The Industry Master Class

Wednesday 30th November, 2011

Tahir Basheer & Daniela Cohen, Sheridans

How can you protect your brand?

•A strong brand name is a valuable asset in the world of fashion

•Generates goodwill, recognition and word-of-mouth interest

•Can also be lucrative for licensing and franchising

•Given the amount of time, effort and money that goes into creating your brand name and identity, it is crucial that you know how to protect your brand and intellectual property

How can you protect your brand?

Trade Marks

•Can be registered or unregistered

•Indicate the identity of origin of the product

•Distinguishes the products

•Word and/or logo

•Must not be merely descriptive

Copyright

•Unregistered right

•Exists on creation

•Tangible expression of an original idea

•Must be ‘original’ and involve independent skill and labour

Design Rights

•Can be registered or unregistered

•Apply to shapes or configurations, but not surface decoration

•Must be original and create a different overall impression to existing products

•Longer protection for registered design right, but consider cost of registering

•Can register a design right across EU

Patents

•Registered right

•Protect inventions

•e.g. new and improved processes and methods

•Expensive and time consuming to acquire

•Necessity will depend on type of invention

Confidential Information

•Not a strict IP right

•Information must be confidential by nature

•Must be disclosed in a confidential context (i.e. business)

Ownership of IP rights

•Where the design is created by an employee, the employer will own any IP rights created in that employment

•Where the design is created by a freelancer, ownership will depend upon the type of right

•For certainty, it is best to provide for IP ownership in all commissioning agreements with freelancers and designers and in cases of joint designs

Protecting your IP rights

•Where appropriate and affordable, register all registrable rights at the earliest opportunity to afford maximum protection

•Check existing trade marks, designs and copyright works on the market to ensure that you are not infringing anyone else’s IP and that you are entitled to the right

•Take legal advice as soon as you identify any potential infringement

•Put potential infringers on notice at the earliest opportunity

•Mark your goods that have IP with appropriate notices (©, ®, TM, etc.)

Protecting your IP rights (cont.)

•Mark all confidential information as “private and confidential”, limit access to the information and enter into confidentiality agreements with anyone who will be provided the information

•Keep accurate and up-to-date records of the design and creation process, showing the rights and originality in your designs

•Make express provision for ownership of IP rights in all relevant commissioning agreements

•Keep a record of your brand’s goodwill and reputation – this could provide key evidence in the event that you need to bring legal proceedings to enforce your IP rights

How can you plan ahead for a long and fruitful business venture?

How can you plan ahead for a long and fruitful business venture?

•There is no ‘one size fits all’ strategy

•Choice of business structure will depend upon your particular circumstances

•Legal, tax and accountancy advice should always be obtained to ensure you choose the most appropriate and advantageous structure

Sole Trader

•Easy to form

•Unincorporated

•Entitled to all profits of business

•BUT: personally liable for debts and obligations incurred by the business

Partnership

•Flexible and simple to set up

•Between two or more persons

•Not a separate legal entity from its owners

•No registration process but strongly advised to have a Partnership Agreement

•Partnership may be bound by acts of a single partner

•Partners are personally liable for debts and obligations of partnership

Limited Company

•Separate legal entity from individual members

•Directors/company secretary/shareholders

•Must be incorporated

•Filing formalities at Companies House

•Limited liability for members

•Liable to pay corporation tax on profits and capital gains

•Usually easier to raise finance

Limited Liability Partnership

•Alternative corporate business vehicle that combines the flexible structure of a partnership with the benefits of limited liability for members

•Rights and duties of members are governed by a Limited Liability Partnership Agreement (confidential to the members)

Expanding your business

•Importance of a business plan – for your own internal vision and objectives and also to show to relevant external parties (banks, investors, etc.)

•Identify and analyse your target market

•Consider competitors

•Protect your brand and intellectual property (as detailed in part 1)

•Consider sources of finance (loans/venture capital)

•Agency / distribution / franchises / licence agreements

•Joint ventures/collaborations (see part 3)

•Consider international markets

Expanding your business (cont.)

Status

•Decide how you wish to engage the individual

•Employee•Consultant – truly self employed•Freelancer/Worker

•Legal status of individual affects Company’s obligations/duties and its entitlements

Employee

•Implied duties on part of the Company and the employee

•Trust and Confidence

•Confidentiality

•Intellectual Property

•Statutory rights: holiday; working time; unfair dismissal

•Tax: PAYE and National Insurance Contributions

Freelancer

•Certain statutory rights

•Holiday/working time

•Confidentiality and intellectual property not automatically protected

Consultant

•Purely commercial arrangement

•Parties to decide terms

•No implied duties on either party

•May be engaged by own company

•Responsible for own tax/VAT

Protecting the Company’s interests

•Contractual protection important in respect of any appointment

•Arguably more critical with freelancers/consultants

•Provides foundation of working relationship

•BUT not in itself conclusive of type of relationship being formed

•Factors taken into account when assessing status

What needs protecting?

•Services to be provided to the Company

•No other employment/outside interest – conflicts

•Confidentiality

•Intellectual Property

•Post termination obligations

What does a collaboration mean, legally?

What does a collaboration mean, legally?

•No specific law in the UK relating to collaborations

•Subject to a range of legal rules and regulations to govern the broad commercial principles and relationship between the parties involved

Form of collaboration

•Should be a commercial decision based on the degree of integration sought by the parties

•Any form of collaboration will involve complying with a number of legal formalities

•In all cases consideration must be given in the agreement between the parties as to how factors such as management, control, intellectual property ownership, revenues, liabilities and termination are to be governed

Form of collaboration (cont.)

•Purely contractual, one-off collaboration = contractual relationship

•each party will keep its own assets, costs and revenues separate

•Long-term Partnership or Company set-up = more formal relationship

•provides financial flexibility, vests trading activities of both parties in the newly-formed entity, entity has its own legal identity to enter into contracts

Confidentiality

•Likely to be disclosure of sensitive company information, such as accounting figures, between the parties over the course of the collaboration

•Important to identify such information from the outset, when collaboration negotiations are first entered into

•Should seek to maintain confidential information by entering into a non-disclosure agreement before entering negotiations

Intellectual Property

•IP rights of each party will need to be carefully managed to ensure that the value of such rights are maintained

•Try to relinquish ownership of IP rights only as far as is absolutely necessary

•Consider scope of existing IP rights, whether they should they be licensed or assigned between the parties and to what extent should the parties retain the right to continue to use the IP rights themselves

•Agree what is to happen to the IP created in the course of the collaboration, who is to own it and what rights the other party shall have to it

•Agree what happens to the IP rights once the collaboration is terminated

Competition Law

•UK and EU authorities have certain powers to prevent the collaboration from going ahead

•Depends upon certain size thresholds being met and whether the collaboration would create a dominant market position

Employees

•Depending on the form of collaboration, the parties may transfer employees into any collaboration vehicle which is set up

•If the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) applies to any such transfer, employees will automatically transfer to the collaboration vehicle, which must then honour their existing terms of employment

•If TUPE does not apply to the transfer, the collaboration must obtain the relevant employees' consent to the transfer

Contact

Website: www.sheridans.co.uk

Email: fashion@sheridans.co.uk

Twitter: @sheridans_news