How to Triage Your Intellectual Property Needs

Intellectual property presents a conundrum to entrepreneurs and startup businesses with limited cash resources: The measures to protect it must compete with other necessary projects. Yet failure to take this important step can result in significant lost value later on in the business cycle.

Additionally, time limitations unique to intellectual property can exasperate the situation. One way to solve these problems is to “triage” the needs, focusing on assets that rank higher in priority and value. The following outlines the various types of intellectual property, the cost to protect them and some risks associated with inaction:

1. Registering copyrights. Copyrights protect the creative expression of an idea but not the idea itself. Software, websites, photographs and other creative works are all examples of materials that can be protected by copyright. A common obstacle that arises is failure to register a copyright before the infringement begins. That can prevent the owner from recovering attorney’s fees and a special kind of damages called statutory damages. The good news is that copyrights are significantly less expensive to register than other forms of intellectual.

A business owner can file applications online through the U.S. Copyright Office’s website and pay a filing fee of $35. An attorney is likely to charge $250 to $500 to prepare and file an application. Considering the cost balanced against the scope of protection, a copyright is a good first line of defense in protecting intellectual property.

2. Pursuing trademark protection. Trademarks (that protect products), service marks (for services), trade dress (for nonfunctional, distinctive appearance) and trade names (for business names) serve as identifiers of the source of a product or service. Unlike copyrights and patents, trademarks do not expire and continue as long as they are used in commerce.

In most cases, business owners should obtain a registration with the U.S. Patent and Trademark Office for the mark that identifies their key product or service or their business name. The trademark ofice charges a filing fee of $325 per class of good or services claimed, and an attorney is likely to charge from $500 to $1,500 to prepare and file an application. A federal registration provides significant advantages including nationwide rights to the mark and rights to help prevent cyber squatting on domain names or username squatting in social media.

3. Applying for patents. Protecting machines, systems, processes and other things, patents can provide an owner with the right to stop others from making, using, selling or offering for sale an invention. Registration of patents is significantly more expensive than applying for copyrights or trademark.The cost runs $5,000 to $10,000 or more including filing fees if the matter is handled by an attorney.

Patent law also specifies a number of obstacles to registration such as certain disclosures, public use and sales taking place before the application’s filing. Under the revised Patent Act, the United States has a first-to-file system. So a delay could cause serious problems and possibly be fatal to the quest for patent rights. If a business has developed key technology, prioritize the resources for patents because of their useful protection and time limitations. Often, a patent portfolio is one of the most valuable assets of a technology company.

4. Guarding trade secrets. Trade secrets can be extremely valuable and should be protected by businesses. While they do not require registration, keeping them confidential through an employment, independent contractor, noncompete, nonsolicitation or confidentiality and nondisclosure agreement generally protects them.

Additional things for businesses to consider include coming up with ways of protecting their ownership of electronic files created by employees, social media accounts, domain name registrations and account names and passwords. All of these concerns can typically be addressed through employment agreements.

While intellectual property can be expensive to protect, it grants significant competitive advantages to businesses. Due to the expense and potential risk in delaying protection, businesses should carefully prioritize protection of intellectual property and weigh it against other business needs. Businesses can consider seeking strategic counsel from an experienced attorney early in the development cycle.

Darin Klemchuk is a co-founder and managing partner of Klemchuk Kubasta LLP. He focuses on all aspects of intellectual property withan emphasis on patent, trademark, copyright and trade secret litigation. Klemchuk has successfully handled more than 200 intellectual property disputes, including more than 20 patent infringement cases.




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