[Note: this article was originally published on Australian Businesswomen’s Network]
Putting your business online means putting yourself out ‘there’ in the virtual world. And every day we see new and innovative business models that harness this huge opportunity.
But putting your business online also presents its own set of legal challenges. As an IT lawyer, I see many online businesses who are ‘winging it’ without taking basic steps to protect their intellectual property.
What are you sitting on as you read this? It may look like you’re sitting on a chair. But in actual fact you’re sitting on several types of intellectual property (“IP”). The design. The engineering. The materials. The manufacturing process. The brand name. The distribution network. The booklet that came with the chair showing you how to put it together.
The real value in most businesses isn’t in the physical assets they own. After all, second hand chairs and desks and pcs aren’t worth much. The real value is in the IP – and for an online business, this is mostly about copyright and branding.
What should I look for?
1. Identify the intellectual property in your business.
IP isn’t always immediately obvious, and many people underestimate how much IP they own or use. Take careful stock.
There may be valuable IP in:
- your products and other things you create for others
- software – either that you create, or that you use
- your website – the domain name, source code, images, as well as content
- your branding – the name of your business, your logos, get up and layouts or ‘look and feel’
- your business manuals and processes, client lists, and other confidential information
2. Make sure you own the IP you think you own.
As a general rule, contractors will own the copyright in anything they create, unless there’s an agreement that says otherwise. A classic example of this is a web designer, who may own the copyright in a website that they create, even if it’s commissioned and paid for by a customer. The customer has the right to use the website of course, but if the web designer still owns the copyright, they could sell the same design again to the next customer.
Look through the list of IP you’ve put together – ask yourself – where did the IP come from, and are you sure who the owner is?
If you use material and have no idea where it came from – be aware that you may be infringing someone else’s IP.
3. If you don’t own it, make sure you are allowed to use it.
The owners of a web-based business came to me last week with a problem. Their web designer had used stock images to jazz up their website, from the ‘royalty-free’ section of a well known stock image website. The web designer told them it was perfectly legal to do so. But my clients were shocked to receive a letter of demand from the copyright owners for thousands in unpaid royalties and fines. They’ve found out the hard way that ‘royalty free’ doesn’t mean ‘free’.
You might use material from a wide variety of sources, in your business and on your website. But it’s important to check with the copyright owner and ensure you have permission to use the material – even if someone else has ‘given’ it to you.
Where you have existing licences, check that they allow you to do everything you need to do – such as the right to modify, sublicense, resell, rebrand, copy, disclose, give away or set fire to it – whatever it is you intend to do to the material.
People might send material to you that you publish on the website (whether it’s advertising, or comments posted to a blog, or a forum, or hosted content of some kind). You should have an agreement with that person as to what you’re allowed to do with that material, and they should take legal responsibility if the material infringes anyone else’s rights.
4. Register your trade marks
You already have a domain name registration, and you may also have a registered business name. But these only give you the right to operate a business and have a website at that domain. They don’t give your branding any inherent protection – and when you’ve poured your blood, sweat and tears into building your brand, it makes sense to protect it.
A registered trade mark gives you the monopoly rights to use your trade mark throughout Australia, for the goods and services described in your registration. Not every name is registrable (generic names can’t be registered, for starters). But I strongly recommend all businesses register their unique brands as trade marks.
The good news is registering a trade mark is relatively cheap and user friendly, though it takes months to process. Check www.ipaustralia.gov.au for more information.
5. What are others using your IP for?
When you bought your chair, you bought the physical object and the right to use it in any way you want. But that doesn’t give you the right to use the IP in the chair. You don’t have the right to manufacture your own copies of the chair, and market them under the same brand.
In the same way, you should carefully look at what you are delivering to your customers. If you are a photographer, for example – do you intend to transfer your copyright in the photos to your customers? Is the customer allowed to do absolutely anything with that photo, such as making unlimited copies? Do you still have the right to use that photograph on your own website and brochures? Do you want to sell the same image to many customers?
You should have a set of ground rules for your customers, setting out the how you’re going to deal with them, to minimise the chances of a dispute later. These rules can take different forms, for example, an actual document that is signed, or ‘click-wrap’ terms. Your rules don’t have to be overly complex, but should deal with the basics – what, when and how you deliver, get paid, and what happens when something goes wrong.
If you deliver any form of IP to your customers, then the rules should also cover who owns that IP, who can use it, and whether any limits apply.
6. Check your business structuring and internal relationships
You need to choose the right legal structure that fits your business. Structuring can help not only with minimising tax, but also asset protection. This is a highly complex issue and if you haven’t already, you should seek professional advice. From an IP point of view, however, it’s important to make sure that your IP is owned by the correct legal entity, and cross licensed properly.
Finally, if you are in business with other people, you may already have an agreement with them as to how the business should be run. You should make sure that you’ve talked about what happens to the IP in the business if you should ever part company.
7. Know when to get help
We’ve covered a few general issues in this article, and I’m sure you have a good idea how much of it is relevant to your business. There are great resources online where you can get more specific information.
However, particularly if you are investing substantial time and money into a business it makes sense to get professional advice that is specific to you.
It’s your turf, and it’s yours to protect.