What You Don't Know About Intellectual Property ("IP")... Can KILL Your Business!

Intellectual Property, or "IP," is increasingly becoming one of the most important assets a business can own. Almost every business, from sole proprietors to large, publicly-traded corporations, owns some form of IP. IP can generate significant revenue, and help a business remain competitive and innovative. Unfortunately, many businesses have no idea of what IP is, or the IP the business owns. Far worse, some businesses don't keep track of IP created or used by the company's employees and contractors, including IP owned by others.

To compound the problem, IP litigation is steadily increasing in the United States and internationally. IP infringement claims usually aren't covered by insurance, and defending IP lawsuits can be expensive and time-consuming. If a business fails to have an IP management plan in place, it may lose significant IP rights and revenue, suffer reputational harm and be at risk for civil/criminal liability (and even bankruptcy).

In light of the risks involved, it's important for every business, large and small, to have an IP management plan in place. An IP management plan can be very simple, or complex for larger companies. The following steps can help businesses manage their IP.

1. Identify the Company's IP. There are 4 types of IP: Copyrights, Trademarks, Trade Secrets and Patents. Copyrights protect original creative works, such as software source code, publications, marketing materials and graphic designs. Trademarks protect company branding, such as the company's product and service brand names. Trade Secrets protect the company's business secrets, such as a company's marketing and business plan, customer lists, and secret formulas. Patents protect inventions and discoveries, such as procedures, methods, chemical compositions and certain plant inventions. A business should do an internal review to determine what IP is currently owned and used by the company.

2. Track the Company's IP. Businesses should track its IP by keeping records of when the IP was created and by whom; and when the company's IP rights will expire so that the company can strategize and plan. This can be as simple as maintaining an Excel® chart with company IP information, or using an off-the-shelf IP management software program for more complex portfolios. Tracking the company's IP will assist in proving ownership, calendaring significant events and planning for the future.

3. Protect the Company's IP. There are various ways to protect company IP. Copyright protected works may receive additional protection through registration with the Copyright Office. Trademarks may receive extra rights through filing trademark registrations with the relevant state agency, or federally with the United States Patent and Trademark Office (USPTO). Inventions and discoveries can be protected by filing for patent protection with the USPTO. Trade secrets should be held on a confidential basis and disclosed only when there is a "need to know." Confidential documents should be marked as such, electronic documents should be password-protected, and proper destruction procedures such as shredding should be in place. IP licenses should be properly monitored, both when the company is the licensee or licensor.

4. Enforce the Company's IP Rights. If someone is misusing the company's IP, management should be made aware, and assistance from legal counsel should be sought as necessary. Steps can be taken, such as sending "cease and desist" letters or resolving the dispute in mediation, arbitration or litigation. Employees who misuse company IP and IP owned by others may be subject to company discipline, breach of contract and civil/criminal liability in some circumstances. Contractors who misuse company IP or IP owned by others may face similar consequences. Taking appropriate action will show others that the company is serious about protecting its IP, and may help reduce future IP enforcement activities.

5. Create an IP Policy. A company should maintain an IP policy to explain the duties of employees and contractors regarding the company's IP. The IP policy can be a part of the company's employee handbook, or in contract clauses in the case of contractors. IP management should be considered in the company's business plan.

6. Educate Management and Staff. A company should educate management and staff on their duties regarding the company's IP. This can be done through the company's IP policy, paper or electronic materials or live/webinar-based training. A company's board of directors may also benefit from IP training to assist them in making short and long-term strategic decisions concerning the company's IP.

7. Conduct a Periodic IP Review. The company should conduct a periodic IP review to determine the IP owned by the company; to make short and long-term decisions concerning company IP, and to determine if the company's IP management plan or education/training programs need to be revised.

8. Consult an IP Professional for Help. A company should consider hiring a professional, such as an IP consultant, for assistance in developing an IP management plan suitable for the company's needs and budget. The company can also consult with an IP attorney for legal advice when needed.

Having an IP management plan in place can help every business, large or small, remain innovative, competitive, profitable, and out of court (especially bankruptcy court!).

(If you need assistance with creating an IP management plan, please call EB Resource Group at (818) 753-2326 or visit our website at ebresourcegroup.com.)
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Opinions expressed by the author are not necessarily those of WITI.