Intellectual Property for Small Businesses

As a small business owner, it might sometimes feel like you’re expected to know it all. It is tempting to bury your head in the sand when you get overwhelmed. When it comes to legal issues, however, this is not an advisable approach. Knowing the basics of how intellectual property works could save you a lot of hassle in the future.

What is intellectual property?

Under Intellectual Property law, we find the following categories:

  • Copyright: Copyright protects creative content you have created. Think of written work,
  • music, photos, designs, or software. Copyright is automatically granted.
  • Patent: Patents protect inventions. Obtaining a patent can be a complex and costly process. It involves having to hire an attorney.
  • Trademark: Trademark covers your brand and everything associated with that. It is, however, not designed to protect businesses but to protect consumers from confusion. Trademark is not automatically granted.
  • Trade secret: Trade secret is simply applied to secret business information. All the information you don’t want to get out: client lists, strategies, recipes etc. Trade secret applies only when you actively keep your secret e.g. through NDAs.

While copyright might be the most common and well-known type of intellectual property law, the other three are of no lesser importance.

When it comes to copyright, it’s important to note that it does not apply to ideas nor to your name or slogan. This is why it might be wise to choose a combination of different types of intellectual property law for different elements of your business.

What is copyright law?

For many entrepreneurs, copyright law sufficiently protects their creations. Unless there is infringement, copyright can be hassle-free and investment-free.

To hold the copyright of certain work means that you have the exclusive right to spread, copy or sell the work. You can also publish, display or export the work to your heart’s desire. The holder and only the holder of the copyright is entitled to do so.

These are the most important characteristics of copyright:

  • It is automatically granted.
  • In some cases, it is advisable to also register your copyright. Registered copyright carries more weight in a court of law.
  • In straightforward cases, one can register their work online on the website of The Copyright Office. In more complex situations, an attorney can be hired to help register your work.
  • It applies to creative content, not to ideas or brands.
  • It is almost impossible for the creator to outlive the copyright.
  • Work does not have to published to bear copyright.

So if you’re a photographer, all your photos are automatically copyright protected. The ones that you have published on your website, the ones that you have sold, and the ones that no-one has seen yet. If you feel there are some real masterpieces in your portfolio, it might be worth registering.

What does copyright protect?

Copyright protects “creative content”. Most creations from your hands fall under this umbrella. It does not actually need to have any value or artistic substance. As long as you have made it, it’s yours.

Examples of copyright-protected work are:

  • Books
  • Manuals
  • Audiovisual material
  • Designs
  • Photography
  • Visual art
  • Software

It’s all about how you have put something together that counts. How you have put together the words and sentences to write that book or to design that building. That is protected.

What is not protected under copyright?

There are creations that might seem like they should fall under copyright law but actually don’t. Some of these can be protected under one or several of the other three types of intellectual property law.

Examples of what is not copyright-protected:

  • Fashion
  • Computer code
  • Brands and brand-related elements
  • Ideas
  • News
  • Jokes

You might have written a manual on how to build a yurt. The writing in this manual is your copyright.  However, others are free to use the information itself however they see fit. They can completely rewrite your manual using the exact same information with different wording, structure, and design and not infringe on your copyright.

Any methods of operation, policies, or processes that you might have in place in your company do not fall under copyright either. If the formula for your company’s success is your specific meeting structure, you might want to protect these under Trade Secret law.

How long does copyright last?

When you are the sole creator of your autonomous work, your copyright will outlive you by 70 years. Your heirs will be able to profit from your book’s royalties for 70 years after you’ve passed away.

After your passing plus 70 years, your work will become part of the public domain, meaning there is no longer any protection of your work under copyright law. Everyone will now be able to use, publish and duplicate it.

Find more information about copyright on the website of the U.S. Copyright Office.

What is a trademark?

Where copyright does not suffice, a trademark might do the job. As we established earlier, a copyright is not granted on anything to do with your brand. Still, you might want to protect it.

This is what you need to know about trademarks:

  • Trademark is designed to protect consumers, not businesses.
  • It applies to names, slogans, and brand expressions such as colors, costumes, and designs.
  • Because it is meant to protect consumers from confusion, it only applies when a brand is marketed to consumers.
  • It does not automatically apply. You can register at the US Patent and Trademark Office.
  • It requires financial investment and time to register a trademark.
  • Trademarks are not required, your business can perfectly well operate without any.

Let’s say you want to open a bakery called Suzy’s Buns and Rolls, with blue and gold company colors and specific staff uniforms, you could apply for a trademark to prevent Suzan from opening Suzan’s Buns and Rolls two blocks down.

Downsides of registering a trademark

  • The process of getting your brand trademarked can be long and expensive. It will most likely also require you to hire an attorney. Before registering, you will need to make sure that your brand expressions are not already claimed. Your lawyer can help you with this research. He/she will likely save you time and money down the road.
  • You will need to renew your registered trademark every 10 years. For it to be valid, you will also need to keep using your trademark.
  • Others can challenge your trademark. If someone feels your trademark infringes on theirs, they may challenge your trademark.
  • Trademarks are very specific. They only apply to your specific name, slogan or other brand expressions in your particular field. It is very possible that another business in another field may still carry the same name, slogan, or colors.

Find more information about Trademark law on the website of the United States Patent and Trademark Office.

What are patents?

Patents are a lot less visible than copyright and trademarks. There is no little symbol we regularly come across to remind us of all the things around us that are patented. They are in fact much more complex types of Intellectual Property law. Nonetheless, you might one day feel you want to register a patent.

These are the basics of what you need to know about patents:

  • They cost a lot of time and money to register.
  • They need to be registered by an experienced lawyer.
  • Patents apply to inventions.
  • You can make money off of patents.
  • Before the patent is approved, the invention should be kept secret.
  • Apart from new, your invention must also be useful and non-obvious.

What can be patented?

When speaking of patents, we speak of inventions but this does not always refer to the narrow meaning of the word. Yes, patents can be registered for physical, technical inventions but also for e.g. business processes, methods of manufacturing, and chemical compositions. Ideas cannot be patented, neither can certain physical discoveries.

Farmers and plant breeders can register a patent for specific mutations of their crop. If you have managed to breed a new kind of cucumber that can be cloned and reproduced, you might very well be eligible for a patent.

Patents and time pressure

Under U.S. law it is decided that whoever registers a patent first, gets it. Regardless of who actually invented the subject at hand. This means that time is of the essence when it comes to registering your patent. You do not want to run the risk that the new piece of software you have spent years on, will be registered under someone else’s name because they were first to arrive at the U.S. Patent and Trademark Office.

In the United States, you only have a one year window after publicly disclosing your invention to register your patent, another good reason to register as soon as possible. Many inventors never actually get to patent their invention due to a lack of time and money.

If you do get your patent granted, it will be valid for 20 years after which you can apply for an extension.

When to lawyer up

Unfortunately, registering a patent is not something you can easily undertake yourself. You will need to hire an attorney to complete the process for you. This is one of the main reasons it is a costly endeavor. However, once you have officially claimed your invention, your investments can really pay off. Patents can potentially provide the owner with passive income off the royalties for a long time.

What are trade secrets?

The final type of Intellectual Property law is Trade Secret law. As the name suggests, this law protects everything within your business you want to keep secret from the outside world, your competition in particular.

The basics of trade secrets:

  • It only protects secrets. Once you make the information public, it’s no longer protected.
  • It protects you from people creating knockoffs of your product/service.
  • Strategies, recipes, procedures, client list, and processes can all be part of trade secrets.
  • You do not have to register trade secrets.
  • You keep them safe through Non-Disclosure Agreements (NDA) and company policies.

What you need to do

Creating clear company policies is vital for protecting trade secrets. This does not only mean having employees, partners and contractors sign NDAs, it also means having rules and regulation in place for the protection of your classified information. While you don’t need a lawyer to register any trade secrets, they can be very helpful in setting up the right policies to ensure your secrets are safe.

Trade secret law vs. patent law

It’s important to note the difference between Trade Secret law and Patent law. It does not prevent your competitors from creating a similar product with the same exact formula. As long as they came up with it themselves, they are free to use it. This is different in the case of a patent.

Trade secret law prevents people from sharing your secrets, it does not protect the information itself.

Intellectual property exceptions

Joint projects, employee work, and commissioned work could be examples of this. We should also keep in mind fair use policy because in some cases people will be allowed to use your content.

Joint projects

Many entrepreneurs and small business owners work with different partners for different projects. This is especially true in the creative industry. How do you establish copyright for collaborations?

  • When nothing is put in writing, each contributor is granted full copyright regardless of the size of their respective contributions.
  • Each owner is free to use the work to the full extent of their copyright, without any permission from the other owners.
  • Copyright is passed on to the heirs of a contributor in case of death, not to the other contributors.
  • Collective work is where there are several contributors but only one publisher of the work. The main publisher owns the copyright of the whole while each contributor owns their own contribution.
  • When working together on a piece of creative content, it is advisable to set up a contract outlining who owns what and what each contributor is allowed to do with the result.

Commissioned work

As an entrepreneur, you might be commissioned to create work for someone else, who pays for it, or the other way around. Who can claim copyright for this content? How about employees who create work while being paid by you?

  1. Work for hire is content that is created by an employee for an employer. This work is automatically owned by the employer. Standard employee contracts will also state this.
  2. This is different when the creator of the work is an independent contractor. Generally, when the work is made in their own space with their own tools, the creator will be granted the copyright.

The United States Copyright Office has defined exceptions to copyright in the case of an independent contractor.

Where one or more of these apply, the work will be treated as work for hire:

  • a work specially ordered or commissioned for use
  • as a contribution to a collective work
  • as a part of a motion picture or other audiovisual work
  • as a translation
  • as a supplementary work
  • as a compilation
  • as an instructional text
  • as a test
  • as answer material for a test
  • as an atlas

Fair use

In some instances, the work you created can still be used by others under fair use policy. Your work can be published or duplicated for the purpose of news, research, education, criticism, commenting or parody.

A judge will look at different parameters when determining if a practice is protected under fair use:

  1. Was the material used for commercial purposes?
  2. Was the work created for entertainment purposes?
  3. Was a large part or even all of the work used?
  4. Was the value of the work jeopardized by the use?

When the answer to any or all of these questions is yes, a claim of fair use will most likely be overturned.

In fair use cases, judges favor education over profit, science over entertainment, snippets, and quotes over entire works, and the protection of the original copyrighted work’s position in the market.

Intellectual property and the internet

In the digital age, intellectual property has become increasingly complicated. Many entrepreneurs wonder what they can take off the internet for promotional purposes and what others might use from their social media accounts. Is Facebook really the lawless country it sometimes seems to be or do you still own the sketches you posted as promotional material?

Social media

Your posting content on social media does not alter your copyright. You can happily post away and the copyright will remain with you and only you.

Images, video, audio

It might be tempting to scour the web for just the right image to accompany your blog or social media post. Don’t fall for it! No matter how easily accessible, the copyright of the material you find online will remain with the author.

Often, images are protected with watermarks to prevent unauthorized use. You might want to consider doing the same for images you post online.

Avoid getting in trouble:

  • Download images, videos, and audio from free or paid stock websites.
  • Properly cite and source your content.
  • Use a plagiarism checker to be sure you’re following the rules.

Check out our guide on How to Start a Blog

Key takeaways of intellectual property

Follow the rules, invest some time in protecting what is rightfully yours and keep away from unauthorized use of other people’s creations and you will have the basics covered.

To sum it up, as a creator, you remain the sole owner of your work when it is commissioned by another or posted on social media. Employers are the owner of work created by their employees.

You should now be aware of the four different types of intellectual property law:

  1. Copyright – applies to creative content; applies automatically but can be strengthened by registering your work
  2. Trademark – applies to brand expressions; needs to be registered but many companies choose to leave their brand unregistered
  3. Patents – apply to inventions; registration is a long and expensive process that requires an experienced attorney
  4. Trade secret – applies to classified business information; does not get registered but protected through contracts and policies

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