FROM MIND TO MARKET – STARTUPS BUILDING BUSINESS ON IDEAS

The greatest inventions that have revolutionized the way people live, work and do business have originated from the minds of people. They all start in the mind as an intangible idea. With rising competition, organizations are developing innovative strategies to develop more business and attract investments.

The value of intangible assets (from patents, trademarks, copyrights to industrial designs and trade secrets etc.) are increasingly proving to be game changers in business competitiveness and growth.

It is important for businesses and startups in particular, to recognize Intellectual Property (IP) as a valuable corporate asset and to mitigate the potential risks associated with IP infringement within domestic and international markets. WIPO defines IP as “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce”. Regardless of size and sector, a business loses the immense potential of its innovation and ideas, if it fails or neglects to harness the value of its innovation by protection.

Startups drive real innovation and growth, new products, services and solutions that can propel business growth, expansion and ultimately economic growth and development.

As is to be expected, startups invest their energy in the first few years on gaining credibility with their target market and seeking additional capital and investments to grow their business. During that period, any business proposal for investment appears to be a god-sent.  Caution is usually thrown to the wind and startups who have an innovative idea or invention are more than likely to be shortchanged by potential investors.  Whilst, new businesses navigate the challenges of starting a new enterprise, they must not be oblivious of the need to protect their IP assets.  Big organizations such as Apple, Microsoft, and Google spend huge amounts of money in research and development and ensure that their inventions are protected legally (to gain maximum value from their creations).

How Important is IP Protection for a Startup

The success of Ghanaian startups depends on protecting their IP assets. Though protection of IP in Ghana at the initial stages of an organization’s life may involve time and costs, the future benefits are numerous.

For startups to scale up and commercialize their ideas, protection is key and for the following reasons in particular:

  • It provides protection against infringement of their IP rights.
  • It provides some safeguards against exploitation by potential investors.
  • It provides a competitive advantage when market share translates into brand reputation and increased income.
  • It provides leverage in negotiations with investors.
  • IP as an asset of a company may be sold, leased, assigned or transferred for value.
  • Investors consider the intangible assets of a company in determining, whether or not to invest in a company.

Protection of Intangible Assets in Ghana

Whilst starting a business typically starts with an idea, the commercialization of it, where it is in the sphere of IP requires legal protection. Under Ghana’s IP laws, IP rights may be acquired specifically for the following categories of intangible assets:

  1. Inventions (patents)
  2. Cultural, artistic and literary works (copyright)
  3. Symbols, names and images used in commerce (trademarks)
  4. Information with commercial value (trade secrets)
  5. Unique designs for commercial use (industrial designs)
  6. Signs for goods with characteristics arising from their geographic origin (geographical indications)
  7. Designs relating to electronic components of integrated circuits (chips), layout designs and topographies of integrated circuits.

There is also legislation in Ghana on Protection Against Unfair Competition which regulates and sanctions the causing confusion with respect to another’s enterprise or its activities, damaging another person’s goodwill or reputation, misleading the public, discrediting another person’s enterprise or its activities, unfair competition in respect of secret information, and unfair competition in respect of national and international obligations.

Enforceability of IP Rights

Under Ghanaian law, there are civil and criminal sanctions for the infringement of IP rights. Additionally, Ghana is a signatory to international treaties/protocols for the protection of IP including:

  1. World Intellectual Property Organization (WIPO) and a signatory to certain WIPO-administered treaties
  2. Berne Convention for the Protection of Literary & Artistic Works
  3. Paris Convention  for the Protection of Industrial Property (1967)
  4. World Trade Organization – TRIPS Agreement
  5. The African Regional Intellectual Property Organization (ARIPO)
  6. Kyoto Protocol
  7. Agreement establishing the WTO

These international treaties afford additional rights for persons (from member states) whose IP rights are infringed.

Some of the Strategies to be Adopted by Startups For The Protection of IP

Initial Step

As a first step, startups must protect their ideas. While they may be excited about the prospects of partnerships and investors, prudence is key. Prior to disclosing an idea to third parties these must be considered:

  1. physically ensuring that the idea is kept safe from unauthorized access
  2. where disclosure is required, that there is first, some  due diligence  on the recipients of the IP information and where the outcome of the due diligence is positive that there is a  confidentiality or non-disclosure agreement in place.
  3. Registrations

Startups should register their ideas with the relevant statutory entities to provide protection from infringement. For example, it is necessary to recognize that, although we live in a globalized world, the registration of some ideas like trademarks are territorial. It is therefore important for Ghanaian startups to register their trademarks in Ghana and other key jurisdictions.

It is necessary for an official search to be conducted to ascertain if the IP right intended to be protected, is available for registration and does not belong to another entity or person.

Additionally, since Ghana is a member of ARIPO, an IP protection may be obtained in other ARIPO member states by filing a registration application through ARIPO and designating any member state to protect your IP rights.

  1. Contractual Protection

Startups may seek to protect their IP through well drafted legal contracts which must include the following:

  • Ownership and use of the IP rights
  • Monitoring mechanism to ensure compliance with rights of use
  • Restriction of IP access to essential parties, contractors or supply chain partners
  • Prohibition of unauthorized use or copies of IP, e.g. on devices, shared network drives etc.

Many organizations fail to understand the need to protect their IP assets until there is a potential merger or acquisition, a valuation of their company, or a dispute on the ownership, use or infringement of an IP right. In this competitive world, it is critical for organizations to understand IP, stay abreast with the changes in technology and innovation and to recognize IP as a valuable asset.

Authors:

Vera Owusu Osei

Associate Partner

AB & David Ghana

 

Akosua Kyeiwaa Akowuah

Senior Associate

AB & David Ghana