Event Recap: 'Starting up Smart! Phase 2 - Using Intellectual Property to Protect Your Company'

Last week, with General Assembly, Priori Legal hosted a seminar for entrepreneurs to learn how to identify and protect their intellectual property. The event was the second of a three-part series in which Priori’s network lawyers educate startup founders about the legal aspects of getting their business up and running.

In last week’s seminar, Priori lawyer David Boag detailed the various ways startups can leverage intellectual property law to protect their ideas, assets and technology. If you weren’t able to join us, here is a recap of the key take aways on how to protect the very core of your business: your intellectual property!

Phase 2: Using Intellectual Property to Protect Your Company’s Ideas, Assets, and Technology

What Are Intellectual Property Rights?

Intellectual property broadly refers to creations of the mind, such as inventions, literary and artistic works, symbols, names and images used in commerce. Intellectual property law creates a framework for who owns original works, how they can be used and for what period of time. While you may receive common law rights for owning or creating certain forms of intellectual property, formal registration with the appropriate authorities, both domestically and internationally, will provide greater certainty of your rights and more remedies in the event of infringement.

David Boag’s presentation included the chart below, which provides an excellent and concise summary of the differences between patents, trademarks and copyrights.

Patents: Protecting Your Idea or Invention

A patent protects your business’s inventions or discoveries of any new, non-obvious process or method, machine, manufacture or composition of matter. However, a patent cannot protect laws of nature, physical phenomena or abstract ideas. The categorical exception for abstract ideas is the most common reason the U.S. Patent and Trademark Office (USPTO) rejects patent applications. Predicting whether you will receive a patent  requires a technical legal analysis of whether any element or combination in the claim is “sufficient to ensure that the claim amounts to significantly more than the abstract idea itself.” As a result, you should hire a lawyer to help with your patent applicatio to help avoid rejection by the USPTO.  

Your patent application will fall under one or more of the following three types:

1. Utility - issued for invention of a new and useful process, machine, manufacture, or composition of matter, or a new and useful improvement.
2. Design - issued for a new, original, and ornamental design embodied in or applied to an article of manufacture
3. Plant - issued for a new and distinct, invented or discovered asexually reproduced plant

You can’t, however, receive a patent if you have already disclosed your invention or discovery. In the U.S., publicly disclosed inventions will lose their patentability in one year, while in other countries disclosure can lead to immediate loss of patentability. Public disclosure of an invention occurs through any communication about the invention without limitation or obligation of secrecy (e.g., talking to a venture capitalist without a non-disclosure agreement or starting a kickstarter). There are no exceptions to the “public use” rule so it’s important to consult a lawyer about a patent application early in the process. This will have the added benefit of helping secure an earlier filing date in case a competitor also files an application for a similar invention.

Pro-Tip: When patent rights can be lost if an application is not promptly filed, a provisional patent application can act as a place holder to secure an early filing date. Provisional patent applications are significantly cheaper than nonprovisional patent applications because there is a low filing fee and informal application--there is no requirement for a formal patent claim, oath, declaration or any information disclosure statement. But a provisional patent application is only effective for 12 months from the date it is filed. Therefore, you must file your nonprovisional patent application prior to the expiration the 12 month period or you’ll lose the earlier filing date.

Trademarks: Protecting Your Company Name and Brand

A trademark is any indicator as to the commercial source of a good or service. This can include words, logos, symbols, scents, sounds or colors that distinguish your company or products from another and prevent confusion or deception. Since you can receive common law protection of a mark once you use it in commerce, registration isn’t necessary, but it’s highly advisable. By registering your mark with the USPTO, it receives nationwide protection, access to federal courts, use of the symbol ® , entry onto the principal register and customs recordation.

When registering a trademark with the USPTO, you have a number of critical decisions to make. Did you know you can register your mark as a wordmark (standard characters) or logo (specialized form)? It is often more cost-effective to register the name of your brand as a wordmark, since this covers the use of the word regardless of the font, size, color or configuration of the words. A logo, on the other hand, limits trademark protection to the words in that specific style or design.

Under what class, or classes, of goods and services do you register your mark? The USPTO divides goods and services into 45 different classes. Choosing the appropriate class not only prevents  delay in the application process due to misclassification, but also ensures that you will receive the necessary protection against competitors infringing on your rights.

Pro-Tip: In addition to protecting your marks, it is important to ensure that you don’t infringe on another’s marks when choosing your company name or logo. Trademark searches are complex because they require navigating multiple databases, recognition of the proper class of goods and services and uncovering matches that are similar, but not necessarily identical. Whether or not you plan to federally register your mark, you should consult a lawyer before using your mark in commerce to conduct a comprehensive trademark search to ensure you aren’t infringing on an existing trademark.

Copyright: Protecting Your Original Works

A copyright protects original, creative works of authorship that are fixed in a tangible medium, including, among other things, running your blog, composing music or writing software. The owner of a copyright has the exclusive right to distribute, make copies, create derivative works and perform.

Copyright protection does not extend to use of the work that is considered “fair use.” Fair use is a common defense to copyright infringement. Common examples of fair use, that is where the owner’s permission is not required for use, are critical works, parodies, satire, work for an educational purpose or use that is considered de minimis or insignificant. Fair use is determined by balancing 4 factors:

1. the purpose of the use
2. the nature of the work used
3. the amount and substantiality of the work used
4. the effect of the use upon the potential market for or value of the work used

Pro Tip: While a copyright exists from the moment of creation, you will need to register a copyright with the U.S. Copyright Office to bring a lawsuit for infringement. Furthermore, a registered work would be eligible for statutory damages and attorney’s fees in the case of successful litigation.

Don’t Wait! Consult a lawyer about protecting your IP

Protecting your intellectual property is of the utmost importance. Consulting a lawyer early will not only give you the best opportunity to protect your intellectual property but will also save you time and money due to improper filing or litigation.

To learn more about how to start your company up the right way, join us on 6/10 as our experts, Priori lawyer Gary Ross and Galvanize venture capitalist Kate Shillo, discuss everything startups should know about fundraising approaches, investor relationships, and what makes a 'good' deal.