Australia: Setting your IP strategy: key ownership and enforcement questions

Whether it's latent or highly managed, locked down or open source, there is not a business in existence that doesn't have IP in its DNA. Often, IP sits at the heart of what enables a business to differentiate or dominate in its market.

When evaluating the IP your people create, your business buys or your competitors assert you infringe, make sure you think about it from both an ownership and an enforcement perspective – investment in ownership will strengthen any subsequent enforcement strategy (offensive or defensive).

Set out below are a number of key questions that will assist in both setting your IP strategy and making transparent any legacy IP issues you may need to confront. These questions are usefully asked across all common IP rights – trade marks, designs, domain names, copyright, patents – as well as trade secrets and confidential information.

If embedded in an organisation, they will go a long way towards helping avoid the pitfalls of fragmented or fragile ownership and wasted investment in IP.

Ownership questions

  1. What do you own, who else has an interest, and do you need to protect your title?
  2. IP can be a result of in-house enterprise collaboration or an acquired asset. At the creation phase (often a honeymoon period), assumptions can be formed about who owns the IP – especially when senior employees have external appointments or work is commissioned – that can compromise a chain of title in perpetuity.

    To counter this, make sure you address at least the following from the outset:

    • Consider who is materially contributing to the IP and could make a claim to entitlement or ownership, and ask yourself whether there are any competing contractual and fiduciary relationships. In relation to employees, make sure the scope of their duties (e.g. an obligation to invent) and IP vesting in the employer is express. In relation to subcontractors, make sure you have the contractual arrangements in place to secure ownership including any necessary assignments, licences and warranties.
    • If co-ownership is contemplated – think twice before doing it. If it is unavoidable:
      • ensure there is a written agreement that clearly sets out the parties' rights; and
      • agree a mechanism in the agreement that allows a co-owner to exit if one co-owner changes.
    • Ensure registered rights are secured and annuities paid. A gap in protection can lead to a gap in damages.
    • Consider whether IP rights subsist in key assets, and if they don't, adopt alternative approaches to protect these assets. It is a common misconception that IP rights subsist in any "data" held by a business, and that such assets can be "owned" by the business. This is often not the case, and these assets require careful licensing and access control strategies to monetise, which are not hinged on traditional models of IP ownership.
  1. Who owns something you need or something that causes you grief?

Investment in your freedom to operate can not only avoid infringing third party IP rights but also highlight where the sweet spots are, and where the return on investment is greatest. If there is crucial IP you need access to, consider whether your strategy is to challenge (invalidate) or co-operate (licence). Stress test the IP you purchase in the same way.

  1. Publish or protect?

Sometimes, an ownership strategy can be about preventing anyone from owning IP as opposed to securing it for yourself. In tech-heavy and research intensive sectors, there can be more to be gained from publishing an invention (so no one can own it). This avoids the diligence of keeping something confidential and the costs of patent protection, but also ensures a competitor who may be making parallel innovation doesn't lock you out.

Enforcement questions

  1. How will the IP withhold a cross claim?

An allegation of IP infringement is most often met after a denial of infringement, with a cross claim that the IP right asserted is at risk or invalid. The easiest win in a cross claim can be an attack on ownership. Shore this up before any enforcement action is taken, and strategically work through what the consequences are if the IP is threatened or, worst case, invalidated. Some IP is so business model crucial that protective measures are warranted before any dispute is kicked off.

  1. What's the ROI?

Accumulating IP is not an end game. Flexing those rights is where the real return on investment can be realised. Australia is a sophisticated, rights-owners friendly jurisdiction. When successful, injunctions are awarded in addition to monetary relief which is compensatory as well as punitive (where infringement is flagrant).

Robust IP rights are a powerful tool to protect innovation and the competitive advantages they embody. There is also an intangible benefit in cultivating an enforcement reputation – copyists are less attracted to businesses that enforce their IP. Consider the infringer from the same perspective (are they likely to fold or fight?).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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