Many small business owners fail to realize just how valuable their intellectual property is. But the fact is, intellectual property (IP) makes up between 40% to 90% of the total value of some companies, according valuation experts. Given this, it's extremely important that these assets are well protected if you have them—and you probably do, even if you're not aware of it.
However, IP is a somewhat murky area of law, and if you're not educated about how things like copyrights, trademarks, and patents work, you can be at a huge disadvantage. You should always contact us as your Creative Business Lawyer® to secure your IP assets, and to give you some idea of how complicated this legal landscape can be, here are four popular myths about IP protection for business owners.
Myth 1: Businesses automatically own the intellectual property created by their staff.
You might assume that you automatically own the IP rights to the work your employees and/or independent contractors create while employed by you. However, unless you've had that individual sign a contract that explicitly states that you own all rights to any IP they create, using what's called a “work for hire” clause, you might not actually own any of it.
Be sure all of your employees and/or contractors sign a contract stating that the company owns the rights to everything they create while working for you. And if your team members have access to any trade secrets, make sure they sign non-disclosure and non-competition agreements. Note, there is no legal registration for trade secrets, so an NDA is the only legal way to keep your proprietary systems and formulas a secret.
If you think you may be at risk here, contact us immediately.
Myth 2: Once I get a trademark, my brand is totally safe.
A trademark protects your company's brand name from being counterfeited, but it only protects certain aspects of your work. Trademarks are used to protect a word, phrase, symbol, design, or other distinguishing feature that identifies your specific product or service. Yet that protection doesn't cover everything about your brand.
For instance, you could own a brick-and-mortar store that sells unique 3-D seascape art that's called “C-Scapes 2.0” and have a trademark for the business name and logo. But someone else could still buy the legal rights to the URL “C-Scapes2.0.com,” unless you do it first. This is why it's so important to secure all IP rights and domains as soon as you develop the idea, or you could be extorted by trademark and patent trolls, who monitor IP registration, waiting for a clueless business owner to put off securing all rights for their company.
Myth 3: You can ignore trademark infringement when it doesn't warrant your time and effort to enforce your rights.
Unlike copyright owners, who can pick and choose when to defend their copyrights, trademark holders mustmake efforts to enforce their trademark or risk losing it. While forcing a business to enforce their trademark might sound harsh, it's designed to ensure that the foundational value of trademarks doesn't become diluted.
Indeed, the entire point of having a trademark is to distinguish your company as its source, so allowing a bunch of people to use your trademarked logo devalues the protection. And it doesn't matter who the offender is—a multinational corporation or your 12-year-old nephew—or if they even compete with you, you have to enforce your rights.
However, enforcing your trademark doesn't mean you have to take the party to court. There are numerous options for enforcement available, from a polite cease and desist letter to requiring the offender to pay a nominal licensing fee, so you don't have to be a total hard-ass about enforcement. In fact, we often write letters that inspire resolution as well as ongoing joint venturing to infringers if our clients want that. And we can do that for you, too.
Myth 4: Creating an intellectual-property strategy is not a top priority.
With so many things to deal with when starting a business, it can be tempting to think that protecting your IP is something you can put off. But this can be a huge mistake. When it comes to IP, especially patents, you absolutely must file for protection as soon as the idea becomes a reality, or you could lose all rights to that idea.
For example, the U.S. patent office recently changed from a “first to invent” system to a “first to file” one, so patents are actually now awarded based on who filed first, not who came up with the idea first. As soon as you take the first steps to bring a business or product idea to life—incorporating, obtaining business licenses, or initiating production of a product—you should identify which aspects of your business need IP protection and file for a patent, copyright, or trademark. Of course, you've hopefully researched your idea first to make sure someone hasn't already beat you to the punch!
Not to mention, you're probably putting a lot of investment capital into building your website. But did you know that you may not even own your website? Yes, that's right, without the proper agreements in place, you may not own the source code of your own website! Have us review any agreements you enter into when you create anything online or offline, and make sure your investments in intellectual property are protected.
Because intellectual property law can be quite complex and confusing, it's vital that you contact us as your Creative Business Lawyer® to ensure all aspects of your IP are safeguarded. We're well-versed in the latest IP laws and will work with you to develop a comprehensive strategy to protect all of your assets, so you can focus on taking your company and brand to the next level.
This article is a service of Naja I. Hawk, The Phresh Esq., Creative Business Lawyer®. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today at (404) 439-9310 or visit www.phreshprotects.com/schedule to schedule.