Intellectual Property and Its Value In Building Your Business

by | May 6, 2014

Blog written by Michelle Bomberger, Equinox Business Law Group.


Despite Bill Gates’ assertion that Intellectual Property has “the shelf life of a banana,” IP has become one of those “must have” assets for growing companies.  Many companies, however, are unclear as to what IP they have and what value it brings to the business.   Is it something that simply looks good on paper or does it really deliver advantages in the marketplace?

An important first step is understanding the different types of Intellectual Property.  In general, they take three forms:  patents, copyrights and trademarks.  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 in their use, linking a product or service back to its source.

Your business may have or get value from one or all of these types of intellectual property.  Patents are the most complex and least accessible of the classes of IP because they require both novelty, newness, and confidentiality.  A patent for the invention must be filed with the US Patent and Trademark Office to obtain protection of the invention, and patent protection grants you exclusive rights to the invention for 20 years.

You may not know it, but copyrights exist all over your business.  Every time you write down something new or create a presentation or image, you have copyright rights in those creations.  Greater protections, such as statutory damages, are available to you if you register the copyrighted works with the US Copyright Office.  Your copyright rights exclude others from using the copyrighted materials except with permission from you.  Copyright protection generally lasts for the life of the author plus 70 years but the length of time varies based on the creation date and type of copyright.

Trademarks are also very common in businesses.   The trademark is the words, graphics, colors, or other defining characteristic that is used in connection with your product or services in commerce.  Trademarks are commonly called “name brands” or “logos.”  Like copyright, trademark rights are granted at the time you begin using the mark in commerce; however, greater protection is available with registration of the mark with the US Patent and Trademark Office.  Once you obtain a federal trademark, you retain rights to it so long as you have continued use in commerce under that mark.

So, yes, your business likely holds some IP, even if you’ve taken no proactive steps to protect it – but is there a reason to register your IP?  Intellectual Property rights were created so as to encourage creativity and innovation.  The idea is that individuals and companies are more likely to innovate if they know they will benefit from the fruits of their efforts.  In many businesses, value has been created in processes, documents or templates, and branding.  By taking the steps to protect these assets, you have created something inherently unique to your business as well as something that a successor can purchase and leverage.

Another opportunity arises from licensing the rights to the IP you have developed.  Trademarks, copyrights, and patents can all be licensed.  A trademark license would allow another business to use your company’s trademark (i.e. name or logo) in connection with the other business’ sales.  As the licensor, you should be concerned with what products are being sold under that name and the quality of such products since they would reflect on your mark.   Copyright licenses may include allowing a third party the right to publish or use your copyrighted materials in connection with their business.  This may be the right to publish your materials on their website or the grant of a limited license to use templates or other deliverables provided to your clients in connection with services.  You grant a limited right to a third party to use what you have created.  Patent licensing allows a third party to use or manufacture the patented invention.  Again, quality is a major concern in patent license.  Licensing is a powerful tool that lets you capitalize on what you’ve created by allowing others to use it.  A license may be very broad or very narrow depending on the circumstances and needs.  As the licensor, you must determine if you want to retain certain rights to use the license, how much control you want to have over the licensed IP, and how much the rights are worth in the marketplace.

IP protection is always worth considering and you should pursue it where the IP can create value in 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 or simply a new market opportunity.  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.