Intellectual Property Protection for Start-Ups

No matter what industry you’re in, if you’re starting a business, it’s a great idea to pay attention to your start-up’s intellectual property. If you do things the right way, you’ll safeguard the identity of your business in the marketplace, make it easier to raise money, help your social media presence and generally safeguard your competitiveness.

1. 1. What is intellectual property?

U.S law recognizes three distinct types of intellectual property: copyrights, trademarks and patents.

1. 1. Copyrights. Copyrights protect artistic expression fixed in tangible form. In other words, things that you create, or someone working for you creates, that you reduce to some type of physical form are eligible for copyright. The range of things eligible for copyright protection is incredibly broad – copyright protects works of visual art, books, movies, sound recordings, computer programs, architecture, maps, technical drawings and more. 

How can copyright help your business? For starters, all of the materials you create to describe your business are protected by copyright. That includes software code (even if “open source”!), the information you share on your website, such as words and pictures; the information you include in your social media campaigns, including videos; any jingle your business uses in commercials; and pretty much all of your businesses’ communications. Copyright can help stop your competitors from looking and sounding like you in the marketplace.

2. 2. Trademarks and service marks.  These are words and images that are used to identify the source of goods and services in the marketplace. It’s very important that, when consumers buy products from your business, or use the services of your business, that they know those services come from your business and no other source. For example, it’s important that people know the iPhone they just bought actually came from Apple; it’s important that people know that the streaming service they are signing up for is Netflix and not some other entity.

How can trademarks help your business? You can stop people from confusing buyers into thinking that someone else’s products and services are actually your products and services. You spend a lot of time and money building a relationship with your customers, and a trademark or service mark will stop someone else from stealing the goodwill you worked so hard to create and using it to compete against you.

3. 3. Patents. Patents protect products and processes (informally, “inventions”). In order to be eligible for patent protection, that product or process has to be useful, usable, novel and non-obvious. So, you have to do more than build a better mousetrap in order to get patent protection; you have to build a mousetrap that no one has ever thought of before and that does not copy any elements from any mousetrap already in existence.

Patents are intended to give the patent owner a time-limited monopoly on a product or service so that no one can compete with them for an initial period of years. Perhaps the best-known use of patents is in the pharmaceutical industry, where drug companies are able to stop competitors from marketing generic products which compete with their brand-name offerings for a certain number of years. A kind of “bonus” effect of a patent is that it can help you raise money for your business. Telling venture capitalists that you have applied for a provisional patent can make your business look like a much more attractive investment prospect.

4. 4. Trade secrets. Trade secrets are different from other forms of intellectual property in that there is no statutory scheme for registering them with the Federal government. In other words, you can’t apply for trade secret protection. However, keeping key assets secret can give you a leg up on the competition because, while many may try to copy your product, without the “secret sauce” you use to make the product, they are unlikely to come up with the exact same product independently. 

Trade secrets can include formulas, customer lists, manufacturing processes, data compilations, algorithms, programs, techniques and other things. Protecting your goods and services by keeping their elements trade secrets can be a powerful way to stay ahead of  the competition. Famous examples of trade secrets at the core of wildly successful companies include the formula for Coca-Cola and the recipe for Kentucky Fried Chicken (now KFC).  More contemporarily, we are now living through a boom in AI technology, with many major software services companies now offering AI products, all of which involve secret, proprietary customizations (even though the general methods and software are open source).

2. 2. So, how do you go about protecting your intellectual property? Each type of intellectual property has its own rules for being protected.

1. 1. Copyright. Copyright starts protecting your creative work as soon as it is written down or recorded or otherwise fixed in tangible form. You don’t need to do anything else to gain baseline protections.

However, the basic deal behind copyrights – which goes all the way back to the U.S. Constitution – is that you give the public access to your work, and the government gives you the exclusive right to control that work for a very long time. So, in order to get you to register your copyrights with the U.S. Copyright Office and increase public access to them, the government gives you certain additional rights once you do. For example, should someone infringe your copyright and you have registered the copyright in a timely manner, you may be able to skip proving actual damages and just sue the infringer for statutory damages (which don’t have to be proven) – and you may be able to get the infringer to pay your attorney’s fees!

In order to better protect your copyright and gain the above additional benefits, you have to make a filing with U.S. Copyright Office. Filings can be done online for convenience.  The Copyright Office requires you to use the proper form which applies to your type of work, such as the form which applies to works of the visual arts and the form for works which are in text form. Also, it may be possible to file copyright in multiple works at one time. In order to complete the copyright registration, you will be required to provide the Copyright Office with a specimen of the work being protected, so that that work can be filed with the Library of Congress. For works owned by individuals, copyright protection lasts for their lifetime plus 70 years. For works in which the copyright is owned by a company, that protection lasts for 95 years from the date of publication or 120 years from the date of creation, whichever is shorter.

2. 2. Trademark. As with copyright, basic trademark protections do not require you to file anything with the government. However, moreso than copyright, in order to best protect your trademark or service mark, you have to make the appropriate filing with the U.S. Patent and Trademark Office. These filings are somewhat more complex than the average copyright registration application. In order to complete that filing, you will have to determine which one (or more) of 45 possible classes of goods and services applies to your particular good or service. You then have to provide the U.S.P.T.O. with a proper description of your goods or service; a specimen of your trademark or service mark as actually used in commerce; and the date you first started using your trademark or service mark in interstate commerce. If you haven’t used your mark in interstate commerce yet, you can file on the basis of an intention to use, for a limited time prior to actual commercial use.

It should be noted that not every trademark or service mark is eligible for protection. Unlike copyrights, where the standard for registration is pretty low, trademarks need to be somewhat distinctive in order to be registrable. The U.S.P.T.O will often reject a trademark or service mark application because the mark is deemed generic or is deemed merely descriptive of the product or service. The mark needs to be suggestive of the product or service, without being generic or merely descriptive, at a minimum; stronger marks are fanciful or arbitrary. Referring to the pharmaceutical industry again, one of the reasons drug names are so unique is to make the trademarks stronger. 

Once your trademark registration application is filed, it is very common to get correspondence from the person assigned by the U.S.P.T.O to examine that application (the “examiner”). It may be necessary to provide additional information to the examiner, or to answer any objections to registration that the examiner may raise. If this occurs, the process can quickly get more complicated than a typical non-attorney can reasonably handle themselves.

3. 3. Patents. The process of protecting a patent is much more involved than either a copyright or trademark application. After you have determined that what you’re seeking to protect is not a creative work, which is protected by copyright; and not a mark which identifies your goods and services in trade and commerce, which is protected under trademark and service mark registration, patent protection may be the best fit (this categorization may not always be trivial to determine, however – such as in the case of design patents. An attorney can help guide you in these matters). Once you are clear that you are attempting to protect a useful, novel and non-obvious product or service – and you determine with your legal counsel that it would not be better to simply keep the invention a trade secret to avoid disclosing it publicly – you can start the process of applying for a patent.

The first step is to search all the previously registered patents to make sure that what you are trying to protect is not already being protected on behalf of someone else. Next, you have to determine which type of patent you need – a utility patent, a design patent or a plant patent. For most businesses, the goal is a utility patent. Once all of that is completed, you can prepare and submit your application. It is possible that the U.S.P.T.O may contact you to let you know that your application is incomplete in some ways. Once you get over that hurdle, you will be assigned to a patent application examiner, who may simply accept the application, require you to take further steps or ultimately reject the application.

It is also possible to file a provisional patent with the U.S.P.T.O. A provisional patent will give the filer 12 months of protection on the basis of a relatively simple description of the patent in order to more fully develop ideas, test the commercial potential of those ideas or further refine the product. The provisional patent gets the filer an earlier date of protection with minimal risk or investment, and also protects against loss of patent rights on the basis of public disclosure during the provisional period.

4. 4. Trade Secrets. Unlike copyrights, trademarks and patents, you don’t register your business’ trade secrets with the Federal government. Instead, you have to craft a plan that keeps those trade secrets from being made available to the public. The steps necessary to protecting trade secrets involve, at a minimum:

1. 1. Making sure that any written materials which include those trade secrets are marked as Confidential. That can be with a banner at the top of those written materials; by limiting access to those materials by putting them in a safe or behind a firewall; and never disclosing those trade secrets in any public-facing document or communication; 

2. 2. Having everyone and anyone who has access to those trade secrets sign a non-disclosure agreement, or NDA. An NDA typically provides that the people gaining access to the protected information will not publicly disclose that information; will tell the trade secret owner if any government agency attempts to gain access to the trade secret; will only use the trade secret for uses approved by the owner of the trade secret, and for the benefit of the owner; and will destroy all copies of the trade secret upon request of the trade secret owner. An NDA may also include the right of the trade secret owner to seek an injunction against the distribution of the trade secret in question by the person who has been given access; and

While trade secrets used to be protected by different laws in different states, in 2016 the US passed the Defend Trade Secrets Act, or DTSA. The DTSA protects against the misappropriation of trade secrets and allows US companies to protect themselves from actions taken by both US and international actors.

Through the proper use and maintenance of copyrights, trademarks, patents and trade secrets, your start-up will have a much easier time protecting goods and services from competing knock-offs, as well as safeguarding the goodwill and business investment you work so hard to build. By taking the proper steps in the start-up phase (it’s never too early to start!), you will be avoiding potential headaches down the road and setting yourself up for success.

If you have any questions about anything in this article or think you might want assistance in protecting your start-up’s intellectual property (including potential intellectual property), lawyers at Industria Business Lawyers, LLP are available and standing by to help – don’t hesitate to contact us.