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Setting up a business involves complying with a range of legal requirements. Find out which ones apply to you and your new enterprise.

While poor governance can bring serious legal consequences, the law can also protect business owners and managers and help to prevent conflict.

Whether you want to raise finance, join forces with someone else, buy or sell a business, it pays to be aware of the legal implications.

From pay, hours and time off to discipline, grievance and hiring and firing employees, find out about your legal responsibilities as an employer.

Marketing matters. Marketing drives sales for businesses of all sizes by ensuring that customers think of their brand when they want to buy.

Commercial disputes can prove time-consuming, stressful and expensive, but having robust legal agreements can help to prevent them from occurring.

Whether your business owns or rents premises, your legal liabilities can be substantial. Commercial property law is complex, but you can avoid common pitfalls.

With information and sound advice, living up to your legal responsibilities to safeguard your employees, customers and visitors need not be difficult or costly.

As information technology continues to evolve, legislation must also change. It affects everything from data protection and online selling to internet policies for employees.

Intellectual property (IP) isn't solely relevant to larger businesses or those involved in developing innovative new products: all products have IP.

Knowing how and when you plan to sell or relinquish control of your business can help you to make better decisions and achieve the best possible outcome.

From bereavement, wills, inheritance, separation and divorce to selling a house, personal injury and traffic offences, learn more about your personal legal rights.

Intellectual property FAQs

14 FAQs about intellectual property.

  1. What kinds of intellectual property can be protected?
  2. What is database right?
  3. Do trade secrets and confidential information count as intellectual property?
  4. Who has the rights to intellectual property?
  5. What are the most common intellectual property pitfalls for a typical business?
  6. Can someone else have a business name similar to mine?
  7. Can someone else use my company or product name in their internet domain name?
  8. What are the main intellectual property issues for my website?
  9. How can I stop someone else infringing my intellectual property rights?
  10. What should I do if someone is infringing my intellectual property rights?
  11. How can I protect my intellectual property internationally?
  12. What should I do if I want to use someone else's intellectual property?
  13. What are my options for profitably exploiting my intellectual property?
  14. How are intellectual property rights affected by Brexit?

1. What kinds of intellectual property can be protected?

There are four main kinds of intellectual property which can be protected:

  • inventions such as new products and processes
  • decorative designs, and designs for the appearance or shape of a product
  • names and symbols for your product or service - trade marks
  • original written publications, recordings and other material such as websites, plans and blueprints, parts lists, catalogues, promotional literature, manuals, works of art, photos and other images and formats and layouts for publications such as newsletters, webpages or other material

In some cases, the protection is automatic - for example, new text and images are automatically covered by copyright. Other forms of protection - such as patents for inventions - require you to complete an application process (and pay fees).

Another type of intellectual property is 'database right' in a database. Nationals and residents of EU member states (including businesses with a registered office or principal place of business in the EU) who own database rights can stop someone extracting or reusing any substantial part of their database, provided they have made a substantial investment (whether financial, human or technical) in obtaining, verifying or presenting the data in it.

A database is a collection of material arranged so each item is individually accessible, whether on paper or in electronic form. It includes customer lists, directories, encyclopaedias and card index systems.

Make sure you differentiate between ownership of database rights and ownership of the contents of the database. For example, if the contents of your database are someone else's copyright, you need their permission to include them.

You do not have to register your database rights. They apply automatically. Database rights last 15 years from either the date of recording the database or the date of publishing it.

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3. Do trade secrets and confidential information count as intellectual property?

An often unrecognised form of intellectual property is confidential information and trade secrets. For example, information about your customers, products or services, pricing or sales and business strategies that you do not want your rivals (or anyone else) to know about.

You should have rules for identifying which information is confidential, and regulate:

  • when it needs to be marked as such
  • how it is kept securely
  • which employees are allowed access to it
  • who they are allowed to disclose it to (and in what circumstances)
  • how you make sure that all your employees know about these rules

Protect yourself if outsiders, such as contractors, could come across your confidential information in the course of their work. Make sure they sign confidentiality agreements right at the outset, that ensure they are legally bound to keep it secret.

4. Who has the rights to intellectual property?

Subject to some exceptions the rights for new intellectual property generally belong to whoever creates it. Rights can be transferred to someone else (eg by selling them).

Intellectual property created in the course of employment (ie it’s part of what they are paid to do) by an employee generally belongs to the employer.

However, employees are entitled to compensation if the intellectual property is an invention that is patented and is of ‘outstanding benefit’ to the employer. It’s very rare for employees to claim such compensation, but two scientists named as inventors on a patent for detecting heart defects, conservatively estimated as worth £50m or more to their employer, were granted 3% of its worth as compensation in a case in 2009.

An employee's contract of employment should always deal with ownership or assignment of intellectual property rights created by them. Careful consideration must be given to who is named as inventor on any patent application, to reduce the likelihood of an expensive compensation claim.

If you use subcontractors - for example, to help develop new products or designs, or your website - ensure that the contracts with them are in writing and clearly state who will own any intellectual property created. If you do not do this, the intellectual property in the work they do for you will belong to them, even though you have paid them for doing it.

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5. What are the most common intellectual property pitfalls for a typical business?

Common pitfalls include:

  • not taking adequate steps to develop and protect trade marks as part of your brand
  • inadvertently allowing employees, suppliers or customers to gain ownership of your intellectual property through a lack of effective agreements
  • allowing ex-employees to take confidential information, such as customer lists or information about your products and processes, with them when they leave
  • inadvertently allowing agents you appoint to sell your products to gain ownership of your intellectual property through a lack of effective, written agreements
  • failing to keep copies of new designs, publications and documents showing their development as evidence of your intellectual property rights
  • investing in new product development without checking whether other intellectual property rights covering the idea already exist
  • invalidating a patent application by disclosing the invention in advance, or drafting the application poorly
  • asking a web, marketing, design or other agent to do some work for you without an express written agreement saying that any intellectual property they create while doing the work (for example, intellectual property in a website they design and build for you) will belong to you
  • paying a patent agent to do a search for an innovation that almost certainly has no chance of being patentable

Perhaps the biggest pitfall comes in the area of enforcing your intellectual property rights. Protecting your intellectual property requires you to actively identify and legally pursue others who are infringing your rights. Doing this in a cost-effective manner can be a significant challenge.

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6. Can someone else have a business name similar to mine?

If another business uses a name similar to yours which misleads or might mislead customers, you may be able to take legal action against them in the courts for ‘passing off’ (misleading the public into thinking that their goods are associated with your business). However, this can be difficult. Better protection is provided by registering your business name as a trade mark.

If another trader has registered your name, or one that is similar to it, as a limited company name, you may be able to object to a company names adjudicator, who can order the company to change its name. You must show that you have goodwill in the name, and that either the limited company name is the same as your name, or so like yours that it is likely to mislead by suggesting a connection between the company and your business.

The main aim of the adjudication rules is to stop ‘opportunistic’ registration of limited company names - for example, the registration of a name at Companies House in order to demand money from you as the owner of existing rights in that name (or one very similar to it), or to disrupt your trade in some way. Applications to the company names adjudicator are quick (decided within weeks) and inexpensive. Costs may be ordered against the losing party.

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7. Can someone else use my company or product name in their internet domain name?

If they do not have a legitimate claim to the domain name (for example, because it is the same as a trading name they have been using, and which has developed a reputation in their marketplace), you may be able to recover it using one of the internet domain name dispute resolution procedures. Alternatively, you may be able to take legal action against them if they are infringing your registered trade mark or 'passing off' (misleading the public into thinking that the website is associated with you).

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8. What are the main intellectual property issues for my website?

The contents of websites are covered by copyright. Including the words 'copyright - all rights reserved', or the © symbol, and the year of creation will help to emphasise this and is an essential part of copyright protection in some countries (though not the UK).

At the same time, ensure that your website is not infringing anyone else's copyright. Do not include images or text which you do not have the rights to. If you want to link to another website ask the owner's permission. Make sure that any software you use to create or maintain the website is being used in accordance with the licence agreement.

The underlying databases that power your website may be protected by database rights (see 2) if you have made a substantial investment in them (in addition to the copyright protection you may enjoy for the actual contents of the database).

Finally, design right also covers websites.

If you use an external designer to create your website, ensure that they transfer ('assign') all types of intellectual property rights that arise in the course of their work to you - in writing, or the assignment will not be effective.

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9. How can I stop someone else infringing my intellectual property rights?

The first step is to identify your intellectual property, and ensure that you have applied for appropriate protection wherever necessary. Keep a record of what intellectual property you have, when it was created and what protection it has. Include evidence of your rights to automatically protected property: dated and witnessed copies of original material, for example.

Although it is not legally required (in the UK), it is a good idea to assert your intellectual property rights wherever appropriate: for example, including the © symbol on publications, marking products with the patent number, and so on. This may help to deter others from infringing your rights.

Actually detecting infringements may be relatively easy - for example, if you notice a new competitor using a name similar to your registered trade mark, or producing products which you think are covered by your patent. Immediately notify them that you believe they are infringing your rights, and try to resolve the situation without resorting to litigation. It is important not to make threats of litigation which might subsequently turn out to be unjustified.

If intellectual property is important to your business, one option is to consider taking out insurance to cover any legal costs you may need to incur in order to protect your rights.

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10. What should I do if someone is infringing my intellectual property rights?

The first step is to tell them that they are infringing your rights, and require them to stop. A solicitor's letter informing them of their breach of your rights may be enough to stop them doing so, particularly if they are doing so accidentally and have not invested significantly in the activity.

You can also use one of the alternative dispute resolution procedures such as arbitration or mediation. These processes are often quicker and cheaper than resorting to legal action and can be used for a wide range of disputes including domain name disputes.

If this fails, you will need to take legal action. It is essential to take legal advice on the best course of action. Bear in mind that it may be possible for your rights to be overturned - for example, a patent can be amended or revoked if it is shown that the idea was not new when the original application was filed.

In practical terms, you also need to take into account who is infringing your rights. It can be very difficult to fight (and win) legal actions against large companies with deep pockets. Conversely, extensive legal action against a small company may be successful but leave you unable to recover your legal costs if that company then goes into liquidation.

As with other litigation, be ready to negotiate and compromise as necessary to avoid the expense and uncertainty of going to court.

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11. How can I protect my intellectual property internationally?

Protecting your intellectual property in the UK does not provide automatic protection abroad (with the exception of copyright, which covers most countries). You usually need to make separate applications for protection abroad. In some cases (eg patents and trade marks), you can make a single application which covers all the countries in the European Union.

International agreements also exist which allow you to make a single application via the World Intellectual Property Organization to protect your inventions and intellectual property in countries that have signed up to the international treaties and protocols.

Of course, these extra applications add to the costs, and enforcing your rights overseas can be very difficult and expensive. As with domestic intellectual property protection, it will only be worthwhile if the commercial benefits justify it.

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12. What should I do if I want to use someone else's intellectual property?

Check who owns the intellectual property and what sort of protection it has. Bear in mind that a single product, for example, might be protected by several different patents and a registered design. You will also need to confirm whether the owner has already granted licences to others to use the intellectual property you are interested in.

Decide whether you need the exclusive rights to the intellectual property, or just permission to use it. Investigate how valuable the intellectual property is to the current owner - how profitably they are exploiting it and what their future prospects are (for example, if a patent is near expiry). Consider also to what extent granting you rights to use it would damage the original owner's returns. If, for example, you operate in a different market, your use of their intellectual property might have little impact on their own operations.

Then negotiate an agreement and a written contract.

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13. What are my options for profitably exploiting my intellectual property?

In some cases, businesses simply exploit their own intellectual property themselves. For example, a manufacturer might patent, produce and sell their own invention. Businesses generally exploit their trade marks themselves.

As often as not, however, the original owner of intellectual property is not the person best placed to fully exploit it. For example, your business might not have the financial resources or the distribution channels to fully exploit a new product, particularly in the face of competitors selling existing products. Alternatively, the full value of your intellectual property might not lie in its direct use but how it can be used as part of something else - some computer software, for example, is most valuable when it is packaged into other products.

One option is to assign (sell) the intellectual property rights to someone else. Inventors often do this, selling their ideas to manufacturers.

An alternative is to grant licences which allow others to use your intellectual property while you retain ultimate ownership of the rights. This can be the best way if your intellectual property is of value to several others who do not require the exclusive rights. It can also be a good way of structuring an agreement which allows you to share in the upside if the intellectual property turns out to have a very profitable application.

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14. How are intellectual property rights affected by Brexit?

Changes resulting from Brexit may have a significant impact on your intellectual property rights. For example:

  • it may be more difficult to enforce your existing intellectual property rights in the countries of the EU
  • new intellectual property that you create or register in the UK may no longer get automatic protection across the EU

Details may vary for different types of IP. You should check government guidance on intellectual property and Brexit, and take advice on your own particular circumstances.

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