IP: From the Silicon Valley to the Roanoke and New River Valleys, What Every Business Owner Needs to Know
When people hear “intellectual property” they often think of complicated software source codes, top-secret formulas or sophisticated patents developed by large tech companies headquartered in the Silicon Valley. What most business owners do not realize is that every company has intellectual property (“IP”) and they do not have to be Google or Facebook to benefit from it.
Smaller, closely-held companies of all kinds here in the Roanoke and New River Valleys can, and do, benefit greatly from protecting and taking advantage of their IP. Whether your business is in the market of developing software for use by professional institutions or cupcakes made from a time-honored family recipe, building and maximizing your company’s IP can add significant value to the company and expand the company’s presence in the marketplace.
Develop and Protect your Company’s IP
Each company has IP that can be developed in order to protect its operations. Once a company determines what types of IP it has (or could have, potentially) finding the right protection to prevent infringement by other companies and individuals is important.
Protecting your company’s IP can be as simple as registering your company’s name and logo as a federal trademark to prevent infringement by other companies that operate a similar business, or as involved as filing a patent application for a new invention.
IP is typically grouped into four main branches: trademark, patent, copyright and trade secret.
(1) Trademark:
A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods (or services) of one party from those of others. Companies may trademark nearly anything; brand names (Xerox), slogans (Just Do It), logos (McDonald’s golden arches), colors (UPS brown) and even sounds (NBC chimes).
Once a valid mark is used in commerce, the owner acquires the right to prevent others from using a mark so similar that it may create a likelihood of confusion among consumers. Trademark rights are territorial. Common law rights arise upon use in the immediate geographic area where the trademark is used in commerce. Upon State registration, the trademark is protected statewide. Federal trademark registration offers the most elevated form of protection and once federally registered, the trademark is protected from infringement nationwide.
(2) Patent:
A patent is a limited duration property right relating to an invention, granted by the United States Patent and Trademark Office in exchange for public disclosure of the invention. In order for an invention to be patentable it must be “new” as defined in the patent law, which provides that an invention cannot be patented if: (a) the invention was known or used by others in the United States, or patented or described in a printed publication in the United States or a foreign country, or (b) the invention was in public use or on sale in the United States for more than one year prior to the application for patent in the United States.
(3) Copyright:
A copyright protects works of authorship, such as writings, music, and works of art that have been tangibly expressed. Copyright rights arise automatically, as soon as an “original work of authorship” is “fixed in a tangible medium of expression.”
While not required, companies may inexpensively register their copyrighted materials online through the United States Electronic Copyright Office to add an extra level of protection for a minimal price. Company manuals, presentation materials, articles written by company employees and marketing materials are some examples of common copyrighted materials companies may have.
(4) Trade Secret:
A trade secret is any valuable corporate information (a formula, device, technique, etc.) that provides a business with an economic advantage over competitors who do not have that information. Some examples of potential trade secrets include a formula for a sports drink, computer algorithms, recipes, specific manufacturing techniques and marketing strategies.
Trade secrets are protected by the Uniform Trade Secrets Act (“UTSA”). As long as the company takes reasonable precautions to protect any information the business regards as a trade secret — such as marking documents containing trade secret information as “confidential” or better yet, having the company enter into a nondisclosure agreement with employees that need to access the trade secret — that trade secret gains protection under the UTSA.
Take Advantage of Your Company’s IP
Does your company have a patent that similar businesses are eager to use? A logo that another company has asked to “borrow”? Copyrighted materials that others would pay for copies of? If so, then consider entering into a license agreement with fellow companies.
Once your company has established what types of IP it has or what forms it could develop, if it makes sense, cash in on your company’s IP through licensing. By doing so, this can provide your company with an additional stream of revenue and add substantial value to the company in the event of a future sale.
Licensing agreements may be instituted to add supplemental income to a company while protecting the company’s valuable IP assets. A licensing agreement is a partnership between an IP rights owner (licensor) and another who is authorized to use such rights (licensee) in exchange for an agreed payment (fee or royalty). Different IP rights will require different types of licensing agreements, some more complicated than others, however, each licensing agreement is an opportunity to add additional income to your company.
So, remember, it does not matter what kind of business your company conducts, the size of your company, or your company’s geographical footprint, every company receives an advantage by building and protecting their IP portfolio and using its IP assets to grow and add value.
