Why Protecting Intellectual Property Is Crucial to Business Success on 5 Counts An ounce of prevention can be really worth the investment.
By Darin Klemchuk Edited by Frances Dodds
Opinions expressed by Entrepreneur contributors are their own.
Because intellectual property is not a physical asset, it can easily be overlooked. Safeguarding a company's intellectual property is crucial to developing and maintaining a successful business, however.
Yet a company's use of its intellectual property can result in high-stakes battles. This past year top U.S. politicians criticized the very name of a NFL team, the Washington Redskins, and last month the U.S. Patent and Trademark Office Trial and Appeal Board cancelled federal protection for its trademarks, saying they disparage Native Americans. The team is appealing this decision, which has implications for its sale of merchandise.
The following is an overview of different ways business owners can protect their intellectual property:
Related: 7 Persistent Myths About Intellectual Property
1. Brand recognition. When a company builds strong goodwill with consumers, its identifying trademark as the source of certain products or services can be extremely valuable. These brands act as a shorthand for quality. Almost every business has at least one trademark. In most cases, a registration with the U.S. Patent and Trademark Office (charging a filing fee of $325 per class of goods or services) provides a good first step in protecting the brand.
2. Competitive advantage. Know-how, confidential information and trade secrets (think of the recipe for Coke) fall into a category of intellectual property called trade secrets. Every business with employees is at risk of trade-secret theft. Patents can protect technological innovations. But the invention must be disclosed publicly for someone to obtain a patent. Trade secrets and patents can be enormously valuable to a company, mainly because they give it a leg up over the competition.
Timely patent registration, employment agreements and nondisclosure agreements are a few steps that can be taken to protect trade secrets and patents.
Related: How to Take Advantage of the "First-to-File" Patent System
3. Creative works. Depending on the business, copyrights can be an extremely valuable asset. For example, software companies, creative companies (involved in film, photography, marketing and advertising), and technology companies, all can benefit by registering copyrights for their key works. The U.S. Copyright Office charges only a $35 fee for a registration. For the price of the filing fee, a copyright owner gains the ability to seek a special type of damages for infringement (called statutory damages), and attorney's fees, if the claim is successful.
Related: How to Avoid Trademark Infringement
4. Internet presence. In today's world, ecommerce is a vital part of sales and advertising strategies for many companies. Establishing and protecting a distinctive Internet presence can be extremely valuable. An owner should consider domain-name registration, practicing search engine optimization, claiming business listings in various search engines and directories, and monitoring periodically for infringement.
From a legal standpoint, be careful to ensure that all account passwords are kept in a central location and in the company's name. Allowing employees or independent contractors to control the account credentials can lead to significant problems if these individuals become antagonistic or disappear.
5. Social media. Any intellectual property advantage can be affected by social media. To protect their intellectual property and avoid legal problems, companies should include social-media policies in their employee handbooks.
Some issues at stake include inadvertent disclosure of confidential information in social media that could lead to an erosion of competitive advantage (involving trade secrets or patents), infringement on trademarks by third parties via social media, infringing posts of creative works (affecting copyrights) and inappropriate employee comments or product reviews.
An ounce of prevention can really be worth the investment. Registering a company's name and key brand as social media handles and user names is another effective strategy to avoid costly legal disputes later.
Related: Writing Social Media Guidelines for Your Company? Tread Carefully.
