These must be identified and protected to give the business a competitive edge and help build and maintain brand reputation. So what should you look out for and what can you do if you have a dispute?
Five legal pitfalls and how to avoid them
A lack of research and protection
SMEs that do not strategically identify and take steps to protect the IPRs that are key to their business may find that these key ingredients are either ‘lost’ or not available to use and the business falters.
Trade marks, patents and design rights are registrable rights and must be identified as early as possible and steps taken to apply register such rights as soon as possible. Searches should be conducted beforehand to reveal the existing rights on the market.
This a key part of the legal toolkit. If the business does not attend to this exercise, their brand rights may be registered by someone else, preventing them from using their own name and branding.
SMEs often overlook other valuable IPRs such as know-how and trade secrets in, for example, recipes and manufacturing processes which are lost through lack of protection. If competitors or potential competitors manage to acquire the ‘secret sauce’ recipe for a food or drink product, the brand and business value is likely to be severely diminished.
Uncontrolled agents and distributors
If IPRs, including the use of branding, are not sufficiently controlled under agency, distribution and other seller agreements, then these third party sellers may act in a way which is inconsistent with the IPRs or misuse the IPRs and may cause irreparable damage to these key assets.
If not controlled, for example, by way of limited licence, third party sellers could register your business’ own trade marks or relevant domain names or alter or modify trade marks or service names or branding.
SMEs must be proactive and anticipate any rights which may accrue during the term of an agreement (including goodwill and reputation in branding) and monitor use by all third parties.
Ambiguous IP ownership
To ensure the SME benefits from all creations and developments, robust IP provisions should be included within employment, consultant and third party supplier agreements.
Ownership of IPRs created by third parties for the business must be clear and all IPRs must be assigned in writing to your business.
Getting lost in the red tape
Navigating the regulatory requirements within the food and drink sector is challenging within the UK and internationally, especially for SMEs with limited resources.
The evolving nature of regulatory compliance may necessitate changes to labelling and packaging.
Labelling regulations mandate specific information and ingredient disclosures on product labels but revealing trade secrets is not a requirement. SMEs can comply with regulations and safeguard their confidential information.
Mismanagement of the suppliers
Reputation can be protected by IPRs but a failure to manage your supply chain may diminish the protection afforded to your brands and business.
Suppliers should be chosen carefully and monitored to ensure standards are adhered to. If not, and lower quality raw materials are supplied or lower quality products are manufactured, your brand and business reputation will be damaged, perhaps critically.
Enforcing your rights
If, despite protections, you find yourself battling the legal pitfalls in court, it may be appropriate to litigate in Scotland.
Key considerations as to whether there is a legal basis to raise a court action in Scotland start with domicile of the defender and/or where the legal “wrong” or harm is taking place.
The courts of Scotland offer a range of cost and time effective benefits to businesses in an IP dispute. These include:
- lower costs in the Scottish IP court than many other jurisdictions;
- less pre-action protocol prior to raising proceedings; and
- in the absence of a caveat, it is possible for courts to grant interim interdicts (i.e. injunctions) without advance notice.
Interim interdicts can, in some cases, offer UK-wide protection.
Where legal action is necessary, SMEs should take advantage of the benefits that Scotland has to offer in relation to IP enforcement.
Euan Duncan
Euan Duncan is a Partner at Morton Fraser MacRoberts. He has been advising on intellectual property matters and commercial contracts throughout his career. He regularly advises on all areas of law relating to intellectual property, technology and media – digital and non-digital, contentious and non-contentious.
