IP for Entrepreneurs—What you Need to Know
You have fantastic technology. You have exciting plans to commercialize it. And you
have the experience and contacts to make it happen. It’s time to start rolling this out
to the marketplace, right? Not so fast. Before you start talking with potential clients
or otherwise promoting your product, read this!
fr.com Now is the time to develop a plan to protect your intellectual property. e sooner
800-818-5070 you act, the less likely you are to give away your technology to your competitors.
email@example.com Sound extreme? It’s not. Although it may sound far-fetched, all it takes is disclosing
your idea to a single person without a nondisclosure agreement, and you could lose
forever the ability to protect your technology.
Whether you know it or not, your new business’s main asset is probably its intellectual
property. Today, up to 75% of the value of public companies comes from intellectual
property, or “IP,” and IP is even more important for early-stage companies. If you plan
to seek funding, get acquired, or sell shares in your company, protecting your IP is a
vital part of building the value of the company. Many people won’t consider buying
or investing in a company that does not have in place a plan for protecting its IP and
Accordingly, the founders of any new company should familiarize themselves with
the four most common forms of IP: patents, trademarks, trade secrets, and copyrights.
Building an IP portfolio with the right mix of the various forms of IP will help you
protect market share, add value to your company, and position yourself well with
investors and acquirers.
First, Protect your Technology
You can protect your technology with a combination of patents and trade secrets (and,
in some cases, copyright, discussed below). A patent is a government-granted monopoly
to practice an invention. A patent grants you the right to exclude others from using
the invention for 20 years from the ﬁling date or 17 years from the date of grant.
In exchange for granting you protection, the government requires that you disclose
publicly how to practice the invention. If anyone uses your invention during the
patent’s term, you can sue that company for patent infringement.
Although comprehensive requirements must be met before the patent oﬃce will grant
a patent, in simple terms the invention (1) must be new, (2) must be useful, and (3)
must have required some ingenuity to create. To get protection in the U.S., you must
apply for the patent within one year of telling people about the idea, whether by selling
it, marketing it, or otherwise disclosing it. In most other countries, you must apply for
patent protection before disclosing the idea.
To get started, contact a business-minded IP attorney who knows how to build a value-
driven patent portfolio. If you are on a tight budget (and most new companies are),
rate the strategic importance of your inventions and technology on a scale and pursue
the most important ﬁrst. You should also think about your core technologies. Which
invention would hurt your business the most if a competitor started selling it today?
at invention is the one you should protect ﬁrst.
To keep costs low, you might consider ﬁrst ﬁling a provisional patent application, a
document that describes the invention but in less detail. You have one year after ﬁling
a provisional application to ﬁle for a patent. A provisional application serves as a
placeholder that gives you a year to ﬁgure out whether you want to spend the money
to ﬁle a full application to obtain a patent.
Finally, you will need to think about your geographic ambitions. Will you be selling
your products overseas? If so, consider ﬁling for a patent on your invention in other
countries. Each additional foreign ﬁling will cost money, but if a substantial part of
your market resides outside the U.S., you might beneﬁt from having international
patent rights. Without ﬁling international patents, you will have no protection outside
the U.S. You should do a cost-beneﬁt analysis with your attorney to determine the
best course of action for your company.
Trade Secret Protection
You can also protect your technology by keeping it a trade secret. A trade secret is
exactly what it sounds like—a business secret. at secret can be anything from a list
of customers to pricing information to ways of making a product. Every state in the
U.S. has laws in place that guarantee protection of trade secrets, and requirements for
protection diﬀer from state to state. Regardless of the precise requirements of each
state, generally a trade secret is something (1) not generally known to the public that
(2) confers economic beneﬁt on its holder because it is generally not known and (3)
is the subject of reasonable eﬀorts to maintain its secrecy. If a business’s trade secret is
stolen, the business may sue for misappropriation of that secret against the individual
or company that allegedly stole it.
e requirement that you keep the information secret is extremely important.
To maintain your trade secrets, you should always have conﬁdentiality or non-
disclosure agreements with all people who have access to the secret, including
employees, contractors, and actual or potential business partners. If you don’t take
this precaution, you risk your secret becoming freely available for anyone to use.
Consult your attorney for a good conﬁdentiality or nondisclosure agreement that
suits your business needs and jurisdiction.
Trade secret protection oﬀers several advantages over patent protection. First, you
need not disclose your idea to the public in exchange for the protection. Second, a
trade secret endures for as long as you maintain its secrecy, with no expiration date.
ird, you do not need to pay for an attorney to draft your patent application or pay
the ﬁling fees associated with the patent. However, unlike with a patent, if another
company is able to reverse-engineer your product to discover the secret, you will have
no ability to stop that company from selling it.
Second, Protect your Brand!
Once you have protected your technology, you need to build and protect your brand.
Trademarks and service marks identify the source of products and services in the mind
of customers and distinguish them from others. A trademark can be a word, name,
symbol, or design used in commerce to identify and distinguish the goods of one seller
from goods sold by others. Even sounds and colors can serve as trademarks. A service
mark is simply a trademark used to identify a service, as opposed to a product.
Establishing trademark and service mark protection for your brand allows you to bring
a trademark infringement suit against others that copy or oﬀer confusingly similar
products or services in the marketplace. To establish trademark or service mark rights
in your brand, you must use the “mark” in the marketplace in conjunction with the
product or service. For a trademark, that means you must use the mark on the product,
container, display, or advertising of the product. For a service mark, you must use the
mark in connection with the service. A trademark or service mark can be protected by
state and federal law.
In addition to rights based on use, federal and state registrations oﬀer added protection.
To obtain a federal registration for your mark, you must apply to the U.S. Patent and
Trademark Oﬃce. To obtain a state registration, you must apply to your state. If you
plan to do business nationally or internationally, you should at a minimum seek federal
registration and consider international applications as well. If you do not plan to use
your mark outside your own state, state registration may be suﬃcient. However, federal
registration oﬀers several beneﬁts that state registration does not. For instance, federal
registration creates a presumption that the mark is valid and is owned by the person
registering it. Most important, if you bring a lawsuit against a company infringing your
mark, a federal registration prevents the alleged infringer from claiming it didn’t know
the mark belonged to you—the law presumes that the infringer knew about your mark.
State registration, on the other hand, oﬀers little protection beyond creating a limited
public record of the use of the mark in the state where it is registered. Registration
requirements can vary widely from state to state, so contact your attorney to determine
the exact requirements in your state.
Finally, do not neglect protecting your brand online. Today, having an online presence
is not a luxury, it’s all but a requirement. You should register a domain name that suits
your business. In addition to securing rights in the .com domain, you should consider
registering the other variants, including .net, .us, .mobi, and any others. If you
have established rights in marks associated with your business and somebody is
“cybersquatting,” or using a domain name that is confusingly similar, proceedings
are available to help resolve this. An IP attorney can help you navigate this process.
With the growing importance of Facebook, LinkedIn, and Twitter, you should also
consider securing an account using your protected marks on each of these sites.