“Intellectual Property” – What Business People Need to Know

Intellectual property (“IP”) is the core of competitive advantage. What you do, how you do it and the works that you create, are your intellectual property and competitive advantage. Protecting your IP is critically important in maintaining your competitive advantage.

Protecting your IP is not a one-time activity. IP issues pop up in many business situations and how you respond can protect or diminish your rights. The following mini-scenarios highlight common examples and provide some tips for handling IP situations effectively.

1. At the beginning of a job/project, you are asked to sign a confidentiality, non-compete, and assignment of rights agreement.

Tip: Read the document carefully. It’s reasonable for a company to want to protect their confidential information so that you won’t leave and take it to a competitor. Be careful of broadly written language that can severely limit your future business opportunities. Your “know how” and the methods and tools that you have developed over the years are your “IP” and should not be restricted by a client engagement. Perhaps you can narrow the scope of the agreement to a specific project, technology or geographic area. Or, ask that the agreement be restructured as a “non-solicitation” agreement. This means that you would not solicit customers/employees for a reasonable period of time following termination of the project.

2. You’ve always done business on a handshake, but now you want to ask a contractor or employee to sign a confidentiality and non-compete agreement.

Tip: It’s difficult to ask someone to sign an agreement after they have been on the job/project for a while, so proceed carefully or you risk damaging your relationship. You may want to position this as a change in office practice to be more protective of company confidential information. You will also need to provide “additional consideration” for the agreement to be legally binding. This means giving the person something more than the compensation that s/he would receive in the normal course of your business relationship.

3. You are meeting with a key customer and want to discuss “new” product plans.

Tip: Depending on the situation, you may want to ask the meeting attendees to sign non-disclosure agreements (“NDAs”).

4. You are going to a trade show and want to show a “prototype” of a new product.

Tip: Consider whether this disclosure will start the “patent time clock” – the one year period from the time of disclosure to patent filing. Should a provisional patent application be filed so that the prototype can be marked “patent pending?”

• You are invited to give a talk to a business meeting. You prepare a slide set that you think could later be turned into a course or a book.

Tip: It’s a good business practice to put a copyright notice on the materials that you prepare. This puts people on notice that you claim copyright protection and should discourage blatant copying (e.g., © Jean D. Sifleet 2004 All Rights Reserved). Registering the copyright for the work provides additional protection (www.loc.gov).

• You come up with a distinctive name and tagline for a product/service offering.

Tip: Search the Web to see if the name is being used. Check the Network Solutions Web site (www.networksolutions.com) for Internet domain names that may be similar. Search the registered Trademarks database (www.uspto.gov). If the name does not appear to be taken, consider registering the domain name and filing for a trade/service mark.

• You hire a contractor to pull together a training program for your company.

Tip: To be sure that you own the content that you are paying to create, you should prepare a contract that says the contractor’s work is “work for hire.” It’s reasonable for contractors to reserve the rights to reuse components of their work as long as they protect the confidentiality of your business information.

• You and a group of friends have come up with a clever new game. People really like the character you created.

Tip: If your character turns out to be the next Harry Potter, Mickey Mouse, Ninja Turtle – there will be many who will want a piece of the action. It’s important to document who created the work and determine what legal protections are appropriate. Definitive agreements are critical to protect rights in creative works.

In conclusion, protecting your intellectual property is a key business skill. It requires both taking advantage of legal protections and being alert for situations in which IP may be created or lost.

Jean D. Sifleet, Esq. CPA
Business Attorney
120 South Meadow Road
Clinton, MA 01510 USA
t. 978-368-6104
f. 978-368-6105
c.978-618-2162

P.S. My office advises business owners and entrepreneurs on smart business practices and legal protections for intellectual property. If you’d like to discuss steps to protect your intellectual property, please give me a call.