Intellectual Property for Small Businesses
Why trademarks, patents and copyrights should be part of your strategy.
Your good ideas are the foundation of your business. Protecting those ideas and the products they inspire is an essential part of building a strong company. The Tory Burch Foundation, along with the United States Patent and Trademark Office (USPTO), part of the Department of Commerce, hosted a special edition of our webinar series, focused on trademarks, patents and other kinds of intellectual property. Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the USPTO and Elizabeth Dougherty, USPTO Eastern Regional Office Outreach Director highlighte the opportunities that intellectual property protections offer and some government resources available to entrepreneurs.
Though you may think that intellectual property protections are only for designers and inventors, Vidal urged our community to think more broadly. “Absolutely every business has something protectable,” she said. While women are incredible innovators and are the fastest-growing segment of entrepreneurs, they hold only 12% of the over 11 million patents issued by the USPTO. Here’s why you may consider joining their ranks.
What is intellectual property?
According to the USPTO, intellectual property (IP) “refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.” A business owner or innovator can prevent other entities from creating or using the same “creations of the mind” through the four kinds of intellectual property protections: patents, trademarks, copyrights and trade secrets.
Patents protect “a new and useful process, machine, manufacturer, or composition of matter, or improvement thereof.” The USPTO offers utility, design and plant patents. Utility patents “protect what we think of as inventions,” explained Dougherty. Think of your smartphone’s components; most are protected with utility patents. This class of patent lasts for 20 years from the filing date.
Design patents protect the “ornamental appearance of an article of manufacture” and last for 15 years from the date of filing. Plant patents go to the person who invents a new kind of plant or discovers and asexually reproduces it. Like utility patents, plant patents also last for 20 years.
The USPTO registers trademarks to protect “a word, phrase, symbol or design, or combination of words, phrases, symbols or designs that identifies and distinguishes the source of the goods of one party from another.”
“Trademarks are incredibly valuable in part because of their duration,” explained Dougherty. “They can last forever as long as the mark is registered, continually used in commerce and renewed with the U.S. Patent and Trademark Office in a 10 year period.” Trademarks can cover sounds, colors (think: Tiffany blue) and even scents (Dougherty gave the distinct smell of Play-Doh as an example).
Entrepreneurs can also file for service marks, which protect the particular services they offer the way trademarks protect products. For example, Visa has a registered service mark to identify its credit card services. Service marks have the same long lifespan as trademarks.
It is possible your unregistered intellectual property is protected through a common law trademark. Common law trademarks protect your IP only in the region where it’s currently being used, which is why the Department of Commerce encourages federal registration with the USPTO. Consult an intellectual property lawyer to learn about your common law protections.
Copyrights are “the legal protection for original works of authorship including literary, dramatic, musical, artistic and certain other intellectual works, such as logos, product design, packaging, advertising, promotional materials, instructional materials” and more. Other less obvious works of authorship include software and architecture. Put simply, copyrights protect creative expression stored in a tangible form. It’s important to note that the U.S. Copyright Office registers copyrights, not the USPTO. They typically last for the life of the author, plus 70 years. Generally, it is less costly to register a copyright than a patent.
Any company information that is valuable and supposed to remain confidential is considered a trade secret. This kind of intellectual property doesn’t fall under the USPTO but is instead protected through contracts an employer gives to employees and vendors. An example of a trade secret is Google’s search algorithm. While you can use tools like Google business profiles to influence the information about your company that appears in search, no one outside of Google understands the coding and exact criteria for appearing at the top of a search page.
Getting started with intellectual property.
Once you have your big idea, you need to identify what kind of protection you need. The USPTO’s IP Identifier tool helps founders understand what they have to protect and how. It is likely that you will have more than one kind of intellectual property and can build an IP portfolio. Women founders may find the USPTO’s Women’s Entrepreneurship (WE) program helpful in starting an application and speaking to mentors about leveraging their IP.
Though lawyers frequently help entrepreneurs build IP portfolios, you may not need paid legal support right away. Many law clinics and individual lawyers around the country offer free or low-cost IP support, especially to those from under-resourced communities. Additionally, the USPTO manages the Patent and Trademark Resource Centers, a nationwide network of over 80 public, state and academic libraries with staff members who can support you with applications and more. Search by state to get started.
Even if you’re able to save on lawyer fees, a patent may cost you and your business hundreds or thousands of dollars. Vidal recommended that in the idea stage or very early stages founders consider filing a provisional patent, which costs as little as $60 and does not require a lawyer. “That buys you a year to think about whether you want to go into the next stage,” she explained.
Seeking a copyright? You can likely do it yourself, as over 90% of copyrights are filed without the support of an IP lawyer.
Build IP into your strategy.
Your business strategy should include an intellectual property strategy. Patents especially can affect everything from your marketing and sales to your funding. “I will tell you at a high level that if you want to get funding, you need to protect your IP, [and] that IP is also part of the value of your company,” explained Vidal. Sharing your plans for IP protection with potential investors and partners piques their interest and increases your company’s valuation. Protection starts as soon as you begin the trademark process. However, IP experts usually advise founders not to publicly disclose an invention before receiving at least a provisional patent.
Even if you aren’t ready to seek outside funding, your first patent has a major impact on your company’s bottom line. Vidal explained that companies with one patent increase employee growth by 36%. After five years, those companies usually have two times the revenue of businesses without patents.
As you consider expansion, plan for the kind of IP needed to support it. For example, if you are a salon chain, you will need to file for a different class of trademark to be able to use your name and branding on products for sale. And it wouldn’t be premature to start the process before even developing the product. As Vidal emphasized, “People need to know that if you don’t get started right away, you could lose the ability to protect what you have created.”
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