In the Know

Find out all you can about patents, trademarks and copyrights now--your business will thank you later.

You wouldn't open your office for business but then go home without locking up, right? That's essentially what you're doing if you don't secure your business ideas. By taking the proper steps, you can protect your trademarks, trade secrets and product design and packaging with intellectual property laws.

Chicago attorney Kara E.F. Cenar of Bell, Boyd & Lloyd says that entrepreneurs should start thinking about these issues earlier than most do. "Small businesses tend to delay securing intellectual property protection because of the expense," Cenar says. But a business that hasn't applied for copyrights or patents, registered its trade name and trademark, or protected its trade secrets--and actively defended them--may have trouble making its case in court.

One reason many entrepreneurs don't protect their intellectual property is that they don't recognize the value of the intangibles they own. Cenar advises entrepreneurs to take their business plans to an experienced intellectual property attorney. Spending money upfront for legal help can save you from expense later by giving you strong trademark or copyright rights, which can deter competitors from infringing.

Choose Wisely
Once you've figured out what's worth protecting, you have to decide how you'll protect it. This isn't always obvious. Traditionally, patents prohibit others from copying new devices and processes, while copyrights do the same for creative endeavors like books, music or software. But in many cases, the categories overlap. Likewise, trademark law now extends to distinctive elements like a product's color and shape. Trade dress law concerns how a product is packaged and advertised.

Consider Ty Inc., maker of Beanie Babies and other plush toys. Before launching the Beanie Baby line, Cenar explains, the owners sat down with their lawyers to look over their business and marketing plans and discuss intellectual property issues. The plan was for a limited number of toys in a variety of styles, with no advertising except word-of-mouth. Getting a patent on a plush toy may have been impossible and would have taken several years--too long for easily copied toys. Trademark and trade dress protection wouldn't help much, since the company planned a variety of styles. But copyrights are available for sculptural art, and they're inexpensive and easy to obtain. The company chose to register copyrights and defend them vigorously. With help from its lawyers, the company has fended off numerous knockoffs.

Tricks of the Trademark
Your first experience with intellectual property will likely be your trademark, since you need to think about that before choosing a company name. Note that your trademarks might include not only your name, but also a slogan, symbol, picture or logo. Your trademarks are how people identify your business. Think, for instance, of General Mills' cursive "G" or Apple Inc.'s apple with a missing bite.

If you've registered your trademark, you indicate that with an ® behind the name. If it's a trademark you're using but haven't registered, you use a TM instead. A service mark, sometimes seen as an SM behind a name, identifies a service company like a retail store.

Any trademark you use is protected under common law as soon as you start to use it. Under common law, the first entity to use a particular name, slogan or symbol has the right to it. So if you're just planning a single shop, it might be enough to know that no similar local business is using the same name. But if you have aspirations to go further, you'd better have a proper trademark search done and register your mark.

State trademark registration is simple, fairly quick and inexpensive, but it only protects your trademark in your state--so someone with a federal patent still gets first dibs on it.

It's best to register your trademarks with the U.S. Patent and Trademark Office. You can do a preliminary trademark search online, but because of the complexity of the process, you should still use an intellectual property lawyer. And since the process can take several years, you start by filing an "intent to use," which is an image of the trademark and a sworn affidavit that you intend to use it in commerce.

International trademark protection, which you'll want if you plan to set up shop online, is especially complicated. That's even more reason to spend the $2,000 or so it costs to have an experienced trademark lawyer search NAFTA, the USPTO and the international registry of the World Intellectual Property Organization, as well as state databases and common law uses. Once you're properly registered, though, you have exclusive rights to your trademark in the U.S. and 50 other countries.
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This article was originally published in the June 2007 print edition of Entrepreneur with the headline: In the Know.

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