in the future.

First of all, we can highlight the following typical mistakes that we encounter in our work with the protection of intellectual property rights.

1. One of the most obvious mistakes is the lack of registration of intellectual property rights. If you have not registered your developments, inventions or trademarks, you risk spending time and significant financial resources in the future to defend these objects in court or negotiate with competitors to divide the market. The absence of registered trademarks, for example, may result in other market players using similar marks or copying your creative works without your permission. Let's imagine a situation where you have a working coffee shop with a signboard with a name and a corresponding consumer who associates your coffee shop with this particular name. In addition, you have developed branded clothing for your staff, tableware and other attributes that distinguish you from your competitors. However, third parties who have nothing to do with your business project have filed an application for registration of a trademark with the name of your coffee shop in order to oust you from the market. This modeled rather simple situation only superficially visualizes the consequences that may arise for a business in connection with the lack of a strategy for protecting your intellectual property rights.

2. Lack of a strategy for protecting intellectual property rights in foreign markets. One of the key issues in the case of a globalization strategy for business development, export of products or services is the registration of intellectual property directly in the countries where production, distribution and sales will be carried out. Entering foreign markets always involves significant financial investments, so I do not recommend neglecting a preliminary audit. Such a study will help you find out whether there are trademarks similar to yours in a potential international market, and if so, you need to analyze the risks that may arise if you apply for registration of your trademark. You should also keep in mind the peculiarities of trademark registration in the European Union: You can register a trademark in each country or in all EU countries in general, i.e., as a single EU trademark (the choice is yours and depends on your business goals).

In addition to the audit for similar trademarks, the strategy for protecting intellectual property rights may include the preparation of an agreement on the transfer of intellectual property rights from the author of the work to the company. This type of agreement will definitely be in the focus of attention in the event of a product sale or investment in its improvement. I always advise clients who are developing an IT product to register copyright for computer programs, register the name and image of the trademark, as competition in this market is particularly fierce.

3. The indifference of owners to possible violations of their rights and the lack of monitoring of registered intellectual property rights by third parties is also a common mistake. Regular monitoring will help to identify violations and take measures to prevent them.

4. It is extremely rare for a business to pay attention to communicating with employees about the protection of intellectual property rights. It is imperative that you inform your employees about the importance of protecting intellectual property rights and what they should do to do so. For example, to keep trade secrets, not to disclose information that constitutes a trade secret to other persons. On the business side, it is important to make sure that there is a non-disclosure agreement in place that clearly defines what is considered confidential information, the procedure for obtaining and sharing this information within the company, actions in case of information leakage, and liability for improper storage of information.

So, when you are planning a budget for a new project, pay attention to the costs of protecting intellectual property rights. These costs will turn into a revenue stream for your business and increase its capitalization as it grows.


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