Understanding Intellectual Property

According to the World Intellectual Property Organization, Intellectual property refers to "creations of the mind, such as inventions, literary and artistic works, designs and symbols, or names and images used in commerce." Whether your company creates or uses what others have created, intellectual property rights should be a major concern, regardless of your business' size.

World Intellectual Property Organization (WIPO)

For up-and-coming small businesses in particular, even common intellectual property mistakes can be detrimental. To help safeguard your business from fines and or other legal costs, understanding intellectual property rights is paramount. A great first step towards protecting your business is recognizing the myths surrounding intellectual property.

The following are David G. Oberdick of Entrepreneur.com's 7 Persistent Myths About Intellectual Property':

Myth 1: Businesses Automatically Own Intellectual Property Created by Employees or Contractors.

While it makes sense to think you have rights over the work created by your employees or vendors, this is only the case if their contract explicitly states this. Without such a contract, entrepreneurs actually have limited or no rights at all to employee's creative work.

Myth 2: Patents Grant Worldwide Protection.

If you are a company that conducts business abroad, you must file for a patent in each country that you operate in. Obtaining a patent from the U.S. Patent Office will only protect your intellectual property in the U.S.

Myth 3: If it Sounds "Official" it is.

Don't be tricked by scammers asking for money to protect your intellectual property. Even if an email or invoice looks legitimate, there is a good chance it is simply not real. Some common examples of fraud include emails asking businesses to pay a fee to protect trademarks or domain names, or invoices for "protection services."

Photo Credit - JordanHill

Photo Credit - JordanHill

Myth 4: If it Doesn't Have a Copyright Symbol, Anyone Can Use it.

While that may have been the case decades ago, the laws have changed. Just because a photo doesn't have the copyright notice or (c) symbol on it, that does not mean it is free for public use. This rule is especially important for you and your employees to recognize when using images from the internet, such as from Google. It is good practice to assume any material found on the internet is copyrighted and that you should ask permission from the owner before using it.

Some great ways for your business to safely use images without risking the fines is to start an account on a stock photo database such as iStock, or simply use the Creative Commons search for high quality and royalty-free images.

Myth 5: Trade Secrets Provide Easy Catch-all Protection.

Another common mistake young business owners make is assuming information not covered by a copyright or patent can be protected as a trade secret. A trade secret, as Entrepreneur.com defines it, is "information used by a business, which can be legally protected, that is secret to the general public and is critical to the livelihood and success of a business."

The problem with trade secrets is that they are difficult to enforce in court. To be successful, a company must prove 1. the information gives the company a competitive advantage because it is not known by the public, 2. the company took reasonable measure to protect that information, and 3. the information is not generally known to the public or competitors.

Myth 6. The Markings Don't Matter.

Many business people misuse the intellectual property markings on a regular basis, either by overusing them or not using them when they should be. A few examples include marking a patent number on items that don't actually have patents or don't bear the exact patented design. This simple mistake can result in fines as high as $500 per mislabeled item. However, if you do not use trademark markings like TM or (R) when you should, you also run the risk of letting your brand name become generic, as was the case for aspirin, zipper and thermos.

Myth 7. I Can Wait to Figure out my Intellectual Property Strategy. 

Just last year, the laws about who own intellectual property changed from the "first to invent" system to a "first to file" system. This means that 1. just because you thought it first does not give you the automatic right to the patent, and 2. that your company has no time to waste in acquiring the rights to your intellectual property.

What Should I Do?

While intellectual property mistakes are all too common for small businesses, they don't have to be for yours. There are a number of practical steps your business needs to be doing to protect itself:

1, Create an intellectual property strategy for your business.
2, Find a trusted intellectual property consultant for your business to help you create this strategy.
3, Be careful when using images you find online. Use Creative Commons search or a database like iStock whenever possible.
4, When it doubt ask the property's owner.
5, Make sure your employees are aware of your company's strategy and rules.

Following good intellectual property practices is the business smarts thing to do, saving you time and money in the long run. Make intellectual property rights a top priority for you and your business!