Intellectual Property
What is It and Why Should I Care?

Toolkit Partner

Gary Eastman

Gary L. Eastman is a Senior Partner at Eastman & McCartney LLP. Mr. Eastman attended San Diego State University earning a Bachelor of Science in Electrical Engineering. Mr. Eastman earned a Juris Doctorate from California Western School of Law in 1995. Upon completion of law school, Mr. Eastman began his career as an associate for a San Diego based patent law firm before forming his own firm to focus on counseling startups and emerging technology companies with an emphasis on the development of strong intellectual property portfolios.

What intellectual property (IP) boils down to is property rights; if you have protection, not only do you have the right to use the property but also the right to prevent others from using it without your permission. That can be very powerful, but it requires you to begin thinking about your IP and the strategy you want to employ as you start and grow your business.

Types of IP

Before you go any further with your business, you need to take stock of your IP. There are a few kinds of IP about which you should know:

  • Copyrights “protect works of authorship, such as writings, music, and works of art that have been tangibly expressed. The Library of Congress registers copyrights which last for the life of the author plus 70 years.”
  • A patent is “a property right granted by the Government of the United States of America to an inventor ‘to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States’ for a limited time in exchange for public disclosure of the invention when the patent is granted.”
  • Each patent fits into one of three types:
    • A design patent “may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture.”
    • A plant patent “may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.”
    • A utility patent “may be granted to anyone who invents or discovers any new, useful, and nonobvious process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof.”
  • A trade secret is “information that companies keep secret to give them an advantage over their competitors.”
  • Trademarks “protect words, names, symbols, sounds, or colors that distinguish goods and services from those manufactured or sold by others and to indicate the source of the goods. Trademarks, unlike patents, can be renewed forever as long as they are being used in commerce.”

Source:United States Patent and Trademark Office Glossary (site last visited September 14, 2015)

Who Knows What and Why

A good place to start when defining your IP strategy is to consider who will be working on your business ideas, inventions, etc. and who will be given information about them. Regardless of whether you, for example, choose to try to protect an invention with a patent or instead, try to keep the underlying information as a trade secret, you will need to avoid sharing information about the idea or invention too broadly. You need to do this both to maintain the possibility of having formal protection for your idea, invention, etc. and to limit the chances that someone else could claim ownership rights to your idea or invention.

Often the need to share information will arise in two ways — the need to get work done on the idea or invention or as part of your normal business operations, or the need to raise capital. When it comes to how you develop your products or otherwise run your business, it is important both to limit the sharing of proprietary information to only the individuals who need the information and to establish ownership rights to your intellectual property formally from the beginning. Agreements with employees and contractors — as well as owners, investors, and advisors — that lay out the scope of the work, who owns what work, the terms of any invention assignments, and the confidentiality and noncompetition provisions, must be put in place before work is started. Without these agreements, it can become unclear who owns work that has been done as part of your business. Therefore, it is worth the time and money you spend in the beginning to set up the agreements so that you don’t have to resolve more issues later when people may feel less generous toward one another.

Entrepreneurs who need to get others to invest in their business typically must explain enough to make their idea or invention clear to potential investors. However, the more other people know about the details of your unique ideas and inventions, the harder it can be — or perhaps, it can be impossible — to protect them going forward. This is precisely why it is good to speak with legal counsel from the very beginning of your business. Your attorney can help you determine the type of IP protection that makes sense for your business and what you can tell people about your ideas and inventions without losing potential protection. The attorney also can help you prepare nondisclosure agreements and other documents that will help prevent potential problems.

Securing Your Data

Another important aspect of protecting your IP is data security. Make sure that you have security for your network and the data you store on it and that you have in place policies and procedures that limit the exposure of the data to outsiders. This can include provisions in employment-related agreements that outline when and how internal systems can be accessed remotely and what information employees are permitted to take out of the office in general. The point isn’t to be so buttoned up that you perhaps lose some of the excitement of a startup, but rather that you anticipate potential issues up front and put policies, procedures, and agreements in place that will make it easier to maintain your IP as you grow your business.

Formally Protecting Your IP

Taking the time and money to seek IP protection from the government is a big (and expensive) step and one that you shouldn’t take too lightly. For example, it may not make sense to file for a patent if you have no idea whether the invention can support a business. Many startups begin pursuing one thing and end up going in a different direction, sometimes referred to as a pivot. In addition, you want to consider where you plan to do business, because, while gaining U.S. protection is helpful, it likely won’t be sufficient if you plan to do business overseas. It may be useful to consult a number of advisors, including an IP attorney, who have some experience with startups and can help you decide when it makes sense to do what.

How Do I Get Started?

Whatever your idea, invention, brand name, etc. is, you should start by writing down — if you haven’t already — relevant pieces of information that together, tell the story behind your IP. Think like a reporter and answer various who, when, where, why, and how questions:

  • What is your idea, invention, etc. (“it”)? How did you come up with it? Why did you come up with it? Were you working on something else at the time on which it is an improvement? Was there a particular event that gave you an idea? What steps did you take to refine it and how has it changed over time?
  • Who collaborated with you on developing it? How were you being compensated at the time and did you compensate any collaborators for their work? Were there any relevant employment agreements in place? Why have you worked with others on it or discussed it with other people?
  • When did you develop it? When did you start using it? Are their different dates on which you started using it for different purposes; different dates on which you shared it with different audiences; or different dates on which you launched a related product or company marketing in different areas (which can be audiences, geographic areas, etc.)?
  • Where were you when you wrote it out or came up with it? Where are the places that are relevant to some of the “who” and “when” questions above — such as where have you promoted it (or any related product or service) or where were you when you discussed it with someone?

Go through who, when, where, why, and how as questions related to your idea, invention, etc. a few times until you think you have answered those types of questions in every conceivable way. The object of this exercise is to provide your IP attorney with all of the relevant background that will enable him or her to provide you with the best guidance. The goal is to uncover both details about the process you have gone through and potential challenges related to how you developed it — such as any ownership claims others could possibly raise. You are literally putting on paper the story of how you came up with your invention, idea, etc. Your attorney may raise questions you haven’t considered, but starting with this information will move your conversation along faster than if you show up empty handed.