Health start-ups: Get brand protection- key intellectual property rights

It is as true for a business offering healthcare services as it is for any High Street seller of goods that the business’ brand and the goodwill associated with it are valuable assets that are worthy of protection.

This is because building up a brand and reputation takes a substantial investment of time, effort and resources. But how can a practice protect its hard-earned intellectual property (IP)? In this article, we discuss the key IP rights that are relevant to an independent practice, along with some key issues to keep in mind when considering how best to protect your hard-earned IP.

IP covers a range of rights, some that apply automatically and some requiring registration for a fee. Some obvious examples are brand names and logos – for example “Coca-Cola” or the Nike ‘Swoosh’. Protecting a brand name or logo as a registered trade mark gives a monopoly right to use that trade mark throughout the territory(ies) covered by the registration in respect of the goods/services for which the mark is registered. So, if someone else wishes to use your trademark in those territories and for those goods or services, then they will need your consent. Businesses will often protect their key brands as registered trade marks since these give strong protection for a relatively small financial outlay.

Goodwill in a business is protected in the UK by the law of “passing off”.  Other countries may have similar passing off laws, or may alternatively afford similar protection under the law of unfair competition.  Broadly speaking, passing off is intended to prohibit a third party from taking unfair advantage of another business’ reputation, e.g. by claiming that it is associated with a business of good repute when in fact it is not.  Protection against passing off is available without the need for any formal registration, but the consequence of the lack of registration is that a business will need to be able to prove that it has goodwill and that the other party has made a misrepresentation that damaged its business. Bringing a passing off claim can therefore be difficult, time-consuming and expensive.  If the aggrieved business also has a registered trade mark that has been infringed by the outside party, then taking action under trade mark law is usually more straightforward.

So here is our first key message: protect your practice goodwill by registering your brands as trademarks.

Confidential information and ‘trade secrets’ can be protected by a duty of confidentiality.  This duty can be imposed under a contract, such as a non-disclosure agreement or by what is known as ‘an equitable duty of confidence’.  The latter does not require a formal contract or registration, but only attaches to information which the law regards as having ‘the necessary quality of confidence’.

Classes of confidential information that might be highly valuable to your business could include:

• business know-how and ways of working, particularly those which give you the edge over your competitors;
• inventions and technical specifications that are not protected by other rights such as a patent; and
• lists of clients and potential clients that include information about those individuals’ requirements or when they might require your services in the future.

Personal data and sensitive personal data, such as patient records, belong to the individual whose data it is.  These are subject to protection under the Data Protection Act, so should not properly be regarded as an asset of the business.  That said, information provided by clients and which the practice is legitimately entitled to retain for its own use, could form part of the practice’s confidential information. Also, if time and effort has been expended in order to include such information in a database for business use, then the database itself might be subject to legal protection.

Even if a non-disclosure agreement is in place, the other party might be careless or might intentionally misuse the confidential information and, once your confidential information enters the public domain, there may be very little that you can do about it. You should also take practical steps to ensure that access to confidential information is only given to those that genuinely need such access. All employment contracts and contracts with third party providers should include appropriate confidentiality provisions.

The golden rule and our second key message is: do not let confidential information leave the business unless absolutely necessary.

Practice literature, promotional materials, software and website content will usually be subject to copyright protection. Where such materials have been produced by employees in the course of their duties, then copyright will automatically vest in the employer. Where such materials are commissioned from outside parties such as graphic designers or website designers, then copyright will belong to the outside party (e.g. the designer) unless it is formally assigned to you, even if they have been paid in full for their work.

So here is another key message: ensure that you secure the future ownership of any commissioned content at the time the outside party is commissioned.  If this is not addressed, then the third party could be free to sell the same materials to others, including to your competitors.

It is a good idea to undertake some basic due diligence on any outside parties who you commission to prepare materials for you.  If a designer copies materials from others or incorporates e.g. a stock photograph or clip art in the materials without the proper usage rights, then you could find yourself liable to the rights’ holder for infringement of those rights and having to attempt to claim your losses back from the party you commissioned.

A website domain name itself cuts across a number of the above rights.  Attempting to register a domain name that includes a third party’s registered trade mark can lead to a dispute.  Ultimately, the third party could secure control of the domain or perhaps make a complaint that leads to the domain being put out of action for a period of time while the dispute is on-going.  Conversely, owning a trade mark does not automatically entitle the trade mark owner to register that trade mark as an internet domain.  In particular, if a third party already holds the registration, then it is not automatically obliged to transfer it to the trade mark owner.

Our final key message is this: select a brand name which is not already in use or registered by a third party in the territories in which you will operate or for the domain name(s) you wish to secure.

You can then register the domain name(s) and trade mark at the same time, having done as much as possible to avoid a third party claiming that the registrations infringe their rights. Some basic internet searching followed by an early “freedom to operate” search from a professional service provider, and registration without delay can prevent a costly and time-consuming dispute at a later date.

If you develop new products, then these may be protectable as patents (for new inventions) or as designs (which protect the ‘look and feel’ of the product). These are worth considering in more detail, since the licensing of such rights might open up additional revenue streams from a much wider customer base than the immediate client base of your practice.

In summary, intellectual property rights can be highly valuable business assets.  Formulating strategies at the earliest possible stage for their protection and exploitation can put you on the right path to avoiding costly pitfalls and gaining the best commercial position in respect of your hard-earned IP.