Why You Should Safeguard Your Newly-Formed Business IP


You started your own business. The papers are on file with the Secretary of State, and you are ready to go. Congratulations! Here is what you need to think about from an Intellectual Property (IP) perspective.

Identify & Protect Your Most Important Assets

In today’s economy, your most valuable asset tends to be your brain power. This includes your IP: patents, copyrights, trade secrets, trademarks and so on. Depending on what you are making and selling, you need to find the right IP to protect your commercial space.

Making Physical Products? If your new business is selling widgets, consider whether the widget is a lot different from old fashioned widgets. Is it configured differently? Is it surprisingly effective? If so, consider seeking a utility patent. If your concept turns out to be patentable, you get the right to exclude others from making, using, selling, offering for sale or importing your invention for 20 years.

If your widget is more of a pizzazz piece – expected to sell because of its sleek appearance – consider seeking a design patent. These protect inventive ornamental features. Your widget may also be entitled to copyright protection. This works if the aesthetic elements of the widget are separable, at least conceptually, from the basic function of the widget.

If your widget has been around, but you developed a better way to make it, you may want a trade secret rather than a published patent application. That is especially true if you cannot tell whether competitor’s widget was made by your method. For this, you will need non-disclosure agreements, employee agreements and solid protocols for maintaining your secrets.

Selling a New App? If you coded the next killer app, the IP issues are a bit more complex. Did you use open source code? Did you integrate open source code into your app? If so, you may have some restrictions on what you can assert as your property against others. The General Public Licenses are beyond the scope of this article, but worthy of your further attention if your app interacts with open source code.

If your software is proprietary, you have a few more options. Certain software applications can receive utility patent protection, even in view of the recent U.S. Supreme Court decision in Alice v. CLS Bank. You have to make sure your patent claims “something more” than a mere abstract idea.

Also, your code may be an original work of authorship that qualifies for copyright protection as a literary work. Your code may be registered as a visual work if pictorial or graphic authorship predominates the program. Or it may be a motion picture / audiovisual work, if it is highly animated, for example.

Branding If the caché for your business is its branding strategy, protect it every way you can. One of the best ways is to select strong names and logos for your goods and services. Use the marks right and consistently, and file for federal trademark registrations for the most important ones. If someone tries to “palm off” the goodwill you invested in your brand by using a confusingly similar logo, you will have a federal cause of action.

Maximize the Value of the IP

IP is at its strongest when you follow some basic rules:

  •  For patents, make sure the business entity owns them, and that the ownership is recorded at the Patent Office. Make sure any products covered by the patents are “marked” in compliance with Title 35.
  • For copyrights, if someone else is developing content for you, make sure they are doing so pursuant to a “work for hire” contract. Register and put notices on your important works.
  • For trademarks, choose a fanciful or arbitrary mark that is memorable and does more than describe the nature of your goods or services.
  • Consider Purchasing IP Abatement Insurance after filing your most important IP applications. As a startup, you likely cannot afford a lawsuit. These policies, if purchased before commencement of infringing activity, put IP enforcement within your reach.
  • Police for infringers. Nothing devalues your IP like others stealing it.