NFIB

Taking Stock of Your Intellectual Property Assets
12/ 04/ 2002

by John C. Borden

Whether you're looking to sell or merge your company or raise capital, intellectual property is essential to properly valuing your business in the transaction.

However, many business owners don't take adequate precautions to protect their intellectual property assets early in the business or product life cycle. As a result, they unwittingly leave their companies vulnerable to costly lawsuits and the potential of losing ownership rights to innovations that bolster their competitive advantage.

What can you do to protect your intellectual assets and maximize your company's value? Here are four things to remember.

1. Register Trademarks

When you come up with a new name for your company or a particular product or service, conduct a trademark search to determine whether your proposed mark infringes on existing marks. Otherwise, you can spend substantial sums printing brochures and placing advertisements, only to receive a "Cease and Desist" letter claiming that you are infringing on someone else's mark. Contact your attorney or a professional search firm for a comprehensive search to ensure availability and consider seeking federal protection for your mark, if it's available.

2. Patent Products and Processes

Patent law protects any "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." A U.S. patent owner has the exclusive right, for a limited time, to exclude others from making, using, importing, offering or selling the invention throughout the United States.

The patent process is complicated, time-consuming and can be costly, so contact a competent patent attorney BEFORE making a significant investment of time and money.

3. Keep Trade Secrets Secret

Trade secret protection is available, in appropriate situations, for sensitive materials such as marketing plans, strategic plans, financial statements and business methods, among other things. Federal and state courts consider various factors to determine whether information constitutes a company's protectable trade secrets.

Protect the value of your trade secrets by using non-disclosure agreements with employees and outside contractors, marking sensitive documents as "CONFIDENTIAL" and restricting access to company secrets on a "need-to-know" basis.

4. Protect Copyrights

While you're not required to register copyrightable materials to create or maintain a copyright, registration is necessary in order to bring a copyright infringement case. Also, when using independent contractors to develop software or any other type of copyrightable work, obtain assignment and/or work-for-hire agreements from each contractor to ensure that appropriate copyright and invention assignment rights revert to your company. Otherwise, you risk investing money in developing intellectual property assets, only to have the ownership rights go to the contractor. It's much easier to obtain agreements on the front-end rather than months or years after the fact.

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This article originally appeared in the December/January 2003 issue of MyBusiness magazine.

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