Wednesdays With Redchip March - Intellectual Property & Structuring
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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.
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Wednesdays With Redchip March - Intellectual Property & Structuring
- 2. Harnessing the property of your mind ZACHARY PAGLIANO ZacharyP@redchip.com.au
- 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
- 8. Copyright Useful tips • Ensure moral rights are addressed • Keep a well organised record of authors, co- authors, date of creation and time taken to create • Ensure ownership is where intended • Be aware of fair dealings – research, criticism or review, parody or satire and reporting • Copyright should be registered in the USA • Design and copyright cross over • Use © [name of copyright owner] [year of creation]
- 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%
- 19. Tax Events Thursday 28 March, Doomben Racecourse CGT Rollovers, SMSFs &Trusts Wednesdays With Redchip 17 April: Business Exit 15 May: Liquidation & Bankruptcy 19 June: Personal & Business Structures 17 July: Property & BusinessTransactions FUTURE EVENTS
- 20. Wednesdays With Redchip THANKS FOR ATTENDING