It is such an exciting experience to start your own business. It is a huge step and there is so much involved. It is common to be completely focused on implementing your ideas to start making money. But there are also legal matters to consider. Here are our top tips to help you on your way.
1. Are You Restricted by a Current Employment Contract?
If you intend to start a new business while still being an employee, it is important to identify whether your contract includes a “Restraint of Trade” Clause. These clauses can restrict you from engaging in other work, starting your own business in the same industry for a period of time, within a certain radius of your employer or both.
Understanding what you can do as a current employee and what you can do after you cease employment is essential because breaching a restraint of trade clause could allow your employer to take legal action.
2. Confidentiality and Conflicts of Interest
Employment contracts may include a clause restricting you from acting in a manner that is in conflict with your employer’s interests. If you wish to remain employed while starting up your own business it is important that you understand what external activities you are permitted to engage in.
Similarly, it is important to comply with your employer’s confidentiality requirements.
Some questions to ask yourself are:
• Is the information publicly available?
• Is the information contained in documents marked confidential or for internal use only?
• If you use it, will it harm your employer?
Breaches of these clauses may result in your employment may be terminated and potentially being sued for damages by your employer.
3. Does Your Employer Actually Own Any IP?
You should also consider whether your employer owns any intellectual property that you wish to use. While something may have been your idea or creation, if you had that idea in the course of your employment, your employer may actually own it. This can occur regardless of whether your employer has implemented, created or used it.
4. Research Whether Anyone Has A Registered Trademark or Patent
It’s also important to consider whether anyone else holds intellectual property rights over any intellectual property that you intend to use. Even if the owner has not used or developed the intellectual property there are restrictions on using a registered property that is subject to a registered trademark or patent.
5. Be Mindful of Copyright
Copyright is another form of protecting intellectual property. If you wish to protect material that you create, you can do so by using the © symbol with your name and the year the material is produced. Copyright is free and applies automatically when material is created. Copyrighted material can be used without reference or permission if certain requirements are met, however the test is not a simple one.
6. Registering a Trademark
Protecting your brand is important. You should consider registering your trademark quickly as the process can take several months! Trademarks can be registered over words or phrases, font and logos and extends to the industry and associated industry in which a business operates.
7. Similar Names Restrictions Apply
If you find an available business or company name that is already registered they can be reserved until you decide upon your structure.
Choosing a name that is a true reflection of your business can be tricky at best, let alone if you don’t check whether it is already taken! The name you operate under (if it’s not your own name) must be registered through a company or as a business name with the Australian Securities and Investments Commission (ASIC). Once a name is taken, it cannot be used again and there are restrictions on using similar names.
You can undertake searches of available names for free and it is possible to reserve an available name for future use, while you undertake the rest of your inquiries.
If you require any information about getting your business idea off the ground we recommend speaking to a commercial lawyer. To book a Quick Match or request a quote from Fiona McCord please follow the links on the Legally Yours website.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.