We end our lessons learned series (co-authored by me and Mike Willee) with our favorite topic, intellectual property (IP). Many entrepreneurs fail to recognize the importance of IP—let alone the value of an IP protection plan in the earliest stages of their businesses. Building a brand, creating a minimum viable product, generating sales leads, and keeping your head above water all push the pressing matter of IP to the back burner. However, having a firm grasp on the importance of intellectual property from the outset can reduce future headaches and chances of financial loss.
Many companies find themselves caught off-guard by what is involved in keeping IP squared away. Managing your company’s intangible assets can take time and money that many startups don’t anticipate, as Jay Litkey, founder and president of Embiotics, explains:
“For companies with intellectual property (IP) to protect, the costs to draft, submit, and maintain patents can certainly be a surprise. Patent applications should have broad and defensible claims, and since the average business operator does not have adequate experience in this area, one often needs to engage an external service provider, which can be costly. Furthermore, each patent application needs to be repeated for each country in which IP protection is being sought (requiring additional fees per country) while respecting subtle differences between patent laws in each country. Again, to do this properly, you usually need to leverage an external service provider. Lastly, once patents are granted in each country, there are recurring maintenance fees required (some being annually) within each country to keep each patent active.”
When you’re starting out and setting a budget, it’s important to set aside resources to take care of your company’s intangible assets . This involves much more than patents. Even if you’re not a company that deals in creating inventions or other physical products, there is IP elsewhere in your company, from your name and slogans to marketing collateral and website copy. Leaving it be and hoping for the best isn’t a viable strategy, especially if you find yourself having to deal with infringement claims against your company.
In fact, many IP issues stem from infringement, whether it is malicious or unintentional. Given how fast and how often things move online, many people don’t give a second thought to using what they find on the web for their own purposes, with little consideration as to who owns it. And while it may seem like a harmless crime, it can have serious consequences, as Kari DePhillips, owner of The Content Factory, points out when referencing her $8,000 copyright infringement case:
“It all stemmed from an image of Omaha, Nebraska, that was used on a client’s blog post, which I could prove had been viewed fewer than 100 times before I took it down. Although I didn’t personally make this mistake, one of my employees did, and I had to pay for it.”
When you’re working on anything for your company, whether it is your website, your ads, or even your product itself, it’s crucial to be aware of others’ IP. There are some cases where you can feel comfortably in the clear, as in the case of images that you have created yourself or copy that you wrote without cribbing from elsewhere. But when it comes to materials created by others, you have to tread carefully. Before using anything that you don’t own, make sure you understand the rights and permissions for that content and how you can use it. Certain creators restrict how their creations can be used, while others will let you use it for any purpose so long as you’ve paid the licensing fee or provided the necessary attribution.
You also have to be aware of ownership rights as it concerns your employees and contractors. Just because you’re paying their wages doesn’t automatically mean that you have ownership of the work they’re doing for you. You should be using employment agreements with all employees and contractors, and those agreements should delineate ownership rights of work created while under your employment. Likewise, if you’re running your business as a side project from your regular job, you should understand what your written agreements with your employer specify with regards to ownership. You don’t want to put in countless hours to your new venture only to find that everything you’ve worked on doesn’t even belong to you.
Read more: Forbes