Intellectual property: protecting your most valuable asset
In the modern age, intellectual property assets are usually among the most valuable of a company’s holdings. Thirty years ago, a company might value its physical property, manufacturing equipment, inventory or even a sought-after lease as its most valuable assets. Today, in a highly specialized global economy connected by the internet, many of those previously highly valued assets can be rented, hired out or have been rendered unnecessary altogether.
Most businesses today stake their fortune on their intellectual property, whether they realize it or not. If your company owns any of the following assets, and they almost certainly do, you’ll want to ensure they’re appropriately protected.
A patent is the right to the exclusive use of an invention. Most companies are well aware of their patents and pending patents, as they are the most obvious type of intellectual property. However, many entrepreneurs are not aware that they need to consistently protect their patent in order for it to retain its value. Have conversations with your patent attorney early on regarding how best to protect your patent in your particular industry. Make sure that your employees and independent contractor agreements contain sufficient language to assign all patentable inventions to your company.
The name “Coca-Cola” itself is more valuable than anything the company owns, a fact that won’t surprise many. But even for a small business, the goodwill it develops by treating customers and employees well and/or delivering a good product or service is inextricably tied to the company’s name. Change it and a loss of customers would likely ensue. Without the name recognition, even recruiting could take a hit.
So how do you protect a name? Before you even choose a name, you should conduct a thorough trademark search or have a lawyer do one for you. I worked with one client who had invested a substantial sum in a public relations firm to build his brand only to have to abandon it a year later because of a trademark dispute. Second, you should file a trademark application. While it’s not necessary to register your trademark in order to claim ownership of it, it does increase you success of prevailing against a competitor. It also increases the damages available to you should another company infringe upon your name.
Copyrights protect original works of authorship and can include books, music, articles and even website copy. Businesses today tend to invest significant sums building out their websites, developing copy, and perhaps even publishing blogs. Like trademarks, you own a copyright in your work even if you do not file a copyright application. But also like trademarks, you will find yourself in a more defensible and protected position by registering a copyright and using cease-and-desist letters (a document sent to an individual/business to stop purportedly illegal activity and not to restart it) any time you discover an infringer.
Trade secrets can encompass any number of things, from customer lists to recipes to marketing strategies and beyond. Most companies are not even aware of the entirety of trade secrets they possess. The second prong listed above — requiring efforts to maintain secrecy — is quite difficult to do if you’re not aware of your own trade secrets!
For this reason, it can be beneficial to have a lawyer run a trade secret audit. From there, you should develop written policies to protect those trade secrets, including cyber security efforts, as well as the consistent use of non-disclosure agreements (NDAs), employee confidentiality agreements and confidentiality terms in vendor or joint venture agreements.
You take steps to protect your physical property with fences, locks and security systems, but your intellectual property is arguably worth even more. The success of many businesses — big and small — lies largely on their ability to acquire, create and protect intellectual property. Small steps — such as the consistent use of confidentiality agreements and the identification and pursuit of infringers — can make a critical difference in the success of your company.
About the author
Heather Orr is an accomplished business law attorney who, after many years as a litigator, built a practice dedicated to keeping small businesses and startups out of the courtroom. She has served the entrepreneurial community through her firm, HSO Law, since 2009. Heather also served as an adjunct law professor at Loyola Law School for three years, where she taught a course on business planning, and is the author of How to Like Being a Lawyer.