Asking for a Fight
Locked doors and a security system protect your equipment, inventory and payroll. But what protects your business's most valuable possessions? Intellectual property laws can protect your trade secrets, trademarks and product design, provided you take the proper steps.
Chicago attorney Kara E.F. Cenar of Welsh & Katz, an intellectual property firm, contends that businesses 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. "They tend not to see the value of intellectual property until a competitor infringes." But a business that hasn't applied for copyrights or patents and actively defended them will likely have trouble making its case in court.
One reason many business owners don't protect their intellectual property is that they don't recognize the value of the intangibles they own. Cenar advises business owners to take their business plans to an experienced intellectual property attorney and discuss how to deal with these issues. Spending money upfront for legal help can save a great deal later by giving you strong copyright or trademark rights, which can deter competitors from infringing and avoid litigation later.
Once you've figured out what's worth protecting, you have to decide how to protect it. That isn't always obvious. Traditionally, patents prohibit others from copying new devices and processes, while copyrights do the same for creative endeavors such as books, music and software. In many cases, though, the categories overlap. Likewise, trademark law now extends to such distinctive elements as a product's color and shape. Trade dress law concerns how the product is packaged and advertised. You might be able to choose what kind of protection to seek.
For instance, one of Welsh & Katz's clients is Ty Inc., maker of plush toys. Before launching the Beanie Baby line, Cenar explains, the owners brought in business and marketing plans to discuss intellectual property issues. The plan was for a limited number of toys in a variety of styles, and no advertising except word-of-mouth. Getting a patent on a plush toy might have been impossible and would have taken several years, too long for easily copied toys.
Trademark and trade dress protection wouldn't help much, because 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. Cenar's firm has fended off numerous knockoffs.
That's the next step: monitoring the marketplace for knockoffs and trademark infringement, and taking increasingly firm steps to enforce your rights. Efforts typically begin with a letter of warning and could end with a court-ordered cease-and-desist order or even an award of damages. "If you don't take the time to enforce [your trademark], it becomes a very weak mark," Cenar says. "But a strong mark deters infringement, wins lawsuits and gets people to settle early."
Sleep on your rights, and you'll lose them. Be proactive, and you'll protect them--and save money in the long run.
Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.
(312) 655-1500, www.welshkatz.com