May 28, 2017

Legal Corner: Intellectual Property Basics

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What is intellectual property (IP) and why be concerned about it?

Quite often IP is not something that you can touch, taste, or smell. In fact, most of its aspects are intangible.

IP represents the value of hard work, of creation and what the future might be. It’s the culmination of a thought and effort based development of something entirely new. It also represents vast fortunes that have been made by other people because clever people failed to protect what they own.

Ironically, most people fail to recognise the IP value that inherently surrounds their business. Take for example, the following true story.

At the end of the nineteenth century a “War of Currents”[1] between 2 brilliant inventors, Thomas Edison and Nikola Tesla, raged. Tesla and Edison’s respective alternating current (AC) and direct current (DC) tussled to emerge as the prevailing electrical standard.

Whilst Tesla’s AC ultimately prevailed, Tesla died penniless. Why and how could that be?

Tesla had patented his AC motor and licensed the right to commercially exploit it to Westinghouse Electric. However, the War of Currents took a heavy financial toll on Westinghouse who found themselves trying to stave off insolvency.

In a bid to survive, Westinghouse sought to persuade Tesla to lower or suspend his royalty payments for their use of his patent. Tesla, surprisingly, agreed to waive his right to the payments and later sold his patent to Westinghouse for a fraction of its worth.

The rest is history - Westinghouse went on to make millions from the patent; Tesla suffered several financial setbacks until his death. Had Tesla obtained proper IP advice regarding his patent’s value, money would not have been an issue.

The world is full of Tesla’s – people who fail to recognise the value of their efforts. Properly advised, Tesla would have negotiated a reduction of payments until Westinghouse resolved its financial problems and not sold his patent for the price offered.

When scientists invent/discover something new, or when artists are creative, when new ideas or models emerge from the garage (or the coffee shop) those responsible for them should ask themselves several questions including:

  • Am I excited about the idea?
  • Could it serve society now or in the future?
  • Could a business emerge?
  • When and how do I profit?
  • If I don’t know the answers to these questions who should I talk to?

In answering these questions, the lesson to learn from Tesla should be borne in mind. Ignorance can be incredibly costly.

You will have figured from Tesla’s tragedy that there are different forms of IP protection. These forms are rights granted by IP laws according to the type of IP. The rights stem from legal constructs under those laws and include:

  • Trade secrets (e.g. the priceless secret of the Coca Cola formula);
  • Patents and utilities for inventions and innovations respectively (e.g. Edison’s and Tesla’s inventions);
  • Know-how for the methods, processes and research used to develop a system or product (e.g. McDonalds’ development of the successful concept of fast food);
  • Industrial designs for drawings and designs that have an application which is of net benefit to any kind of industry (e.g. blueprints of structures/models);
  • Trade marks for names, insignias, devices and logos that create the goodwill surrounding a product be it a good or service (e.g. the McDonalds mark);
  • Copyright for artwork, film, music, software; and
  • Domain names for web addresses (e.g. facebook.com).

In countries of the Middle East and North Africa (MENA), ignoring IP laws can be fatal to your business. Again, ignorance is no excuse under these laws.

IP protection in most MENA countries is premised on a first-to-file rule for rights that are registrable such as patents, utilities, industrial designs, trademarks and domain names.

Other forms of IP rights such as copyright, know-how and trade secrets are subject to the first-to-use/develop/publicise rule as may be applicable. These IP rights need not be filed for but should primarily be protected by contract.

There are many people who fail to secure their IP in the same way they register their title to real property (i.e. land). IP registration enables its registrant to prevent others from using that IP.

For IP rights that can be registered, the MENA countries will presume that the person first to file was the first to develop/use that IP. This presumption is not absolute as the true/actual developer can contest the registration.

However, contesting the registration can be quite challenging, time consuming and costly. This means that taking a pedestrian approach to your IP could see you “miss the bus”.

On a final note, here are some takeaways:

  • understand your IP to know what’s capable of protection and what’s not;
  • fully appreciate the value of your IP – if you fail to do this, remember Tesla;
  • decide how best to protect your IP – depending on the type of IP right you hold;
  • never sign anything that restricts your IP rights without seeking proper counsel; and
  • make the most out of commercially exploiting your IP – Tesla again.

The advice obtained on these points must be strategic, practical and responsive to your needs. This advice will be crucial to addressing all IP challenges faced by your business. For further details contact GLS.

 

Bachir A. Chakra, Global Legal Solutions (GLS)

Bachir A. Chakra works with GLS Law as a trilingual commercial lawyer and has more than 12 years’ experience in the Middle East and North Africa. Currently located in Dubai, he heads the firm’s IP, Franchising and Media practice. Bachir can be contacted on +971 (0) 56 469 5866.

The GLS Group delivers 24/7/365 access to world-class legal solutions for all businesses globally, whether big or small. By combining 'Big Law' legal talent with advanced technology and superior processes, the GLS Group has created a new support reality; time, cost and location are no longer barriers to accessing world-class legal support.

 


[1] War of Currents, Wikipedia the Free Encyclopedia, https://en.wikipedia.org/wiki/War_of_Currents#cite_note-1 last visited on 9 May 2017.

Topics: Legal Corner

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