Are you regularly identifying intellectual property (IP) in your business?
If you’re like many entrepreneurs, you might think that you don’t have any IP. You may believe that IP is only for technology companies and large corporations. That’s a mistake.
IP is critical to many businesses in a variety of industries. I have encountered countless situations where IP is the most valuable asset of a business. Here are three common IP mistakes that can put your business at risk.
1. Failing to identify intellectual property
All entrepreneurs and small businesses create IP assets during their day-to-day business operations. Your IP may include creative ideas, artistic works, inventions and trade secrets. Items such as articles, books, marketing materials, website content, product names, company logos, novel product designs and trade secrets are examples of IP assets.
Unfortunately, many entrepreneurs fail to recognize IP assets being created in their business. This mistake causes businesses to overlook valuable IP that might provide a competitive advantage by distinguishing the business from others in the marketplace.
The first step in evaluating and protecting IP is to identify the IP assets. Once you have identified those assets, then you can evaluate their value and determine whether the IP is worthy of being protected.
If you fail to recognize the IP in the first place, that asset is lost or, even worse, donated to the public domain. If your IP falls into the public domain, the unique creation or invention that distinguishes your business is freely available for all of your competitors to use. You invested the time and expense of creating the idea or invention, but everyone else gets to use it for free. Your competitors receive a free gift and you lost a valuable competitive advantage.
Create a habit of identifying the IP you create in your business and protect the most valuable creations using a copyright, trademark or patent.
2. No agreements to ensure intellectual property ownership
When starting a business, many entrepreneurs find it cost-effective to hire contractors, consultants and freelancers to help with certain activities. For example, graphic design, website design, video editing and copywriting activities are commonly outsourced to freelancers.
This is a critical time for new businesses to protect their IP, especially the business name, company logo and product/service names. These items represent the foundation of the business and it must own these IP assets.
When hiring anyone to do work for your company (both freelancers and employees), be sure you own all IP rights to the items created by that person. For example, if you are hiring a freelancer to create a graphic design used by your company, you should own all IP rights to the created design. This prevents the freelancer from selling the same design to other clients, which may include your competitors. Whenever possible, use a written agreement with a IP clause for every employee, freelancer, contractor and consultant working for your company.
I have seen situations where a company hired a freelancer to create the company’s logo with no agreement indicating who owned the IP rights. Several months after the company had invested significant time and funds to incorporate the logo into its branding materials, the same logo was used by another company (in one case, a direct competitor).
If you are paying someone to perform work for your company, use a written agreement to be certain you own all IP developed by that person.
3. Not protecting intellectual property quickly
In some situations, entrepreneurs must take fast action to protect their IP. For example, the United States patent laws are based on a first-to-file system. If you develop an invention, but don’t file an application rapidly, another inventor may develop the same invention at a later time and file a patent application. If you have not already filed a patent application, the later inventor typically has priority over the earlier inventor because they were the first to file a patent application.
Other situations can occur with trademarks if two different companies use similar trademarks to identify the same goods or services. In a recent example, I worked with a client who spent a significant amount of time and money developing a business system with a unique name. The client began marketing the system before taking steps to protect the name as a trademark. Several weeks later, a competing business began using the same name for their own business system. The client will not necessarily lose the right to use their name, but they must take fast action to protect this core part of their business.
Start protecting your business today by looking for the IP assets you regularly create. Identify your most valuable IP and take steps to safeguard those assets to avoid future headaches.
You are invited to continue this discussion in my Free Intellectual Property Community where you can connect with other entrepreneurs and get intellectual property tips and strategies.