When Kim Hawkins hired the first employee for Events Wholesale, a discount event and wedding planning supply company, she willingly showed the staffer how they ran the successful e-commerce business.
"We gave her supplier and customer information without a second thought. She had complete knowledge of confidential business practices," says Hawkins, president of Events Wholesale.
It made sense—until the employee quit to start a competitive business.
Hawkins now advises business owners to protect their intellectual property by getting professional advice about confidentiality and noncompete agreements before hiring anyone. She adds that intellectual property can include supplier and customer lists, advertising keywords, and other confidential information unique to your business.
Three most common types of intellectual property protection
Hawkins's experience is a reminder that protecting your company's intellectual property extends beyond the three terms most associated with protection: copyright, trademark, and patent. Still, each of these is important to understand, especially if you have an exciting product idea:
- Copyright. A copyright lets you protect authorship and creation—of books, songs, screenplays, artworks, software, and so on—from being copied, so that others don't make money from your creative work without your permission.
- Trademark. A trademark, according to the U.S. Patent and Trademark Office (USPTO), "is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others."
- Patent. The USPTO defines a patent as "a limited duration property right relating to an invention."
There can be some overlap between copyright and trademark protection.
"If the business owner is protecting a branding asset, such as a company name, logo, or slogan, he or she will register a trademark," says intellectual property attorney Abe Cohn of Cohn Legal, PLLC.
However, you may choose to seek applicable copyright protection as well; for example, to protect a logo as an artistic work.
Types of patents
If you've got an invention you want to patent, the next question is, "What type of patent do I need?" There are three main types according to the USPTO:
- Utility patent. The USPTO reports that about 90% of the patent documents issued are this type. A utility patent protects inventions that include machines, processes, things that are manufactured, and compositions of two or more substances. It gives the inventor the right to prevent others from making, using, or selling the invention for up to 20 years.
- Design patent. A design patent is issued for any new, original, and ornamental designs embodied in or applied to a manufactured article. It applies for 14 or 15 years, depending on when the patent was granted.
- Plant patent. A plant patent is granted to anyone who invents or discovers and asexually reproduces a distinct and new plant variety.
If you need a utility patent and haven't fully refined your invention, but you expect to do so within a year, then consider filing a provisional patent application. This gives you the right to use the term "patent pending." However, you will lose the protection if you don't file for a non-provisional patent within 12 months.
Other ways to protect intellectual property
Both legal experts and small business owners like Hawkins advise protecting your intellectual property in other ways, too.
If it's in files that can be copied, Allan Buxton, director of forensics at SecureForensics, recommends preconfiguring servers and workstations to log file system copies. "No modern operating system logs file copies between storage devices by default. Talk to your network administrator or services provider about turning on or expanding file audit services," he says.
You might take that even further, says Nicole Haff, litigation partner at Romano Law, by restricting server access to certain groups and password-protecting sensitive files. She also suggests using a dummy name before a product goes to market in case these measures fail and there's a leak.
Erin Austin, founder of Erin Austin Law, points out that any unique methodology used to provide client services, including workbooks or assessments, is valuable intellectual property that you should protect. To do that, be clear on the differences between "work for hire," "assignment," and "license."
"If you don't understand [these terms], you may be giving clients the right to make and distribute copies, make derivatives of your work, or provide your training to affiliates without you," she cautions.
Protect your small business's intellectual property by consulting with an intellectual property attorney. Investing in professional advice now can protect you from frustration and loss later.
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