Protecting the intangible

Siddharth Mahajan from the Rights Lawyers explains how innovation in the IT industry can be protected

Tags: CopyrightIntellectual PropertyThe Rights LawyersUnited Arab Emirates
  • E-Mail
By  Siddharth Mahajan Published  June 27, 2009 Arabian Computer News Logo

The multi-billion dollar IT industry thrives on innovation. IT enterprises are constantly innovating to provide products and services to their customers, who use them to reduce their costs and maximise profits.

The result of this innovation is the creation of intangible assets ranging from human resources, know-how, ideas, technology, brands, and designs whose commercial value is enormous.

Therefore, it is imperative to make best use of these intangible assets. One crucial way of doing so is by legally protecting intangible assets, where they meet the criteria for Intellectual Property (IP) protection, which would enable the innovator to use and exploit the innovated asset to maximise the profits from it.

In terms of the IP protection of these assets, the first step is to decide on the form of IP which is best suited to protect a particular asset. From the perspective of an IT enterprise, the most commonly used IP is copyright which is used to protect software.

To get copyright protection in most countries it is not mandatory to register a copyright - as soon as an asset is created it is automatically protected by a copyright. However, in the context of the Middle East, it is sometimes advisable to register the copyright. Any new hardware can be protected by a patent if it fulfills the conditions of novelty and prior use. Brands used by an enterprise on a new product can also be protected under the trademarks law.

Besides legally protecting the IP it is also important that all documentation with respect to an IT asset and its commercial exploitation is maintained to ensure that the enterprise retains ownership of the IP at all terms.

Some important things to be kept in mind in this regard are:

• All documents used in the development of software should be preserved with proper dates inserted on them, to be used as evidence in case of a challenge to the copyright.

• An IT enterprise should have proper contracts with its employees and contractors, clearly stating that all IP in the innovation shall rest with the enterprise and they would have no claim on the same and maintain confidentiality restrictions on its employees.

• All commercial exploitation of an IT asset by a third party should be according to a legal agreement.

• Have clear provisions with respect to the ownership of the materials resulting from commercial exploitation and use of the IT asset.

In any arrangement for an acquisition, outsourcing or license involving an IT asset, a proper legal due diligence to assess the risk and to clearly establish the rights of the parties is advisable. The due-diligence should review things like:

• Any claims with respect to the ownership of the IP

• Status and validity of the applications and registrations filed for registration of relevant IP

• Any claims of infringement of IP used in the IT asset

• Agreements with employees and contractors who have worked on development of the IT asset

• Any existing licence arrangements previously entered by an enterprise and how those effect the proposed arrangement.

The above measures would help an enterprise to maximise the value of an innovation and minimise future disputes with respect to the IT asset. This lack of adequate due diligence and contractual clarity on part of the parties was one of the reasons why a billion dollar lawsuit was initiated by Upaid against the Indian IT major Satyam. The matter involved improper assignment of the IP rights to the customer resulting in a third party claiming rights to an innovation and depriving Upaid of the profits which would have accrued to it.

Siddharth Mahajan is a solicitor with the Rights Lawyers.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code