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What Small Businesses Need to Know About Intellectual Property Law

Operations

What Small Businesses Need to Know About Intellectual Property Law

What Small Businesses Need to Know About Intellectual Property Law

Updated: Dec 13, 2019

Regardless of the service of product your enterprise provides to consumers, it is likely that intellectual property is a crucial part of your business and is often its most valuable asset. If you are a small business owner or thinking about launching a startup, it’s important to learn about intellectual property (“IP”) rights.

Here’s a basic overview on the types of IP protection and how they might apply to your small business.

There are three basic types of intellectual property protections:

  • Patent rights
  • Trademark rights
  • Copyright rights

Patents

Most people associate intellectual property with patents. Patents protect a new machine, chemical formulas, article of manufacture, or process. As a business owner, you can’t patent a business idea, but you can protect a method of doing business, as long as it meets a specific set of requirements.

For business owners, the most applicable type of patent is a utility patent. Utility patents are granted to these types of inventions:

  • A process or method, such as computer software or medical procedure
  • A machine, such as a 3D printer or coffee grinder
  • An article of manufacture, such as a soap dispenser or light bulb
  • A composition of matter, such as a drug formula or cleaning solution
  • An improvement of an invention that fits within one of the first four categories

In order to be patentable, an invention must be new and non-obvious to someone of an average level or skill and ability in that field. To obtain a patent, an application must be filed to the U.S. Patent and Trademark Office. When a patent is granted, the owner has protection for about 20 years. A patent holder can prevent others from making, using, or selling the invention throughout the U.S. or importing the invention into the U.S.

Of all the types of intellectual property, patents are the most complex and difficult to obtain. It typically takes over two years from the date of filing an application until a patent is issued.

Check out the U.S. Patent and Trademark Office’s “Getting Started with Patents” guide to learn more about this type of intellectual property and the patent application process.

Trademarks

You’ve probably seen a logo or slogan with a tiny “T M” or “ R” next to it. This indicates a trademark. A trademark can be any word, sign, symbol, or graphic that you apply to your company and its goods and services to distinguish them from those of your competitors.

Consider trademarks the face of your business. Though logos and slogans are the most common forms of trademarks, other distinguishing features can be registered trademarks, for example, the shape of the Coca-Cola bottle, the shade of orange of Nike’s packaging, and even the chime noise played frequently by NBC.

At the very least, business owners should consider securing a trademark for their company’s name. This is different than registering the business name with the state when applying for a business license. A trademark gives your business exclusive rights to use the mark nationwide and provides a legal basis to stop any copycat businesses.

For example, Adidas brought a trademark suit against Payless for selling shoes similar to their famous three stripe athletic shoes, but with two and four stripes. After claiming that Payless was infringing upon their trademark, duping buyers, and tarnishing its brand, a jury agreed with Adidas and awarded the athletic brand $305 million.

There are two ways to assert trademark protection. The ™ symbol is used to claim an unregistered or common law trademark. This is the easiest way to apply intellectual property protection to these types of works, but it offers limited protection. The other way is to register your mark with the U.S. Patent and Trademark Office. This offers the most protection and makes it easier for you to assert your intellectual property rights should you need to take legal action to do so.

Check out the U.S. Patent and Trademark Office’s “Getting Started with Trademarks” guide to learn more about this type of intellectual property and the trademark application process.

Copyrights

Copyrights protect original creations, most typically words and images. Common examples of copyrighted items include books, speeches, photos, drawings, paintings, and musical recordings. A copyright is the exclusive right of the creator of a work, who has the power to determine how the work should be used or reproduced in any way.

You don’t have to register a copyright because it is automatically assumed the moment your work is created, but registration is required if you ever wish to pursue a case involving copyright infringement. Some creators also opt to register their work in order to establish the facts of their creations on the public record and hold a certification of registration.

For a small business owner, copyrights can come into play when promoting your business. Make sure to avoid using copyrighted images on your website and promotional materials. For example, if you use a copyrighted image on your website and the creator discovers it, you could face a infringement penalties, which could be upwards of $10,000. See Wikihow’s “How to Avoid Copyright Infringement” guide for more information on avoiding infringement.

Check out the website for the U.S. Copyright Office to learn more about this type of intellectual property and the copyright application process.

Tags: Operations

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