Protecting Your Business Intellectual Property

In our global, internet savvy world, it is imperative to establish, protect and enforce intellectual property rights. Healthy entrepreneurship and business growth depend on such protections. According to the World Intellectual Property Organization, intellectual property (IP) refers to “creations of the mind: inventions, literary and artistic works, symbols, names, images, and designs used in commerce.”

It’s hard to think of a business where intellectual property does not play an important role. No matter what the industry or line of business, whether local or global, retail or manufacturing, intellectual property can be essential to business growth and success. While large companies typically have vast resources dedicated to IP protection, intellectual property is equally important to many smaller enterprises and entrepreneurs. The two most common forms of IP protection for smaller companies are copyright and trademarks.

When a business wants to immediately associate its products or services with the business, the best way is to identify them with a trademark.  A recognizable trademark is important in developing brand recognition, reputation and loyalty, and can be an extremely valuable asset to maintain and build the goodwill of a business. To prevent others from using a trademark and avoid confusion with other trademarks, it is important for a business to protect and monitor it.

A trademark or service mark includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.  A trademark is used with the sale of goods, while a service mark is used in the sale of services.

Although federal registration of a mark is not mandatory, it has several advantages, including notice to the public of the registrant’s claim of ownership of the mark, legal presumption of ownership nationwide, and exclusive right to use the mark on or in connection with the goods/services listed in the registration.

In the U.S., trademark rights are acquired through bona fide use of the mark in commerce, and such use is necessary to obtain a federal registration for a mark. A trademark or service mark may be reserved for a short period, however, under an Intent-to-Use designation when the mark is filed with the U.S. Patent and Trademark Office (USPTO). Trademarks must be used to maintain rights. Abandonment through nonuse can occur when a brand owner stops using the mark.

Good information on the filing of trademarks can be found on the USPTO website at www.uspto.gov.  Although not definitive, an applicant can check there for other similar marks prior to filing in order to avoid potential disputes.  While not required, most applicants use private trademark attorneys for legal advice regarding use of their trademark, filing an application, and the likelihood of success in the registration process, since not all applications proceed to registration.

Copyright protects an author’s original and concrete expression, including books, songs, art, and web design. In fact, an author has a copyright the moment his or her original work is fixed in a tangible medium of expression. A copyright gives the owner the right to reproduce, distribute, display publicly, and prepare derivative works based upon the copyrighted work. While copyrights do not need to be registered immediately, it is advisable to do so for works of higher importance and potential value.  Copyright registration is a prerequisite to bringing a lawsuit for infringement.

Use of the notice is important because it informs the public that the work is protected by copyright, identifies the copyright owner, and shows the year of first publication. Furthermore, in the event that a work is infringed, if proper notice of copyright appears on the published copy or copies to which a defendant in a copyright infringement suit had access, then no weight is given to a defense based on innocent infringement in mitigation of actual or statutory damages. Innocent infringement occurs when the infringer did not realize that the work was protected.

Anyone found to have infringed a copyrighted work may be liable for statutory damages up to $30,000 for each work infringed and, if willful infringement is proven by the copyright owner, that amount may be increased up to $150,000 for each work infringed, if the work was properly registered within three months of first publication. In addition, an infringer of a work may be liable for the attorney’s fees incurred by the copyright owner to enforce his or her rights.

An attorney is not necessary to file an original claim to copyright with the U.S. Copyright Office.  The website provides information and forms at copyright.gov. An application for copyright registration contains three essential elements: a completed application form, a nonrefundable filing fee, and a nonreturnable deposit—that is, a copy or copies of the work being registered and “deposited” with the Copyright Office.

Most companies in which employees produce potentially copyrightable work as part of their normal job duties require those employees to sign an agreement that any works they produce while employed by the company are owned solely by it.  If an independent contractor produces copyrightable work for the company, a license agreement should set forth exactly what IP rights the contractor is transferring to the company in exchange for payment and exactly what rights are being retained.

Understanding intellectual property is more critical than ever for small business owners, especially now that the Internet is so prevalent.  Small businesses should consider the role their intellectual property plays in achieving short and long term goals and obtain proper protection to enforce those rights.