June 29, 2010

“Intellectual Property”, or IP, is one of those things that used to be important to only a few small business owners involved in very narrow industries, most typically inventors and writers. While there are very few things I miss about my lawyering days, IP is one of them. It was always interesting to meet and speak with entrepreneurs who were busy creating something that needed protection.

But these days, just as the Web has changed everything else, it has also changed both the nature of IP law and which small business owners need to be concerned about IP.

I am talking to you.

Today, almost every small business needs to understand, and understand how to protect, their Intellectual Property. There are several reasons for this:

1.     We are living in the Information Age. Much of what we create today is based upon information.

2.     We are all publishers now. Between websites, blogs, social media and more, the ease of publishing online makes protecting those creations vital.

3.     Stealing is easier. Bootlegging content, stealing code, pilfering ideas and the like is simply much easier in a copy and paste world.

4.     Branding is vital: Because small businesses are so much more attuned to the need for a brand and all that entails, protection the intellectual capital of your brand is a necessity.

So yes, all small businesses need to be concerned with protecting their IP. But before I explore how to do that, let’s just make sure we are on the same page as to what constitutes Intellectual Property.

Generally, Intellectual Property relates to patents, copyrights, trade secrets, and trademarks. (Note: I recently communicated with Terence Church, an experienced, sharp and savvy IP lawyer in the Silicon Valley with Morgan Miller Blair. Much of the information in this piece comes from my interaction with Mr. Church. Many thanks!)

Patent: A patent protects ideas, inventions, and methods. Says Church, “Patents are not as important to most small and medium sized businesses as other forms of IP.  Patents are expensive to obtain and even more expensive to enforce.”

To obtain a patent requires applying for one at the U.S. Patent and Trademark Office (USPTO) and likely requires the assistance of a lawyer.

Copyright: Copyrights protect writing, pictures or other works of art. Your online writing is your copywritten material. But note, while copyright law does protect expression (the words in this sentence for instance), “it does not protect the idea that is expressed in the work” (the ideas in this sentence.) Copyright law prohibits copying, displaying and creating derivative works of a work without permission.
 

Copyrights are created as a matter of law when the work is published. Extra protection is granted when the work is registered with the U.S. Copyright Office.

Trade Secret: “A trade secret is by definition a secret that derives independent economic value by reason of its secrecy and is the subject of reasonable efforts to maintain its secrecy. It is by far the most important for small and medium businesses,” says Church. Trade Secret protection applies to any secrets:  formulae, customer lists, know-how, negative know-how (i.e., how not to do things), etc. 
 

There is no formal filing or registration required, and there is no set duration for the protection.  It remains protected as long as it remains a secret. 

Trademark: Here, IP protects the value of the company’s brand.  Although a trademark does not have to be registered to be protected, there are advantages to registration with the USPTO. 

Church told me that it is never too early for a small business to think about protecting its IP. “The earlier a business can identify its “secret sauce” and define it, the better able it will be to protect it. For example, if a business delivers its secrets to a partner or a customer without getting a signed confidentiality agreement in place, it risks losing trade secret protection and event patentability.”

Here is how to protect your IP

1. “First, identify them.  Name and brand are prime candidates.  Any ideas that employees have that are 'cool' are potential trade secret candidates and even possible patents.”

2. Get appropriate employee agreements in place. Church says that every employee needs to sign what he calls a “proprietary information agreement.” “This provides that ideas and inventions the employee comes up with during the course of his or her employment belongs to the company.”

3. Put the right policies in place. Church says that small businesses need to create and enforce a policy of having confidentiality agreements (NDAs) signed with vendors, customers and partners. “Be disciplined about not giving your information without some form of NDA.” In addition, Church advises that you create internal policies and procedures for access and disclosure of IP.

4. Be prudent: Takes prudent steps to protect your IP. “Don’t give it to untrustworthy people. Be careful about talking about secrets in public places or displaying them on a computer where the screen is visible to others. (Think airplanes.)”

5. Lawyer up: IP is one area where it is a good to pony up and hire a lawyer (that’s me talking, not Terry Church.) But Church adds, “Have a lawyer review agreements that deal with development of IP assets.”

Finally, Church advises: “What’s important is that the business respects the potential value of the IP.  What was the value of the golden goose before it laid its first egg?  There was something there, but who knew what? Treat every goose as if it was going to lay a golden egg, and perhaps one will someday.”

Join the conversation ( 2 )

• IP Counsel OTC 1 year 5 months and 19 days ago

  

  Thank you for your post, Steve. To flesh-out the section on trademark, more information can be found here:
  
  www.ipcounselotc.com/pages/Trademark.html

• Diane D. Stein 1 year 7 months and 9 days ago

  

  Great post Steve and thanks for sharing what you learned from Church. Too many business owners do not realize the importance of understanding IP until it is too late. Your post takes a poorly understood subject and not only makes it easy to understand but also clearly demonstrates the importance of IP.