A contractor's guide to protecting new ideas and inventions

By Sheena Wheeldon and Nigel King
Solicitors, Kensington Swan Lawyers

Businesses that are market leaders usually have not only a good brand but also a clear advantage over their competitors relating to some type of innovation, new technology and/or innovative business model.

In the contracting industry, many of the ideas and technology behind commonly used construction equipment and materials are protected by their owners using intellectual property rights. Leading businesses are aware that the successful use of copyright, confidential information, patents and registered designs are ways to prevent competitors from ‘copying’ their point of difference. In this, the second article in a series of three helping to clarify how intellectual property rights can be used to protect your innovations and inventions from competitors, each of these intellectual property rights is explained.

The first article, published in the May 2009 edition of Contractor, dealt with business and product branding and trade marks. The third and final article will explain how to enforce intellectual property rights against other parties or avoid infringing the intellectual property rights of others.

Copyright

Many people incorrectly assume that copyright is only relevant to artistic and creative works such as books, movies and music. In the contracting industry, important copyright works include design and engineering drawings, architectural or surveyor plans, technical drawings, proposals, manuals, building models, the actual building itself, and material posted on websites. Copyright in a work prevents others from duplicating a significant part of that work without the owner’s permission. It lasts for a variable amount of time depending upon the type of work involved.

Copyright automatically arises when a work is created. A good way to publicise that your work is copyright is to use the © symbol. The usual format for copyright includes the © symbol, year of creation, the owner’s name and the phrase ‘all rights reserved’.

An important issue with copyright is ownership. Under the ‘default’ provisions in New Zealand’s copyright legislation, the creator or author of the copyright work is usually the first owner. However, there are some key exceptions to this rule:

• Usually an employer will own the copyright in any work created by an employee;
• Where one party commissions another party to create a copyright work (such as photographs, design drawings or software), the commissioning party usually becomes the copyright owner.

It is important to be aware that the terms of any contract can override these default provisions. For example, architects commonly seek to retain ownership of copyright in building plans.

Confidential information

Confidential information is secret information that has not been released into the public domain or to competitors. It includes trade secrets, inventions, formulae and business strategies.

Owners of confidential information must rely upon the legal action known as breach of confidence to protect their confidential information. Anyone who is given information in confidence by another party has an obligation to keep it confidential, and to not use it for their own benefit. To disclose it publicly or to other parties will be in breach of this obligation and enable the original owner of the information to bring an action against the discloser for damages.

Once confidential information is in the public domain it is no longer secret and so cannot be protected. Therefore, adequate security measures must be put in place to stop unauthorised access to confidential information. Examples include marking all confidential information accordingly, and disposing of confidential material in a way that ensures the material is not accessed by others.

It is recommended that employees, contractors and consultants are made aware of their confidentiality obligations at the outset of their employment. Confidentiality or non-disclosure agreements, or including an appropriate clause in an employment contract, are a good start.

Patents

Patents are a way of protecting new inventions and can give you an important edge over your competitors. Examples of patents in the construction industry include tools for assisting construction, improved construction methods, new construction materials, machinery and heavy equipment.

To be patentable, an invention must be novel, inventive and have commercial application. In New Zealand a patent gives its owner a 20 year monopoly of the invention. During this time competitors cannot use the invention without a licensing arrangement. A requirement of the patent process is that the invention must be fully described in a published document. This means that at the end of the 20 year period, competitors can use this document to start ‘copying’ the invention.

It is crucial to keep secret a potentially patentable invention until a patent is filed. Any disclosure of the invention before a patent’s filing date may destroy the validity of any subsequent patent, as the invention would no longer be regarded as novel.

It is recommended that advice from a patent attorney familiar with your area of technology is sought at any early stage to ascertain whether your invention is patentable and to develop the best strategy to protect and commercially exploit the invention.

Registered designs

Registered designs protect the aesthetic look of a product. Although copyright can protect original designs, registered designs have the following additional benefits:

• A registered design will be infringed by a later similar design even if there has been no actual copying, whereas to prove copyright infringement it is necessary to prove copying;
• In many countries (including Australia) copyright protection does not exist for designs that have been applied industrially to produce three dimensional articles, which means the only form of protection for these designs is design registration.

In New Zealand, rights in a registered design last for a maximum of 15 years.

There are a number of ways in which being aware of and protecting your intellectual property rights can give you a real advantage over your competitors. Seeking advice early and making sure you have the maximum protection available can set your business up for greater profitability in the future, through exploiting that competitive advantage.  

A contractor's guide to trademarks

A contractor's guide to intellectual property enforcement and avoiding infringement