What is intellectual property and what does it mean for UK small businesses?

Whether you’re a small business just starting out or a business owner who’s no stranger to trade, you’ve probably heard about the need to protect your physical assets – like equipment, machinery and stock. But what about the non-physical creations that are your intellectual property?

In this guide, we’ll walk you through everything you need to know about IP, including its different types and what happens when you — or another business – infringe on these rights. 

What is intellectual property?

Intellectual property (IP) is otherwise known as something created “by the mind” that should be protected. An idea, brand name, or patent, for example. This can be anything from business assets like brand logos to a new technique used in your manufacturing process. 

Think of IP as a way to protect your ideas and hard work. 

What are the different types of intellectual property? 

Intellectual property can come in all shapes and sizes even though it’s not a physical object. Here are some of the most common you’ll find you use as a business include:

Copyrights

Copyrights are a key protection for creative works as they automatically protect original work by an author. This includes things like music and art, but also business-related works like software and logos.

For example, publishing companies rely heavily on copyrights to protect their books, articles, and other written materials. In music production, companies use copyrights to protect musical compositions and recordings, while film and television studios use them to guard movies and shows against unauthorised copying.

Patents

This form of IP provides critical protection for new inventions and innovations — they’re key for technology companies that patent a wide range of products, from gadgets to software. 

Pharmaceutical companies also rely on patents to protect their investment in developing new drugs and medical devices. Also, a business in the manufacturing sector might use a patent to protect new machinery and industrial processes that can give companies a competitive edge. 

Trademarks

Trademarks play a big role in branding and marketing for businesses. Retail companies, for example, use trademarks to protect their brand logos and product names, which are key to customer recognition and loyalty — think of logos like the iconic bitten Apple or McDonald’s golden arches. On the topic of fast food, restaurants and food chains also benefit from trademarks, using them to protect their brand identity and food creations.

Digital assets

Digital assets cover a wide range of digital content like domain names, multimedia, and digital art. Online retailers rely on IP laws to protect their website domain names and online content, which are central to their business identity and operations. 

Digital marketing agencies use IP protection for their digital ad campaigns and multimedia content, whereas companies providing Software-as-a-Service (SaaS) rely on IP to protect their digital platforms and interfaces. 

Trade secrets

Trade secrets are a form of IP protection that covers confidential business information such as recipes, manufacturing processes, and customer lists. Food and drink companies often rely on trade secret protection for recipes and unique ingredient combinations. 

Technology businesses guard their algorithms, processes, and customer data as trade secrets to keep them from competitors.

Who owns the intellectual property?

Typically, the maker of the work is deemed to be its owner. But in a business setting, if work is created for an employer, the employer is the owner of that intellectual property. 

Ownership can also be transferred to other parties. 

Why are intellectual property rights important for businesses?

Disputes between businesses about intellectual property can come with a hefty price tag in legal fees and compensation, not to mention the bad publicity and reputation that it can give. 

In April 2005, tensions escalated between MGA Entertainment — the maker of The Bratz dolls — when they filed a lawsuit against toy powerhouse Mattel — the creator of Barbie. They stated that Mattel’s line of ‘My Scene’ Barbies copied the big-headed and slim physique of Bratz dolls. Mattel swung back, accusing a Bratz designer of designing the doll while on Mattel’s payroll — stating that his contract stipulated that his designs were the property of Mattel. In July 2008, a jury ruled in favour of Mattel, forcing MGA to pay $100 million and remove Bratz from the shelves. 

In 2000, British inventor James Dyson sued Hoover, stating that they deliberately copied part of the technology driving the success of Dyson’s bagless vacuum cleaners. Hoover was taken to the cleaners when they were forced to pay £4m in damages for infringing the patent on Dyson’s ‘Dual Cyclone Cleaner’ and ordered to immediately stop manufacturing and selling its ‘Triple Vortex’ cleaners. 

What is intellectual property infringement?

Failing to protect your IP can become costly, especially for small businesses. 

Attached to IP are intellectual property rights (IPR), which refer to the ‘legal rights given to the inventor or creator to protect their invention or creation for a certain period of time’. Essentially, these rights can’t be infringed upon by anyone without authorisation to use them. As a business owner, you can register your intellectual property on the UK government site.

• Copyright infringement — This happens when someone copies, distributes, performs, or creates works from a copyrighted material without permission. For example, downloading and sharing pirated movies or music, using copyrighted photographs or the writing in a blog post without the owner's consent.
• Patent infringement — This is when a person or company makes, uses, sells, or imports a patented invention without the patent holder's permission. If a company produces a smartphone with a patented technology without getting a license from the patent owner, it would be patent infringement and could be costly.
• Trademark infringement — This involves the unauthorised use of a trademark — like a brand logo or name — in a way that can cause confusion or deception about the source of a product or service. For example, using a logo similar to a famous brand on your products could mislead consumers and infringe on the trademark.
• Trade secret violations — When someone unlawfully acquires, discloses, or uses a trade secret, this counts as a violation. For example, if an employee leaks a secret recipe or a manufacturing process to a competitor or starts a new business using that confidential information, it would be considered a violation of trade secret protection.

Infringement can have severe legal and financial consequences. The rights holder can often send a cease-and-desist letter from a solicitor, which should usually be enough to stop the person or business infringing. If not, or if it’s a larger claim, it may need to go through the Intellectual Property Office or be taken to court. 

How can businesses avoid intellectual property infringement?

Infringement is basically ‘the action of breaking the terms of a law or agreement’ and avoiding intellectual property infringement is key for your business and its reputation. You don’t want to throw away all the hard work you’ve put in, but it’s also important to respect the rights of others and avoid any legal complications. Here are some ways you can avoid IP infringement:

• Conduct thorough research — It's important to do detailed research before you launch a new product, service, or marketing campaign. This way, you’re making sure that your business doesn’t infringe on someone else's IP rights. You can do this by checking online for existing patents, trademarks, and copyrights, such as on the GOV.UK website. For instance, searching for a patent before developing a new product can reveal if a similar invention is already patented. 
• Use formal agreements and contracts when collaborating — When working with contractors, partners, or suppliers — it’s so important to have a clear agreement regarding IP rights. This agreement should state who owns what IP, how it can be used, and any licensing terms. This can go a long way and prevent any misunderstandings that could lead to a nasty infringement claim.
• Monitor the market for potential infringements — The last thing you want to do is come up with an amazing idea, spend months or even years perfecting it, and find that someone has copied your idea or technology. Make sure to regularly monitor the market as it can help spot any potential infringements of your IP rights. You can do this by setting up alerts for new patents or trademarks, watching competitor activities and using online tools like Google Alerts and Oxylabs and more. 
• Respect confidentiality and non-disclosure agreements (NDAs) — Respecting anything you are told in confidence, especially when it's covered by NDAs, is very important. Breaching these agreements can lead to legal action for infringement, especially if the information includes trade secrets or private information.

Get your business set with Bionic

No matter what type of business you run, if you come up with any form of idea, technology, or anything else in between, it’s important that you start the process to patent it — you don’t want all your hard work to go to waste!

And to protect yourself in case another business tries to sue you, business insurance is essential. Get in touch with our team here at Bionic, who can help you get the best deals on your business insurance, or check out our broadband, phone, and VoIP services to get your business connectivity sorted. 

Head over to our Business Insurance guides page to find more information on commercial insurance.