Startup Bootcamp: Understanding Your Company's Intellectual Property
Know Your Intellectual Property:
As a startup, your intellectual property (or “IP”) may be your most valuable asset, and so it’s important that you have a good grasp on the basics. Often confused for one another, there are four primary types of intellectual property – namely copyrights, trademarks (including trade dress), trade secrets, and patents (which are then categorized as “utility” or “design”). While there may be significant cross over, each form of intellectual property protects different things, and affords specific exclusive rights. Typically, what an “exclusive right” means is that owner or rights-holder has the power to prevent someone else from doing a specific activity (for example, using their brand name). You should understand what these exclusive rights mean for your business both from the perspective of liability and monetization of the company.
Copyrights
Copyrights protect creative content and expressions. To obtain a copyright, you must simply meet the requirement of “creative expression fixed in a tangible medium.” This means that copyrights will protect things such as written articles, books, photographs, or computer programs etc. Importantly they only protect creative expression, and will not cover anything that is deemed “functional.” Contrary to common belief, registration with the U.S. Copyright Office is not necessary, though highly recommended – you’ll need it if you ever want to sue for infringement, and there are specific legal requirements pertaining to registration in order to recover statutory damages, which may translate to recovering big bucks from an infringing party. Additionally, claiming a copyright by using “© Company Name” is not required legally speaking, though considered prudent and recommended as well. Have a copyright? Great! Just know it won’t last forever. Though the term of a copyright depends on a lot of factors, generally copyrights will last 70 years after the death of the author, or 95+ years for a corporate author.
Trademarks
Trademarks are tools that greatly enhance your marketing, branding and company’s good will. A trademark is any word, mark, or symbol that is capable of identifying an owner’s products from those of another. It must be distinguishable, and not a generic term. They can be words, designs, and sometimes even colors and sounds. Famous examples include Pillsbury, Coca-Cola, BMW, Nike, and Starbucks. The purpose of a trademark is different from other forms of intellectual property, which are concerned with protecting creators and inventors. Trademark law is designed to protect consumers. Also distinguishable from other forms of intellectual property in that a trademark will last as long as your business truly uses it (potentially forever). Similarly to copyright registration, trademark registration with the United States Patent and Trademark Office (USPTO) is not required, though incredibly beneficial, and therefore, also recommended. You also only get the ability to use the ® symbol if you have a federally registered mark. Paramount for any startup investing in their brand name and marketing is ensuring that you do your due diligence before picking a trademark as to make certain that you’re not infringing on another’s mark (an experienced trademark attorney can help you through this process, and with registration). Doing your homework should allow you to sleep better at night knowing that you have a brand name that is afforded strong legal protection, and you have reduced the likelihood that you are forced to abandon your brand at the threat of a lawsuit down the road.
Trade Secrets
Trade Secrets are tools for keeping proprietary information secret. One famous example of a trade secret is Coca-Cola’s soda formula. Trade secrets are typically protected through the use of something called NDAs (Non-Disclosure Agreements) and Confidentiality Agreements. If you have a trade secret, it’s imperative you take certain measures to keep it secret. Once the cat is out the bag, there is not much you can do about it.
Patents
Patent rights provide the ability to exclude others from practicing your invention for a set period of time. As a startup, it is also important not to use, market or sell another’s patented invention without permission (even as part of a new invention), or you may face liability for infringing on another’s patent rights.
There are two types of patents: utility and design. A utility patent protects functionality (i.e. how something works), while a design patent protects ornamental appearance (i.e. how something looks). To qualify as a design patent an invention must be “useful, novel, and non-obvious.” It is examined by the USPTO, and if granted, will last for 20 year from the date of filing with the USPTO. And don’t think you’ll get a patent quickly, as it usually takes around 3-5 years to issue. To qualify as a design patent, it must be novel and non-obvious. These patents are also issued by the USPTO, but generally are issued more quickly than a utility patent. Design patents last 14 years. Provisional patent applications may be helpful to you as well. If you’re looking to secure a patent, it’s advisable to seek the counsel of an experienced patent attorney to walk you through the patent process.
Summary
Managing your startup’s IP portfolio can be difficult, and a riddled with land-mines. It’s important to understand the different forms of intellectual property in order to mitigate risk and liability of infringing on others’ intellectual property, and importantly, to help maximize the value of your company.
Need more? Talk to an attorney experienced in intellectual property law – they can fill an invaluable role at your startup, helping you navigate the challenging waters of acquiring, maintaining, and enforcing your company’s IP. Christina Saunders helps build and protect client’s IP portfolios of all types. Please contact Christina at 303-396-0270 or at christina@saunders-saunders.com for legal counsel on your company’s intellectual property.