LEGAL GUIDE
Written by attorney Bruce E. Burdick | Dec 14, 2011

Starting Business? How to Protect Your Creations (your “intellectual property”)

Know Your Options, there are many kinds of protections

Patents protect inventions that are new, useful and unobvious. The owner of a patent has a right to exclude others from making, using, selling, offering for sale or importing the claimed invention, upon issuance of the patent and ending 20 years from the date of filing a patent application . Copyrights protect original works of authorship in tangible form. The owner of a copyright has, among others, the exclusive rights to reproduce the copyrighted work, prepare derivative works, distribute copies or phonorecords of the work, and perform or display the work publicly. A copyright last a long time, the life of the author plus 70 years or, in the case of a business, 95 years from publication or 100 years from creation (whichever is earlier). A trademark or service mark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that is used in association with goods or services in commerce to identify their source and distinguish them from similar goods or services of others. A trademark or service mark can last forever if properly maintained and used. The owner has the right to prevent others from using a confusingly similar mark. A trade secret is information of commercial value not generally known and can last as long as it is still not generally known, often decades. It is protectable if subject to reasonable efforts to maintain secrecy. By protecting a trade secret, its owner can maintain a competitive advantage over other companies in its industry. A domain name is an internet address obtained from ICANN via a registrar and can last indefinitely so long a renewed and maintained and not adopted or used illegally. It is protected much like a trademark or service mark although there are unique procedures to protect. A IP license is an agreement giving another entity permission to use your intellectual property under terms and conditions defined in the license agreement. These need to be done properly to be legal and enforceable, as there are a number of laws preventing over-reaching by licensors.

Learn how to acquire IP rights to creations of those who work for you

Whether created by employees or independent contractors, your rights depend on which types of IP are created:

Patents – Generally, but subject to certain exceptions, companies do not own patentable inventions that employees or contractors develop on the job unless there is an agreement by which the employee or contractor assigns the invention to the company. So, you need to hire a patent attorney or business attorney to prepare such an agreement and have each employee sign it. Once you have such an agreement, under current law, you can proceed to obtain patents even if the inventor refuses to cooperate. Without such an agreement, filing for patent protections can be very problematic if the inventor chooses, for whatever reason (such as having been fired) not to cooperate.

Copyright s – For work prepared by an employee in the scope of employment, the employer is legally considered the author and owns the copyright. For works prepared by contractors a WRITTEN agreement, called a “work-for-hire" agreement, or an agreement assigning the copyright is needed to obtain ownership, as the contractor is presumed the author and owner absent such an agreement. You should have a lawyer prepare that agreement.

Trademarks – Ownership is based on first use of the mark in commerce or first application for Federal registration followed by timely use in commerce. If the mark is first used (or applied for Federally, if earlier) by the employer, the mark will be owned by the employer, except under very unusual conditions.

Trade secrets – The one who created the information owns the information and the “trade secrets" pertaining to it. Like with copyrights, an employer generally owns trade secrets. You will want an employee agreement that spell this out so there is no dispute. The wise employer will have each employee sign an employee agreement safeguarding proprietary information and invention assignment agreement requiring that the employee: - Document inventions, assign all rights to the employer, and assist the employer in perfecting those rights. - Maintain employer information in confidence.

Domain name – Owned by the first to register legally. It is usually not legal to register as a domain name someone else's trademark.

License – A license is owned by the parties to the license agreement.

How to own the creations your contractors make for you:

-US based contractors. In a nutshell, you need a good agreement.Start-ups usually start small and use independent contractors for many tasks such as designing products, creating ads, photography, distribution, marketing, etc. To own the creations you pay for, you need a sound legal agreement with the contractor, as the law generally is that the contractor owns the creation unless otherwise agreed. Your company may have to pay an exorbitant price to get control of it if you don't have an agreement that you, not the contractor, control and own the creation. This is especially true with patents and copyrights, absent an agreement to the contrary, the independent contractor typically will own the work product, and the company will, at most, merely have a license to use it. It is best to have an intellectual property law attorney prepare that agreement so that your position is fully protected. The agreement should call for the contractor to sign all formal documents transferring ownership to you, to inform you of any infringements known to the contractor, to assist in any enforcement, to keep the creation secret, and to do nothing to undermine the value of the creation.

-Foreign contractors. Realize that foreign contractors may not be subject to US law and may not be subject to suit and may not be honest and that enforcing rights in other countries where the Government will not be on your side can pose big problems.For example, Chinese, Japanese and Korean companies are notorious for stealing IP and until recently for a Government with deliberately weak laws to protect IP owners. As a result, it is best to send overseas only IP that your company can afford to have stolen overseas. If the market is only in the US, there are protections against importation of infringing goods. In fact, CBP (Customs & Border Patrol) allows you to register your IP and they will watch for and even confiscate any counterfeits they discover.

Have an IP Audit Performed

Have an intellectual property lawyer with the broadest most experienced background you can find review your company and its business and technology to determine what intellectual property you have. This is an important investment in the future of your business. An IP Audit not an expensive proposition for a start-up, but can be quite expensive for a large diversed business with lots of R& D. Doing this audit will allow your business to identify and protect all of the protectable IP . I have done over 50 of these and never have I failed to find several key pieces of IP that the owners had not given much thought but which when protected turned out to be very important to their ultimate success.

You can file online, but be very careful

To save money, entrepreneurs sometimes file their own patents, trademarks or copyrights online, as the Government has set up procedures to allow online filing so as to reduce the need for paper files and take advantage of computerization. However,just because you can do it does not mean you should. These are very valuable rights andunless you know what you are doing, you are taking a major legal risk in filing online yourself. These online procedures are really intended for use by patent, trademark and copyright attorneys who know exactly what they are doing. Your should NEVER try to file a patent without the assistance of a patent attorney. Big businesses know this and always use one. So should you, and it will save you money in the long run by avoiding lots of unnecessary legal problems that will usually result in loss of your patent rights if you file yourself. With trademarks, online filing is not as risky since the software has error checking, but unless you have substantial experience in trademarks you are engaging in a high risk gamble filing on your own. With copyrights, however, it is usually possible to file on your own once you have been through the process using an attorney. So, use an attorney for your first copyright application and thereafter you can likely do your own. Of course, the prudent thing is to use an attorney if you can afford one. If you run into any rejections, refusals, or objections from the Government on any of these applications, then you absolutely should immediately get an attorney who is skilled in responding to them or you will almost certainly damage your legal position.

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