IP Masterclass: Getting Your IP Investment Ready

This July and August in the TechTribe Community we focused on everything IP for Start-Ups hosted by Von Seidels, world leading IP attorneys. 
We closed off this theme on 31 August 2021, with an informative IP Masterclass titled ‘Getting Your IP Investment Ready’ with patent attorney, Ralph Van Niekerk.
In the masterclass, Ralph looked at the key IP issues that investors consider when deciding whether to invest in a business and went through a strategic framework for entrepreneurs to make use of for preparing for an IP due diligence.

Key Takeaways from the Masterclass

There are certain steps that are important to take when it comes to getting your IP investment ready. These are the types questions an IP attorney will ask you when assisting you with this:

1. What IP is there?

  • What IP does the company have?
  • Is the IP appropriately protected?
  • Does the company own the IP?
  • What is the status and validity of the IP?

 

It is important to keep a data room of all your IP.

2. What agreements are there?

  • What third party IP do you use, and do you have permission to use it?
  • Do any third parties use your IP?
  • Are there any informal arrangements not governed by written agreements?
  • Is your confidential information protected?
  • If third parties do work for you, do you own their work product? Can they easily take the know-how to a competitor?

Two key things to note:

Record all company, rights, and obligations in writing

Keep agreements in data room.   

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3. How is IP generated?

  • What research and development (R&D) do you do?
  • Is any of your R&D likely to be patentable and if so, how do you identify and deal with that?
  • Do you outsource any aspect of this process?

 

If you do R&D, have a process for identifying and protecting the output.

  • Clear
  • Precise
  • Self-contained
  • Easily accessible
  • Intelligible
  • Durable
  • Objective

4. How is employee IP handled?

  • Do employee agreements have appropriate assignment of IP and confidentiality clauses?
  • Are any restraints of trade clauses applicable?

 

Have a standard employee contract which includes IP and confidentiality clauses.

Restraint of trade clauses may be appropriate but should be used with caution.

5. IT & Software

  • Who developed the company software?
  • Is open-source software used, and under what license?
  • Are key developers still employed by the company or have any of them left to join a competitor?
  • Who can access the company systems?

 

Ensure all developers are either employed or are under consultancy agreements that include IP and confidentiality provisions.

Ensure your commercial exploration of the software does not interfere with the OS license items.

Have appropriate data security processes.

QUESTIONS & ANSWERS

When we established our academy Africa Institute of Multimedia AIM, we wanted to secure the use of the name and registered it with CIPC as a trademark. However, we don’t know what further steps to take to ensure the name is fully protected. Kindly advise.

A: It often happens that companies will file their trademark applications themselves with CIPC, which is reasonably easy to do. The problem is that the CIPC isn’t really geared to work with the public directly and may have posted you an issue with the trademark application and said that you need to associate the trademark with a different name for example, or you need to do some formal step. And you would not have gotten that notification or won’t know what to do. Your trademark application will therefore not proceed to registration. So most likely your trademark application has been filed but never registered, which means that you haven’t really got a trademark yet. The advice there is to engage a trademark attorney, my colleague Christine, whom you may have seen in some of the sessions is a very experienced trademark attorney. We can easily look up the status of that trademark application for you and see what next steps are needed.

My business is an online marketplace for peer-to-peer trade. Once our concept has a foothold in SA, we have ambitions of geographic expansion beyond SA’s borders. Some of our code and processes will be patentable. Please advise what we should consider in terms IP protection and registration given our plans to expand internationally. Should we consider registering now in any particular territory abroad? Are there tax considerations?

A: Patents need to be filed before there is a public disclosure or commercial use of a particular technology. The answer as to, should we register now, is you need to file your first patent application before you use that technology publicly. With patents you have timelines in which to extent those rights internationally. For example, if you’ve filed a provisional patent application in South Africa you then have 12 months in which to file either direct applications in all of your countries of interest or there’s a different process called the Patent Corporation Treaty, which gives you another 18 months before you have to select your member countries. So, for patents, if you believe that your technology is patentable it is something that you must consider filing before you commercially use it. Because once you put it out there, you can no longer get patent protection.

What are the costs to get an IP lawyer?

A: Most IP attorney’s me included, wouldn’t charge anything to look at what you’ve got. We’re not going to start running the clock if you give us a call or send us an email, we’ll be able to provide you with what you need and then provide you with a cost estimate. My encouragement would be don’t be afraid to get in touch, you won’t get any surprises, you’ll know what you’re in for once we’ve looked at your business and what you need and recommended an approach. That’s something that I can say with confidence, just talking to us initially and getting us to look at what IP might be applicable isn’t by itself going to cost you anything. Of course if you end up filing patents all over the world, it gets enormously expensive but that is probably not an approach that is going to be valuable to you.

Who in the company should be tasked with coordinate IP issues?

It needs to be the person that feels the most ownership of that project. For a startup if way well be the CEO or Founder that needs to take that on but with time it needs to be something that should be delegated to perhaps the CTO or legal department if you have one. If you do delegate it, make sure that it’s not something that just gets decided in the dark, make sure that the overall management of the company takes all of this into account the issues as it comes along. Initially it needs to be something that top management involvement.

Q: What form of IP can an online marketplace and a SAAS ERP company look out for?

A: For an online marketplace you would certainly have your trademark, that would be really important and of course you would want your domains, preferably your .com domain. There’s always a temptation when coming up with a trademark initially to tell everyone what you do, and those trademarks are often very difficult to protect because they are also trademarks that other people need to use. Think about Exclusive Books, not a great trademark because CNA also has a section at the back called their exclusive books section. You want to be Amazon, which doesn’t tell you anything about what the company does, and a good test there as well is if you can get the .com domain then you’ve already had to create a distinctive or had to coin a word to be able to get the .com domain. So trademarks would be really important for an online marketplace, if you have technology that works differently you might want to consider patent protection.

Q: What are the three most essential steps to getting your IP investment ready?

A: 1. Try and get everything in writing try not to have too many informal connections. Get agreements signed. 2. Make sure that you own the IP that you own, make sure that where your IP is generated that they have in writing agreed to transfer the IP to you. 3. Start the process of protecting your IP and the most likely first candidate there would be your trademark application. Get your trademark application filed so that you don’t have issues with other companies able to use similar trading styles to your company.
Missed this masterclass? Catch up here:

 

Von Seidels is an intellectual property law firm specialising in patents, trade marks, copyright, designs, trade secrets, licensing, and related areas of IP throughout Africa. Based in South Africa, Von Seidels also has offices in ARIPO (Namibia), OAPI (Cameroon) and Nigeria.