A common mistake made by small New Zealand businesses is misunderstanding what business registrations offer IP ((Intellectual Property) protection, says Natalie Fennell, Director and Principal Lawyer at Luminate Legal and co-owner of legal tech platform, OnYourTerms.co.nz, which has free information on legal issues commonly faced by SMEs.

Many believe incorporating a company, registering a business to get a New Zealand Business Number, or registering a domain name gives them exclusive rights to use the company name, business name, or domain name, says the commercial lawyer.

But the best and easiest way to legally prevent other businesses from using the same or a similar name in relation to the same type of products or services, is to register a trademark, says Fennell.

Be clear about IP ownership at the outset

Another common mistake businesses make is failing to clearly document IP ownership and licensing rights.

This can happen when businesses enter into collaborations but don’t have clear written agreements about who owns the resulting IP, explains the lawyer.

“For example, if two businesses work together to create a new product, process, or software, but don’t clearly define who holds the ownership or licensing rights with the ability to commercialise the IP, this can lead to disputes later," she says.

Examples of companies not protecting their IP and the damage that does

The Luminate Legal lawyer has seen an instance where a small company that developed proprietary software failed to clearly document IP ownership with its software developer contractors who were employees in another business and doing extra development work on the side.

Without an agreement in place with the contractors, disputes can arise over who owns the rights to the software, making it difficult to sell or license the software, or the business, later, particularly when the software becomes a key asset of the business.

“This had the potential to result in a loss of interest by an investor, loss of competitive edge and/or costly legal battles,” says Fennell.

Failing to take out trademarks and patents for cost reasons is a false economy.

The commercial lawyer frequently hears businesses say they haven’t pursued trademarks or patents because they believe the cost is prohibitive.

“What’s ironic is that these same businesses often invest a significant amount in branding and marketing—creating logos, websites, and packaging—but overlook protecting the very assets they’ve invested in,” says Fennell.

In New Zealand, registering a trademark is relatively affordable and easy compared to other intellectual property protections, says Fennell. The cost starts at $100 plus GST per class of goods or services and can be done online on the Intellectual Property Office of New Zealand (IPONZ) website.

And while businesses can register a trademark in New Zealand on their own, it’s advisable to use a lawyer if the trademark is complex, there’s a risk of conflict with existing marks, or if the business plans to expand internationally, the Luminate Legal lawyer advises.

www.onyourterms.co.nz

www.luminatelegal.co.nz

Where do I find startup funding in NZ?

Am I missing something?

Physical vs Digital

What you need to know about protecting your IP