Start-ups warned against rushing to register patents

Simon Martin

Innovative businesses should be careful about getting carried away with registering patents and trademarks while still in their start-up phase, say experts of intellectual property law.

Mark Gavin and Simon Martin, partners in Auckland technology and intellectual property (IP) law firm HudsonGavinMartin, said they were not "patent nay-sayers", but enforcing registered IP in the courts could become an expensive and time-consuming business

Martin said entrepreneurs needed to decide whether or not the money required to legally protect their product could be better invested elsewhere during their business start-up period.

"You need to weigh up what you are going to get, what you are going to protect, and how much it is going to cost," said Martin. "It's a cost-benefit analysis, and in order to do the analysis you've got to be able to work out what you've got compared with the cost of protecting it."

Gavin, a litigator, said when the time was right for an innovative company to head down the path towards registering its IP, the first thing it needed to do was identify exactly what needed protecting.

"Often a business will think that their valuable intellectual property is X, but when you actually sit down and analyse it with them it's something completely different."

Martin said businesses considering legal protection of their IP needed to think about what that meant "because a lot of people automatically assume that protection means registration".

He said there was a range of things businesses needed to protect that might not be considered IP, such as copyright (which in New Zealand does not need to be registered - it exists if something is worthy of protection), goodwill and confidential trade secrets.

Patents were also territorial in nature, so one that was registered in New Zealand would not necessarily be valid anywhere else in the world.

While protecting IP through patents and trademarks could be an expensive process, legal registration could become a valuable asset when it came time to sell a business.

But in order for a business to be sold for top dollar it needed to survive to the point where it became that valuable entity, Martin said. "If you've got $2 to spend to keep [a business] going, and you spend it on patents, then what's the value in having the patents in the first place?"