Mind the gap: A crash course on keeping it legal - 6 Oct 15

@Olswang@CampusLondon#olswangequIP

Mind the Gap

A crash course on keeping it legal

| 7 October, 2015Mind the Gap2

Agenda

Identifying and protecting your IP

Incentivising your staff

Attracting investors

Legal surgery


Agenda




Legal surgery

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What is Intellectual Property?

7 October, 2015Mind the Gap4

Intellectual property refers to creations of the mind: inventions; literary and artistic works; and symbols, names and images used in commerce

Types of IP rights include:

Patents –to protect inventions

Trade marks –to protect brands

Copyright –to protect literary works including software


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Patents


Very powerful right which bestows a 20 year monopoly

Test to achieve registration: Novel + Inventive Step (Not Obvious)

Acquired on a per country basis, so expensive to get worldwide protection

Invention must be kept confidential prior to filing

UK vs. European filing




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Software Patents


If your software invention makes the computer operate better (e.g. faster or more efficiently), operates at the level of the computer architecture or has an effect on a process outside the computer (e.g. process control software or design software for a hardware item) then you should be eligible for a UK patent.

If your software invention solves a technical problem (rather than a business problem) then you should be eligible for a European patent. A technical problem is one which would be solved by an engineer (rather than a marketing executive) -think about the differences in the way the software works and not the differences that are seen by the user.

Whilst the UK and European tests should always come to the same result, there will be some inventions which fit better with one test than the other.


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Trade Marks


Protects brands, names and logos

Applied for in respect of a list of goods/services

Must be distinctive, not descriptive

In most countries, acquired on a first to file basis, not first use

Can be renewed indefinitely

Vulnerable to revocation if not used

Bestows a right to prevent others from using an identical/similar mark for identical/similar goods/services




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Pinterest –Case Study


In Jan 2012 Premium Interest, a UK online news aggregation site which trades as “Pinterest” filed a CTM for PINTEREST for “entertainment services”.

In Feb 2012, Pinterest Inc, filed their CTM Application for the same trade mark.

In May 2012, Pinterest Inc. filed an opposition against Premium Interest's CTMApplication relying their rights acquired through use (passing off).

Pinterest also commenced legal proceedings for passing-off to stop Premium Interest from using the PINTEREST mark in the UK.

Key issue is whether Pinterest has protectable goodwill in the trade mark PINTEREST in the UK as at 31 January 2012 (the date of Premium Interest's CTMapplication) which would enable them to prevent Premium Interest's use of PINTEREST on the ground of passing off.


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Copyright


Arises automatically.

Owned by author unless employee, when owned by employer.

Protects literary and artistic works ie documents, graphics, logos and software

Duration lasts lifetime of author + 70 years

Infringed by copying but there are exceptions:

• Back-up copies made by a lawful user;

• Decompilation necessary to allow inter-operability;

Open Source software is offered to all for use on certain licensed conditions. Some are more restrictive than others.

Beware: issues can arise if you combine open source with proprietary software and then want to sell that combined software


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Key Takeaways



Intellectual Property is often the most valuable asset class

Getting the right advice early, is critical

Keep your invention confidential

Get a trade mark filed in home territory early, and use priority to spread costs for international filings.

Don’t forget about copyright, a valuable and unregistered right.

Open Source: be choosy about which O/S to use –read the licence terms.


Agenda




Legal surgery

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Why would I want to give away my shares?


Sense of ownership - managers’ interests will be aligned with yours

No “pay day” until an exit

Saves cash

Potentially tax efficient for managers

Retention of key individuals

Attract new talent


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The common problems


For you:

• Loss of control

• Administration

• Dealing with leavers

For your managers

• Upfront tax exposure


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EMI –a “no-brainer”?



Flexible

Low administration

Keeps you in control

Highly tax efficient

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Keeping you in control


Vesting conditions

Exit only

Leaver provisions

Setting a “strike price”


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How is it tax efficient?


HMRC will agree the current value of your shares upfront

No income tax or national insurance for employees

No national insurance for the company

Capital gains tax at 10%

Corporation tax deduction


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Is it suitable for all?


Targeted at small, growth companies

Qualifying trade

Independent ownership

Only for employees (not for NEDs or consultants)

Working time restrictions


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What do I need?


Plan rules

Individual option agreements

Agreed share valuation

Registration with HMRC

Notification of options to HMRC

Annual returns



Agenda




Legal surgery

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Why should you care what a lawyer thinks?


It’s what we do, everyday

People talk to us about what they want

Hey it’s free –don’t knock it!


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So what can you do to attract great investors –the three K’s:


Keep it organised

Keep it simple

Keep it


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Keep it organised


An organised company is a more valuable company

The simple things will trip you up

Test yourself and your team regularly


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Keep it simple


The importance of a clean cap table

Complicated structures get in the way of business

… but do it early


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Keep it


Giving away equity is cheap –right?

Alternative funding

Your interest in the company matters to investors



Agenda




Legal surgery

•For more information•please contact:

Brussels+32 2 647 4772

London+44 20 7067 3000

Madrid+34 91 187 1920

Munich+49 89 203 031 300

Paris+33 17 091 8720

Singapore+65 6720 8278

Thames Valley+44 20 7067 3000

Andrew Quayle

+44 20 7067 [email protected]

Anthony Waller


Sarah Wright


[email protected]@Olswang#OlswangequIP

Small Business & Entrepreneurship

Mind the gap: A crash course on keeping it legal - 6 Oct 15