Video Transcript

Are you protecting your intellectual property? What are some tips to protect your IP? That is what we are discussing today. I am assuming that you are a business owner and you are wondering, do I have intellectual property? And if so, what intellectual property do I have? What are the legal classifications or characterizations of that, and how do I protect it?

What should I keep in mind to avoid growing a company and its intellectual property? Only to have that destroyed by a competitor taking it, a disgruntled employee, taking it to a new business or someone else stealing or misappropriating your intellectual property. That is what I am talking about today, so that you can be educated on how to protect your company and grow it in a successful manner without common legal pitfalls that I see regularly made by new business owners.

I am Aaron Hall, an attorney for business owners and entrepreneurial companies. You have subscribed to this newsletter and in doing so, you got a free cheat sheet, which is called Seven Common Legal Mistakes Made by New Businesses. This is now a video explaining one of those common legal mistakes, and that is failing to protect intellectual property.

Often that is because you don't even know what that intellectual property is. Now, if you have been around the block a little bit, you may know, "Oh yeah, I know what copyrights are, trademarks or patents," but that is the kind of stuff we are talking today. And then some common pitfalls and common mistakes and common misconceptions that are out there on the internet. And then what can we do about that?

All right. What is intellectual property? Let's start there. Intellectual property is generally any art that is created by you and that can be protected by copyright. When I say art, I mean paintings, music, images, videos, some sort of clay that you might create. It might be some sort of sculpture. It's the text on your website. It's the design of your website. Anything that has creative expression can generally be protected by copyright. So when we talk about IP and we think about copyright, it's art and creative expression, the next category of intellectual property is trademarks.

I often think of cows when I think of trademarks, and here's what I mean. If you saw a cow, how would you know which farmer owns that cow? Well, if there is  some sort of brand on the cow, you would know that brand might be five dots in a certain order. It might be somebody's name, it might be a logo, it could be something else.

The purpose of trademark is to tell the public or to use some sort of symbol or mark or name or slogan that tells the public this is a product or service offered by a particular provider. So if you provide a certain type of cellphone, then your name or brand or logo would be on that phone and people who saw that would know, "Oh, I see, that is this brand phone."

So whether it's a shirt or anything else, that also means nobody can use that brand as a general rule without infringing on your trademark. The other category of intellectual property is patent. Patent law protects software code and the functioning of it, business methods, recipes. It's really going after that functional benefit.

By the way, patent has a short period of time, less than three decades of protection, whereas trademark can be indefinite, and copyright is generally over a hundred years. Now, there are some caveats to that. There are some different categories, but trademark is indefinite. Copyright is for a long time, and patent is for a short time. So that is one distinction between the three.

Sometimes people also consider, other categories to be intellectual property, such as domain names, but I think these days now those are considered more of a trademark. Another category of intellectual property can be secrets and information lists within the company that may not qualify for copyright, trademark, or patent protection, but it's confidential information that you are keeping within your company in order to have a competitive advantage. So those are the categories of intellectual property.

What are some common examples of intellectual property? Common examples are the website you create, the images on the website, the text on the website, the style, and colors, and kind of look and feel of the website, the name that you go under on your website, any internal processes that you have, any software that is running on your website.

So as you can tell, we have just focused on the website so far. Now let's talk about your customers. Maybe you have a proprietary or secret process for dealing with them. Maybe you have confidential customer lists or prospect lists. You may have confidential processes or standard operating procedures. All of those can be protected by as some form of intellectual property.

All right, let's talk now about the product or service that you provide. You may have designs, look and feel, methodologies and steps, and recipes associated with that. There is intellectual property there. So what do we do about all this? Well, typically you are going to work with a business attorney to figure out which of these can be protected, what's the expense associated with protecting them, and how important is that protection for your company.

What are the different types of intellectual property as major categories? It's going to be copyright, trademark, patent, trade secrets, and then maybe some hybrids of that, which like are domain names, for example.

What is a trademark and can you register and protect it? A trademark is whenever you use a name, logo, or some other symbol or a slogan to essentially associate that mark with the source of goods and services. That is you. So, for example, if you sell cows, you might put a brand on the cow. That brand is your mark or your trademark. Technically speaking, if you are off selling a service, it's a service mark, not a trademark. But often people just use the word trademark because it's simpler and usually it doesn't matter.

How do you protect a trademark? Well first, just by using a trademark, you acquire common law trademark rights in the county where you used it. So here in Minnesota, if you use a mark in commerce in Hennepin County, you generally will acquire trademark rights, common law, trademark rights in that county. But let's say you want to expand to have nationwide protection. Well, the option there then is to do federal trademark registration. And there is a process that you go through. You pay a fee. It's the trademark is scrutinized by an examining attorney at the US Patent and Trademark Office. But once that trademark is approved, you then acquire registered trademark rights nationwide.

There are certain categories that can't be trademarked. I cover those in some other resources. You can click in the description below to learn more about what can be trademarked versus what cannot be trademarked. For example, a generic name cannot be trademarked. Whereas a very unique name could. What's generic?

Well, if I said the word attorney, let's say, for example, I wanted to register the word attorney and say, "all right, I am going by attorney or the attorney, and nobody else can use that in the industry." Well, that doesn't make sense. Nobody's going to give you a monopoly on one single word that describes what you do. That is just a generic category or description. That is not going to be permitted. But let's say you offer tissue and you come up with a very unique word called Kleenex. Well, Kleenex is going to be trademarkable because it is so unique. It's a brand name for a type of facial tissue.

What is a patent, and how can you obtain and enforce it? Let's say you come up with a recipe, and let's say it's a recipe for fried chicken. It's so good and you keep this confidential. You are not going to share it with anyone. But then, you decide, "you know what, I am going to patent this." Or let's say it's a recipe for some new drug that makes a big difference in the health of a body. And you say, "You know what? We are going to take that formula. We are going to patent it." You need to file for a patent within one year, essentially, of disclosing this formula or recipe and putting it out in the market. And the process for protecting a patent is registration. You will need to use a patent attorney for this. There is no way you can do this on your own, at least from my experience.

Now, sure. Have people been able to do it on their own? Yes. But these days it's tough because you are being scrutinized by the US Patent and Trademark Office. You are also being scrutinized by other companies who will try to get your idea without paying you for a license for your patent. And so they will look for loopholes or flaws in your patent application. So the way to protect a patent is to register a patent.

What is a copyright and how can you register and enforce it? A copyright might be the lyrics to a song. It might be the tune or music or melody of a song. It might be the music video that you record of that. Those are just some examples. When you create something of artistic expression, you have an automatic common law copyright. However, that sort of copyright is limited in what you can do to enforce it. For example, if you want to sue someone for infringing your copyright, you need to have registered the copyright first.

Registering a copyright can be done without an attorney. It's really easy. All you do is fill out some paperwork or online forms with the US copyright office. So in order to protect a copyright, you need to create something, but in order to enforce the copyright, you need to register that copyright first.

What is license law and how can it help protect your intellectual property? A license is just permission to use something. So if I say, "Hey, I gave you a license to use the rights to a song," that means you have permission to use the rights to that song. Now I might say, "I am going to sell you the rights to use that." And so that license might have some sort of compensation associated with it. Maybe it's a royalty.

What is a royalty? Well, a royalty is when a percentage of the proceeds you get from using my intellectual property goes to me. So for example, let's say I produce a big hit song and then 20 years later, you want to remix that song and use it for a new style of music. Let's say mine was, mine was rock, and you want to use it now for hip-hop. Well, you could get my permission, license that from me, and you might say, okay, "I will pay you a hundred thousand dollars." That is one way to do it, but you might say, "I will pay you 3% of all proceeds from my new hip-hop song." That is an example of a royalty. A royalty is a percentage of the revenue received from a song, and there are all sorts of ways to write that up, but a license is usually in a contract that is written up.

Now, you might say, does a license have to be in a written contract? No, a license could simply be you and me talking and I say to you, "Oh yeah, you are welcome to use that song as long as you pay me a hundred dollars. You pay me a hundred dollars, you have an oral license to use that song. It didn't have to be in writing. It was an oral license.

Who benefits from intellectual property? The society benefits, our entire country benefits, as well as the individual owners of intellectual property. Here's what I The reason that the United States Constitution provides for copyright protection is to foster and reward the arts and the sciences. The reason that the United States allows for patent protection is to allow for the creation of new formulas or new compositions or new mixes or recipes and reward those people who do provide valuable patentable concepts for society.

Now, do they get to reap the rewards forever? No. They get it for just a period of time. Less than three decades.

What about trademark? Trademark, the whole idea there is to benefit the public by letting them know who is the source of goods or services when they see a brand. That brand might be a name, like a business name. It might be a logo, it might be a slogan, but the public knows who is associated with that. For example, if you hear, "Just Do It." And you see that next to a shirt, you know that that is a Nike shirt because Nike owns the trademark to the slogan "Just Do It." So intellectual property protects the owner, but it also benefits us in society.

How do you know if you own intellectual property? Well, that is a tricky question. Generally, if you create something with artistic expression, you own the copyright. Unless you are an employee for a company or a contract says that somebody else is getting the rights to that. If you start using a unique name as a mark or a trademark or a brand in your business associated with your services or, your products or goods, then you generally will own the trademark to that brand or that mark that you are using.

In a patent, registration is required, so you are always going to know who owns a patent by looking at the registration in the government records. Does intellectual property expire? Yes, it does. Each category of intellectual property has a different expiration date. Trade secrets won't expire, though, as long as you keep them a secret, and trademarks won't expire as long as you keep using that trademark in commerce. Copyrights and patents though, they both expire.

What are the risks of not protecting your intellectual property? The primary risk is that you lose the financial benefit of that intellectual property. You may also lose the intellectual property itself and the rights to use it. There is a general rule in intellectual property law that says you need to police your mark, which means search for people who are violating your intellectual property rights and you need to enforce your intellectual property rights.

If you don't even care enough to do that, the laws considers then you lose the rights. So it is important if you are going to go through the process of protecting your intellectual property rights, that you also, work to enforce those rights and police your rights.

What are the common ways intellectual property is infringed? Pretty regularly, I see competitors using someone's intellectual property, or it might even be somebody who is not a competitor, but they are using it for some sort of commercial purpose.

How can you detect and prevent infringement of your intellectual property? The main way is to either search for people who are violating or infringing your intellectual property rights on your own or, hire somebody to do that. There are companies that will do that for you in different categories, whether it's trademark, patent, or copyright.

So there are services available to help you enforce your intellectual property rights, or at least know if somebody's infringing them. How can you enforce your intellectual property rights in court? Quite simply, you need to sue and keep in mind there are very strict rules on how to do lawsuits for intellectual property. For example, with copyright, you need to register your copyright before you can even file a case for copyright infringement. But if you want to enforce your rights in court and somebody is violating your rights, you need to file a lawsuit. In the United States, that is the only way to protect your intellectual property rights.

What are best practices to follow when disclosing your intellectual property to others? The best practice is to have a confidentiality agreement or non-disclosure agreement. It's the same thing, two different titles for the same sort of document that basically says this is protected information. I am disclosing it to you. You don't have a right to use it. You are not acquiring it. You don't even have a right to talk with people about it. That is the best way to protect your patents or patentable ideas, I should say, your trade secrets or other information that you are trying to keep confidential. If you are sharing a copyrighted work, so like a piece of art or you are sharing with somebody a slogan that you are using, the copyright and trademark associated there don't need an NDA or non-disclosure agreement because there is no obligation for you to keep that information confidential. But for something that is going to be patented, and especially for trade secrets, you need to have a non-disclosure agreement, also known as an NDA or confidentiality agreement in place.

What should you do next to protect your intellectual property rights? Step number one is figuring out what intellectual property is in your company, and how valuable is it. How important is it to your competitive advantage, or how devastating would it be if somebody took that intellectual property from you? Once you have figured out what your intellectual property is and the value of it, then you can talk with an attorney in your state about the easiest options or the most effective options to protect that intellectual property. For example, if you are trying to protect a picture, you might simply file a copyright registration on your own. Or maybe you won't even file that for now. You will leave it as unregistered and only if you decide to sue somebody later for infringement would you file a copyright registration.

We have covered a lot of topics today. You probably have questions. There are a number of exceptions to different rules. There are best practices in how to do this. If you have those sorts of questions, feel free to send me an email and also I will probably be doing future videos to cover some of these frequently asked questions, so don't hesitate to reach out to me.

As a reminder, the purpose of this video series is to help you avoid legal problems in your business. Today, we talked about not knowing even what your intellectual property is, not protecting it, not enforcing it, and letting the value that you are creating in a company get lost to competitors or others who would come along and want to benefit from your intellectual property.

This is all part of the Seven Common Legal Mistakes Made by New Businesses. Our next video will be talking about how you can prevent your competitors from taking your best customers, business know-how, and employees. So as you are building value in your knowledge in the company, your relationships with customers or clients, and your relationships with employees who you are training and investing in. How can we prevent losing that value that is so important for your business? That will be covered in the next video. One final note, if you haven't checked out my YouTube channel, I cover a lot of other content on similar topics. You can find that at youtube.com/@Hall.