Intellectual property (IP) is not necessarily something on the forefront of every entrepreneurs’ mind. However, copyright infringement and other violations of intellectual property rights could result in a major expense, so it’s important to be apprised of the legal limitations and whether you could be violating the law.
“The first step in protecting IP is determining what the IP actually is,” said MaryAnne Armstrong, partner at IP law firm BSKB. “Is the IP something that is best protected by a copyright, trademark, patent or trade secret?” [Small Business Legal DIY: What's OK to Do Yourself]
The major types of intellectual property protections one might encounter, Armstrong said, are:
- Copyrights: Copyrights protect the rights to “original artistic works” including literary, dramatic, music, video, architecture, computer software, and so on.
- Trademarks: Trademarks protect aspects of branding like words, phrases, or symbols that identify goods, services, and companies.
- Patents: Patents cover inventions and protect the rights to that innovation for a predetermined amount of time. These include utility patents, design patents, and plant patents.
- Trade secrets: Trade secrets protect information of a proprietary nature, including formulas, programs, and data. Trade secrets grant one party an economic advantage over competing interests.
Unfortunately, avoiding infringement is not always so cut and dry. Entrepreneurs run the risk of violating the legal limits of IP rights in many ways each and every day, so the it’s important to inform every decision you make regarding the use of graphics, slogans, and even particular product components.
"There are many ways that entrepreneurs could unknowingly infringe upon someone else's intellectual property, or leave themselves open,” said Mary E. Juetten, founder of IP protection service provider Traklight.
One of the costliest IP mistakes entrepreneurs can make is using work they don't own the rights to, Juetten said. When you hire an outside source to create something for your business, ownership of the created work — graphics, written content, coding, websites, etc. — doesn't automatically transfer to your company. It needs to be explicitly stated in a contract that the creator gives his or her rights to that work to you.
Juetten gave the example of a Web designer being hired to create a website for a company. If the work is done without a contract, or is based on a contract that has no mention of who owns the website files, IP issues can arise if the designer wants use the files he or she created for another purpose. IP theft can also occur with product development if the entrepreneur hasn't secured patents for the product.
"If patents are not all assigned to the company, there may be a risk that one [developer] can commercialize the product on their own," Juetten told Business News Daily.
To ensure that your business stays out of legal trouble for IP infringement, Juetten offered the following tips:
- Plan and prepare. Before you begin promoting a product, piece of content, or other material for your business, take the time to research related patents and copyrights to make sure your idea isn't already protected by someone else's IP copyright. This is especially important for crowdfunding campaigns, which can be affected by international patent rights.
- Read the fine print. Always read all the terms and conditions in contracts or licenses for online images, music, video or other content. Even if you don't have time to read the whole thing immediately, download and save a copy to refer to for any future questions about infringement.
Additional reporting by Nicole Fallon.