What You Need to Know to Protect Your Big Idea Trademarks, patents and copyrights are esoteric legal matters of huge importance to entrepreneurs.
By Charley Moore Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Intellectual property, trademarks and patents are dense and can be intimidating for many in the startup world. Unless you delve into the nuances of these legal issues on a daily basis, it's difficult to understand the impact that these processes can have on your business. However, we don't have to go very far from Silicon Valley -- and the heart of technology -- to illustrate their importance.
Recently, one of the most well-known craft breweries in Northern California, Lagunitas, filed trademark-infringement lawsuits against a fellow craft brewery, Sierra Nevada Brewing Company, over the logo of its newest brew. To Tony Magee, founder and CEO of Lagunitas, the bold IPA design on the label Sierra Nevada's brew was too similar, and in an attempt to protect his brand, he decided to take legal action. Following a Twitter backlash, Magee decided to drop his case.
While we'll never know how this story would unfold, the incident brings up important questions for any growing brand in a competitive space. How can I protect my brand? And how do I keep from infringing on others?
Related: Lower Trademark Filing Fees Coming Soon
The Lagunitas/Sierra Nevada incident's reverberations will be felt by the tech community, as well. Just a few weeks ago, Minneapolis startup Tech Guru, LLC, which operates under the domain name TechGuruit.com, filed a federal lawsuit for trademark infringement against Tech Guru Consultants, Inc. of New York, which operates under the domain name TechGuru. Similar cases are sure to appear in Silicon Valley, where emerging startups often snatch up tech-centric phrases and buzzwords like guru, app, insights and cloud.
Though it seems tedious, it's imperative that entrepreneurs invest adequate time and money in brand research and defense. This often translates to legal procedures that protect trade names, in order to avoid infringement. Ignoring legal process often leads to costly repercussions, ranging from monetary settlements to forced brand changes. Those are unfortunate consequences for brands that may have been picking up steam. Such could have been the unfortunate reality for Sierra Nevada, if it had to change its new beer logo as a result of the lawsuit that was brought, then dropped, by Lagunitas.
The fast-paced nature of the tech and startup industries can make protecting intellectual property a challenge. It can take years and thousands of dollars to go through the patent process. Coupled with a rapidly evolving market, applying for a patent may be a moot point for companies working with technologies and innovations that can change overnight. However, there are options and workarounds for companies to overcome this challenge. Outside of traditional patents are provisional ones, which offer a faster and cheaper alternative for startups that fall under these categories.
Related: How to Take Advantage of the "First-to-File" Patent System
Regardless, all businesses should aim to have some form of protection. No one can be certain that their big idea will not be poached for someone else's profit. For example, there are patent, trademark and copyright "trolls," or patent holding companies, bent on hoarding intellectual property to bully small companies into legal settlements. Even giants like Apple and Google aren't safe, as they often find themselves spending more money on patent litigation than in research and development.
As a result, it is important that entrepreneurs are aware of the different intellectual property types:
Patents: Patents are usually best for products or services involved with ideas or bodies that are already in place. They stand in contrast to trade secrets, which usually serve the business best when kept under wraps from competitors.
Trademarks: Trademarks protect names or symbols associated with a product or series by preventing others from conducting business under the same moniker. It also protects consumers from being confused by businesses that attempt to use similar or blurring names for their products, as a scheme to build brand awareness.
Copyrights: Copyrights protect original works that are fixed on perceptible mediums of expression including literary or musical works, as well as images, music, software, or video. Although this step is not often necessary, it can help in any future legal proceedings.
Many entrepreneurs opt out of these steps to save time and money, but recent developments in filing and new classifications for small businesses have streamlined and lowered the cost of the process. Moreover, the America Invents Act (AIA) of 2011 further focused the process by changing the process from "first-to-invent" to "first-to-file," so it pays to jump on the process sooner rather than later.
Another option for brands is to acquire a trademark under common law through consistent use. However, this route can be risky, as it is much more difficult to hold up in court. While acquiring a common law trademark through building brand identity and loyalty may seem tempting, going through the proper legal procedures is a much safer option. Using the proper channels don't take too much time, are low cost and can save you a legal headache in the long run.
Choosing the right legal protection is a must for any business at any level—especially in tech, where the next big idea is always right around the corner. Ultimately, it's recommended to tap legal counsel when choosing the right path for your business. Putting in the time and effort up front to go about legal procedures the right way could be what saves your business time and money in the future.
Related: When Entrepreneurs Should Be Concerned About Copyrighting and Trademarking
