Intellectual Property Checklist: 9 Steps to Protect Your Business
July 15, 2010 No Comments
Almost all businesses have some sort of intellectual property – legal rights in ideas, writings, trademarks, slogans, graphic works, creative works, and other “intangible” things of value. A smart business takes steps to protect its intellectual property and to profit from it.
9 Step Intellectual Property Checklist
The following is a list of steps a business should take to protect its intellectual property and to maximize its value:
1. A business should determine what kind of intellectual property it has or is likely to have.
Both new businesses and existing businesses have names, trademarks, ideas, writings, creative works,confidential information or methods, and other intangible things that are valuable to the business. In fact, in the modern business world, intangible assets often are more valuable than tangible ones.
These intangible valuable assets are called intellectual property. The law recognizes a variety of kinds of intellectual property, and a business may have one or more of these different kinds. They are:
Patents. Patents are useful ideas and inventions that are protected for a limited term of years after being registered with the United States Patent & Trademark Office. A patent must be registered to be protected. The patent registration process can be fairly long and expensive. Only a licensed patent attorney can represent a business in the patent registration process. (Note: Davis & Leonard LLP are not licensed patent attorneys and do not handle the registration of patents. We do refer patent registration work to licensed patent attorneys that we know.)
Copyrights. A copyright is the exclusive right to copy, publish, display, or create “derivative works” from creative, expressive works, such as books, articles, stories, songs, sound recordings, paintings,sculptures, computer source code, paintings, photographs, and a number of other works. Anyone who creates such a work automatically owns the copyright in the work, but to enforce that right against an infringer one must register the copyright with the United States Copyright Office.
Trademarks. A trademark is a name, mark, or slogan used by a business that identifies the source or origin of products or services offered by the business. “Coca-Cola”, for example, is a world famous trademark that identifies a specific brand of cola in the mind of the consuming public. A business acquires rights in a trademark by using the mark in commerce in connection with a product or service. A trademark can be registered with the United States Patent & Trademark Office and/or with the applicable state government if certain registration requirements are met.
Trade Secrets. A trade secret is any valuable idea, method, or information that has value to the business by virtue of the fact that it is a secret, and is the subject of reasonable efforts by the business to maintain its secrecy. A confidential “in-house” manufacturing process can be a trade secret, as can a customer list. A trade secret, by its nature, cannot be registered with the government. Instead, its secrecy must be zealously protected by the business. Businesses can take a number of steps to protect their trade secrets.
2. At the outset of the formation of the business, the business should make sure it owns or has the legal right to use any intellectual propertythat is going to be part of the business.
New businesses often are created precisely to take advantage of a new idea, or a new piece of software, or a new business concept, or to market a new creative work, like a book. Sometimes, though, these ideas or works are created by third parties, and the right of the new business to use the intellectual property isn’t very clear. A smart business will take stock of all the intellectual property that is needed to get started and make sure that it has the right to use that intellectual property under the law or, if necessary, through properly prepared and signed contracts with those third parties.
3. A business should take steps to protect valuable, confidential ideas, methods, and information from disclosure to competitors and to the public.
The business world is fiercely competitive. Generally speaking, a business’s competitors are free to compete against it by adopting similar ideas, methods, and processes, and are free to compete for the same customers, vendors, and employees. Every business that has valuable, confidential information should take steps to protect it from disclosure to unwanted eyes, by doing things such as having employees sign nondisclosure agreements, keeping information in a secure place, and taking other similar steps.
4. A business should consult with a patent attorney about protecting useful inventions and business methods by registering them as patents.
Inventions and new, original ideas may be protected by a business, but only if they are registered with the United States Patent and Trademark Office. Patent registration entitles the patent owner to exclusive use of the patented invention. The patent process can be lengthy, complicated, and expensive, however, so consultation with a licensed patent attorney is a good idea.
5. A business should take steps to protect business names, trademarks, and slogans through trademark registration.
A business may acquire a legal right to the exclusive use of its names, marks, and slogans if it uses them in commerce to distinguish the source or origin of the business’s products or services. Trademarks that are used in “interstate” commerce — that is, commerce that crosses state borders — can be registered with the United States Patent and Trademark Office. Trademarks that are used strictly within state borders can be registered with the appropriate state authority.
6. A business should protect valuable creative works, such as books, articles, songs, graphic works, computer software, videos, sculptures and similar works by copyright protection.
Patents protect useful ideas and inventions, but not purely creative works, like songs, books, etc. That’s what copyrights are for. Unlike patents, copyrights are relatively easy to register with the Copyright Office. Copyright protection also lasts much longer than patent protection.
7. A business should make sure that employees and independent contractors sign contracts to make sure that ideas and works created for the business are owned by the business.
It is a common misconception that hiring someone to create a work for a business automatically gives the business ownership of the work. To make sure it owns the rights in all of the intellectual property in works it pays for, a business should enter “work made for hire” and assignment contracts that explicitly confer rights in the works to the business.
8. A business should not allow others to use its intellectual property except through properly prepared and executed license agreements.
The way to retain ownership of intellectual property while working with others to profit from the work is to license the rights in the work to another party. A license recognizes the licensor’s ownership of the intellectual property, while granting to the licensee a valuable but limited right to do something with the work, for the benefit of both parties. For example, an inventor might license the right to another party to manufacture and sell goods that embody the invention. In return, the inventor might earn a royalty from the profits earned by the manufacturer from the sale of the goods.
9. A business should consider conducting a valuation of its intellectual property.
Businesses often know that they have intellectual property, but they have no idea what the intellectual property is worth. The business may be able to estimate the value of the intellectual property by projecting the profits it can expect to earn from the use of the intellectual property over the course of its expected life. If this is difficult, there are valuation experts that can assist with placing a value on the intellectual property. Valuation can also be useful to establish licensing terms and royalty rates.
Are you in need of protecting intellectual property? Contact Davis & Leonard LLP for more information on how your business can take the necessary steps to protect and profit from your intellectual property.