Section 2: Protecting Your Intellectual Property (IP)
As you build a team, there is another issue that naturally arises: protecting and preserving your intellectual property, or IP.
What is Your IP? An Overview of the Basic Types
Your company’s intellectual property, or IP, consists of any original material that it produces, from patented products to original content, trade secrets, trademarks, and more. Generally, your IP can be broken down into four primary categories: patents, trademarks, copyrights, and trade secrets.
In short, a patent is an exclusive right to use an invention or creation. A company that seeks to patent a product will file an application with the U.S. Patent and Trademark Office (USPTO). If the application is approved, the company or individual will essentially protect its idea from being copied or appropriated by another entity.
In order for an item to be patented, it must be both original and useful. Examples of products that can be patented are computer software and hardware, chemical formulas, medical devices, drugs, and consumer products. The process of obtaining a patent is highly complicated, so it is advisable to reach out to an experienced patent attorney if you would like to seek patent protection for one of your products or ideas.
Unlike patents, trademarks are more about identification than invention. A trademark is a brand or name associated with your business. For instance, large companies like Google have received trademark protection for the words, names, or symbols that comprise their brands. Although it seems intangible and hard to grasp, your company’s brand is one of its most valuable assets, so it is critical to seek trademark protection for your company’s name, logo, motto, or other components of your branding. In other words “Just Do It” (see how powerful branding can be?). By doing so, you signify to the public that your company has the exclusive right to use, claim, and display these branding marks.
As with a patent, you may register your trademark with the USPTO, but it is not mandatory. Even if you opt not to register, you still retain some localized rights to your marks. However, there are certain benefits to registering your trademarks, specifically if your business uses the internet in any substantial way.
A copyright is the exclusive right to reproduce, publish, sell, or share any original work. In short, any original form of work is automatically copyrighted. However, there is an important distinction between the work itself and the ideas underlying the work: The underlying concepts or ideas are not copyrightable, but the author or creator’s particular arrangement of them is copyrightable. Most of the original content you produce, whether your marketing materials, blog, video content, social media posts, and creative assets will be protected by copyright law. If anyone reproduces your work without your permission, you might have a legal claim against them.
Before copyright protection was incorporated into our statutes, common law copyright protection applied to a variety of unpublished works and attached at the time of creation, not publication.
Today, the federal Copyright Act protects authors and creators from having their ideas, time, effort, and ingenuity stolen and gives them the right to reproduce, distribute, or display their work. The owner of the copyright also has the ability to transfer these rights to someone else. For example, if you produce an original piece of content for a client, you may transfer the IP rights in that content to your client.
As a general rule, for works created after 1977, copyright protection lasts for the life of the author, plus an additional 70 years.
A trade secret is any valuable commercial information that gives companies a competitive advantage in the marketplace. It may comprise some design, invention, idea, or compilation of data that a business uses to give itself a competitive edge or to be more successful.
Typically, these items are not readily accessible to the public, but rather, companies will protect them in order to maintain a competitive advantage. In order to protect proprietary information as a “trade secret,” a business needs to treat it as such by limiting access to those who truly need to know and keeping it under lock and key (or the electronic equivalent). In other words, the law won’t treat your proprietary information as a trade secret if you don’t.
Liability for taking or appropriating trade secrets generally arises in cases where a party breached a contract or engaged in activity prohibited by company policy, like unlawful surveillance or espionage. Additionally, employees and agents of a company may still be held liable for disclosing trade secrets if they had reason to know the information was competitively valuable to the company and knew they were expected to keep it confidential.
Protecting Your IP
Any original material that your company produces, from its products to its content, to any trademarks or copyrighted materials, should belong solely to the company. Additionally, your clients and customers belong to the company, and as a business owner, you have a right to retain control and ownership over both your IP and your customer base.
For that reason, before you engage employees or contractors, consider how you will protect and preserve your IP. There are several ways to do this.
- Secure a confidentiality agreement. Ask your employees and contractors to keep proprietary company information confidential. Additionally, require your team members to explicitly agree, in writing, that the company’s IP belongs solely to the company and that they may not assert any rights to it.
- Especially when working with contractors, clarify who owns your business’ IP. If you engage a contractor to develop a product for your company, make sure you are very clear at the outset about who owns the IP rights to that product. Many business owners execute consulting agreements that expressly state who owns the work product the consultant was engaged to create. Airtight provisions in a contract would state, for instance, that all intellectual property rights to a product belong exclusively to you, the business, and that by signing the agreement, the contractor expressly assigns away any and all rights to it. In some cases, the work done by consultants is known as a “work made for hire,” an exception to the common law implication that IP rights vest in the person who created the work.
What To Do When Your IP is Compromised
If a current or former employee, contractor, or co-founder steals your IP or breaches one of your agreements, you have legal recourse in a variety of forms.
First, you can hire an attorney to send a cease and desist letter, demanding that the individual cease any and all infringing activities. Typically, these letters will give the person a discrete timeline – usually no more than five business days – to “cease and desist” all offending activity before the aggrieved party pursues legal action.
If the person does not cease and desist, you can consider filing a lawsuit. This allows you to request and pursue either monetary damages or a court order demanding that the infringing individual take certain actions, from signing an order to restoring any and all IP to the company.