In the world of technology, speed is everything. If you want to introduce a product or service that is genuinely disruptive, then first mover advantage is vital.

But, even if there is by necessity a rush to market, everything has to be carefully considered. That includes ensuring that the legal position is understood, and that intellectual property (IP) rights are fully protected.

This is particularly true of the fintech sector, and the growing popularity amongst consumers for technology-based financial services offerings.

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“It’s a very fast moving area and there’s a lot of innovation,” says Iain Rutherford, contentious intellectual property expert at Scotland’s leading and top 50 UK law firm Brodies.

“That means protecting IP is really important. Quite often there’s a degree of collaboration, with different people on the project.

“Amid the excitement and enthusiasm at the start of a project, there can be a lack of clarity around who brought what to the table and then, when the project is successful, who is entitled to what.”

There can be a feeling at the development stage of a new product or service that legal and protection issues – never, in honesty, the most exciting things to grapple with – can be left until later.

However, if and when money starts to be made, this lack of a legal framework can be detrimental.

“At the start, when everyone is getting along and there’s a shared commitment – that’s the time to nail this stuff down and decide how any upside should be divided between the different contributors,” says Iain.

It is vital at the outset to get the fundamentals right. If consultants are working on the project, for example, do they just get a fixed rate?

HeraldScotland: Read more about the Scottish Fintech sector in our recent edition of Business HQ - Click Image aboveRead more about the Scottish Fintech sector in our recent edition of Business HQ - Click Image above

Are they keeping or surrendering their own intellectual property rights? Should they also receive an equity share in the new company? These issues all need to be discussed honestly and transparently.

“This is a contractual arrangement, and it has to be right,” says Iain.

“It’s also important to document what you’re doing and to read the small print in anything put in front of you. That can contain provisions you don’t expect, particularly in relation to IP.”

Protecting these rights generally breaks down into four areas: copyright, trade marks, patents and trade secrets. All have different applications and vary in time and cost.

Copyright is the simplest. It is applied in areas such as software and does not have to be registered: it exists automatically and immediately, provided that the work is original. To prove infringement, you have to show that the infringing work copied yours.

Registered trade marks are the element most people involved in IP understand. Registration provides protection for your brand and is not normally expensive.

Even if you don’t register, you can still bring a claim of “passing off” if another company tries to muscle in on your brand, though formalising your trade mark protection through registration does strengthen your rights when it comes to goodwill and reputation.

Patents are generally the most expensive option and the process of registering is a long and specialised one. They don’t necessarily apply in areas such as computer software, though the law here is complex and it may be that with creativity, some novel elements and processes can be protected in this way.

Contrary to popular belief, there is no requirement to register trade secrets or confidential information. “If you are legitimately treating certain elements of your business in this way, then they will automatically be afforded protection,” adds Iain.

“If there was a threatened public disclosure of that type of information, then you would be entitled to take steps to prevent that disclosure and if it did happen, to be compensated for that. The steps to protect this material are quite simple, such as marking material as confidential, password protecting, keeping a record of who has access to that information and clarifying its status.”

None of these, he points out, need cost a fortune. “If you just seek out a little bit of legal support at the outset and arrange a basic contract between the parties, you’re going to be in a materially better position than if you had nothing at all.” 

For more information please visit www.brodies.com