William Miles, associate at Briffa, talks through the key legal things to be aware of when setting up a food and drink business
We all know that getting started on a project is often the hardest part. It’s not just a question of setting yourself a goal and having the willpower to see it through. It’s a question of taking the right steps. But once you acknowledge there are steps to achieving your goal, how do you find out what these actually are? Where do you start?
In our view, the goal is ultimately to create something with impact, which at the same time makes you profit. This can be done by protecting the value in your business, which is not just the food you sell and service you provide. The value is also intangible, and you may not have considered that you should protect it.
We’re going to break down the five most important intellectual property considerations all fine food retailers should consider when starting-up or scaling up their businesses.
Registering your brand
Your brand (or trade mark) differentiates you from your competitors in the eyes of your customers. We all know someone who is happy to pay a little more, or travel a little further, in order to visit a certain shop or restaurant. These businesses have generated a reputation, which customers associate with a brand. This is the same for all businesses – when customers think of your brand, they associate various things with it, which hopefully increases customer interest and sales.
But it is all too easy for copy-cats to benefit from the goodwill you have generated if your trade mark isn’t registered. Registered trade mark protection gives you stronger rights to challenge others who may use your mark, or a mark which is similar, in relation to similar goods and/or services. This allows you to prevent others from benefitting from your reputation, and/or diluting the distinctiveness of your trade mark, which could result in permanent damage to your brand.
Who are you in business with?
Of course the relationship between you and your business partners are excellent - why else would you go into business with them? You both have common goals and objectives for the business, and know each other’s strengths and responsibilities.
Although we don’t like to imagine that things will change, unfortunately things sometimes do, including business relationships. As such, having a simple agreement setting out the rights, responsibilities, financial contribution and decision making power of each partner often helps to prevent disputes and disrupted running of the business.
Different agreements may be applicable depending on the type of business you run. For example, if you have a company limited by shares a shareholders agreement may be more suitable, whereas for a partnership you will usually require a partnership agreement. In any event, it is safest to define the relationship you have with each person within the business.
Who are you doing business with?
Who are you purchasing your goods from? Who are these goods being sold to? What happens if the goods are of poor quality? What if a consumer wishes to change their mind?
Every time you make a purchase, or a sale, you will benefit from certain rights and have to comply with certain obligations. For example, if you purchase goods from a wholesaler, you will benefit from the right that the goods must be reasonably fit for purpose, but you are also under the obligation to pay a certain amount for those goods within a certain amount of time. When you sell to a customer you must ensure that the sale complies with the various rights they have as a consumer.
Having standard agreements in place is a sure-fire way of knowing what you’re getting, when you’re getting it, what will happen if things go wrong, and the steps you need to take to ensure that you comply with your obligations. Not having such agreements in place has the potential to cause you headaches, reduce your profit margin, and can increase your potential liability.
Do you own what you need to own?
Some intellectual property rights may not be owned by you, but they may still have value to your business.
For example, copyright arises automatically in relation to numerous “works”, including photographs, wording within catalogues, brochures, websites and artistic pieces (such as artistic logos etc.).
The problem is, as this copyright arises automatically, the author of the work being created will own the copyright in that work personally, unless they are an employee of your business and are acting in the course of their employment. Problems are most likely to arise when you commission somebody outside of your business to create something for you. For example, a photographer taking photographs for you will own the copyright in such photographs, or a website developer creating your website will own the copyright in the coding.
You may have already dealt with the issue of ownership of copyright in point 3 above prior to any copyright works being created, but people often don’t. However, all is not lost – it is possible to transfer the ownership of copyright to somebody else after the copyright has arisen, but doing so will be contingent on you and the owner of the copyright coming to an agreement. Be aware that the transfer of ownership must be recorded in an assignment document, though, and the owner may sometimes insist on being paid for the transfer.
Unless your business is based around an invention which is patentable, you will not be able to protect your business idea. Unfortunately, a new type of business or consumer experience is highly unlikely to be patentable. However, when you are in the development stage of any idea or business, you can protect its confidentiality and limit the way in which other individuals could use this information whilst it is not in the public domain.
For example, before entering into discussions with third parties in order to develop your idea, having that party enter into a simple non-disclosure agreement (or NDA, as they are commonly known) can be the difference between them taking your idea and running with it, or them assisting you in getting the idea off the ground.
Essentially, an NDA sets out that any information which is not in the public domain, which is disclosed by you to another party in the course of discussions, is to be treated as confidential. This can be information such as a recipe, a method of sale or delivery, a service, a business name, your branding etc. Any breach of this agreement will likely constitute a breach of contract and allow you to pursue the other party for damages.
Call for a free consultation. Details at briffa.com