Don’t Make the Mistake of Not Securing Your Intellectual Property and Patent Rights.
How much of the value of your company is in its intellectual property (IP)? Depending on what business you are in, the answer can range from “some value” to “the most critical asset,” or somewhere in between. Every business should be able to answer this question.
If you tend toward the “critical asset” end of the spectrum, then the first IP protection issue for you to address is:
Do you even own your IP?
Work Made for Hire
To resolve this fundamental question of ownership, many businesses are unaware, for example, that they should pay special attention to the “work made for hire” issue in their dealings with independent contractors.
In general, your company will be able to secure patents and copyrights in any inventions and creative works developed by your employees. You might be surprised to know that an independent contractor who develops something for you – even a website – automatically owns the rights to any patent or copyright unless the contract specifies otherwise.
Case in Point: The president of a real but small medical records software company believes he lost at least $2 million in business for lack of simple IP protection. He hired a software developer to create a key product, but the contract failed to address the “work made for hire” doctrine.
The contract should have provided that all copyright to the software belonged to the medical records company. Absent this simple provision, ownership of the software copyright defaults to the software developer.
This unfortunate scenario came as a shock to that company, especially since it paid more than $600,000 to develop the software. The unscrupulous developer who owned the copyright turned around and sold the software to several of the medical records company’s competitors for only $50,000.
If the medical records company had received the copyright via some simple language in the contract, then the software would have been owned exclusively by the company, instead of being offered at a substantial discount to its competitors.
This same trap arises very frequently for small businesses that hire a contractor to create a website, which has copyright issues, or to develop a prototype that yields a patentable invention or two.
Protect Your Brand
Whether or not copyright and patent are important to your specific business, your brand likely is.
You can protect your brand with a trademark. If your business extends beyond a local region, consider filing for a trademark to get nationwide protection for your mark and/or logo.
Registering your trademark will allow you to use ®, an indication that your business has been around awhile. It also provides notice to others not to use a mark confusingly similar to yours.
Although less complex than patents, trademarks are often used improperly, putting at risk the investment in your brand. For example, a frequent error is to use a mark as a noun (e.g., I bought an iPod) rather than as an adjective (e.g., I bought an iPod® mobile digital device).
It is also wise to do a good clearance search before settling on a name and logo for your business to avoid a potential conflict with another business.
IP Action Plan
To provide a starting point for you as new business owner, here are some practical, simple action steps to consider in consultation with your IP attorney:
General: Conduct an early IP audit to identify your IP assets and liabilities. Review agreements: make sure you own what you need to own.
Trademark: Select your name and logo to avoid infringing a trademark. File to register your own trademark. Properly use your mark with “TM” in advertising until registered.
Patent: File a patent application describing potential inventions before the first disclosure outside your company, or within one year of first commercial activities. Advertise and mark products as “patent pending.”
Copyright: Secure copyright to your website and logo.
Trade Secret: Establish a good non-disclosure agreement and confidentiality procedures to allow you to market your invention.
Strategies for IP
In general, if your business involves patent issues, you should consult a “patent attorney.” For non-patent issues, consider consulting either a patent attorney or an IP attorney with experience in the areas relevant to your business.
Your IP may be a valuable asset as an offensive tool. But note that your competitor’s IP could be used as an offensive tool against you. IP can turn into both an offensive and defensive battle.
A little early preparation could easily identify problems to avoid, save unnecessary costs, and maximize growth potential. Your preparation should help you avoid litigation risks and better handle any licensing negotiations.
Bottom line: Get in the IP game early. If you snooze-you-lose. Trust me. A brief meeting with a qualified IP attorney to conduct an IP audit early in your business is likely to give you a tremendously cost-effective education about how to identify and protect your IP and, most importantly, your new business.
Oh, I also practice what I preach: Copyright © 2019, Thompson Patent Law Offices PC. All rights reserved.
