5 Biggest IP Mistakes and How to Avoid Them

Categories: Business , Commercial Law , Patents and Trademarks

Intellectual Property word cloud on green blackboardMany business owners come to me worried that they have made a mistake with their intellectual property. Sometimes I can help fix the mistake, but other times the company has lost the opportunity to secure an advantage or will need to spend a lot of money to make changes because of their mistake. Sometimes the mistake is big enough that the company shuts down and the owner is left with a large liability after losing everything they put into the business. Every company has some intellectual property. It may include brands, unique processes, customer lists, inventions, marketing plans, and databases. Different types of intellectual property are protected in different ways including contracts, trademarks, copyrights, and patents.

#1 Using a brand name that is too close to the brand of another company.
Brand names are protected by federal trademark law. A company does not need to register for a trademark to enforce trademark rights, but a federally registered trademark in the United States Patent and Trademark Office is much easier to enforce. Companies often think they have the approval to use a brand name because of approval of an LLC name or a state trademark when they are actually infringing the brand name of another company. Trademark infringement does not require an exact match of the name or even direct competition with the trademark owner. Rather, trademark infringement occurs when customers are likely to be confused about who is selling. If the customer is likely to think, even for a second, that your company is associated with or sponsored by another company because of your brand name, you might be infringing. To avoid this mistake, get a brand name cleared by an experienced trademark attorney before using the brand.

#2 Sharing confidential information without a contract.
If you share confidential information without a contract, you cannot stop the other person from sharing or using that information. The biggest way that companies make this mistake is with their employees. Many companies hire employees without requiring them to sign a contract regarding the company’s intellectual property. If the employee leaves to work for a competitor or becomes a competitor by starting their own company, then it will be very difficult to stop them from using confidential knowledge that they gained while working for your company. Even when information is protected in other ways such as copyright, patent, or trademark, it is still important to have employees, contractors, vendors, and partners sign an intellectual property agreement. To avoid this mistake, work with a knowledgeable attorney who can help you draft an enforceable contract to protect your confidential information.

#3 Using photos without permission on their website.
You need to assume that all images on the internet are copyrighted unless there is clear proof that they are not copyrighted. Many companies face the challenge of receiving a cease and desist letter demanding a settlement from a copyright holder for an image that was posted on their website. In some cases, the company sending the cease and desist letter is misusing copyright law, but in others, they have a legitimate claim and can sue for damages. Either way, the company needs to spend time and effort to defend against the allegation of copyright infringement. Copyright law protects “creative works” including photos and images even if the creator or artist does not register the copyright or provide a notice that the photo or image is copyrighted. To avoid paying a settlement for unauthorized use of an image, only use images that you license or own. There are many images with a free license (with some restrictions), for example images at Creative Commons. To use these images you need to make sure you are complying with the license, and if your website does not qualify under the license, make sure you pay for a license.

#4 Launching a product or service without an IP strategy.
Companies can lose their opportunity to obtain patent rights if they publicly share the idea or invention before filing a patent application. Oftentimes a “launch” is not actually a sale of the product or service, but is market research, to find out if the product will be successful. The entrepreneur should ask themselves or their team “what happens if this is successful, will we want patent rights?” Not every product can be patented, and not every product should be patented, but if obtaining a patent might be a valuable strategy for a company, then an evaluation should be done before disclosing or launching a product. A patent can still be filed in the United States up to one year after the first public disclosure, but if someone else files a patent application first, the opportunity has been lost. To avoid this mistake consult with a registered patent attorney to talk about how an intellectual property strategy can support your business strategy with a new product or service.

#5 Failing to track deadlines to maintain IP rights.
Companies often lose their intellectual property rights when they fail to pay renewal fees or take other actions before deadlines. Patents and trademarks require renewal payments to allow the company to maintain enforceable rights to its brand or invention. Patent renewal fees must be paid on time to maintain the patent. This is a property tax on the patent, and if it is not paid, the patent goes into the public domain. For trademark renewals, a company must prove they are still using the trademark and pay fees. Other deadlines are the deadlines to sue someone that has infringed your intellectual property. Deadlines to file a lawsuit are called the statute of limitations. While some of the deadlines, such as patent and trademark renewals, are easy to identify and calendar, others are more difficult and require a knowledge of the law. To avoid missing deadlines companies can hire an IP paralegal, or use a law firm that will track and notify them regarding their IP deadlines.

This article was written by Of Counsel Wayne Carroll and is published by permission. © 2021 Inspired Idea Solutions, LLC