Republic of the Philippines

CATANDUANES STATE UNIVERSITY

College of Business and Accountancy
Virac, Catanduanes

CHAPTER 3

Lesson 2: How to Protect Your Business Idea

In recent years, there has been an increase in interest in entrepreneurship. Consequently, there
is much demand for innovative ideas able to create something of value to society and to generate good
financial performance. What many of these do not know is that when they are faced with a business
idea, they must protect it at all costs. Yet, startups still struggle on securing an idea.

Entrepreneurs should understand the basic principles of Intellectual property (IP) to protect
your ideas from aggressive competition. This is suitable for all companies, regardless of their size or
the sector in which they are embedded, whether technology is a more traditional industry.

Intellectual property refers to creations of the mind. It can be an invention (patent / utility
model), a design (industrial design), a brand name (trademark, or a literary and artistic work
(copyright). (https://www.ipophil.gov.ph/what-is-intellectual-property/)

The rights of intellectual property can be about a brand, logo, corporate identity, products,
services, or even processes that differentiate the commercial offer. These are the most valuable assets
that a company can own.

At present, most companies bet and benefit from communication marketing digital in order to
get their products to a huge audience, and at relatively low cost, which is a more traditional method
would be impossible. But also increases the likelihood of business ideas being stolen by third parties.
That’s why intellectual property protection is essential to the success of business and entrepreneurs
should understand their rights, duties, and securing an idea.

Intellectual property plays an essential role in business success. Especially in the case of a
startup where innovation of the idea and the risk on investment and success of this are united.

Of the various advantages that this protection features, it highlights the following:

 Is the exclusive right by preventing third parties to produce, manufacture, sell or to

economically exploit the developed solution, without the permission of the holder;

 Facilitates business growth as this is protected legally impossible competition to adopt the
ideas;
 It demonstrates the commitment of entrepreneurs for their ideas;
 Values the investment for the development of products or services;
 It allows for differentiation from competitors by offering customers something new and
innovative;
 It generates money by selling or licensing the product or service;
 Transmits security, credibility, and commitment to the customer by the holder.

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes
Types of Protections for your Business Idea
Here are the types of protection existing and steps securing an idea.

The kind of intellectual property protection an entrepreneur or business can get depends on the
setting in question. Thus, they must decide which of his ideas fall into which of the options available
and that action is taken as soon as possible to reduce the likelihood of losing protection.
There are four main types of business ideas protection:
1. Patent
2. Trademark
3. Copyright and
4. Trade Secrets

Patents
If the entrepreneur is facing an invention may consider protecting it with a patent. A patent
grants property rights to an invention, new products and innovative processes. That is, this gives the
holder the right to prevent others from making, using, importing, or selling these without your
permission.

There are three main types of patents of which the entrepreneur must learn about how to
protect a business idea in these circumstances:

1. Utility Patents– these patents protect processes, machines, manufactured items, or

composition of matter. Some examples include medicine, electronics, etc.
2. Design Patents– these patents protect new, original, and ornamental designs for manufactured
items. Examples are the design of athletic shoes or an automobile body.
3. Plant Patents- these patents cover asexually reproduced and distinct plant varieties. For
example, plant patents cover hybrid tea roses, as well as Better Boy Tomatoes

Trademarks
Trademarks provide us with valuable information. They are source indicators that allow us as
consumers to know what to expect in the quality of a product or service. They allow us to buy with the
assurance that we are getting products or services that we liked in the past or to avoid those products
or services we did not like. In addition to offering protection to the consumer, trademarks are often a
company’s most valuable assets. They stand as emblems of a company’s reputation and good will.
Often, consumer confidence and trust built upon brand loyalty encourages product sales.
A trademark includes any word, name, symbol, sound, scent or device or any combination
used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or
seller from goods manufactured or sold by others, and to indicate the source of the goods.

In short, a trademark is a brand name. A service mark is the same as a trademark except that
it identifies and distinguishes the source of a service rather than a product, such as dry cleaning service
or banking services.
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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes

As a brand name, most inventions have two names- a brand name and a generic name. For
example, think about Coca-Cola. You may know it as Coke-the brand name, but its generic name is
soda or pop. It is important for new inventions to be given both a brand name and a generic name.
That way people identify it generically and associate the brand with quality and desire to purchase.

Developing a brand name isn’t as easy as it sounds. There are guidelines to consider to make
sure your name is fully protected under trademark law. Take a look at the scale below:

1. Fanciful – new words that had no meaning before their use as a trademark.
Example: Starbucks, Verizon, Cingular, Exxon
2. Arbitrary– common words used so that their original meaning has no relationship to the
goods or services to which they are applied.
Example: the trademark Apple for computer products – an apple (which is known to be
a fruit) has nothing to do with computer products.
3. Suggestive– these trademarks allude to a quality or characteristic of the product or service.
Example – the name Jaguar implies speed – a quality that is desirable in high end cars
also named Jaguar.

4. Descriptive– these names describe the service or product such as Autoway– a store for Autos,
or Frosted Flakes to describe Flakes or Frosted Cereal. Descriptive names may be easier to
market but harder to register. To register a trademark, the company must show that consumers
identify it as a particular brand from a specific name.

5. Generic– a generic term identifies a type of product or service, without indicating any
particular manufacturer or source. For example, cola and soda are generic terms, PEPSI and
COKE are trademarks used to identify types of cola and soda. Trademarks can lose their ability
to identify the source of specific products when the public begins using them as generic names
of products.

Copyright
Copyright is the legal right granted to a creator of an original work of authorship to control
publication, production, sale, or distribution of it, including literary, dramatic, musical, artistic, and
certain other intellectual works.

Think about the word itself – “copy” with “right”. The owner has the right to decide how or if
the creation is going to be copied.

Copyrights protect original works of authorship. Examples of these are literary works, music,
sound recordings, dramatic works, pantomimes, and cinematic choreography, sculptural works,
pictorial and graphic, architectural works, software, web content, among many others.

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes
Under the 1976 Copyright Act, notice of copyright consists of three elements: (1) the symbol
“Ⓒ” or the abbreviation “Copr.,” or the word “Copyright” (2) the date of first publication; and (3) the
name of the owner of the copyright.

To qualify for copyright registration, the work should be represented in a tangible means of
expression, such as a piece of paper. The duration varies according to the type of work, when, and
where it was created. Thus, the company should seek information on securing an idea.

Trade secrets
A trade secret is information that a company keeps to give them an advantage over their
competitors. Trade secrets can include formulas, patterns, plans, designs, physical devices, processes,
software, and “know-how.”
A formula can be a trade secret. A well-known example of this type of trade secret is the
Coca-Cola formula. This formula gives the Coca-Cola Company a significant business advantage in
the soda market, as there is no other soda that tastes the same. Other common formulas that are kept as
trade secrets are found in the food, drug, and cosmetics industries, and include formulas for the
seasoning for Jollibee chicken, butter flavoring, special diet rations for dogs, lipstick, and hair
conditioner.

A pattern, plan or design can be a trade secret. For example, courts have found color TV
circuitry, schematics for an analog circuit, molds for the manufacture of street markers, and a design
for a grating all to be trade secrets.

A physical device used in manufacturing can be a trade secret. Examples of these devices
found to be trade secrets include: a device for manufacturing radio parts, a machine for inking carbon
paper and ribbons, and an adhesive-tape machine.

A process, method or technique used to make the final end product can be a trade secret.
These types of trade secrets include: a process to treat a metal, a process to manufacture fiberglass and
a process for an environmentally sound method to manufacture coated paper.

“Know-how can be a trade secret. A method or technique might fall into the “process”
category, but many methods and techniques can be better described as “know-how” this is information
and experiential expertise related to using formulas or processes. Examples include methods to
manufacture computers and know-how to identify malfunction in computer scanning and components.

LESSON 3: HOW TO APPLY FOR REGISTRATION OF A BUSINESS NAME

What’s in a name? In a business, it means a lot. Your business name is your company’s
branding, so it should catch attention and can be easily recalled.

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes
Aside from spending time coming up with a name for your new business, you also need to
register it with the Department of Trade and Industry (DTI), if you’re a sole proprietor.

What is a Business Name?

Business Name (BN) shall refer to ANY name that is different from THE TRUE NAME OF
AN INDIVIDUAL WHICH IS USED OR SIGNED in connection with her/his business on any written
or printed receipts, including receipts for business taxes, duties and fees, and withdrawal or delivery
receipts; any written or printed evidence of any agreement or business transaction; and any sign or
billboard conspicuously exhibited in plain view in or at the place of her/his business or elsewhere,
announcing his /her business.

Why do you need to register your Business Name with DTI?

Business name registration is required in the Philippines. According to the Business Name
Law (Republic Act 3883), it’s illegal for anyone to use any name for a business other than the owner’s
true name without first registering the business name with the DTI.

In short, securing your trade name will guarantee you the legal and exclusive right to use it
within its validity period (renewable every five years). This means no other business can register or
use your business name in the barangay, city or municipality, region, or country, depending on your
business location coverage.

However, note that business name registration with the DTI is only for sole proprietors and not
a license to run a business (You’ll need to secure a business permit and other related documents for
that purpose).

What are the Tips in Choosing Your Business Name? To make the process a lot
faster and easier, follow these guidelines from the DTI Business Name Registration System when
deciding on your proposed business names: Hence, it is your responsibility to ensure that your
proposed Business Name is:

● not a term or word or group of words that connote activities or norms that are unlawful,
immoral, scandalous or contrary to propriety (e.g. Boobs Massage & Spa);
● not a name, words, terms or expressions used to designate or distinguish, or suggestive of
quality, of any class of goods, articles, merchandise, products or services;
● not those that are registered as trade names, trademarks, or business names by any government
agency authorized to register names or trademarks;
● not a name that is inimical to the security of the State;
● not composed purely of generic word or words (e.g. The Drugstore, Health Care Clinic);
● not a name which by law or regulation is restricted or cannot be appropriated (e.g. Red Cross,
Red Crescent, ISIS);
● not officially used by the government in its non-proprietary functions (e.g. NBI Private
Investigation Services, PNP Security Agency);
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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes
● not a name or abbreviation of any nation, inter-governmental or international organization
unless authorized by competent authority of that nation, inter-government and international
organization;
● not ordered or declared by administrative agencies/bodies or regular courts not to be registered;
● not a name of other persons; and
● not deceptive, misleading or misrepresent the nature of my business.

Who Can Apply for DTI Business Registration?

You may apply for DTI business name registration if you meet these eligibility criteria:
● At least 18 years old (Foreign nationals aged below 18 must submit proof that they come from
a country where the legal age is lower than 18.)
● Filipino citizen
● Foreign national with a Certificate of Registration of Sole Proprietorship/Certificate of
Authority to Engage in Business in the Philippines
● Refugee or stateless person

A representative may file your application for DTI business registration by submitting your
authorization letter as a business name applicant, his or her valid ID, and other required documents.

What are the DTI Business Registration Requirements?

All applicants (except for those filing their application online) must download, print, and fill
out two copies of the Business Name Registration Form[1] and present any of the following valid IDs:
● Passport
● Driver’s license
● UMID
● PRC ID
● NBI Clearance
● Police Clearance (in ID form)
● Postal ID
● Voter’s ID
● OWWA ID
● Seaman’s Book
● IBP ID
● Senior citizen ID
● PWD ID
● Government office ID
● Validated state college/university ID

Additional documents are required depending on the applicant:

● For foreign nationals: Alien Certificate of Registration and Certificate of Registration for Sole
Proprietorship/Certificate of Authority to Engage in Business in the Philippines issued by the
concerned DTI office

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes
● For refugees/stateless people: Certificate of Recognition issued by the DOJ-RSPPU or
Certificate of Recognition

Foreigners, refugees, and stateless people who apply for DTI business registration online still
need to submit the documents listed above at any DTI office.There’s also a business name registration
fee that varies per business territorial scope:
● Barangay – PHP 200
● City/Municipality – PHP 500
● Regional – PHP 1,000
● National – PHP 2,000

An additional PHP 30 must be paid for the Documentary Stamp Tax during your DIT business
registration.

How to Register Your Business Name with DTI

A. Online Application for DTI Business Registration

Starting February 2019, all applications for DTI business name registration should be filed
through the Business Name Registration System (BNRS). No need to visit a DTI office to get a
Certificate of Business Name Registration.

Here are the steps to register your business name online through the BNRS.

1. Check if your prospective business name is available. Go to the Business Name Search page of
the BNRS website and type the keywords of your preferred trade name.
2. Proceed with your DTI business registration online once you’ve confirmed that your target
business name is still available. Access the New Registration page of the BNRS site and read
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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes
the Terms and Condition. When you’re done, click the I Agree button at the bottom of the
page.
3. Fill out the online registration form. Fields marked with a red asterisk must not be left blank.
Your tax identification number (TIN) must also be provided on the online form.
4. Pay the business name registration fee within five calendar days from the online application
date. You can pay at the DTI office or Negosyo Center indicated in your Transaction
Reference Number (TRN) acknowledgment form. For convenience, make your online payment
immediately during your DTI business registration via Gcash. If you have a Gcash account,
just enter your mobile number in the Payment Details section.
5. Claim your Certificate of Business Name Registration at the nearest DTI office or download it
for printing.

8. Walk-in / Over-the-Counter Application for DTI Business Registration

1. Go to any DTI office or Negosyo Center
2. Submit all the DTI business registration requirements. Make sure to have a list of backups in
case your three proposed business names are already taken.
3. Pay the business name registration fee.
4. Once DTI approves your business name, it will issue a Certificate of Business Name
Registration to you.

Keep your business name document because it’s one of the most important documents you
need to register your business at the municipal office and the Bureau of Internal Revenue (BIR).

SYNTHESIS
1. As a future entrepreneur, always remember that a business must be firmly established on
existing business opportunities and that there can be no business opportunities in the absence
of an entrepreneurial idea. The ability to come up with a business idea can be transformed into
a viable business, where ideas supported by feasibility and a business plan can then be sold to
interested investors, firms, and interested parties for a lump sum or a management contract, or
as agreed. Business ideas are always available through different sources.

2. Nowadays, there is likelihood for companies’ business ideas being stolen by other parties.
Entrepreneurs should understand the need for intellectual property protection to ensure their
exclusive right by preventing third parties to produce, manufacture, sell or to economically
exploit the developed solution, without the permission of the holder.

There are four main types of business ideas protection namely, patent, trademark,
copyright and trade secrets among others.

3. When deciding on a proposed business name, it must conform to the guidelines from the
Department of Trade and Industry (DTI) Business Name Registration System.

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes
Here are the requirements for you to be eligible to apply for DTI business name
registration at least 18 years old (Foreign nationals aged below 18 must submit proof that they
come from a country where the legal age is lower than 18.)

o Filipino citizen
o Foreign national with a Certificate of Registration of Sole Proprietorship/Certificate of
Authority to Engage in Business in the Philippines
o Refugee or stateless person

A representative may file your application for DTI business registration by submitting
your authorization letter as a business name applicant, his or her valid ID, and other required
documents.

All applicants (except for those filing their application online) must download, print,
and fill out two copies of the Business Name Registration Formand present two valid IDs.

REFERENCES
Aduana, N.L. (2016) Entrepreneurship in Philippine Setting for Senior High School. C&E Publishing,
Inc. Quezon City

WEBSITES
Zoleta, Venus (2019) DTI Business Registration Guide for Entrepreneurs in the Philippines, Retrieved
from https://www.moneymax.ph/government-services/articles/dti-business-registration

How To Protect A Business Idea: The 4 Types Of Protection. Retrieved from: https://www.the-
itfactory.com/startup-knowledgebase/en/article/how-to-protect-an-idea/
Business Name Registration. Retrieved from:
https://bnrs.dti.gov.ph/search?
keyword=Zee+Kee&criteria=exact&sort_by=business_name&sort_order=asc

https://www.uspto.gov/sites/default/files/kids/icreatm_guide_hs.pdf

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