Small Business Talking Points and Suggestions

As a small business, early on in the innovation and creative process you will want to assure yourself that you are not infringing on another’s brand or intellectual property rights. Of course legal assistance is recommended; however, it would be wise to begin with a simple Google search. A huge issue for start-ups is people stealing their ideas. That is why it is important to keep any and all development of your brand/product confidential. Not only do you risk forfeiting any potential intellectual property rights in the future, but, you expose yourself to breach of that information. It is very important to clearly mark all confidential information as confidential, even while exchanging it internally. This will eliminate any potential confusion.

Before, involving any third parties such as advertising agencies, be sure to have them sign a confidentiality agreement and non-compete agreement. This may include assignments or work-for-hire agreements to transfer the intellectual property rights to your small business. Lastly, be sure to keep accurate records of the development process and date these documents. This will help provide documentation if any infringement arises.

Small businesses should take several steps to protect themselves against others from infringing on their Intellectual Property. To begin, familiarize yourself with your competitors’ products and make educated guesses as to whether or not their intellectual property has been potentially infringed upon. In order to figure this out, you will want to search various Intellectual Property registrars, including the USPTO.gov trademark and/or patent sections (you may also want to review the registrars’ publications). In addition to the registrar searches, it would be beneficial to subscribe to various trade journals, newsletters or industry-specific publications for information about potential infringers.

However, you should not stop here. Once you learn all this information you need to share it. Small businesses need to periodically train their employees about the company’s IP portfolio as well as the IP relevant to your industry or work. This will allow your employees to not only help you protect your IP; but will allow them to make educated decisions in order to avoid infringing on other’s IP rights. It is important to implement guidelines structured to avoid infringement and assure your employees comply with these guidelines.

After filing for IP protection, it is important to use the brand consistently. Even minor changes in the way your brand is used, (font, color, layout, process, or structure) can create a new right that will then need to be protected in addition to the rights you already have. The costs of protection can quickly increase if you have multiple variations of your brand. Further it is important to use proper notices. Use copyright notices (©) and trademark symbols (for example in the US, ™ for an unregistered trademark and ® for a federally-registered trademark) where appropriate. For patents this means using “patent pending” or including the patent #. These notices act as an early warning system to potential infringers and will help you when proving that an infringer knew about your rights (was on notice). Finally, it is important to assure timely compliance with any renewal or maintenance requirements for your registered rights. Failure to do so may result in loss of protection or abandonment.

When seeking potential financial assistance, be aware that small business owners commonly grant security interests over their IP assets. The valuation of IP collateral and the enforcement of IP security interests are more complicated than the valuation and enforcement of tangible assets, such as real estate. Although some IP assets can generate income on their own, many IP assets are often part of a group used in a business. These IP assets may have limited value outside that business or group. In addition, the value of IP collateral can change when IP assets are subject to challenge or infringement.

Security interests in patents, copyrights and trademarks should be in writing and should be recorded under the Uniform Commercial Code (UCC). In addition, security interests in patents and registered trademarks should be timely recorded with the USPTO and security interests in registered copyrights should be recorded with the US Copyright Office. For patents, registered copyrights and trademarks, recordation protects the secured party from later bona fide purchasers claiming an interest in the IP. In the case of copyright registrations, recordation in the US Copyright Office is also a requirement for perfection of security interests.

Many small business owners seek IP protection for the sole reason of licensing. A license is a transfer of less than all of your substantial rights in the IP or an undivided interest in the IP to another party, typically in return for royalties. Substantial rights to IP can include, among other factors: (1) Exclusivity. (2) Right to sublicense. (3) International rights.

However, it is possible to sell a subset of the seller's overall IP. For transactions treated as licenses, royalties derived from use or potential use in the US, regardless of exclusivity, are treated as income from sources within the United States (IRC § 861).

In special circumstances certain remedies may be available under state statutory and common law for actions which are deemed to be unfair methods of competition. The two main actions are:
a. "Tortious interferences with contract," such as inducing a person to breach confidentiality agreements and disclose a competitor's trade secrets, or inducing the breach of a covenant not to compete may be an unfair method of competition.
b. Blatant industrial espionage activities, (i.e. electronic surveillance, wiretapping, breaking and entering, accessing computer-stored information or software without authorization, etc.) may be both unfair methods of competition and violations of criminal statutes.

It is important to note that taking advantage of a competitor's carelessness by listening to conversations which occur in public places or over mobile telephones, or by going through a competitor's trash which has been disposed of in a public place, or by asking prospects about information which competitors have disclosed without first requesting confidentiality, or by viewing competitors' displays at trade shows and other public places is NOT unfair competition.

Further, it is not unfair competition to reverse engineer or to copy a competitor's publicly marketed product, unless doing so violates the competitor's copyrights or patent rights; or the resulting product is marketed in a way which so resembles the competitor's product that there is a likelihood of confusion as to the source of the copy, or affiliation with the senior user.