How to Protect Your Business Idea
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CREDIT: Dreamstime
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Intellectual property, while not listed on a company’s balance sheet, is a valuable asset worth protecting. For small businesses, understanding what’s worth protecting and how to protect it may seem overwhelming. Here's the lowdown on those simple, yet powerful words often bandied about by lawyers – patents, trade secrets, copyrights and trademarks – all designed to protect your intellectual property (IP).
“Certainly everyone should be aware of what IP is and what IP they own – do a little bit of stock taking on the IP,” said Ian Cockburn, patent attorney at Pipers, an intellectual property law firm in New Zealand. “Small businesses need to understand what their rights are, and how they can use these tools to actually generate income and also to make sure they’re not infringing on someone else’s exclusive rights,” Cockburn told BusinessNewsDaily.
Some examples of IP include:
- Company name, logo and slogan
- Exclusive products
- Processes or methods exclusive to your business
- Marketing materials—web sites, blogs, brochures, advertising, etc.
Once you’ve identified the company’s IP, the next task is to figure out the value of that IP and how best to protect it.
”A business’ product or service may be eligible for more than one type of IP protection, said the U.S. Patent Office’s website. “For example, the company name could be protected by trademark, its products patented, and its promotional materials protected by copyright. Decide which protections are right for you,” the USPTO website says.
Patents and trade secrets
There are two basic routes one can take in protecting the IP embodied in an invention or product – patents and trade secrets.
A patent “gives its owner the exclusive right to prevent or stop others from making, using, offering for sale, selling or importing a product or a process, based on the patented invention, without the owner’s prior permission, according to a document published by the World Intellectual Property Organization.
“Patents open doors and they close doors,” Cockburn said. They close doors to competitors in that they prevent them from copying a company’s competitive advantage. At the same time, they open doors to the patent owner in terms of licensing and cross-licensing agreements. (Licenses bring in revenue for the patent owner.)
The downside is that patents are published information, which means competitors can use this information and improve on it to create their own competitive advantage, while skirting any patent infringement.
A trade secret, on the other hand, only protects against “improper acquisition, use or disclosure” of that secret, said WIPO in a published document. This means that competitors can legally “reverse engineer” the product, thereby discovering the secret and then be entitled to use it. Also, if the secret is publicly disclosed, anyone who gains access to this information is free to use it.
The upside: Trade secrets are not public, and if they are enforced by the company through employee agreements and company culture, they can be a valuable way to protect certain IP. For example, some IP does not meet the patentability requirements but can get trade secret protection.
“While patents and trade secrets may be perceived as alternative means of protecting inventions, they are often complementary to each other, said WIPO in a published document. “This is because patent applicants generally keep inventions secret until the patent application is published by the patent office. Moreover, a lot of valuable know-how on how to exploit a patented invention successfully is often kept as a trade secret.”
Copyright and trademark
A company’s IP extends well beyond its products. There are client lists, brand symbols and other literature.
Most companies will have some sort of business IP that is protected by copyrights. Some examples from WIPO: computer programs or software; website content; product catalogs; operating manuals for equipment or consumer products; the art and text on product literature, labels, or packaging; and marketing and advertising materials.
Other ways to protect “original creations” include trademarks and design patents. Trademarks provide “exclusivity over a sign (such as a word, logo, color or combination of these) which helps to distinguish the products of a business from those of others,” WIPO said in a document. Design patents, on the other hand, protect “ornamental or aesthetic features of a product,” the document said.
Patents and trademarks can be filed with the U.S. Patent and Trademark Office. The U.S. Copyright Office has an online filing system. For more complicated IP issues, such as trade secrets and employee contracts, an intellectual property attorney may be helpful.