For any startup, whether based on a recent college graduate’s first mobile app or a serial entrepreneur’s “best idea ever,” the beginning stages of the small business process can be overwhelming.
“Do I need investors?” “How do I hire employees?” “Am I going to make any money?”
While sorting through the answers to some of these difficult questions, many new business owners overlook an important aspect of any business: intellectual property (IP), which includes trademarks, patents, and copyrights.
IP is crucial to the growth and success of any size business. A company’s IP often is its most valuable asset, and it should be given the same attention as the other key aspects of the business. Failing to provide that attention can prove costly to a business, particularly a new one.
Your business’ name and logo, and the names of your products and services, are all trademarks that are important in building a well-recognized brand that consumers associate with quality goods and services. While the mere use of your mark in advertising and selling your goods and services creates rights to keep others from using a confusingly similar mark, those trademark rights are limited to the geographical area where the mark has been used. To protect your ability to later expand the geographical reach of your business using your mark, a federal trademark registration can be sought.
In addition to nationwide priority to use the mark from the date the federal trademark application is filed and the right to recover certain damages if successful in an infringement lawsuit, a federal registration of your mark also allows you the right to display the ® symbol, which provides notice to others of your claim to rights to the mark.
Patents and Copyrights
Patents and copyrights are also valuable for businesses of all sizes. Utility patents protect the way your product works, and design patents protect the way your product looks. Patent rights allow you to keep third parties from making a product covered by your patent. The right to exclude competitors from “knocking off” your product creates exclusivity in the market and can yield big returns if there is demand for your patented product.
In addition, copyrights can protect the creative components of your business or products, such as the written and visual content on your website or in your promotional materials. The copyright owner has the exclusive rights to reproduce and make copies of the protected material. Registration is not a requirement for copyright protection, but there are additional benefits of having a copyright registration, including the right to sue for copyright infringement.
The exclusivity granted by IP rights is only beneficial to your company if your company owns rights to the IP. Many business owners logically believe that they own the exclusive rights to the work product that they paid another to create for their business. However, a third party hired to develop a mobile app or design a new product may have rights to the IP under the default ownership rules that govern copyrights and patents. For non-employees, the default rule for copyrights is that the creator of the work owns the copyright. Similarly, the default rule for patents is that the inventor of the new invention owns the patent.
When to Start
These IP ownership issues are best addressed before the work is performed. For IP created for the business by non-employees, an IP agreement should be signed before the work begins that states that rights to the work product created at the request of the business are owned by the business. When the IP is created by an employee, the default IP ownership rules are more favorable to the employer, but future disputes can be avoided by having a written employment agreement in place that clearly sets out that the employer owns all rights to IP created by the employee in the course of her employment.
IP is the backbone of many new businesses, and a failure to protect that IP might be fatal to their success. By protecting your IP and proactively addressing potential IP ownership issues, you can eliminate that threat in the early stages of your business.