Legal issues for entrepreneurs 2

Intellectual Property Rights (IPR)

People have ideas all the time. In business, new ideas can lead to new products and services. They can lead to a better way of doing something. Ideas can come from existing businesses through research and development. For example, Apple, an established technology company, developed the iPod. Ideas generate value to the economy by encouraging people to buy or invest in new developments. Many ideas come from entrepreneurs who go on to start up new businesses. They also inspire competitors to invent new products in order to regain market share.
Intellectual property rights (IPR) can be used to protect the technology, brand name, design and creativity behind the concept. It gives the creator sole ownership of the concept, in a similar way to owning physical property like a house or car. Owners can control the use of their intellectual property to gain financial reward.

Why do entrepreneurs protect their ideas?

It is important for anyone to protect his or her ideas. This allows them to benefit from their creativity without their ideas being directly copied and exploited by others. For entrepreneurs, the idea is often the entire basis for the new business. Without the idea, the business would not exist. Entrepreneurs invest money to develop business ideas. It is therefore essential that entrepreneurs safeguard this investment.

Benefits of IPR

Intellectual property (IP) rights provide entrepreneurs with many benefits:

•    IP rights provide protection against a competitor directly copying the idea. This helps the entrepreneur to recover their costs in developing the idea.

•    IP rights help businesses maintain their long-term competitive edge. Registered IP ensures that entrepreneurs get all the financial benefits from their ideas. Continued revenue will keep the business afloat.

•    Registered IP is an asset. It helps convince financial institutions to invest in a business, enabling more money to be raised for development.

•    Registered IP gives consumers confidence that products meet appropriate standards and quality.

•    By being able to profit from their IP, entrepreneurs are rewarded for taking risks and developing new innovations. They can invest profits in work on new ideas.

•    Ownership of the IP enables entrepreneurs to license or franchise ideas to others without risk. This means entrepreneurs are able to expand the market for their products and services more easily, and can increase revenue for the business.

How do entrepreneurs protect their ideas?

There are four main categories of intellectual property rights (IPR). Each gives a different protection and is used for different purposes.

Patents

Patents are for inventions. Entrepreneurs can seek patents for a new product or a new process that can be used in industry. For example, James Dyson obtained a patent for his bag-less vacuum cleaner. A patent can protect the invention, preventing other businesses from making, using, importing or selling similar products.
To apply for a patent, a business must submit a patent specification. This is a written description, often with drawings of the invention. This sets out what the invention does and provides important technical details. A patent can last up to 20 years; if it is renewed every year.