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FEATURED ARTICLES           Thursday, September 09, 2010                                Email to a Friend

Business 101: Protecting Your (IP) Assets

Your crash course on becoming a successful entrepreneur

- Anne Swift

Intellectual property (IP) protection provides inventors with rights to the production and sale of a product, design, or construct and can be a new entrepreneur’s most valuable asset.

If you are dubious about the value of patents, read about the fascinating story of Research in Motion and patent infringement. Napster ultimately suffered because of the structure of the copyright regime (then, Apple came up with the better model for working with the laws). Intellectual property does matter, particularly for first time entrepreneurs. It can help you to validate your idea, as well as add value for your investors and partners – and help you triumph over competition.

There are several types of intellectual property.

Patents
Patents are usually on tangible products (i.e. not ideas) that meet the following criteria: (1) they are of practical use; (2) they demonstrate new characteristics not present in existing knowledge in the field; (3) they show an inventive step; (4) they are “patentable,” as defined by the national intellectual property office. The office responsible for intellectual property registration in Canada is the Canadian Intellectual Property Office (http://www.cipo.gc.ca); in the United States, the United States Patent and Trademark Office (http://www.uspto.gov).

Trademarks
Trademarks are distinctive signs used to identify certain goods and services. You may wish to trademark your company’s name or a slogan along with patenting your invention. You can file a registration with the national intellectual property organizations listed above.

Copyrights
Copyrights protect works expressed in a medium. Thus, you can copyright literary works, databases, films, paintings, and technical drawings, among many other things. You do have to express the idea in a physical medium. Thus, you can’t protect an idea for a story that you have yet to write.

There are other types of intellectual property, including industrial designs, business method patents (in the United States), trade secrets, and geographic indicators (i.e. Champagne). The World Intellectual Property Organization (WIPO) (http://www.wipo.int) provides information about various types of intellectual property in different countries. If you are very interested in intellectual property, you may wish to take one of the online courses offered by WIPO to familiarize yourself with the area.

Protecting Your Assets in a Global Market
While visiting the WIPO web site, note that there is no such thing as an “international patent.” That is, you have to select countries for which you obtain protection for your intellectual property and you should think carefully about where you would like to sell your products.

Prior Art
If you are wondering whether your idea has already been patented or trademarked, you can review the databases available on the Canadian and United States’ IP office web sites. Some other offices also offer this service, so visit the sites of the offices in countries where you wish to file for protection.

Previous patents in an area are appropriately known as “prior art” because searching the database is as much of an art as it is a science. Search terms can yield thousands of results and only a few of the patents may be relevant to your invention. Your best bet is to do a preliminary check for similar inventions using various search terms, but work with a patent agent or lawyer when you are ready to file your application. The investment can save you thousands of dollars if the patent agent finds an invention similar to yours that is already patented; the agent or lawyer may even suggest how your invention is different than prior art so that you can take these differences into consideration.

Keeping Your Invention Confidential
Many inventors worry that their invention will be stolen. But, if you don’t yet have a patent and time is of the essence when bringing your invention to market, how can you talk to suppliers and potential team members?

One way to mitigate risk is to prepare a Confidentiality or Non-Disclosure Agreement (NDAs), which is signed by you and the people with whom you share your idea. NDAs state that the person will not steal your idea. However, NDAs are not perfect and there are ways to invent around them. In addition, many service providers do not sign NDAs because they may be working with someone who has an idea similar to yours independently of working with you.

If you are thinking of speaking to anyone about your invention, you should talk to a lawyer. While there are many templates of NDAs available, they often do not address your specific needs. In addition, they may be drafted in favor of one party and you may end up getting the short end of the stick. If you use a modified template, you should talk to a lawyer about the modifications.

As you may have gathered, the process of obtaining intellectual property is lengthy and costly. While it may seem extravagant to spend money on lawyers’ fees when you are first starting your business, there may be serious repercussions to trying to protect your intellectual property by yourself. Your plan should be to familiarize yourself with the law (so that you don’t spend precious time with the lawyer just to find out the very basics), prepare a list of questions you would like to ask the lawyer, and call a few lawyers in your area to see whether they might offer a complimentary first consultation so that you can see whether or not you are comfortable with them (and their fees).

Despite the costs, however, investors prefer to work with companies that have intellectual property assets. Also, if your start-up does not succeed, you can license your intellectual property to another firm and still recoup your costs (and much more).

Anne Swift is the Founding President of Young Inventors International and is currently a student in the Doctoral program on Strategy, Entrepreneurship, and Technological Change at Carnegie Mellon University. Young Inventors International is a not-for-profit organization that offers more than 1,500 student members access to resources and networks to build their first ventures. For more information, please visit www.younginventors.org.

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