iStock_000000461549MediumAll businesses have valuable intellectual property, not just “tech” focused businesses such as software developers or pharmaceutical companies.  However advisers may need to translate for their clients what they mean in practical terms when they use the words “intellectual property”, in order for clients to appreciate its value and take steps to protect it.  For example, instead of talking in terms of trade marks and copyright, a business owner might more readily recognise the value in their trading or product names, logos, manuals, systems, standard operating procedures and process instructions.  Ideally this type of a conversation would be followed with a recommendation that the business conduct an “IP audit”.  This will help a business to identify and prioritise assets for protection.

Similarly, when drafting or reviewing a contract for a business, intellectual property issues should be kept in mind, even if the subject matter of the contract does not immediately trigger an alert.

For example, intellectual property ownership is commonly overlooked in joint venture, collaboration, contracting and employment arrangements.  A recent case on point is the Australian Federal Court decision of Neobev Pty Ltd v Bacchus Distillery Pty Ltd [2014] FCA 4.  That case concerned a Mr Scott who was engaged under a contract by Bacchus, an alcoholic beverage manufacturer, to come up with an alternative to the ethanol base that Bacchus used in its cream liqueurs.  Mr Scott invented a method of creating a ‘clean wine spirit’, and also authored certain confidential documents containing recipes, specifications, standard operating procedures and laboratory testing procedures for use by Bacchus in the manufacturing process.  Mr Scott was paid for his work, and it was Bacchus that later filed patents for the “clean wine spirit” invention.  The Court determined that, notwithstanding Mr Scott had received payment for his work, Mr Scott was the inventor, and Bacchus held the patents on trust for both Bacchus and Mr Scott’s company.

Another area that is frequently overlooked is access to and ownership of data and databases.  Most businesses have some sort of data, even if it is just a customer list.  Access to and ownership of data and databases is frequently overlooked in transactions, or contracts aren’t drafted to take into account a change in the access or holding of data.  To the extent that protection for data and databases is available in Australia, confidentiality obligations and copyright are the most likely form of legal protection.  Although copyright is automatic when the requirements under the Copyright Act are met, not all data / databases will be protected.  The data must be sufficiently “original” which requires creation by a human author who can be identified, and the exercise of skill and intellectual effort.

Privacy compliance is also an essential consideration that is dangerous to overlook.  For example, if pursuant to a business sale agreement personal information is collected, due diligence should cover the question of consent to use and disclosure.  “Sensitive information” including health related information, tax file numbers and credit reporting information are the most tightly controlled in Australia.  Privacy compliance is also to be kept in mind if there will be cross border disclosure, and reasonable steps must be taken to protect personal information when outsourcing services.

Post transaction completion considerations include registration of interests with IP Australia and ASIC, and registration of retention of title and security interests on the Australian Personal Property Securities Register.  There is no register for copyright registration in Australia.