We are regularly approached by charitable clients asking for advice on assessing, organising and, where applicable, registering their intellectual property (IP) portfolio. The issue can often prove especially challenging for charities when compared to their sole trader or company counterparts for a number of reasons:
- Commercial focus: trustees may overlook the commercial value and importance of their organisation’s IP due to the philanthropic purposes of their organisation.
- Lifespan: in light of the above, older charities may have been active for decades without properly cataloguing their IP holdings or the third party arrangements that may exist (whether expressly or impliedly) regarding the use of this IP. This tangle of rights, licences and ownership can be compounded with the passage of time.
- Oversight: some charities simply fail to grasp the inherent variability of what “IP” constitutes (discussed below) and neglect the valuable assets which they have generated.
In this article we summarise four initial steps that should be considered by charities to make sure they are protecting and getting the most from this valuable asset.
1. Understand the variety of “IP”
IP is not a monolith. Broadly speaking, IP as a concept represents a collection of different assets which relate to various forms of intellectual output. Charities and their trustees should aim to have a basic understanding of these sub-categories:
- Trade marks: arguably the most important right for many charities, trade marks protect an entity’s brand and typically take the form of logos, names, or slogans. Trade marks can be registered (see further below) and will provide the owner with a monopoly in respect of the goods / services which underpin the brand, eg the Nike swoosh for sportswear.
- Copyright: copyright protects original literary, dramatic, musical and artistic works. The protection is essentially a series of acts which are reserved to the owner of the copyright (typically the creator of the work), for example, the right to copy, rent, perform, or adapt the work. Unlike trade marks, copyright is not a registrable right in the UK, instead it exists automatically upon the creation of the work. Training manuals, advice guides and support materials produced by charities are likely to benefit from copyright protection, as are images and graphics. Note that trade marks can sometimes be protected by copyright too (eg a colourfully designed logo).
- Patents: typically less relevant in the charitable sphere, patents protect new inventions with some sort of industrial application. The right is registrable and protects against other people using the invention without permission.
- Design rights: these rights protect the appearance of a product such as its physical shape or pattern and can be registered or unregistered. The rights and monopoly granted will depend on whether the design is registered or unregistered.
- Database rights: whilst copyright can protect the selection and arrangement of material in a database, the database right is a separate right which covers the material within the database itself. To qualify, there needs to have been substantial investment in obtaining, verifying or presenting the contents of the database. The right is unregistered and is infringed if someone extracts or re-utilises all or a substantial part of the contents of the database without the owner's permission.
- Confidential information /trade secrets: this covers material which does not necessarily qualify for any of the other categories listed above but which an organisation would like to protect and control. For example, a secret recipe or financial formulae. There is no registration for this and so control is often exerted through contractual means (eg making an intern or volunteer sign an NDA so they cannot disclose your lucrative know-how).
It is important to understand these rights so that charities and their trustees can responsibly catalogue, cultivate and protect any IP assets which their organisation may hold.
As discussed above, there are certain types of IP which can be registered. The registration process is overseen by the UK Intellectual Property Office, an official UK Government body.
Overall, registration of certain items your IP portfolio ensures far greater clarity in terms of the rights you hold rather than relying on an unspecified and unregistered backlog of potential rights. For charities, this is especially pertinent when it comes to trade marks and it is advisable to consider registering elements of your brand (eg your name, logo, and any other commercial straplines). Each registered trade mark has a unique reference number and is listed online on the UK IPO’s official register. If another person or organisation starts using a mark that are the same or similar to yours without your permission in relation to the same goods / services you offer (for example, charitable fundraising), certain rights and remedies are available to stop them and to obtain remedies to cover any loss your charity suffers as a result. This is especially useful online, where many major websites and search engines enable you to list your registered trade marks if you notice that they have been infringed by a third party.
It is worth noting that trade marks can be unregistered and those rights can be enforced through an action known as “passing off”. Essentially, a charity would have to prove that it has acquired “goodwill” in its brand / get-up and that a third party is harming that goodwill by misrepresenting an association with the brand. However, passing off claims are usually far harder to establish, typically because proving the goodwill in one’s brand is less straightforward than simply pointing to a registered trade mark.
As well as the more defensive aspect of brand protection and infringement, trade mark registration affords greater flexibility when it comes to commercialising a brand. Simply put, it is not as easy to licence, assign, value or attract investment in a brand if it is not underpinned by a registered right. For example, drafting a sponsorship agreement will be easier to bring to life and enforce if you can simply highlight the relevant registered trade marks and their reference numbers which you intend to licence out.
The guidance above of course needs to be tempered with a reminder about the various hurdles involved in registering a trade mark. These include: the inherent registrability of the mark (eg non-distinctive elements will fail), the costs involved, the fact that a trade mark does not have universal market applicability (you must choose the goods / services which the mark is registered for based on what it is actually marketing), and the existing field of play (trade marks are registered on a “we got here first” basis). (For more detail, please see our recent “registering a trade mark” guide here).
3. Remember: IP as an asset
Do not forget the “P” in IP: intellectual property relates to a number of defined, albeit intangible, class of assets. As alluded to above, these assets can be licensed, assigned (ie fully disposed of), and purchased. They will often form the backbone of your charity’s underlying value and appeal. As with any asset, such as real estate or bank accounts, a charity’s trustees are duty bound to safeguard and manage their organisation’s IP in order to support the charity and further its purposes.
One of the most crucial manifestations of this “IP as an asset” consideration for charities is ensuring that you own your core IP. This is particularly pertinent when it comes to trade marks and copyright. By way of illustration, the general rule of thumb is that IP which is generated by people during the course of their employment will be owned by their employer. This position is convenient when dealing with your key personnel and the output they may create as part of their day-to-day work, but care needs to be taken when engaging with other parties who operate within the orbit of the charity but are not directly employed. For example, freelance designers, volunteers, or other third party contractors. The charity should consider entering into IP assignments from these third parties to the charity to ensure that the IP is appropriately transferred into its ownership. Similarly, your charity may enter into a collaboration arrangement with a third party funder. Again, you should be mindful to hardwire suitable IP clauses in your contract to ensure that any resulting output does not accidentally end up belonging to the other party.
Charities should also evaluate their position when it comes to related entities, such as trading subsidiaries and / or connected charities, utilising their brand and other IP. The key consideration here is the extent to which these third party organisations should be able to lean on and associate with their parent (via a “licence” of your trade marks). Often this assessment is governed by factors like:
- Commercial position: a charity should not simply subsidise its trading subsidiary and must therefore charge reasonable market value fee for licensing its brand (unless the marks are used to further the charity’s purposes).
- Reputation: would it be suitable for this other entity to be evidently associated with your charity? Your trade mark licence can factor this issue in by providing for various levers and controls to allow your charity to withdraw the branding if a reputational trigger occurs.
- Independent operations: relatedly, if, let’s say, the sister charity carries on a distinct and self-sufficient operation, it may be more appropriate for that entity to have its own independent name and logo.
4. Catalogue, monitor, and implement
As indicated above, IP rights are multifaceted and (potentially) complex. They grant varying rights, have differing lifespans and can be distributed (and indeed inadvertently lost) to third parties. Charities should take proactive, organised steps to classify, quantify and safeguard their IP portfolio. Charitable clients who fail to do so (especially longstanding organisations) are particularly vulnerable to headaches further down the line when they are unable to properly verify what IP they own. Therefore, it is important to:
- Catalogue your IP, especially trade marks: registration dates, numbers, territories, any licences granted, etc.
- Monitor the market to keep a close eye on any third parties who may infringe your IP. Lawyers can prove helpful in this area and can monitor / advise on trade mark applications which could affect your existing marks’ sphere of influence.
- Implement an IP policy depending on your charity’s size, operations and likely IP output. IP policies can be useful if your organisation is fairly sizeable and engages more extensively with third parties, and therefore needs to clarify the position on ownership of outputs and exploitation of various rights. Care will need to be taken to ensure the IP policy meets the charity’s needs and is well understood and implemented across the organisation.
The above is a summary of steps that can be taken to streamline and clarify your charity’s IP position. This will enable the trustees to instrumentalise and safeguard what could potentially be quite lucrative assets within their organisation, as well as secure greater value for the charity’s overarching brand for the future.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, February 2024