Key Legal Considerations for Businesses Approaching Summer

For many companies, June marks the beginning of the busy summer season, and theoretical budgetary considerations that one might have had when budgeting earlier in the year start to clash with the “facts on the ground”- challenges and opportunities unforeseen during the planning stages.

Getting the legal side of the business right (and making sure it stays right) not only protects your business but also empowers you to respond agilely to both good and bad circumstances.

In this blog post, we outline some (but not all) key areas that businesses should examine now and review regularly so that they are ready to use when the time comes.

Your contracts

Once you have a contract in place, it is easy to say that the contract is done and dusted and not look at it until something goes wrong. However, business deals and relationships are ever-changing, and the context or requirements of a deal can change significantly over a year.

For this (amongst other) reasons, it is always good practice to periodically review your supplier and customer contracts. You should consider the following:

• Do your contracts reflect the relationship you have with your customer/supplier? If they don’t, you need to take steps to update the contract so that you aren’t tied into an agreement that is not commercially suitable.
• How long is left on your contract? Is it still in force and valid? If the contract has expired but you continue to provide or receive services and goods, there could be a grey area about what terms apply to the ongoing relationship or what (if any) new term has been agreed upon. The uncertainty and ambiguity can result in increased costs and time spent debating the terms of the agreement if the relationship breaks down.
• Have there been any recent changes to the law? Where laws change, you might need to change your terms to make sure you are complying with relevant statute, or if a certain statute increases the risks to your company, you might want to increase protection to your company in your terms.

Your Business

As your business grows, you may bring more directors and shareholders into the fold. Ensuring everyone knows their role and obligations to the company is important. You should also regularly check that your business documents are updated with any changes being made. For example:

• Do your articles of association still work for your company? It is common for companies to adopt model articles when they first incorporate their company, as these require no amendments or drafting. However, model articles are not always suitable for all companies, and they should be regularly reviewed to make sure that they reflect the needs of the company.    

• Have you got a shareholders agreement in place? Your company’s articles may set out some shareholder rights.  However, it is best practice to have a written agreement to regulate the relationship between shareholders. Such an agreement might deal with what happens if the shareholders fall out, a shareholder dies, when dividends are declared and any restrictions on the shareholders, amongst other important issues. Existing shareholders’ agreements should be reviewed regularly to ensure that the shareholders comply with their obligations, that the terms of the agreement still apply to the shareholders, and making sure that all shareholders are signed up to the terms.

Your assets: Intellectual Property

Your intellectual property (IP) is a commercial asset, even more so for those businesses operating in creative industries. Being able to exploit your IP can help to protect your business and generate revenue.

• Should you get a trade mark? If you do not already have a trade mark, this is definitely worth exploring. Having a trade mark in place gives you the right to use that mark exclusively for the goods/services it is registered for and the right to stop others from using that mark or others which are confusingly similar to it. Going through the trade mark application process sometimes also serves to highlight issues with the business name you have chosen; however, if you are unsure as to the name you have chosen – and in particular are uncertain as to whether others already use it, then undertaking some pre-filing searches in the jurisdictions you wish to operate in will be prudent.
• You have a trade mark, what now? Once you have your trade mark registration, you should be actively using your chosen mark. From time to time, you might notice other companies using a similar mark to yours, in which case your trade mark may allow you to ask them to stop using their mark. In addition, you may receive notices from Intellectual Property Offices where you have filed your trade marks notifying you that another company or person is looking to register a trade mark that is similar to your own. You can pro-actively supplement these occasional notices with a trade mark-watching service. This service lets you know what other companies in your field are filing – usually in time to object.

Defending your trade mark is important – even if you believe a trade mark does not look similar, or that there is not enough of an overlap to warrant any action at this stage, there are potential risks to allowing similar registrations to go through, including the dilution of your own brand or deemed acceptance of a registration, which might prevent you from taking action in the future.

• How do you make the most of your IP? IP can be sold and licenced out to other companies to use in exchange for payment (sometimes called royalties). Examples of this include artists agreeing for a piece of artwork to feature on a T-shirt, a game developer entering a publishing agreement to allow a larger company to market and launch its game or transferring a patent to another company as part of an asset sale. Ensuring that the terms of the sale or licence reflect what you have agreed is important to make sure that your IP is protected and your brand is not negatively affected.

At Birkett Long, our business solicitors and patent and trade mark attorneys can advise you on a range of topics. If you would like further information, I can be contacted on 0330 818 3168 or via chloe.vertigen@birkettlong.co.uk