In Business Law, Corporations, Intellectual Property, Startups

As you grow your business, your brand and intellectual property may become your most important asset. There are five categories of intellectual property: patents, trademarks, copyrights, trade secrets, and rights of publicity. Some studies show that 80% of companies’ assets are in intellectual property. Because of this, it is important for companies to vigilantly guard against infringement.

The following is a list of tools that businesses have available to protect their intellectual property.

  1. Trademark with USPTO. As you begin to develop goodwill and brand recognition, you need to protect your name and logo. At a minimum, you need to ensure from the outset that your business does not violate trademarks already in the marketplace. You do not want to receive a cease and desist letter two years after building goodwill and brand recognition. For example, if you have operated Johnny’s BBQ for two years, then everyone who has enjoyed your delicious BBQ knows you by that name plus all of your merchandise and legal registrations are in that name. When you have to change to a different name, you will have to start from scratch.
  2. Copyright. The author of a work is granted a copyright once the work is fixed in a tangible medium of expression, e.g., literary works, recorded or notated music, photos, etc. In other words, it has to be more than in your head. Some examples of works that could apply for a copyright include “literary works; musical works, including any accompanying words; dramatic works, including any accompanying music; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound records; and architectural works.” Copyrights are inexpensive and easy to file so if your business operates in written content, it may be a good idea to take the extra step and apply for the copyright. For more information, read our article, Copyright Laws.
  3. Nondisclosure clause. Nondisclosure agreements and clauses are a great tool to protect a company’s intellectual property. These agreements can be used any time you are working with a third party or with your employees to protect your proprietary interests. For example, if you need to hire someone to write code for your app, you can have them sign a nondisclosure agreement prior to working with you so that they cannot use the information learned about your app to their advantage in creating a competitive app or to disclose the information to a third party (i.e. steal your idea).
  4. Noncompete clause. A noncompete agreement or noncompete clause is a contract entered into between an employer and an employee that restricts the employees ability to engage in competition with the employer after the termination of their employment. Noncompete clauses and contracts have been increasingly popular over the last decade. A noncompete contract needs to be limited in its duration and geographic scope (i.e. the area where competition is prohibited) to be enforced by courts in South Carolina. These contracts are generally frowned up by the courts so you need to ensure that they are appropriately drafted and entered into. If you plan on enforcing the agreement, you should consult an attorney to ensure that it will be enforceable. Don’t relay on the do it yourself agreements because each state has different standards for enforcement.
  5. Nonsolicitation clause. Nonsoliciation agreements and clauses protect employers’ proprietary interests by preventing employees from soliciting certain clients. These agreements are very useful in protecting a company’s customer list that it has worked hard to develop. These agreements must also be reasonably tailored but are generally met with greater acceptance by the courts in South Carolina.
  6. Intellectual property clause. Intellectual property clauses can be entered into to transfer ownership of certain types of intellectual property (e.g., inventions) developed while employed by the employer. Since the author of works has the inherent ownership of intellectual property, these clauses are needed to transfer ownership to the business. Oftentimes, the business facilitates the inventions by providing resources and encouraging the development of new ideas. As a result, it is often a part of the employment terms of these types of companies to transfer ownership of intellectual property from the individual creator to the business.
  7. Licensing agreements. A licensing agreement can give another individual authority to use or sell your property. The agreement will set the terms for using your content. For example, you would need a license to use a song in your promotional video. In fact, “March Madness” is trademarked by the NCAA so you would need their permission to use the phrase “March Madness” legally as part of a promotion at your restaurant or elsewhere.
  8. Patent. Protect your inventions by applying for a patent. It is perhaps best to understand patents by a list of famous inventions that were patented: the cotton gin, the electric motor, and the light bulb. There are three types of patents: utility, design, and plant. Utility patents may be granted to an individual that invents or discovers any new and useful process, machine, article of manufacture, or composition of matter. Design patents may be granted to an individual that invents a new, original, or ornamental design for an article of manufacture. Plant patents may be granted to an individual that invents or discovers and reproduces any distinct and new variety of plant. This is a complicated and pricey venture. Once you determine that your invention is worth patenting, you will need to contact a patent lawyer to help guide you through the process.
  9. Disclaimers. Although I often find the way that many attorneys write disclaimers to be overkill and ridiculously written, they can be useful to notify your audience or clients about certain aspects of your relationship. Disclaimers are useful ways to set the expectations of people that use your product or services. They are also useful in defending and preventing lawsuits.
  10. Watermarks. If you work with photos or music, you can use visual and audio watermarks to protect your content.

Intellectual property is an exciting and changing area of law. If you have valuable intellectual property in your business, you need to contact an attorney to ensure that you are protecting these assets.

About the Author

Wesley Henderson is a business attorney with Henderson & Henderson. His Charleston, SC practice focuses on a variety of business law matters including intellectual property. He can be contacted via email or by phone at 843-212-3188.

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