Yes, your business has intellectual property (IP). In fact, 100 percent of businesses have IP. Your email list, logo, sales process, and even your website domain are parts of your IP. These intangible assets become very real when you value your business for investors, banks, and creditors.
Intellectual property is divided into four major categories:
- Copyrights: software, literature works, and TV broadcasts
- Trademarks: brands and logos
- Patents: things like the light bulb or apparatus for simulating a “high five”
- Trade Secrets: such as the formulas for Chartreuse and Coca-Cola
IP is not typically thought of as the most exciting component of a startup or business. However, knowing about your intellectual property can help you thrive; not knowing it can lead to fines, lawsuits, and expensive litigation.
Did you have the rights to post that last photo you posted on Facebook? Are you outsourcing projects without a “work-for-hire” agreement? Being able to answer these questions will keep you out of harm’s way and help you understand when someone is unfairly using your intellectual property.
Let’s take a deeper look into the four pillars of intellectual property.
Copyrights protect written or artistic expressions in a fixed or tangible medium. This could include everything from website copy and content to photographs, marketing materials, and sales and training materials—all of which are created during the course of doing business.
Only the owner of copyrighted work is permitted to reproduce said work in any medium. A copyright lasts the lifetime of the author or artist, plus an additional 50 years.
A company can register its name, phrases, sounds, or even symbols used with promoting their product. This intellectual property is important to trademark in order to help identify said company with its brand and to protect their already established brand.
Failing to register a trademark can lead to competitors impersonating a company and stealing customers. This protection can last a decade and is able to be renewed in perpetuity.
Patents protect a company’s tangible inventions, which can encompass machines, devices, formulas, processes, etc. The time it takes to get a patent can take 12 months or longer. Once the patent is issued, no other entity can make or market the invention.
The initial patent lasts two decades and then enters public domain where anyone can use the invention. If there is competition in foreign countries, an international patent can also be registered. Mistakenly, countless companies design items or products to conduct business and do not apply for patents, leaving their intellectual property and profits at risk.
Generally speaking, a trade secret is any information not widely known. It derives some economic value from its obscurity and thus undergoes reasonable efforts to remain unknown. This valuable information can be considered a trade secret, especially if it is a company’s private and exclusive information solely designated for their business.
For example, the formula for Coca-Cola® is considered the world’s most famous trade secret. Trade secrets can also include things such as financial information, business plans, and selling methods. A common way to protect trade secrets is by having non-disclosure agreements and protecting sensitive documents.
Three reasons to learn more about IP:
1. Part of the value of your startup is IP, so you want to know what it is.
2. You may lose IP if you don’t understand you have it.
3. You may be infringing on another business’s IP and not know it.