What is Intellectual Property (and why Should I Care)?
“My words and my ideas are my property, and I’ll keep and protect them as surely as I do my stable of unicorns.” - Jarod Kintz, This Book is Not for Sale.
Intellectual property (“IP”) refers to “creations of the mind” – such as art, books, and inventions. Similar to owning a piece of physical property (land, a house, a boat, etc.), ownership of intellectual property comes with special rights. Sounds interesting, but why would a startup founder care? Isn’t this just going to be a waste of time and money?
If you are creating a logo for your business, a website, design mockups, wireframes, or a prototype, then you are creating IP. Unless you keep track of your IP and make sure that you protect it, then you could end up in a situation where you can’t do anything about someone who has copied your code, stolen your idea, or ripped off your logo/design. Additionally, you could end up in a situation where someone else accuses you of stealing their IP.
You’ve probably heard of trademarks, copyrights, and patents, but you might not know the difference or how to protect these different types of intellectual property. In this post, I’ve provided a brief description of each type of IP, along with what you can do to protect it. If you would like a quick (and fun) video overview of IP, you can watch ”The Laws of Ring Pops” by Etsy‘s General Counsel, Sarah Feingold.
Copyrights
Copyright protection is available for original works of authorship that are fixed in tangible form. People usually think of copyright protection in relation to books or music, but your website design, content, and code are all also eligible for copyright protection.
However, copyright law is extremely rigid and protects only the actual expression of an idea – not the idea itself. You can get copyright protection for your actual written code, a blog post on your website, or your design, but copyright won’t protect any of the ideas underlying these expressions. If you want to protect the underlying idea, then you should look into patents, which are discussed below.
You don’t need to do much to obtain copyright protection for your work. Copyright protection begins as soon as the work is created and it lasts up to seventy years after the creator’s death. A copyright is created as soon as it is “fixed” in a copy or phonorecord for the first time (publishing it on your website will do the trick).
What you can do: Put “© Copyright [Startup Name] [Year]” in the footer of your website and in a comment in your code.
Read more: Copyright Basics – United States Copyright Office
Trademarks
Trademarks are available for words, symbols, devices, or anything else that serves to identify where goods or services are coming from. This means that your startup’s name, colors, and logo are eligible for trademark protection. The only catch is that you must actually be using (or intend to use) the mark in relation to your business.
You don’t need to register to obtain a trademark. However, your trademark will only be protected after active use of the mark in commerce in connection with the product or service. Before you choose a a mark or a name for your startup, you should conduct a preliminary trademark search and a basic Google search to avoid infringing on someone else’s identical or similar trademark. You can search the US Patent and Trademark Office (USPTO) database of registered trademarks using their Trademark Electronic Search System (TESS). You can see if your domain name is available using Whois or GoDaddy.
You should be ale to obtain trademark protection if your mark is fanciful, arbitrary, or suggestive. If it is generic or merely descriptive, then you probably won’t be able to obtain protection. For example, “Apple” is arbitrary when it refers to Apple Computers, but it’s generic if it refers to an apple grower.
What you can do: Do a trademark search and a Google/domain name search before choosing your startup name. Put a ™ after your startup’s name and/or logo.
Read More: Basic Facts About Trademarks - United States Patent and Trademark Office
Registered Trademarks
Have you ever wondered why some companies put an ® after their name and others put a ™ ? The ® can only be used if you have registered your trademark with the USPTO. As mentioned above, you don’t need to register your mark in order to protect it, since you can establish rights based on use of the mark in commerce, without registration.
However, owning a federal trademark registration on the Principal Register has some advantages, such as putting everyone on notice that you own the mark, a legal presumption that you own the mark, and the ability to sue over the mark in federal court.
If you want to register your trademark (and start using a fancy ® after your startup’s name), you can do so on the USPTO website. It will cost you $275.
Patents
Patent law protects new, novel, and non-obvious inventions such as games, software methods/processes, chemical compositions, devices, machines, and business methods. A patent is a grant given by the government that allows the inventor to exclude others from using or selling the invention for a limited period of time (generally, 20 years).
There are three types of patents:
- Utility Patents: Any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof.
- Design Patents: A new, original, and ornamental design for an article of manufacture.
- Plant Patents: An invention or discovery (and asexual reproduction) of any distinct and new variety of plant.
The alleged societal benefit of patent law is that it creates a financial incentive to innovate. The societal drawback is that it reduces competition, reduces the spread of innovation, and creates deadweight legal costs.
Investor, Brad Feld, is another long time advocate against software patents – he thinks that “they are (a) invalid constructs, (b) totally unnecessary, and (c) a massive tax on and retardant of innovation.”
If you are interested in learning more about the software patent debate, you can watch Patent Absurdity, a short film that “explores the case of software patents and the history of judicial activism that led to their rise, and the harm being done to software developers and the wider economy.”
Patent Absurdity from Boris Loukanov on Vimeo.
What you can do: Fill out an Invention Disclosure Questionnaire (Example) to help you (and your lawyer) decide whether you should be filing a patent application.
Read More: General Information Concerning Patents - United States Patent and Trademark Office
Trade Secrets
Trade secret law protects any information that can be used in business that is sufficiently valuable and secret to afford an economic advantage over others. Trade secrets can include technical information, such as formulas or software code, or business information, like customer lists.
There is no federal protection for trade secrets in the United States. Rather, each state has its own laws. The best thing that you can do to protect your startup’s confidential information is to have your employees and contractors sign Non-Disclosure Agreements (NDAs). Just don’t ask a VC to sign one.
What you can do: Ask employees/contractors who are exposed to your startup’s secrets to sign an NDA.
Read More: The International Guide to Privacy – American Bar Association
A Note About IP Ownership
If there are other people contributing to your startup, it’s critical that you obtain an IP assignment from all of them. If you don’t have your designers, developers, or other contributors assign all of their rights in the intellectual property that they are creating for your startup, they could end up owning the IP, instead of your startup. I have already touched on this issue in a previous post, but this is one of the reasons that you should incorporate your startup as soon as you and your team begin creating IP.
What you can do: Incorporate your startup and make sure that all contributors sign an agreement that assigns all their rights in IP to the company.
Disclaimer
Disclaimer: This blog is a public resource for general information. Nothing in this blog or any link should be used as a source of legal advice. If you have a legal issue – do not rely on this blog (or any blog, for that matter). You should get a lawyer.
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