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At Sprintlaw, we’ve spoken to thousands of startups and small businesses.
For startups particularly, it’s quite common to create an app.
To protect that app, startup founders often jump to the conclusion that they need to “patent” the app.
However, this isn’t necessarily a good idea. And it isn’t really the best way to truly protect your app.
Here’s why.
What Is A Patent, Anyway?
When you have a creative idea for your business, you want to make sure you can protect it so that nobody else profits off it.
So, how do you do that?
There’s no way to protect an idea. Instead, it’s only when that idea is expressed in some material form that you can protect it. This is what we call protecting intellectual property (IP).
In Australia, there are many different ways to protect your intellectual property.
One of the most common ways to protect intellectual property is to apply for a patent with IP Australia (Australia’s agency for administering intellectual property rights).
Patents are typically suitable for anyone developing a new invention or innovation. It is a type of IP right that makes you the sole owner of a particular device, substance, method or process that you’ve created.
A standard patent lasts up to 20 years, which means you can enforce your patent right over anyone who might be infringing your right to patent.
Put simply, it means nobody else can benefit from your creation for a set period of time.
When you’ve just created an app that you want to protect, you might be thinking that a patent is the way to go.
However, patent laws are quite complex.
There are strict requirements for what can be accepted as a patent. The application process can also be a headache (and it’s very expensive).
So, before you think about patenting, it’s a good idea to speak with an experienced lawyer to help you decide whether this is the right option for you.
Can I Patent My App?
So, to address our initial question: can you actually apply for a patent for your app?
Technically speaking, yes. However, this would really depend on how your app works. For example, you might be eligible for a patent application if you are trying to protect a method—such as the functionality that your app performs on a mobile device.
However, your invention or innovation has to be “novel”. And with the world of apps constantly evolving, and with most apps running in similar ways, this could be difficult to prove.
As such, applying for a patent may not be the most suitable way to protect your app.
This is because you cannot protect the software code, display or concept of your app with a patent.
Plus, most apps have the same functionality.
So what you’re actually trying to protect—whether that be the code running the software, the idea or the look of your app— can’t actually be protected with a patent.
Additionally, patents can take some time (and a lot of money!) to process. With the digital age moving so fast, it may not be worth your time and money to invest in a patent.
Think of Snapchat: one of the original creators of the “Story” function on social media. Snapchat was unable to apply for a patent for its function, as it did not satisfy patent requirements (i.e. to be non-obvious and novel). And, before they knew it, most other social media platforms were using Snapchat’s story functionality on their own platforms.
It’s also important to note that you can’t show your app to the public before applying for a patent.
This means that if you demonstrate, sell or discuss your invention in public before applying for a patent, it might stop your patent application from being successful.
So, if you want to discuss your app with employees or investors, they’ll need to sign a Non-Disclosure Agreement. Then, if your application is successful, your patent will be publicly available on IP Australia’s patent search. This effectively means you won’t be able to keep your app a “trade secret”.
Is A Patent Right For Me?
Deciding whether a patent is right for you will really depend on your app and how it works.
In most cases, it might not be practical to apply for a patent because:
- It’s expensive
- It will take time
- You can’t go public with your app before the patent application
- The method to your app will be made public if the patent application is successful
- You won’t actually be able to achieve what you want to protect
For a small business or a first-time startup, the importance of getting the ball rolling and the potential commercial returns may not justify the time, effort and money that goes into a patent application.
So, in deciding whether to apply for a patent, you should take a step back and ask yourself: what am I really trying to achieve with a patent?
Generally, we find that businesses want a patent to prevent someone else from copying their app idea. But, on a practical basis, it’s almost impossible to entirely protect an idea (especially as apps are constantly evolving).
A patent won’t really help you achieve this, so it may not be worth investing the time and money into it.
If you’d like to read more on patent basics, IP Australia has some useful information here.
And if you’re still deciding whether a patent is right for you, speak to a lawyer.
How Else Can I Protect My App?
There are several other ways in which startups and small businesses can protect their app.
Though you can’t protect the idea of your app, you can still protect how it’s expressed. There are 3 main ways you can do this.
Trade Marks
As a first step, you can protect the branding of your app through a trade mark application. A trade mark is also an enforceable IP right on IP Australia.
For example, you can protect your app name or app logo by applying for a trade mark to protect those assets. This also involves an application through IP Australia. If all goes well, and IP Australia accepts your application, you’ll be able to exclusively use that trade mark in Australia for up to 10 years.
While trade marks don’t protect the concept or idea of the app, they’ll still protect the branding. It’s a good idea to be thinking about trade marks as soon as possible (before someone else registers a trade mark for your app name).
Copyright
Your app can also be subject to copyright protection.
For example, you can protect your software code that runs the app or the app’s interface. Unlike trade marks, you don’t need to register copyright in Australia. Instead, it is an ‘automatic’ right and arises as soon as any creative idea is expressed in material form.
This means that, once you’ve created the software code or the design of your app, you own the copyright to it.
However, this is where copyright gets a bit tricky. Generally, whoever creates the original work is the owner. But with small businesses and startups, it’s typical to use graphic designers and contractors to create these assets for you.
Under Australian copyright laws, the designer/contractor would still technically “own” the copyright to those assets—so you want to make sure they “assign” the ownership to you.
This can be done contractually. For example, if you hired a developer to create your app’s infrastructure, it’s a good idea to have a contract with them. A Development Agreement would set out how they’ll be paid, what milestones they’ll have to reach, how they’ll maintain your app and, most importantly, who owns the copyright to the app.
In most cases, it’s typical for the developer to “assign” you the ownership of the app’s copyright. However, they might still ask for a licence to use some of that copyright for their own portfolio (for example, to attract future customers by showing off the work they did for you).
And this goes for anyone who is involved in your app. If you have employees working on your app, their employment contracts should include clauses addressing who owns the intellectual property they create.
Even without a full contract, it’s always a good idea to have some sort of legal documentation in place with the people working on your app. An IP Assignment Deed, for example, would suffice as a simple document that assigns copyright ownership back to you as a business.
Business Structure
You can also protect the copyright and ownership of your app through your business structure.
In startups particularly, it’s quite common to set up as a company. Creating a company means you set up an entirely separate entity (i.e. separate from you or your co-founders). You can make sure that all intellectual property related to your app is owned by that company.
This structure is a cleaner, smoother and safer way of protecting your business’ important assets—from your shares to your intellectual property. This means that all the IP sits safely within one entity, rather than between several co-founders.
And, if you want to take things a step further, you can also set up a Dual Company Structure. This is done by setting up two companies: an Operating Company and a Holding Company.
While the Operating Company conducts the ordinary day-to-day business activities, the Holding Company would generally hold all the important assets (like cash and IP). This way, these assets sit safely within your holding company and are separate from any debts and issues that your operating company might incur.
Dual companies are a really popular structure for startups who want to be extra safe with their most valuable assets. If you’re thinking of speaking to investors later down the track, keeping your IP and important assets secure is especially important.
Speak To A Lawyer
So, we started with the question of whether you should think about patenting your app.
While a patent might not be the most practical option for your business, there are other ways to protect your app and IP. This opens up the conversation to the bigger world of business legals.
Need help navigating this world? That’s what we’re here for! Don’t hesitate to reach out to us on 1800 730 617 or at team@sprintlaw.com.au for a free, no-obligations chat.
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