Commercial Law

Why use an IP License Deed?

Any forms of intellectual property (IP), whether they be trade marks, copyright or others, can be licensed for use by third parties. It is effectively renting them out, like an asset hire arrangement for physical assets. So why use an IP License Deed?

A licensing arrangement is advantageous to the holder of the IP as royalties, licensing fees or other forms of payment can generate revenue for the benefit of the holder of the IP, in addition to confirming that the IP remains held by the holder even though it may be used by the licensee.

Another common reason for the use of an IP License Deed is to aid in asset protection, such as where one entity may hold assets (such as IP) and another entity may trade (and hence incur liabilities and hold risk). The licensing arrangement means that the “at risk” entity that is using the IP can do so without putting the IP itself at risk. If the trading entity finds itself in financial difficulty or ends up in external administration or liquidation, then the license can be terminated and the IP returns to the control of the asset holding entity.

Licenses do not have to be written, but it is strongly recommended as it can prevent arguments and uncertainty.

License Agreements can cover things including:

  • term and territory
  • whether the use is exclusive or not
  • obligations when using the IP (eg, not to adversely affect the IP)
  • matters that result in termination
  • obligations on termination (such as return of all forms of IP and stop all further use)

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Companies signing contracts

In prior blogposts, we explained the differences between Deeds and Agreements and what Deed Polls are and we also explained how to properly execute a legal document depending on the type of entity entering into it.

This article relates to execution by or on behalf of an Australian corporation – a Pty Ltd (but not a public company) – that is, what are the requirements for companies signing contracts?

Part 2B of the Corporations Act 2001 (Cth) (Corporations Act) sets out how companies can execute legal document and the assumptions those dealing with companies may make about the execution of documents by or on behalf of a company.

Section 127 describes the ways in which a document may be executed by a company, namely by:

  • 2 directors; or
  • a director and a company secretary; or
  • for a company that has a sole director – that director, if:
    • the director is also the sole company secretary; or
    •  the company does not have a company secretary.

This applies regardless of any other requirements in the company’s constitution.

Companies can also sign via an employee, officer or an agent under s.126 acting with the company’s express or implied authority.

If a company executes a document in accordance with the those sections, then any person dealing with that company is entitled to assume under ss.128 & 129 that:

  • those persons shown as directors/company secretaries on ASIC’s register; and
  • anyone held out by the company as being an officer or agent of the company
  • are:
    • validly appointed;
    • have the authority to exercise the powers of the company; and
    • are properly performing their duties

This assumption applies even if an officer or agent of the company acts fraudulently or forges a document but not if that person knew or suspected that the assumption was incorrect.

Business should be wary of the authority of persons signing and query the person’s authority if they aren’t listed at ASIC formally as a director or company secretary.

Many businesses give higher level employees titles like “Director”,Sales Director” and the like so, often so as to minimize pay rises or for other reasons, but they run the risk that those persons can bind the company due to the statutory assumptions identified above as they are potentially being held out by their titles as having authority to bind the company.

Separately, those employees also run the risk that they are considered ‘shadow directors‘ if the company runs into financial trouble, particularly where any director duties haven’t been followed.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is copyright?

There are various types of intellectual property (the general name given to the laws covering trade marks, patents, designs, circuit layouts, plant breeder’s rights and copyright), but the simplest (at least in terms of how and when it is created at least) is copyright.

What is copyright?

Copyright exists in a ‘work’ as soon as that work is created.

People spend time, money and talent in creating ‘original’ works and their efforts are protected by copyright.

Works include:

  • literary works - texts, books, poems, screenplays, song lyrics, letters, computer programs etc
  • artistic works - drawings, paintings, maps, plans, sculptures, photographs etc
  • dramatic works - plays, screenplays and choreography etc
  • musical works – musical scores (but not the recording of the music itself)

Protection is also given to ‘subject matter other than works‘, being sound recordings/broadcasts, films/movies, published editions of works etc.

Unlike a patent for example, copyright does not protect ideas or information as such but only the original expression of ideas or information. If it is not original, there is no copyright.

Two people could independently come up with a similar work at the same time. Both would hold copyright on their own works.

Copyright is free and automatic in Australia – there is no need (and indeed no place in which) to register it.

What rights does copyright give?

The Copyright Act 1968 (Cth) and the Regulations made under that Act set out the law in Australia regarding copyright.

Copyright protects the original expression of ideas or information – the work itself. The owner of the copyright owns copyright in the text in a book even though the owner of (an authorised) physical copy of a book owns the physical book itself.

Copyright entitles the holder the exclusive right to publish, reproduce (copy) and otherwise use that work (and to make money from doing so). Using a substantial part of a work without the copyright holder’s permission is an infringement upon that right and the holder can commence a legal action for an injunction to restrain such use, damages or accounting for any profits made from such use etc.

There are exceptions to copyright including ‘personal use’ and use (known as fair dealing) including:

  • research or study
  • reporting of news
  • giving of professional advice
  • satire/parody

as well as certain ‘special purposes‘ such as making accessible format copies for persons with disabilities, for educational instruction etc

Overseas copyright is enforced in Australia and reciprocal arrangements exist overseas to protect Australian copyright abroad due to various international conventions. There are treaties in place in some countries only however.

How long does copyright last?

Copyright generally lasts for as long as the person that owns it is alive, plus 70 years (but some shorter timeframes apply to certain works).

Once copyright ends, the work is said to be in the ‘public domain’ – and can be used by anyone.

How to help enforce copyright in a work

If your work is written or able to be viewed such as online or on a screen, you can use the copyright symbol © or (c) on the work, with the author’s name and the date it was created. This symbol serves as notice to the world that you assert copyright in that work and from when.

Using the © symbol is not a requirement to establish or assert copyright however, just a good practice.

Songwriters can register their works through licensing agencies, so fees can be collected and paid for using their songs.

Contractual arrangements regarding copyright and its use can also impose rights and obligations on the parties to it. Copyright can be assigned, licensed or even borrowed against.

Titles, business names and slogans are not protected by copyright (as they are usually too small/unoriginal to be protected by copyright), but they can in some cased be protected by trade mark.

What are moral rights?

Moral rights are the right of integrity of authorship, the right of attribution of authorship and the right against false attribution of authorship. They are non-economic rights that are personal to the creator of a work, so if a work is commissioned by a business, the business would require the person creating the work (and getting paid for it, whether as an employee or a contractor) to assign their moral rights or permanently consent to alterations to it that may otherwise infringe them.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is a trade mark?

Trade marks are a form of intellectual property right. A  trade mark can be used to protect a business name, tag line/phrase or word  (a word mark) and/or logo (a figurative mark), but less commonly, it can also be used to protect a letter, colour, sound, scent, picture, movement, aspect of packaging or any combination of these.

Protecting a brand can add to its value as an asset so it is a very important business consideration, particularly if you ever intend to sell your business in the future.

Why have a trade mark?

A registered trade mark provides the holder the exclusive right to use that trade mark in Australia in respect of specified goods and/or services. This means that the holder of such an intellectual property can legally prevent others from using the trade mark for similar goods and services.

The holder of a trade mark can sell the mark to a third party or allow others to use that mark, for example for a fee, such as through a licensing arrangement. Often a franchise agreement also includes a license to use the trade mark of the franchised business.

Many business owners mistakenly believe that registering a business name or domain name gives them some sort of ownership of that name - this is not the case.

What requirements are there to register a trade mark?

The Trade Marks Act 1995 (Cth) and the Regulations under that Act govern trade marks in Australia.

In order to be registered, a trade mark must be able to distinguish the goods and services of the holder from other traders. It can’t be an everyday word or phrase, a geographical name or be descriptive of the goods or services (as other traders may need to use those words to describe their wares). Further, some signs and names are prohibited from registration.

When seeking registration, certain categories of goods and/or services must be chosen. The protection of the trademark is only in that category (or categories) chosen and only for the types of goods/services described in the application.

A trademark lasts for 10 years but can be renewed for successive periods.

How to help protect your trade mark

Having a registered trade mark gives the owner the right to place the ® symbol next to the trade mark so as to let others know it is registered and to help deter them from using it (without permission).

When a trade mark is not yet registered but an application is pending, the TM symbol can be applied to the mark. There is no requirement to use the ® or TM symbols however. use of the ® symbol in connection with a mark that is unregistered in Australia is an offence under the Act.

Trade marks must be used as registered. Failing to use a trade mark can render it liable to being removed from the register for non-use.

Registration of a logo that includes a trading name does not necessarily protect the trading name, just the logo. This is why the name often needs to be separately registered. Care needs to be taken to consider what is to be registered and how it will be used. Separate registrations are often advised for a name and for a logo.

If you have a trade mark and become aware of someone infringing it (such as by using a very similar name or logo without your consent or indicating they have some association with your business or products when they do not), you should get advice from a lawyer on sending an appropriately worded cease and desist letter asking them to stop using it.

What if your trade mark isn’t registered?

Registration of a trade mark is not essential. Unregistered trade marks can possibly be protected under the common law, such as through the tort of ‘passing off‘ and claiming misrepresentation such as under the Australian Consumer Law however, registration if recommended.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is a Deed Poll?

In a previous article, we explained the difference between Deeds and Agreements however, there is a special type of Deed that does not require more than one party to sign it to make it legally binding (although it can also be made by more than one party, jointly).

That document is the Deed Poll. As soon as it is signed by the party that executes it, it becomes immediately operative and binding.

Deed Polls are solemn declarations, so they are commonly witnessed by lawyers, Justices of the Peace and notaries (but they requirements as to who can be witnesses and whether you need one can differ between States and Territories).

Deed Polls are used for various purposes such as:

  • part of the process of changing your name or gender
  • affirming your identity (such as where you may use more than one name)
  • declaring:
    • a promise to do not not to do something (including keeping information confidential)
    • the validity of a document or right
    • a fact or intention
  • releasing rights

The unilateral obligation/s created by a Deed Poll can be enforced by any person with whom the covenant in the document was made as against the party making it, so they ought not to be entered into lightly.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Leasing business premises from a SMSF

Many business owners own the commercial or industrial premises that they use to operate their business from.  Often that property is owned by a Self-Managed Superannuation Fund (SMSF).

Leasing business premises from a SMSF is becoming commonplace. SMSFs can be a tax-effective way to create wealth and provide for your retirement, in addition to providing some asset protection benefits however, they come with a requirement to comply with the Superannuation Investments (Supervision) Act 1993 (Cth) (SIS Act) and its Regulations.

Additional obligations apply when the SMSF is using a limited recourse borrowing arrangement and bare trust when borrowing to acquire the premises and consideration ought to be given to who the members of the fund are and what happens if they were to pass away.

One of the leasing obligations on SMSF trustees in the SIS Act is that there be a written Lease in place. Not only does there need to be a Lease in place, but it must be at ‘arms length‘ and on commercial terms.  This effectively means that it must have all of the usual or typical terms that would be expected to be in place if the property was being rented to a third party, for example with market rent being required to be paid in full and on time, with no discounts.

Practically, there are other benefits of having a proper Lease in place and one of them is that on the sale of the business, the Lease can be assigned to the purchaser so that the SMSF continues to get the benefit of the Lease and its protections after you cease to run the business. It also can assist your SMSF to maintain the value of the premises as any purchaser of the land is bound by it, so having a good yield is important.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is independent legal advice?

If you are:

  • borrowing money from a bank or someone else, like a parent,
  • have some special vulnerability in relation to a borrowing arrangement (such as due to age, inability to speak English well etc),
  • borrowing in relation to a self managed superannuation fund’s limited recourse borrowing arrangement, or
  • perhaps going guarantor on a loan for a company or a family member for their loan,

then chances are you will be asked to get “independent legal advice” from a solicitor in relation to the loan and the security for the borrowing or guarantee.

The document evidencing the loan is usually a:

  • Loan Agreement,
  • Letter of Offer or similar

and may have accompanying terms and conditions etc.

Security for a loan arrangement usually takes the form of a:

  • Mortgage,
  • Caveat or
  • Security Interest registered on the PPSR.

Independent advice us usually required by the lender so that it cannot (easily) be argued later that the borrower or guarantor didn’t understand the gravity of the arrangements being put in place – so although you get the advice, it is really for the lender’s protection.

In order to give independent legal advice, the lawyer will read the loan and security documents provided, advise you as to the meaning and effect of them and discuss any risks.

You will then be required to sign a document called a Declaration under oath confirming that you obtained independent legal advice before you freely and voluntarily signed the loan/guarantee/security documents.

Often the lender will also require the borrower or guarantor to obtain “independent financial advice” from a financial advisor, accountant or other appropriately qualified person. Lawyers, simply by virtue of their profession, possess no special skill to give financial (as distinct from legal) advice.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Severing a joint tenancy

If you own real property with others, then it is either held as “joint tenants” or as “tenants in common“. For more information on the difference between both, please click here.

Assuming land is held jointly, on your death it will pass to the surviving joint tenant/s regardless of what you state in your Will. This is known as the “right of survivorship” and it operates because each joint owner of the property owns the whole of the land at the same time as the others, so the deceased owner simply drops off the title leaving the remaining joint tenants on title. This isn’t automatic as the land registry needs to have the details of the death to update the register, but it is a relatively simple process.

Joint tenancy may be a suitable scenario for a husband and wife where the survivor expects to retain the house however, generally joint tenancy is not suitable for investments as the investors would want their family or beneficiaries to inherit their interest in the property on their death, rather then their co-owners on title. From an estate planning perspective, tenants in common would generally be more sensible in this situation.

Property is sometimes incorrectly held as joint tenants because, for example:

  • people inherit property from their parents jointly with siblings, but they intend for their own children to inherit it on their deaths, rather than it staying with their surviving siblings;
  • sometimes purchasers just don’t understand the difference or don’t take advice at the time of acquiring a property (or the advice they got was wrong); or
  • they have divorced or separated and not taken any steps to separate their assets, update their property interests or estate planning arrangements

however, this is not a massive problem provided that they identify the issue and seek to rectify it without delay;

You can sever a joint tenancy. Severing a joint tenancy changes the nature of ownership so you and your co-owners own the land as tenants in common, which allows you to leave your share of the property to anyone in your Will (or if you don’t have a Will, under the laws of intestacy).

NSW Land Registry Services allows joint tenancies to be severed (converted to tenants in common) either unilaterally or with the consent of the other joint owners.

No stamp duty is payable in such a severance.

FURTHER INFORMATION

For further information in relation, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is bankruptcy?

Bankruptcy is a legal process where you’re declared unable to pay your debts and released from most debts (but not child support, court imposed fines, HECS and HELP debts etc) so you can make a fresh start financially.

You can either enter into bankruptcy:

  1. voluntarily; or
  2. on petition to Court by a creditor after not complying with a Bankruptcy Notice.

An order declaring someone as a “bankrupt” is known as a sequestration order.

Bankruptcy normally lasts for 3 years (and one day) provided you comply with your obligations. If you don’t, it can be extended several years.

Once a bankrupt, your Trustee has ownership and control over your assets (with exceptions such as some household items, a car up to a certain value, tools to earn an income, superannuation etc).

The trustee can be the Official Trustee (from the Australian Financial Security Agency, AFSA) or a registered (private) trustee. The trustee is either appointed by the Court or in the case of voluntary bankruptcy, by AFSA or you can nominate one of your choice.

When you are bankrupt:

  • you must provide details of your debts, income and assets to your trustee
  • your trustee notifies your creditors that you’re bankrupt – this prevents most creditors from contacting you about your debt
  • your trustee can sell certain assets to help pay your debts
  • it can affect your ability to be a company director
  • you may need to make compulsory payments if your income exceeds a set amount (currently around $64,000)

Bankruptcy may have a serious impact on you. It may affect your ability to get credit, travel overseas or gain some types of employment so you should get some advice before voluntarily bankrupting yourself. The National Debt Helpline provides free support on 1800 007 007.

Bankruptcy is just one formal option available under the Bankruptcy Act to manage your debt. Other formal options include temporary debt protection for 21 days reprieve from creditors enforcing a judgment against you, a debt agreement  or a personal insolvency agreement (both being arrangements to settle debts without becoming bankrupt).

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is redundancy?

If an employer no longer needs a role to be performed or doesn’t need the same number of employees to perform certain tasks, then an employee’s position can be made “redundant”.

Reasons for redundancy can include:

  • the job the employee is doing is being replaced by new technology/machinery
  • outsourcing tasks to contractors
  • an slow down affecting the business
  • a restructure or reorganization of the business or a merger or takeover taking place
  • the business stopping trading

Redundancy may or may not however, result in an obligation on the employer to pay the affected employee ‘redundancy pay’ (sometimes called ‘severance pay’). This, and the amount, depends on:

  • the length of employment
  • the employer’s size
  • whether the employee can be redeployed
  • the terms of the:
    • employee’s employment contract
    • any applicable Award or Enterprise Agreement; and
    • the Fair Work Act / National Employment Standards (NES).

An employee must have been employed for 12 months or more for redundancy pay to even be considered.

If the employer employs less than 15 (full time or full time equivalent, not casual) employees at the time of dismissal, then there is no entitlement for redundancy pay, unless your Award, Contract or Enterprise Agreement provides for it.

If there is no other position the employee could be redeployed into or if an offer to do so is not accepted, the amount of redundancy pay can be reduced, or even removed.

Redundancy pay is based on ordinary rates of pay (so it doesn’t include bonuses, commission, overtime, loadings, allowances etc).

If redundancy pay is payable, then the table in the NES applies.

Often there is a requirement for employee consultation regarding major workplace changes that could result in dismissal.

If a redundancy is not “genuine”, then issues of potential unfair dismissal can arise. If an employee is made redundant but, for example, someone else is hired at the time or soon thereafter to perform their duties, then the redundancy is not genuine.

Even if no redundancy pay is payable, notice (or payment in lieu thereof) is still required as the employment is being terminated (in addition to payment for all accrued employee entitlements).

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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