Hashtags have proven to be very valuable tools for businesses, with Facebook, Twitter and Instagram posts that include hashtags returning twice the engagement rate of those without one. While hashtags are too short to be afforded copyright protection (they hardly constitute ‘literary works’, now, do they?) and don’t qualify for patent protection because they are not an invention, it is possible to register a hashtag as a trade mark for your business.

#MakeItYourOwn: Hashtags As Intellectual Property (IP)

Trade marks help with brand recognition and differentiating your business from your competitors.

To qualify for trade mark protection, a hashtag must be something most consumers consider to be synonymous with your business (a brand identifier) and not merely a social media tool. In other words, if most people in the general public associate a hashtag with your product or service, it likely qualifies for trade mark registration. Think #sayitwithpepsi, which was registered as a trade mark by PEPSICO last year, or Twisties’ #lifesprettystraight hashtag.

In most cases, the “#” symbol itself is not considered the registerable part of the trade mark, rather, what follows the hashtag (for example, the unique word or phrase) that is checked against the requirements for trade mark protection.

What Is A Trade Mark And How Do I Get One?

Put simply, a trade mark is a unique descriptor – a logo, word, phrase, sound, smell, shape, picture, movement, aspect of packaging, letter, number, or a combination of these – that helps consumers distinguish between your goods and services and those of other businesses.

Unlike copyright protection, a trade mark does not automatically protect your intellectual property. Trade marks need to be registered with the relevant government authority, IP Australia.

Successfully registering your hashtag as a trade mark gives you exclusive rights to that trade mark for 10 years. If another business infringes those rights by using your hashtag without your permission, you can sue them for damages.

Trade mark protection is, however, subject to some qualifications. You must continue to use your trade mark (if you cease using it for three years you risk having it taken from the register), and it must continue to be regarded as a trade mark. This means that if your hashtag becomes a common name to describe goods or services, it is possible for someone else to seek to have your trade mark cancelled through the courts.

What Value Can A Hashtag Provide Your Business?

As a powerful content indexing tool, hashtags are incredibly valuable particularly given their potential to go viral.

Hashtags are recognised by brands as a low-cost marketing technique that, when used correctly, can be a fast, highly-effective and lucrative way to #jointheconversation and drastically increase audience engagement and sales. When used in conjunction with social media influencer marketing, the potential for growth is enormous.

Some of the most popular campaigns in recent memory have even gained traction with mainstream media outlets, leading to even more market exposure (think about the #MyCalvins campaign).

Increasingly businesses are seeking to not only stake their claim on their plot of digital real estate but also to protect themselves against other businesses who seek to cash in on their popularity. For example, where a competing enterprise piggybacks on the success of your social media stream by using a hashtag you created to promote their marketing agenda.

As the digital landscape becomes more and more crowded, businesses are looking to add value to their social media marketing strategy in more novel and distinctive ways. It seems that trade marking hashtags is a growing trend that is likely to gain much more momentum in the future as it becomes an integral part of brand strategy.

So, how will you differentiate your business from the rest of the digital crowd in 2017?

Further Information

For more guidance on the status of hashtags under trade mark provisions in Australia visit:

• IP Australia – What do hashtags mean for trade marks

To make an application to register your hashtag for trade mark protection visit:

• IP Australia – Hot to apply for a trade mark

There are multiple factors that impact the success or failure of a startup.

In Australia, entrepreneurs are being put out of business by more than just underdeveloped planning and poor sales. The grim reality is that over 95% of new startups are destined to fail. Many of these are sunk by preventable legal pitfalls that new business owners did not foresee or did nothing to protect themselves against. When you have solid foundations in place to protect yourself and your business against unnecessary risk, you can devote your energy full time towards making your startup dream a success.

Below are some strategies to deal with avoidable legal issues in business early and effectively.

Have A Clear Ownership Structure

The common legal structures for businesses include sole trader, company, partnership and trust.

Choosing the right legal structure for your business from the outset is important as some structures provide protection against personal liability for debts and legal disputes. It also impacts your tax obligations and expenses and makes it easier to sell your business in the future, if you wish.

A Shareholders’ Agreement

Even if your partners are your parents or your best mates, a shareholders’ agreement is an important and necessary document that clearly sets out the rights and responsibilities of each shareholder in your company.

Without such an agreement in place, in the case of a legal dispute, it will be up to a court to decide the outcome.

There is no ‘one size fits all’ shareholders’ agreement. Each agreement must be drafted according to your unique set of circumstances and the outcome the shareholders wish to achieve in relation to shareholder funding or contributions, director appointments, how the company should be managed, dividends and financing, transfers of shares or an exit strategy.

Depending on how much of the company certain shareholders own, for example, the agreement may also stipulate that minority shareholders cannot be forced out of decision-making by majority shareholders.

You can start by downloading a basic shareholders’ agreement template and supplement basic clauses according to your needs by speaking with a legal professional.

A Commercial Lease You Understand

Commercial leases can be complex documents which spell out the rights and responsibilities of both landlord and tenant.

If you don’t understand the lease document, you could end up being liable for costs you didn’t anticipate such as utilities, repairs, taxes and the cost of documentation regarding the lease.

You may also have difficulty renewing the lease. Fighting a lease dispute can be expensive and losing such a dispute could mean that your company loses its space.

Make sure you fully understand the legal implications of your commercial lease agreement before signing.

Have Proper Warehouse Safety Equipment

If your business has warehouse space for storage, it is critical to have proper equipment and procedures in place that comply with Work Health and Safety legislation to protect your staff from preventable injuries.

Loads falling onto forklift operators and other workers account for a high percentage of Australian workplace injuries and fatalities. Forklift safety cages and large goods cages, for example, protect operators and everyone else working in the immediate area from physical injuries and protect your startup from potential workers compensation claims.

Mandatory Sexual Harassment & Bullying Education

No doubt you agree that this behaviour has no place in your workplace, but do your employees understand exactly what is defined as sexual harassment or bullying?

As a business owner, if you don’t dedicate the time and resources to train your employees in appropriate workplace conduct, you could leave yourself open to large fines for breaching workplace health and safety legislation. The resulting financial drain on your startup could quickly put you out of business.

Understand relevant legislation surrounding workplace health and safety, bullying and sexual harassment and have each employee complete the necessary compliance training.

Maintain Detailed Record Keeping

A commitment to detailed record keeping is necessary for many reasons including invoicing and accounts receivable, tax compliance and payroll.

If your company is not large enough to hire a full-time accountant or business manager, record keeping is a task that you can adequately perform yourself by using accounting and online bookkeeping software like Xero. If you don’t have time to maintain your own records, it is worthwhile contacting an accounting firm in your area.

Yes, outsourcing this work is an ongoing overhead expense, however, failure to keep accurate records can lead to serious problems for your business, the consequences of which can doom your startup before it starts.

Compliance With The Privacy Act

Depending on the nature of your business, you may be collecting data about current customers and potential customers.

As a business owner, it is critical that you comply with your obligations under the Australian Privacy Principles to avoid breaching the Privacy Act in the way that you collect, store, use and disclose private information about your customers.

Mishandling or misusing private information can lead to serious fines and penalties.

Conclusion

These are some of the main legal risks faced by Australian startup owners.

Understanding your rights and obligations, and building your business on a rock-solid platform, places you in a strong position to avoid any unforeseen obstacles that may impede your startup success.

What unanticipated difficulties have you encountered on your startup journey? Let us know in the comments below!

Remember, you can change your structure as your business develops but take care when you decide on a particular structure because there are costs and obligations that might affect the choice you make.

Getting your startup’s legal structure right from the beginning is critical as it can impact your expenses, tax consequences, extent of ownership and your overall legal liability. Confused? Let’s go back to basics. In Australia, there are four common legal structures to consider: sole trader, partnership, company and a trust. Each structure has its pros and cons, so let’s go through each one to help you decide which option may be best for you.

Going Solo – Sole Trader Structure

A sole trader is the most common and the simplest legal structure. If you are setting up a low cost small business with limited expected growth, then this may be the structure for you.

Although a sole trader may employ staff, you trade on your own and the business is owned and operated exclusively by you. This means you can make your own decisions, you have no one to answer to and, most importantly, everything belongs to you.

Setting yourself up as a sole trader involves minimal cost, few tax formalities and any assets and profits of the business are included in your personal tax return.

Sole traders are not a separate legal entity so while you reap all profits and benefits, you also personally take on all liabilities and business risks. This means that you personally owe any outstanding amounts to employees, contractors or suppliers. It also means that if someone decides to sue you, legal action is initiated against you personally.

Most importantly, if the business fails it falls solely on you.

Partners In Crime – Partnership Structure

A partnership can be formed when two or more people decide to run a business together with a view to making a profit. It involves an agreement between two or more people to enter a legally binding relationship.

To avoid disputes, a formal partnership agreement should be made setting out, for example, each partner’s responsibilities and share in the profits as well as what is to happen if the partnership is dissolved.

There are different requirements for various types of partnership, depending on which Australian jurisdiction you are setting up your business. In NSW, there are three types of partnership: a normal partnership, a limited partnership and an incorporated limited partnership.

1. A normal partnership is one where all partners are equally responsible and involved in the day-to-day management of the business, and each partner has unlimited liability for both the profits and losses. This type of partnership does not need to be registered under the Partnership Act, but the two other types of partnership must be registered.

2. A limited partnership must be registered through the Australian Business Licence and Information Service (ABLIS),but this type of partnership is more flexible than a normal partnership.

It must consist of at least one general partner, whose liability is unlimited, and at least one limited partner, whose liability is limited to the extent they have invested in the business. A limited partner is more like a passive partner who usually does not contribute to the management of the business. Raising funds in a limited partnership is less complicated. This type of partnership is ideal for a prospective partner who simply wants to invest in the business without being involved in the day to day management and and without accepting liability for the risks associated with general partners.

This type of structure may be suitable for a small to medium business seeking to raise funds in an uncomplicated way without the formalities and requirements of a registered company.

3. An incorporated limited partnership may be the right fit for you if you intend to be engaged in a partnership for venture capital investment purposes. You will need to register as an incorporated limited partnership (ILP).

Partnerships share many of the same advantages as sole traders in their simplicity and inexpensive nature. However, the downside is that a partnership is not a separate legal entity and, consequently, normal partners are jointly responsible for debts and liabilities owed by the business, regardless of who actually incurred the loss.

In Good Company – Company Structure

This structure is better suited to medium to large business enterprises. Unlike a sole trader or partnership structure, a company is a separate legal entity.

A company has the same rights as a person, meaning that it can incur debt, sue and be sued. A company’s owners (shareholders) can limit their personal liability and are generally not liable for company debts.

A company structure is a more expensive and complex legal structure to set up and has higher administrative costs. It must be registered with the Australian Securities and Investments Commission (ASIC) and comply with reporting requirements, including initial establishment, regulatory and compliance costs. Company officers and directors must comply with legal obligations under the Corporations Act 2001.

Tax requirements for a company are very different to sole trader and partnership structures. A company pays income tax on its profits at the company tax rate and there is no tax-free threshold.

It may sound like a lot of work but if you need a flexible legal structure which allows you to grow, attract investors, and limit personal liability for company debts, a company can be the most attractive option.

Ready To Commit – Trust

A trust is an entity that holds property or income for the benefit of others. A trustee can be an individual or a company who is obliged to hold and deal with property and assets (business assets) for the benefit of beneficiaries. These can be business partners or family members, for example.

A trust can be expensive to establish and maintain. You will need to create a formal trust deed that sets out the terms of the trust and how the trust is to operate.  There are annual administrative tasks that must be undertaken and, if you operate your business as a trust, the trustee is responsible for its operations. A trust does not need to be registered with ASIC.

Some asset protection is available to the trust if the trustee is a company.

Final Remarks:

• Know your business – Consider how much control you want to have, the future growth of your business, the possibility of needing investors and employees, the amount of risk involved and any assets you may want to protect.
• Uncertain about the future? – Don’t fret. You can change your legal structure throughout the life of your business. As your business grows or changes, you can change its structure.
• Don’t be afraid to ask for help – Setting up a business can be a very complex and confusing process, especially if you decide to set up a company or a trust. Consulting with a professional lawyer or accountant gives you peace of mind knowing that your new venture has been set up correctly from the outset.

Further Information

For more information on starting your own business and choosing the right legal structure for your startup visit:

• Business.gov.au
• Australian Securities and Investments Commission (ASIC)
• Fair Trading (NSW)
• Australian Tax Office

To get in touch with a legal professional specialising in startup law, contact:

• General Standards

While previous generations have prided themselves on maintaining job security, a stable income and working up to executive-level positions, unlike any generation before them, Millennials place a high value on independence.

We are wary of working in stagnant jobs with little variety or flexibility. After, perhaps, observing family and friends toiling in unfulfilling roles in a fluorescent-lit cubicle (nb: no one looks good in fluorescent light), we want to innovate by breaking the traditional career mould.

We crave the occupational freedom to create something meaningful and unique. In a recent study of Millennials in the workplace undertaken by Bentley University, 67% of surveyed participants described their career goals as starting their own business.

One of the most important criteria for establishing a successful business is to set it up the right way, in accordance with relevant legislation in your state or territory.

Say you have an amazing business idea to open your own boutique cafe! You have found excellent premises to open up shop and all that stands in the way of your thriving new venture is your landlord, and negotiating a favourable commercial lease for the premises.

The following tips will help you prepare for your meeting with your new landlord or leasing agent and put you in a position to confidently negotiate your new lease.

1. Rent

Do your homework. What are the rental costs like in the area of the premises you wish to rent?

It is handy to work on a costs per square metre basis.

Keep in mind that GST will usually be payable on top of rent.

2. Rent Review

A Rent Review is either of the following options (or sometimes a combination of them):

• Consumer Price Index Increase – CPI reviews are usually carried out once per year;
• Fixed percentage increase (for example, 4% each year); or
• Market review – ensures the rent you pay is consistent with current market rates. Market rent reviews are based on the rent paid by tenants in similar properties in the surrounding area and influenced by demand for similar properties. These reviews can be carried out by your landlord, a property valuer or estate agent.

From the perspective of your landlord, the rent review is an integral element of your commercial lease. It means that your rent will be reviewed at specified intervals and makes sure that your rent aligns with current market rates.

Make sure you aren’t paying too much. Over the course of a five-year lease, fixed price increases of 5% a year can see your rent increase 25% over the term of your lease.

3. Term Of The Lease

The length of your lease agreement is something you will need to negotiate with your new landlord. You may wish to sign a long-term lease to secure your premises, however, there are advantages and disadvantages with this approach.

One of the main benefits of a long-term lease is that it provides you with security, the ability to build up your business and to make it a saleable asset.

A potential disadvantage is that if the term of your lease is too long, and you expand your business, you may outgrow your premises.

Write a business plan so that you are confident of where you want your business to be in 5 years time. Is the current location temporary until you can find the capital to expand? Or do you have plans to develop the business operations from the same location?

By asking yourself these simple questions you can be sure that the length of your commercial lease is right for your circumstances.

4. Will You Need To Fit-Out The Premises?

Do you need to provide the necessary equipment to run your business from the premises, such as final decorations or fittings? If so, what is it likely to cost?

Sometimes your landlord will either pay for the fit-out or provide a combination of a lease incentive payment and/or rent-free period to assist with the costs of your fit-out. The most common lease incentive is a contribution by a landlord to whole or part of a tenant’s cost of fitting out of the premises or the provision of a rent-free holiday or a rent discount period.

Make sure you consider these hidden costs and ask your landlord for a lease incentive payment and rent-free period.

5. Permitted Use Of The Premises

When negotiating your lease agreement you should be aware of your proposed use of the premises.

Negotiate your permitted use to be as broad as possible to account for the fact that in the future your business may diversify, or you may want to sublease some of your space.

Without a broad permitted use of your premises, this may not be possible unless the lease is varied.

6. Assignment And Subletting

It is important to ensure that your lease allows you to sell your business and assign the lease. Assigning your lease means that all rights you have over your premises may be transferred to another party. This will be important if your business expands or you wish to move premises for other reasons.

You should also make sure that your lease allows you to sublease part of your premises. Subletting allows you to lease all or part or your premises to a third party, rather than your landlord, during a period of the unexpired balance of your term of occupancy in the premises.

Most landlords will allow this, subject to several conditions.

7. What Are The Outgoings/Operating Expenses?

The reference to ‘outgoings’ in a commercial lease usually refers to increases in taxes and rates that may include the running of the physical building where your premises are located. Generally you will not be responsible for paying outgoings, unless this is specified in the lease agreement.

If your landlord is passing on the outgoings (or operating costs) to you, and is charging separately for these services, negotiate a fixed-fee or cap on the amount.

Also, make sure your landlord is transparent and discloses these expenses to you before you enter into the lease.

8. Alterations Or Improvements

Most leases state that a tenant cannot make any changes or improvements to the premises without your landlord’s approval.

While sometimes a landlord’s approval is a formality, the approval is still conditional and subject to your acceptance that:

• all work is undertaken by a licensed and approved contractor
• you must extend your own insurance to cover all improvements
• you agree to make restitution for any damage incurred when removing the improvements (if mutually agreed – to restore the property to its previous condition).

What happens with the improvements at the end of your tenancy should be clearly documented and understood by you and your landlord.

Ask for a clause that gives you permission to complete particular work, for example, if you require a fit-out of the premises with your landlord’s consent.

9. Make Good And Refurbishment

A make good clause is common for commercial lease agreements. It requires you to make sure that the premises are returned to your landlord in the condition you found them.

Some leases only say that you must return the premises in the condition they were in at the start of the lease. Other leases can be onerous and impose redecoration obligations that extend to re-painting and re-carpeting premises.

Make good clauses can have some hidden lurks, so it is important to carefully check the terms of your lease agreement and raise anything you are concerned about with your landlord prior to signing.

10. Costs

When negotiating your lease agreement, make it clear who will pay the lease preparation costs.

Ideally, each party should bear their own costs. In the case of a retail lease, Retail Lease Legislation in each state and territory prohibits your landlord from passing on these costs to you.

There is no such restriction in commercial leases, and all prospective tenants should be aware of this.

Conclusion

Like most things in life, starting your own business is not hard when you know how.

Branching out on your own entrepreneurial venture is less daunting when you understand how to avoid potentially costly pitfalls and where to find professional help.

Renting a commercial property is a business transaction, and you should make the decision to enter a commercial lease agreement carefully and with professional assistance. The cost of your business lease is likely to be one of the biggest overheads you have.

Have you started, or dream of starting, your own business? Tell us about your startup experiences in the comments section below!

Further Information

To get in touch with a legal professional specialising in commercial leases visit:

• LegalVision; or
• Ph: 1300 544 755

When many young entrepreneurs and start-ups turn their minds to business assets, matters such as finances, office accommodation, computers, equipment and staff are among the first things that come to mind.

But protecting your business assets, and the profits that flow from them, also encompasses intellectual property (IP).

Australia’s framework of IP laws are designed to protect everyone – whether you are an entrepreneur, small business owner, designer, artist or inventor – with exclusive rights to use and control your intellectual or creative work.

What Area Of Intellectual Property (IP) Law Protects You?

The first step is to work out what kind of IP you actually own. IP is not registered or protected as a physical ‘thing’, but rather as a set of rights over how certain things such as sounds, images, words or creative works are used.

IP is the umbrella term for ‘property’ that you have developed and devised through your intellect. Nevertheless, not all IP is the same, and not all creations will attract IP protection under the law. Some forms of IP require formal registration through a government body to be protected by the law; while other forms are automatic.

Ideas are not IP and cannot be protected as IP. To protect a form of IP, it must have an aspect of physicality or be in some tangible form.

1. Patents

Patents are devices, substances, processes or methods that are useful, new and inventive.

Quite often, patents are referred to as ‘inventions’. To successfully claim protection and ownership of a patent, patents must have formal registration.

To satisfy the ‘new’ component of a patent, it is very important that you keep your invention somewhat secret. Do not share your invention with the world before it has patent protection.

Patents grant their owners a state-granted monopoly of the commercialisation of the invention, but they do have a maximum life span for you to exploit them as your exclusive property. The number of years you have this monopoly over the invention will depend on the type of patent you obtain.

2. Designs

A registered design covers the look or appearance of a product that is new and distinctive.

It does not, however, cover how something works, i.e. its purpose or function. These aspects are likely to come under the heading of patents.

To achieve the greatest degree of protection under the law, and to ensure your designs are not copied, you will need to have certification of your registered design. Again, as a design must be new, you will need to look into filing any applications prior to publicly disclosing your designs. The maximum lifespan for a design is 10 years, during which time you have exclusive ownership to exploit the design.

3. Trade Marks

As an entrepreneur or business owner, do you use any signs or symbols to distinguish your goods and services from the goods and services of other traders?

A trade mark can be your brand name, logo, slogan, or even more abstract things like sounds, smells and colours.

Formal registration is required for the owner of a trade mark to claim protection and ownership. While patents and designs must be new, trade marks do not have this same requirement, which means applications can be made after publicly disclosing your trade marks. Trade marks, in Australia, can be renewed in 10 year blocks indefinitely.

4. Plant Breeders Rights

If you are able to successfully breed new and distinctive plant varieties, you may be entitled to register IP rights over this breed.

Like trade marks, these rights are not granted automatically. Since the plant variety needs to be new to satisfy the registration requirements, it is important to seek advice to assess your legal position before publicly disclosing your plant breed. If you disclose your discovery too early, the opportunity to gain exclusive ownership may be lost entirely.

5. Copyright

In Australia, copyright protection is an automatic form of IP protection. This means that you do not need to submit any painstaking applications, or pay any government fees.

Copyright protection covers ‘works’ that are creative and original, including literary works, broadcasting works, dramatic works, and works of craftsmanship, to name a few. In other words, if you created or authored the work, then you own the copyright in that work.

If you have outsourced any sort of work, it is important to check that your contractor’s contract stipulates that ownership of copyright in works created in the course of their employment is assigned (transferred) back to you. Failure to check this will mean that, by default, the contractor will own the copyright they create.

Copyright protection lasts for the life of the creator, plus 70 years. In cases where the duration depends on the year of publication of the work, it lasts until 70 years after it was first published.

6. Circuit Layouts

Circuit layouts are automatic rights granted to original layout designs of integrated circuits and computer chips.

Although these laws are based on the laws of copyright, circuit layouts are a distinct form of IP that is protectable in its own right. From the first commercial exploitation of a circuit layout, the owner will have 10 years of exclusive ownership rights.

To be valid, however, the first commercial exploit must take place within 10 years of the date of creation of the circuit layout. This means that the lifespan is, in some cases, more like 20 years.

Important Takeaways

• The subject matter of Designs, Patents and Plant Breeders Rights all must be new. As such, any sale, promotion or public disclosure of your patent, design or plant may forfeit your ability to seek protection. Get legal advice before you share your intellectual property with anyone, and, if disclosure is inescapable, make sure that the other party signs a confidentiality agreement.

• In general, intellectual property rights apply in all states of the country in which you are granted rights. As such, when looking to commercialise your IP in other international jurisdictions, it will be important to look into the filing and registration requirements of those countries.  In certain cases, particularly with Designs and Patents, there are limitations on how much time you have to apply for registration overseas.

Conclusion

To be a successful young entrepreneur or start-up it is critical to understand, and be proactive, in safeguarding your rights and interests.

Obtaining IP protection and registration can be a complex and confusing process. Any mistakes made during the application stages can leave you unprotected, with an invalid protection and/or the need to redo the application, which may lead to further expenses.

The best approach is to seek advice from a legal professional who specialises in IP law early, and especially when lodging your applications and registrations. This way you can rest assured that your IP interests are water tight.

Further Information

For efficient, high-quality and cost-effective advice visit:

• LegalVision website; or
• Ph: 1300 544 755

LegalVision business lawyers primarily work online, meaning you can receive a response to your legal question quickly (often within 48 hours).