Expert shares 5 tips on intellectual property rights
There are many aspects to a business that are considered creations of the mind, and are therefore intellectual property, and these intangible assets, just like tangible ones, need protection.
To provide vision on how entrepreneurs can protect their brand and business in franchising, the Franchise Asia Philippines 2024 International Conference held the learning session “Franchisor Track: Protecting Your Brand in Franchising” on September 3. Sharing her expertise on intellectual property was Atty. Reena Mitra-Ventanilla of Quisumbing Torres.
“Intellectual property is an intangible asset resulting from the creative work of the human mind,” she says. There are several types of IP and these include copyright and related rights, trademarks and service marks, trade names, domain names, geographic indications, patents, industrial designs, utility models, lay-out designs/topographies of integrated circuits, and undisclosed information/trade secrets.
Atty. Ventanilla explained that a single product can be protected by various IP rights. An example of this is a smartphone that could be protected via its trademarks, design, trade secrets, patents and utility models, and copyright. Hence, IP is definitely essential in business as well as in franchising.
“There are two general principles, first, intellectual property confers upon the owner/creator exclusivity over commercial exploitation. However, the second principle states that the use by third parties is not prohibited per se, what is prohibited is unauthorized use,” she explains.
Importance of IP
Intellectual property allows for commercialization and rewards entrepreneurs. “In terms of IP valuation, we now have accountants, auditors, and lawyers who are experts in valuation of your intellectual property rights. Through certain methods, they can assess and put value or amount to different types of IP…they undergo training to ensure they give the proper monetary value to your IPs,” says Atty. Ventanilla. IP is very important in franchising as it can be used as security and it can be licensed to get royalties.
IP also encourages innovation and competition and forges economic growth. “In very similar businesses, or for businesses belonging in the same industry, the stronger the IP, the better,” she explains. Finally, IP associates high quality with the owner. “IP puts association with high quality of the goods and services of the IP owner,” she says.
5 Tips on IP
Ensure that IP rights are duly protected, recognized, and/or registered.
Some IP rights need not be registered, like copyrights. “Your copyrighted work is protected from the moment of its creation,” Atty. Ventanilla explains.
Regarding trade secrets, she said that businesses definitely have trade secrets that they do not want to disclose to any government agency. “You have to protect it through a robust non-disclosure agreement and other similar types of agreement,” she adds.
Meanwhile, other types of IP like trademarks, utility models, etc. have to be registered in order to follow the first-to-file rule. “If you are the first to file, then you are the owner,” she says.
Zooming into trademarks, in the Philippines, these are any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods.
As discussed by Atty. Ventanilla, the purposes of trademarks are to indicate the source, ensure certain standards of quality, and be used as a marketing tool or recall.
“Trademarks have to be registered because the rights to a mark are acquired by registration and priority is given to whoever applies first for registration. Prior unregistered marks could not prevent use and/or registration of the same or confusingly similar mark in the Philippines. Lastly, registration confers exclusive rights to use the trademark,” she explains.
Ensure that IP rights are protected in contracts with franchisees, employees, contractors, service providers, etc.
In an employer-employee relationship, for example, if an employee made an invention as part of his/her regularly assigned duties, then the IP right would belong to the employer. “But if the employee does an invention or work not part of his/her regular duties, then the IP right would automatically belong to the employee unless there is a written agreement,” Atty. Ventanilla explains.
Include IP guidelines in company policies and documents.
“Companies must be aware of the IP guidelines and put these in their company policies and guidelines,” she says. These guidelines can be added to the company handbook or manual so that everyone in the company will be aware.
Be aware of third-party’s IP rights and ensure not to infringe other’s IP rights during the course of marketing and sale.
Atty. Ventanilla stresses the importance of being aware of third-party IP rights. “Especially for trademarks, this is the main cause of problems in relation to brands…for example, if your marketing department is not aware that the poster that they created is very similar to an earlier poster of a competitor, then it would be a problem for your company,” she explains.
Moreover, the words or names of brands being registered are as important as the look or appearance of the brand logo. “Even if you didn’t copy the same name or words of the brand, but you copied the exact lettering, color combination, overall look, etc., you will still be liable under the law,” she adds.
Deal with any demand from another IP owner in a timely and appropriate manner.
“If your company receives a demand letter from an IP owner, make sure to report immediately to your legal department,” Atty. Ventanilla says. Usually, these demand letters allow only a few days to take action, so immediate attention should be given to resolve such.
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Sam Christopher Lim is the Chairman of the Philippine Franchise Association; CEO of Francorp Philippines; Co-author of 12 Strategies for Franchising; President of U-Franchise Sales & Management; and Chairman of ActionCOACH Philippines.
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