Many businesses rely on intellectual property to launch their companies and attract venture capital. Yet many also fail to safeguard their unique assets, leaving them vulnerable to theft. According to the government, $250 billion and 750,000 jobs are lost per year due to IP theft.

Outside of theft are the lawsuits spawned from a failure to protect IP. One doesn’t have to look far to find the consequences – the proprietor who loses the right to conduct business under a company name he’s used for years; the company that fails to protect its brilliant new product innovation only to see someone else profit from it.

Investing in IP protection can be complicated, and smaller businesses are at a particular disadvantage because of scarce resources and limited access to expert in-house counsel. But failure to do so can be like constructing a building on a site before the property title has cleared.

Whether or not to file for protection is a decision each business must weigh carefully. Companies can start by itemizing the products, names, and services that make them unique. Then using a cost/benefit analysis, they can determine whether the IP value to the business is worth the investment to protect it.

Which protections are right for which assets?

Various types of IP protection are available for products, services, and promotional materials. For instance, a company’s name might be protected with a trademark, its brochures can be copyrighted, and its product patented. Here’s a basic primer for understanding the difference.

Patents

Patent law protects any “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” The U.S. Patent and Trademark Office may grant property rights to an inventor that exclude others from making, selling, or using the invention for a limited time. For an invention to qualify, it must be both “novel” and “non-obvious.”

Generally, utility patents are granted to new machines, chemicals, and processes, while design patents protect the unique appearance or design of manufactured objects. 

Companies that want more time to test the business potential of their inventions can file a provisional application versus a full patent application. Less costly, it protects the company for a year, letting it conduct more research on market viability.

The patent application process is intricate, and it’s almost always worthwhile to engage the services of a competent patent attorney.

Trade secrets

Instead of seeking patent protection, companies may instead hold onto unpatented trade secrets. Formulas, patterns, methods, processes, and techniques can all be considered as trade secrets. In short, they are the things that provide a company with economic value and a competitive advantage.

Many soft drink and food companies retain recipes as trade secrets without protecting them by patent. That’s chiefly because patent information is available to the public and patents expire, leaving those secret formulas open for eventual duplication.

If a company holds trade secrets, it will still need to consider how to best preserve them using secure company procedures and employee agreements.

Trademarks

Trademarks protect words, names, symbols, sounds, or colors that distinguish goods and services. For instance, a company’s name and logo can be protected with trademarks.

Before an organization settles on a great new name, however, it’s advisable to conduct a trademark search to determine whether the proposed new name infringes on an existing mark.

Unlike patents, trademarks can be renewed forever as long as they’re being used in commerce.

Copyrights

This form of protection is provided to authors of “original works of authorship,” both published and unpublished. Businesses can secure copyrights for their marketing collateral, advertising, web materials, and publications.

Unless a company foresees the need to prove a copyright infringement case, registering copyrightable materials is not actually required.

Final protection tips

• Secure nondisclosure and work-for-hire agreements. Before sharing confidential information with vendors, investors, or prospects, make certain all parties sign nondisclosure agreements. Additionally, secure work-for-hire agreements with any contractors of copyrightable work (advertising agencies, software developers, etc.) to ensure that copyright ownership belongs to your company.
  
• File for protection overseas. Patents and trademarks are territorial. Companies that sell goods or services outside the United States should seek legal counsel regarding the intellectual property laws in other countries.