How to Protect your Intellectual Property (IP)

Creativity and innovation are the secret ingredients that differentiate a startup from the competition. When researching and developing your products, you create irreplaceable assets in the form of intellectual property (IP), the value of which is understood by investors, clients and competitors. Diligent IP protection will help you build strategic partnerships and attract investment. For companies that want to make long-term progress, IP protection is a matter of survival.

You should think about the optimal strategy for protecting your IP right from the start of your business. The most common mechanisms of IP protection are copyright, trademark and patent or utility model.

1. Copyright

Copyright, together with the licensing system, plays a key role in IP protection. All authorial works are subject to copyright.

Authorial work:

• Examples: computer program and software (digital product), database, website content, graphics, photographs, music and other works of art or literature.
• Creativity is always important – the law does not protect works or parts of works that were created by mechanical activity, e.g. testing.
• The © symbol is used, together with the author’s designation and the year of creation of the work, to be used to mark the authorial work, but in our region, it has no legal significance and is only a tradition taken from the USA.
• Only a natural person can be an author. Particular attention must therefore be paid to securing the copyright to the work through IP transfer (e.g. licensing or work for hire regime).
• The licence is an expression of consent to the use of the work.

Copyright consists of: 

• Personal rights allowing to decide on the first publication of the work, to be designated as the author and inviolability of the work, meaning protection against any unauthorized interference or alteration of the work. These rights are non-transferable, meaning that the author cannot transfer or relinquish these rights to another person and they expire upon death.
• Property rights allowing the use of the work or giving consent to the use of the work. Unlike personal rights, they can be disposed of without limits (e.g. by a licence or a contract) and are the subject of inheritance.

The copyrighted work is not registered (unlike a trademark or a patent). It arises when the work can objectively be perceived by senses.

In case of copyright infringement or in case of a dispute over authorship, it is always necessary to prove the authorship with evidence, which is more complicated due to the absence of formal registration. Therefore, it is necessary to think about how to reliably record who created the work, already at its creation. For a computer program, uploading it to a repository (GitHub) will usually suffice. Interestingly, it is possible to register copyright in the USA.

Licences

Startups must first and foremost ensure that they can exercise all copyright in the work, which is achieved through licence agreements and IP clauses. Although in some cases the law stipulates the possibility for a startup to exercise property rights in a work without the need to grant a licence (work for hire regime and partly also commissioned work regime, or joint work regime or collective work in the Czech Republic), this may not always be sufficient or possible. Therefore, it is necessary to assess whether it is needed to conclude a separate licence agreement with the author (developer, designer, etc.). You can find a sample at the end of the article.

In practice, there is often a transfer of rights from the startup to another company or end customer. This is done under a licence agreement. The licence may be agreed by the parties as:

• exclusive or non-exclusive
• for consideration or free
• limited or unlimited, in relation to the territory, time or method of use (e.g. the territory of Slovakia, for 3 years, methods of use: licensing the work to clients)

Exclusive vs. Non-exclusive Licence

EXAMPLE: A startup that develops software usually grants an exclusive licence only to portions of the work tailored to the client. An exclusive licence prevents the startup from using the software and granting the right to use it to another person. On the contrary, a non-exclusive licence allows licensing of the same work to other people. It is also necessary to pay attention to the regime of open-source software and dependencies, the use of which is regulated by open-source licences, e.g. GNU General Public License (GPL).

A sample licence agreement from Sparring can be found under the article.

2. Trademark

Startups should create a unique and unmistakable brand for their products or services from the very beginning. When creating a new brand, examine both free domains and unregistered trademarks.

Assessing the conflict of the intended brand (or domain) with existing trademarks in the early stages of business can save a lot of costs in the long run by avoiding the costs of rebranding and disputes over the right to use the brand. At the same time, every investor requires a certificate of trademark registration.

Trademark

• The trademark is mainly a word, figurative or combined sign, which helps the startup to differentiate itself from the competition. In particular, it protects the name or logo of a company or product and helps to avoid a conflict between a brand and an existing trademark.
• The date of filing of an application for registration of a trademark is decisive in determining who has priority in the registration of a trademark and, consequently, in its use. Another important factor is the actual use of the brand (albeit unregistered) and the moment when the brand became known to the relevant public. Simply put, the first person to use the brand in question intensively has the right to it, even though the brand has not yet been registered as a trademark.
• The trademark is valid for 10 years from the date of filing the application. For a renewal fee, it can be repeatedly extended by 10 years.
• The ® symbol can only be used when the trademark is registered. Until then, the symbol ™ can be used to declare the rights to the brand.

Trademark Registration

• Trademarks are registered at the intellectual property offices of the selected territory (the so-called territorial principle).
• Registration takes approximately 5-7 months, which is mainly caused by the mandatory publication of the trademark for a period of 3 months, when third parties may challenge the registration by opposition. There is no need to worry about the length of the proceedings because, after successful registration, the trademark is protected from the date of application for registration.
• The price depends mainly on the official fees of the country in which the startup requests protection. Here is an overview of prices, where the price is final (but does not include representation in litigation – in case of objections):

Country	SR	CR	EE	USA
Price (EUR) including the official fee	300	450	1,300 – 1,500	900 – 1,400

Due to the small size of our market, the European trademark (EUTM) is the ideal solution for most startups. Through a single application and fee, the startup will receive protection in all EU member states. EUTM and a US trademark is a common combination.

It is possible to verify the existence of identical or similar trademarks in the European Trademark Register or through the TMview tool, which aggregates data from all official national and international registries. However, a conflict arises only when the trademarks and the goods and services protected by the trademarks are similar.

Which Designations Cannot be Registered as Trademarks

The most common mistake when choosing a brand is its poor distinctive capability. In particular, the trademark may not consist of descriptive designations specifying the type, quality, quantity, purpose or other characteristics of goods or services; and interchangeable brands that have become commonplace in everyday language or customary business practices.

3. Design

A design protects the product’s appearance. Photographs of the product are normally attached to the design application, from which its edges, outlines, colour, shape and structure are clear. It can be used to protect the designs of all types of products from microchips to toothbrushes.

In addition, designs can be used to protect graphical user interfaces (GUIs) and GUI animations. This can be especially useful when protecting software applications.

By default, design protection is especially important for world-famous products, such as an iPhone or a Coca-Cola bottle, the purpose of which is, similarly to trademarks, to distinguish the product from the competition. However, design protection is not common for startups.

The Registration of a Design

• Designs are registered for a selected territory at intellectual property offices, similarly to trademarks.
• The conditions for design registration are a global novelty and a distinctive character of the design.
• The registration of a design is valid for 5 years from the date of submission of the design application. The validity of the design can be extended up to four times, each time for another 5 years for a total period of 25 years.
• Price: for registration for the territory of the Slovak Republic and the Czech Republic the price is approximately EUR 300 and for the EU approximately EUR 1,000 including all fees.

4. Patent

Patents protect innovations that may take the form of computer device, chemical formula, mechanical equipment, or other types of inventions (e.g. a gaming console or Rubik’s cube). Patent applications may exclude competitors from the market covered by the patent, but it is more time-consuming and costly to obtain. Patent protection is not common for digital startups. Patents are relevant for startups building a hardware product, or operating in the healthtech or biotech sector.

• A patent gives its owner the exclusive right to use the invention in the territory to which the patent relates, and no one may use the invention without their consent.
• The owner may give consent to the use of the patent by other persons. Consent to use the patent is granted by a licence agreement. The patent can also be transferred to another person.
• We distinguish the owner and the originator, i.e. the person who devised the invention. Typically, the originator is an employee of an institution and the owner is that institution.
• The relationship between the originator and the owner is usually regulated by contract, or the work for hire regime is applied similarly to copyright.

Utility models are a more accessible alternative to patents. It is basically the same institution as a patent (protection of inventions), but its validity period is only 4 years with the possibility of extension to 10 years. By filing a utility model application, the applicant can obtain the protection of their invention in a relatively short time and for a small fee while awaiting a decision on a concurrently filed patent application. When deciding between a patent and a utility model, it is important to take into account the speed of innovation. If there is a reasonable probability that a new technical solution may soon become obsolete, protection by a utility model is likely to suffice.

The Registration of a Patent

• The patent application for the selected territory may be submitted by the originator or owner. If you need to protect your invention on a pan-European level, you can register a European patent. However, there is no European utility model.
• An important factor is the necessary worldwide novelty of the technical solution or invention. Care must be taken when a discovery or invention is published in scientific articles. If the condition of novelty is not met before the filing of the patent application, the application would be rejected.
• Registration is also costly because the attorney’s fee exceeds the maintenance fees listed in the table.

SR	Patent	Utility model
Duration of protection	maximum 20 years	maximum 10 years
Fees – up to 4 years	EUR 357.50	EUR 33
Fees – up to 10 years	EUR 1,219	EUR 432
Fees – up to 20 years	EUR 5,365.50	does not apply
Duration of proceedings	more than 3 years	up to 12 months

CR	Patent	Utility model
Duration of protection	maximum 20 years	maximum 10 years
Fees – up to 4 years	CZK 4,000	CZK 1,000
Fees – up to 10 years	CZK 19,000	CZK 13,000
Fees – up to 20 years	CZK 169,000	does not apply
Duration of proceedings	more than 3 years	up to 12 months

You can use https://www.lens.org or https://patents.google.com to search for registered patents. Further practical information is in this text (for the Slovak Republic) or in this text (for the Czech Republic), while it is also possible to contact the Industrial Property Office of the Slovak Republic or the Industrial Property Office of the Czech Republic. However, due to the complexity of these legal institutes, it is always necessary to consult an experienced patent attorney.

5. How to Protect Your Know-how?

Every startupist should also know that an idea, thought or know-how is not subject to legal protection in itself. Only when they are expressed in a form that is perceptible by the senses (e.g. in the form of a business plan, presentation, instructions or work procedures) do they become a part of a trade secret and their protection can be enforced. These values are also summarized by a registered trademark, the market price of which is an expression of all investments, know-how, employees and corporate culture.

For a start-up company, a trade secret has a high value at often very low cost. In order for a startup to keep a trade secret, it must pay attention to how the information is stored. Dissemination of information must be limited and entities and employees or contractors that have access to it should sign a non-disclosure agreement (NDA).