Intellectual Property: a necessity, a nice-to-have, or a waste of time?

by | June 2, 2010

Is protecting your Intellectual Property a necessity, a nice-to-have, or a waste of time?

Entrepreneurs and CEOs around the world ask this question regularly – and the answer differs for each business and each circumstance as the answer is driven primarily by what can be protected, for how long, and the risks associated with not proactively protecting your IP.

What is it?  An important first step is getting an understanding the different types of IP.  Patents are what we consider “inventions.”  They are novel, something no one has done before.  Copyrights are original works of authorship, something that has been created and put into physical or digital medium.  Trademarks are commercial.  They link a product or service back to its source.  These definitions are not the “legal” definitions but rather a high-level description for discussion purposes. 

Do I need registration? For trademarks and copyrights, you have certain rights in the IP simply by creating it or using it in commerce, as the case may be.  No registration is required but without it, IP rights may be limited.  Patents, on the other hand, must be registered and the invention must not be publicly disclosed in advance of filing.

What does registration buy you?  First and foremost, registration offers you “notice” to third parties of the details of your IP and your claim of rights to that IP.  In connection with that notice, registration also offers you statutory damages if someone infringes your rights.  Without registration, you would be required to prove damages.  

Can it really protect you?  This question is the key and the answer depends in large part on the plans of the business.  If the company is only offering its products and services domestically, it is typically easier to control the IP.  As the company expands, IP protection must be considered for each of the various countries under the relevant treaties or laws.  Companies that have expanded cross-border without first protecting their IP have missed out on opportunities to have exclusivity in that area.  This applies even for US companies looking to expand into Canada.  Of particular importance is considering IP matters in determining the location of product manufacturing.  By electing to manufacture overseas, specifically in parts of Asia, a company takes a significant risk in the possible disclosure and infringement of its IP.  For some businesses, this risk is acceptable.  For others, it is not. 

IP protection is always worth considering and pursuing where it makes sense for the business.  IP protection can sometimes get you a long term benefit in the marketplace.  In other cases, it can buy you a first-mover advantage that is short-lived.  Understanding what you have that can be leveraged for your company’s benefit and taking action to protect it, with or without registration, will build value in your company for the future.  As in most business decisions, whether registration is appropriate or necessary requires a cost-benefit analysis in light of your business model.

All that being said, I must admit to a smile when I saw Bill Gates’ quote:  “Intellectual Property has the shelf life of a banana.” Moving forward under the assumption that IP has value and maximizing that value, even for short amounts of time, can make a difference in your business’ traction and put your business on the map for growth or acquisition.