Every business has intellectual property which has the potential to be extremely valuable.
In simplest terms, intellectual property (often referred to as “IP”) is a type of intangible asset for your business that includes your ideas, inventions, creations and secrets that give you a competitive advantage in the marketplace. Intellectual property is protected by trademark, copyright, patent and trade secret laws.
Intellectual property laws date all the way back to the U.S. Constitution, which gives Congress the authority to, “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors, the exclusive Right to their respective Writings and Discoveries.” Art. 1, sec. 8, cl. 8.
While some intellectual property laws have been slow to change with the times, they still exist as a way to enable creators and inventors to leverage their ideas and inventions for profit or for the public good. In other words, just because someone might not like the rules, doesn’t mean he or she is allowed to break them. Only the owner of intellectual property can decide what becomes of it and who can use it and profit from it.
The Types of Intellectual Property
Intellectual property falls into four categories: trademarks, copyrights, patents and trade secrets.
Trademarks
Trademarks identify the source of goods or services in the marketplace. The purpose is to ensure there is no confusion about who is providing a good or service to consumers.
A trademark is a distinctive word or symbol (or combination) that indicates the origin of products or services. For example, the Nike swoosh, the AT&T globe, the McDonald’s arches, and the Disney logo are all trademarked symbols. Brand names like Starbucks, iPhone and Google are examples of trademarked words. There are also trademarks for distinctive shapes and package design (called “trade dress” like the Coca-Cola hourglass bottle), colors (like Tiffany blue), sounds (like the MGM lion’s roar), and scents (but this is very uncommon).
Trademarks live forever as long as the trademark holder continues to use the mark properly in commerce (and files the right paperwork with the U.S. Patent and Trademark Office). That means for the life of the mark, the trademark holder can exclusively use the mark in commerce and stop others from doing so. Counterfeit goods, websites, social media profiles, store fronts and anything else that uses the trademarked word or symbol in a manner that could confuse consumers would be a trademark infringement. The rights holder can not only stop the infringer but also collect fines and more.
What do you think Nike would do if a company started selling athletic wear with a name like Nikee on it that included a similar (but not exactly the same) swoosh symbol? They’d take action to stop that company because it’s a trademark infringement. Under U.S. trademark laws, you have the exact same rights as a small business when you register a trademark.
How would you feel if another company started using the same name as yours to sell similar goods and services? They could start taking profits from you if consumers think they’re actually buying from your company but mistakenly buy from the trademark infringer. That company is trading on your brand reputation and good will, and that’s illegal.
Don’t wait for it to happen to you. Register your trademarks now (and get help filling out the application so you get the protection you need). Furthermore, don’t make the mistake of assuming registering your business name (i.e., trade name) with your state is enough. Trademarks and trade names are not the same!
Copyrights
You can copyright an original work that has a basic level of creativity and was independently created once it has been fixed in a tangible medium such as when you type a book, write a speech, record a song, paint a picture or take a photograph. You can even copyright choreographic words, oral presentations, blogs, scripts, educational courses, architectural works, software and pantomimes!
Copyright attaches to a work at the moment it’s fixed in a tangible medium, but in order to sue an infringer and collect fees and damages, you need to register your copyrights with the U.S. Copyright Office.
When you register a copyright for an original work, you get special legal rights that you can leverage in the marketplace for commercial gain. In other words, if you write an ebook and offer it for sale on your website, no one else is allowed to take your ebook and sell it on their website, too (unless they have permission from you to do so).
If you find someone infringing on your copyright, it’s in your best interest to stop them or you could lose your rights over time. However, without an actual copyright registration, your recourse will be limited. In fact, if you don’t get your copyright registration at the right time, the fees and damages you can collect from an infringer could be limited.
Patents
A patent gives an inventor the legal right to exclude others from making, using, and selling the same invention for a limited time. The inventor gets a “limited monopoly” to make, use and sell the invention. When the patent expires, the invention enters the public domain, which means anyone else can make, use, or sell it.
To patent something, it must meet five requirements. It must be patentable subject matter, useful, novel, not obvious, and provide enablement, which means the patent application must explain enough detail to enable another person with appropriate skills to duplicate the invention.
You can only patent something that is patentable subject matter. These are the subject matters that Congress has deemed to be appropriate. They include:
- Processes (actions): An invention requiring various steps to be performed.
- Machines (products): A concrete thing consisting of various parts or devices.
- Articles of manufacture (products): Something created by taking raw or prepared materials and giving them new forms, qualities, or properties.
- Compositions of matter (products): A composite article consisting of two or more intermixed substances.
There are three primary types of patents: utility, design and plant. The life of a patent is 20 years form the date of filing for utility and design patents and 14 years from the date of grant for plant patents.
You should file your patent application before you try to sell your invention, or you won’t be able to patent it at all. If you’re not ready to file a patent application, you could file a provisional patent application to save your place in line.
Trade Secrets
Your business’ trade secrets include software programs, customer lists, manufacturing processes, recipes, data models, vendor contracts, new product development communications and research information. The list can go on and on. Anything that gives your business a competitive advantage that can’t be trademarked, copyrighted or patented but must remain secret to ensure your company keeps its competitive advantage in the marketplace, could be a trade secret.
Trade secrets are only valuable if they’re kept secret. If the recipe for Coca-Cola got out, Coke sales would certainly be affected. As long as that recipe is kept secret, competitors can’t duplicate the Coca-Cola taste that consumers love. You need to protect your trade secrets as vigilantly as Coca-Cola protects theirs.
The first step to protecting your trade secrets is identifying and describing them so employees and anyone else with access to the trade secrets cannot plead an ignorance defense regarding what the employer is claiming to be proprietary. Next, you need to draft the right contracts, develop physical security measures, and train employees, business partners and vendors so everyone understands their role in the company’s trade secret protection program. Leave no room for confusion or misinterpretation.
Important Intellectual Property Considerations for Businesses
Before you start registering your trademarks and copyrights, applying for patents, or developing trade secret protection programs, here are three important considerations you should think about:
Does it Really Belong to You?
The creator of an original work isn’t always the owner unless there is a written agreement to the contrary such as an employment agreement, assignment or rights, or work-made-for-hire agreement.
For trademarks, the owner is the entity using the mark unless there is a written agreement to the contrary such as an assignment of rights.
How Do You Protect It?
For trademarks, copyrights and patents, you protect your intellectual property by filing applications with the U.S. Patent and Trademark Office or the U.S. Copyright Office. Think of it like securing the “title” to your car.
For trade secrets, you have to keep the information secret to protect it, so develop a trade secret protection program and train your employees, business partners, vendors and so on.
What if Someone Steals Your Intellectual Property?
It’s your responsibility to police your intellectual property rights and ask infringers to stop. If someone trespassed on your property, it’s your responsibility to tell them to stop just as it is if someone “trespasses” on your intellectual property rights. If you snooze, you lose. In fact, if you ignore infringers, you might give up some of your legal rights over time, so it’s imperative that you develop a monitoring process!
The Key Takeaways
Remember, even if you don’t think your brand, creative works, inventions and company secrets have value, they probably already do. And their value could increase significantly in the future. Who knew the Apple and Google brand names would grow to be worth billions each back when the companies first started? No one would have predicted it, but according to 2015 brand valuations, those are two of the most valuable brands in the world.
Intellectual property is valuable so protect it diligently with the appropriate trademarks, copyrights, patents and trade secret protection programs.
Finally, monitor for infringements on an ongoing basis and stop infringers before they do too much damage to your business.
Intellectual Photo via Shutterstock
Aira Bongco
This can be quite tricky to understand. I remember that we asked some kids to come over to have a seminar about it. It must be discussed especially if you are dealing with informational data.
Aira, You’re absolutely correct. Intellectual property can be very complex and it’s easily misunderstood but it’s so important for businesses to identify and protect theirs or they could be giving up a significant competitive advantage (and a lot more money in the future than it would have cost to properly protect it in the first place). That’s the key point though – properly protecting it. Just filling out a trademark or copyright application and submitting it doesn’t mean you’ll get the protection you need. If an application isn’t not filled out strategically, you might not have the right protection to reach your goals.