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This month we focus on key IP & IT considerations for medium-sized companies.
This practice note was created by LexisPSL IP&IT; and supplements a separate practice note: Key IP & IT considerations for start-ups.
Suggestions in that note are also important for medium-sized companies, but this note focuses on additional intellectual property (IP) and information technology (IT) issues which are likely to be of more relevance to larger companies than start-ups.
This practice note is a brief summary of IP & IT law considerations when operating a medium-sized company that owns some IP assets and uses IT as a support function. This note is intended as a very high level introduction to typical considerations but the emphasis placed on these will vary depending on the nature of the business.
1. Appoint an Intellectual Property Officer and Management Board
Appoint an 'Intellectual Property Officer' to take primary responsibility for the management of your business's IP & IT assets. In some companies this role might be filled by the IT or Finance Director, but in a larger company it would be by an in house lawyer. The Intellectual Property Officer will need to co-ordinate the work of an 'Intellectual Property Management Board', comprising representatives from different business functions (eg marketing, sales, IT and human resources (HR)) to ensure IP & IT strategies are properly agreed, communicated and implemented across the business. This is also likely to require support from specialist external lawyers, trade mark agents and patent agents who will, for example, be responsible for monitoring renewal dates for registered rights, conducting clearance searches and providing specialist advice as required.
2. Implement good record-keeping systems
Ensuring dealings in IP & IT are mutually consistent
It is important that IP & IT transfer and licensing arrangements entered into by a business are mutually consistent. For example, IP licensed from a third party can only be used subject to relevant licence terms (eg licensed software to be used only by specific permitted users). Licensing of rights to third parties should also be done in a methodical way (eg it is important to ensure appointments of resellers and distributors do not overlap in terms of relevant territories or products that they cover). Maintain a central register of IP & IT contracts, including accurate summaries of what contracts provide for.
Establish record retention policies
There are numerous obligations for businesses to retain records for tax, HR and other legal reasons. There are also commercial reasons for wanting to retain or deleting records (eg storage costs). Implement appropriate record retention policies. See precedent: Record retention—training materials.
3. Avoid shooting yourself in the foot
Any business may run into occasional IP & IT disputes, whether as claimant (when preventing counterfeiters) or as defendant (when accused of infringing third party IP rights). It is important to avoid initiating IP disputes, for example claiming IP infringement, where this may be counterproductive or give rise to a 'threats' action. When faced with claims from third parties, it is also important to avoid inadvertent admissions of liability and implement comprehensive settlement agreements. See practice notes: Threats of trade mark infringement and Patents—threats. See also precedent: Settlement agreement (long form).
4. Protect trade secrets from loss, system failures and hacking
A reputation and goodwill built up over years can be easily lost, for example where employees disclose valuable know-how or lose confidential information. Trust can also be lost where IT systems fail or are hacked into by criminals. Extensive measures should be implemented to protection trade secrets and IT systems from loss or attack. See practice notes: Security and encryption and Hacking and computer misuse.
5. Encourage innovation
IP rights are a useful asset that can generate additional revenue for a business. Many companies have built their success on innovations made by staff; see, for example, the huge numbers of patents filed by companies such as Apple. Implement incentivisation programmes to encourage creativity and sharing of ideas by staff. This involves educating staff so that they understand their obligations to keep know-how confidential. Also be aware of obligations to staff in relation to patentable inventions created by them. See practice note: Patents—employee rights and compensation.
6. Beware of social media and defamation risks
It is increasingly important for businesses to manage the risks posed by social media as their use becomes more widespread. The blurring of work and home life in online media such as Twitter, Facebook and LinkedIn increase reputational and defamation risks for a business. Staff need to understand their online responsibilities to the extent they represent themselves online in any way in connection with their employer. See practice notes: Social media risks and guidance—including brand management and Defamation and social media.
7. Be careful when using open source software, royalty-free and similar 'free' IP & IT assets
Open source software and 'open data', 'copyleft' and similar free IP & IT assets offer valuable opportunities for businesses to grow rapidly without the development and licensing costs that would otherwise be necessary. However, there is a price to pay in using such materials, in particular in loss of ownership and control of materials developed in future which are derived from these 'open source' products. Staff, in particular IT personnel, should follow clear approvals processes before using 'free' IP & IT assets of this kind. See practice note: Open source software.
Key IP & IT considerations for start-ups.
Precedent: Record retention—training materials.
Threats of trade mark infringement.
Precedent: Settlement agreement (long form).
Security and encryption
Hacking and computer misuse.
Patents—employee rights and compensation.
Social media risks and guidance—including brand management
Defamation and social media.
Open source software.
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