Bud­get pro­pos­als offer start-ups an oppor­tu­ni­ty to get their legal house in order from the start

In Brief

The Fed­er­al Gov­ern­ment announced new mea­sures in its bud­get this week that will no doubt be wel­come to new ​‘start-up’ busi­ness­es. New busi­ness­es will be able to deduct start-up costs such as pro­fes­sion­al, legal and account­ing ser­vices from the 2015/2016 income year. This will replace the cur­rent sit­u­a­tion, known as ​“black hole expen­di­ture”, where some of the pro­fes­sion­al costs asso­ci­at­ed with a new start-up busi­ness are cap­i­talised and deduct­ed over a five year peri­od. This mea­sure will result in an imme­di­ate tax sav­ing for prof­itable businesses.

The pro­posed changes will help new start-up busi­ness­es off-set the cost of seek­ing pro­fes­sion­al advice in respect of their new oper­a­tion. This includes estab­lish­ing the enti­ty through which the busi­ness will oper­ate, as well as any terms and con­di­tions under which the busi­ness will be trading.

Now is also the per­fect time for new start-up busi­ness­es to con­sid­er devel­op­ing and pro­tect­ing one of their most valu­able assets – their intel­lec­tu­al prop­er­ty includ­ing the brand, prod­ucts, sys­tems and infor­ma­tion of the business. 

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Reg­is­tered trade marks

A trade mark is a dis­tinc­tive sign used in busi­ness to dis­tin­guish goods or ser­vices of one trad­er from oth­er traders’ goods and ser­vices. It can be a let­ter, name (includ­ing a busi­ness name or domain name), sig­na­ture, word, num­ber, brand, head­ing, label, aspect of pack­ag­ing or shape, and even a scent or sound. How­ev­er, it must be dis­tinc­tive — it can­not be direct­ly descrip­tive of the char­ac­ter or qual­i­ty of the goods or ser­vices, or some­thing that anoth­er trad­er will use legit­i­mate­ly to describe their sim­i­lar goods or services.

Reg­is­tra­tion of a trade mark gives exclu­sive rights to use that trade mark on or in con­nec­tion with the reg­is­tered ser­vices. Trade marks in Aus­tralia must be reg­is­tered for spe­cif­ic goods or ser­vices. In Aus­tralia all goods and ser­vices must be grouped into at least 1 of 45 class­es. It is impor­tant that the state­ment of goods and ser­vices is prop­er­ly draft­ed as a nar­row spec­i­fi­ca­tion will lim­it the pro­tec­tion pro­vid­ed for the reg­is­tered trade mark. On the oth­er hand, if it is word­ed too broad­ly, there may be good grounds for attack­ing the appli­ca­tion or reg­is­tra­tion includ­ing on the basis of ​‘non-use’ of the mark in the future.

A reg­is­tra­tion will ini­tial­ly last for 10 years and may be renewed for fur­ther ten year terms indef­i­nite­ly by pay­ing the renew­al fees with­in the per­mit­ted time.

Reg­is­tered designs

It is pos­si­ble to reg­is­ter, and pro­tect, a design in Aus­tralia. A design being the over­all appear­ance of a prod­uct result­ing from one or more visu­al fea­tures of the prod­uct. It may include the shape, con­fig­u­ra­tion, pat­tern or orna­men­ta­tion, but it must give a prod­uct a unique appear­ance – for exam­ple a piece of fur­ni­ture, a stor­age con­tain­er or a piece of cloth­ing. A design can be reg­is­tered in Aus­tralia pro­vid­ed it is ​‘new’ and ​‘dis­tinc­tive’. It must be new inso­far as it must not be iden­ti­cal to any design pre­vi­ous­ly dis­closed any­where in Aus­tralia or the world. It must also be dis­tinc­tive mean­ing its over­all impres­sion must not be sub­stan­tial­ly sim­i­lar to any design pre­vi­ous­ly dis­closed any­where in Aus­tralia or the world. If your busi­ness will trade in a new and dis­tinc­tive design you may wish to con­sid­er reg­is­ter­ing the design. Reg­is­tra­tion in Aus­tralia will allow you to take action to pre­vent any­one else using, sell­ing, offer­ing for sale, man­u­fac­tur­ing or import­ing any iden­ti­cal or sub­stan­tial­ly sim­i­lar item in Australia.

A design may be reg­is­tered to allow the own­er to exclu­sive­ly exploit their work for an ini­tial peri­od of 5 years, with an option to renew for a fur­ther 5 years.

Patents

In Aus­tralia there are two types of patents – a stan­dard patent and an inno­va­tion patent. A stan­dard patent grants exclu­sive rights to com­mer­cial­ly exploit a nov­el, inven­tive and indus­tri­al­ly applic­a­ble advance in forms or uses of tech­nol­o­gy for usu­al­ly a peri­od of up to 20 years. An inno­va­tion patent only lasts for 8 years but grants exclu­sive rights for a nov­el and ​‘inno­v­a­tive’ advance or use of tech­nol­o­gy, being a low­er thresh­old than an ​‘inven­tive’ idea. It is impor­tant to ensure that the idea remains con­fi­den­tial when dis­cussing it with employ­ees or busi­ness part­ners. If you dis­cuss, demon­strate or sell your inven­tion in pub­lic pri­or to fil­ing a patent appli­ca­tion, you risk los­ing its abil­i­ty to be grant­ed a patent.

Get­ting on with business

The changes pro­posed in the bud­get will allow fledg­ling busi­ness­es to take advice ear­ly on and ensure they are sup­port­ed by a sol­id foun­da­tion of suit­able trad­ing terms and cor­po­rate struc­ture, and appro­pri­ate intel­lec­tu­al prop­er­ty pro­tec­tions. Swaab Attor­neys has sig­nif­i­cant expe­ri­ence advis­ing clients in rela­tion to estab­lish­ing new busi­ness­es and com­mer­cial­is­ing intel­lec­tu­al prop­er­ty rights, and are well placed to ensure your new start-up busi­ness has the best pos­si­ble foun­da­tion for future success.