This document discusses different types of intellectual property (IP) rights and structures for holding IP. It describes registered IP rights like patents, trademarks, and designs as well as unregistered rights like copyright and confidential information. It provides tips for protecting each type of IP and outlines considerations for different holding structures like sole trader, trust, and company. The document recommends a preferred structure with separate IP holding and trading companies held underneath a family trust to obtain tax benefits and asset protection.
3. Intellectual property (IP)
rights
• Provide IP owners with the
ability to commercialise
their creations
• Incentive to create
• Contained within well
defined pillars
• Exist in many different
forms and have different
advantages
4. The value proposition
• Transition from manufacturing to information economy
• IP dominating transactions (volume and value). Driven by:
• Acquirer’s desire to obtain the target’s IP assets
• Tragedy of the commons
• Owning and protecting IP rights critical to expansion,
bottom line value and competitive advantage
• Effective exploitation supports exponential growth –
possible in the information economy
5. Types of IP rights
Registered rights
• Patents
• Trade marks
• Plant breeders rights
• Circuit layouts
• Registered designs
Unregistered rights
• Copyright
• Confidential information
Tip
Keep a catalogue
of your IP or
conduct an IP audit
6. Confidential information
Protection Practical and contractual measures
Examples • Distribution methods
• Lists of suppliers or clients
• Manufacturing processes
• Formulas
• Recipes
Duration Perpetual, unless made public
Tips • Define with precision
• Obligate before revealing
• Keep a ledger of what’s been disclosed
• Protect publicity of designs and patents
7. Copyright
Protection
Granted upon the creation of expressions with sufficient
originality
Examples WORKS
• Literary works
• Dramatic works
• Musical works
• Artistic works
OTHERTHAN WORKS
• Sound recordings
• Cinematograph film
• Television broadcasts
• Sound broadcasts
Duration • Literary, dramatic or musical
• 70 years after author’s death
• 70 years after making
• 70 years after first made public if that was within
50 years of making
• Sound and file recording – 70 years after making
• Crown – 50 years after making
9. Patents
Protection Monopoly in relation to commercialising a device,
substance, method or process
Standard patent Innovative patent
New, useful and involve an
innovative step
New, useful and involve
an inventive step
Examples Anti-cervical cancer drug,
Gardasil
Typically computer
hardware or software
algorithms
Duration 20 years
(may be extended to 25 years for
certain pharmaceutical patents)
8 years
Costs $30,000 + GST over its life $9,000 + GST over its life
Useful tips • Ensure novelty (be aware of self-publication)
• Incorrect specifications recorded in the patent
application
• Ongoing costs
10. Trade marks
Protection Exclusive use of a sign used to distinguish one business’s
goods and services from those of other traders
Examples Any letter, word, name, signature, numeral, device, brand,
heading, label, ticket, aspect of packaging, shape, colour,
sound or scent
Duration Perpetual (registration paid for in 10-year blocks)
Useful tips • Conduct a search before adopting a new brand. Business
and company names do not inherently provide protection
• Ensure mark is not likely to be genuinely needed by other
traders to describe themselves or goods / services
• Take care with determining ownership, the applicant and
the most effective sign
• Actively protect your rights once the mark has been
registered
• Use it or lose it
• DisplayTM and ®
12. Different Structures
A Co
Pty LtdFamily
Trust
Considerations SoleTrader Trust Company
Asset Protection ✓ ✓
Ease of Sale (asset sale) (asset sale)
(asset sale)
✓ (share sale)
Patent, Registered Design,
Copyright tax – revenue tax – revenue
(asset sale – tax – revenue)
✓ (share sale – CGT discount)
Other IP ✓ CGT discount ✓ CGT discount
(asset sale – no CGT discount)
✓ (share sale – CGT discount)
Income Flexibility ✓ ✓
Stamp Duty Exemption
(aggregation)
✓ (non-aggregation
(aggregation)
✓ (non-aggregation)
(aggregated asset sale)
✓ (share sale)
13. Restructures
Slide 13
A Co
Pty Ltd
Rollovers Considerations
Subdivision 122-A Capital assets – other IP
Section 40-340 Revenue Assets - Patent, Registered Design, Copyright
Subdivision 328-G Capital assets – other IP
100%
14. Restructures
Slide 14
A Co
Pty Ltd
Rollovers Considerations
Subdivision 122-A
(fail section 122-20(1))
‘You’ did not receive shares
Section 40-340
(fail section 40-340(1)(c))
Fail rollover under subdivision 122-A or 328-G
Subdivision 328-G
(fail section 328-440(a)(ii))
The asset is not included in the property of a family trust
100%
Family
Trust
15. Restructures
Slide 15
A Co
Pty Ltd
Steps
Rollover
Either Subdivision 122-A/328-G or
Section 40-340
Value Shift Section 725-70(1) – de minimus
Part IVA Dominant Purpose – asset protection
Y%
Family
Trust
X%
16. Restructures
Slide 16
Rollovers Considerations
Subdivision 122-A Capital assets – other IP
Section 40-340 Revenue Assets - Patent, Registered Design, Copyright
Subdivision 328-G Capital assets – other IP
A Co
Pty Ltd
100%
Family
Trust
17. Preferred Structure
Slide 17
IP Co
Pty Ltd
Trade Co
Pty Ltd
Hold Co
Pty Ltd
Family
Trust
Section 588V
Corporations Law
IP Co
Pty Ltd
100%
Family
Trust
Trade Co
Pty Ltd
100%