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When you sell goods or services to customers, your sales terms and conditions are an essential document to draft. This fact is true whether you solely operate as an online business or from a physical store. Your sales terms and conditions set out the contractual relationship between you and your customers when they make a purchase. Therefore, you should craft it appropriately to ensure it adequately protects your business and its interests. Notably, one aspect that you need to cover is your business’ intellectual property (IP) matters. Your sales terms and conditions set out your IP rights and how customers should honour those rights. Therefore, this article will provide five IP tips for your New Zealand sales terms and conditions.

1. Seek Legal Advice

If you are a new business or startup, you should seek legal advice in some format when drafting your sales terms and conditions. This document is important for:

  • setting out your business’ rights and obligations;
  • informing your customers of their rights and obligations;
  • limiting your legal liability; and
  • protecting your business.

If you do not have experience drafting legal documents of this nature, you may miss crucial points in your terms and conditions that could cause issues in the future. This fact is especially valid for IP concerns, which can be complex and challenging. 

Therefore, to adequately protect your business, seek legal advice when reviewing or writing your sales terms and conditions. Additionally, draw particular attention to your IP clauses in your sales terms and conditions, and ask for help from an experienced IP lawyer. They can help you write this document or review what you have drafted yourself.

2. Clearly Define Your IP

In your IP clause in your terms and conditions, clearly define what IP your business owns or has rights in. This way, you can be sure that your customers know to what extent you have protected your IP rights, which can be important for any future legal action. Your IP may include:

  • your business name;
  • your business logo;
  • product designs;
  • recipes or crafting instructions;
  • articles;
  • software;
  • statistical data;
  • reports; and
  • contracts.

When you clearly set out your business’ IP, customers will know what to avoid so as not to attract infringement claims. Furthermore, you should keep your IP definitions in your terms and conditions broad so that you do not limit your IP rights.

3. Detail Your Protections for All Types of IP

The extent of your business’ IP can be varied and broad. Subsequently, the corresponding protections for your IP can vary as well, depending on the kinds of IP rights you have. These can include:

For example, you may have registered trade marks in your business name and logo. If these are unregistered trade marks, still make a note of this IP in your sales terms and conditions.

Some of these IP rights are inherent, such as copyright, but some you will need to apply to register. Others, you need to implement other mechanisms to ensure you have the proper protection for your valuable IP.

For example, for trade secrets and other kinds of confidential IP information, you would include a confidentiality clause in your sales terms and conditions if this is appropriate.

Therefore, be sure to accommodate these different kinds of protections by detailing them in your sales terms and conditions. This information will aid your customers and potentially prevent future IP infringement.

4. Address Overseas Application

If your business operates overseas or engages with international customers, your IP clause in your sales terms and conditions needs to address this. Clearly state that New Zealand law applies to your sales and other contractual engagements. Your IP rights may apply internationally depending on the kind they are. Notably, through various kinds of international cooperation, your copyright protections may also apply in international contexts. Therefore, you should detail this in your IP clause.

However, if you want to use your trade mark or other registrable IP rights, these may not apply in an international context. Therefore, you may have to register these rights in the countries you want to operate to gain similar protections to what you have in New Zealand.

5. Clearly Explain Licence Terms

Depending on the nature of your sales terms and conditions, you may also include a licence for customers to use your IP. When doing so, in your licence clause, you should clearly explain what customers need to note when using that licence, which can include:

  • exclusivity;
  • permitted actions/prohibited conduct;
  • royalty payments or fees;
  • geographical application;
  • consequences for breach; and
  • time limits.

An experienced IP lawyer can help you determine what terms you need to set for your IP licence clause.

Key Takeaways

Your sales terms and conditions are an essential document that protects your business and limits your liability. This fact is especially important for managing your business’ IP and protecting it against potential infringement. If you would like more information or help with IP in your terms and conditions, contact LegalVision’s IP lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What are sales terms and conditions?

Sales terms and conditions are a document that sets out what every customer purchases your goods or services agrees to. These apply to your sales and bind the customer if you have drafted and prepared them appropriately.

Do I need an IP clause in my terms and conditions?

You should have an IP clause in your terms and conditions so that customers know how to avoid liability if they deal with your IP. If they use your website with your IP on it, then you should include a licence allowing this.

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