Business requires inventors to be one step ahead when protecting their intellectual property. There are many ways to protect a business idea from infringement. For example, it is possible to copyright, patent, or trademark a business idea to legally secure it from theft. This article looks at six essential steps that outline how to protect a business idea.
A big part of being an entrepreneur is keeping alert to threats to your business and taking action to decrease risk. One element of protecting your business is keeping your ideas safe from intellectual infringement.
This article outlines the essential steps of how to protect intellectual property from infringement. Regardless of what stage of conception your business project is in, it’s a good idea to start learning how to legally protect a business idea.
Please note that this article should not be interpreted as legal advice. This blog is for informational purposes only. We recommend consulting with an attorney to learn how to protect your business ideas.
When developing a business idea, you may first consider acquiring startup funding. However, you also need to consider protecting the business idea or the products and services being developed.
In the early stages of conception, signing legal agreements with co-developers can ensure that you, and your intellectual property, are protected. This can include written agreements, such as contracts, that hold legal power if a breach occurs.
In 2003, Cameron and Tyler Winklevoss hired a fellow Harvard student, Mark Zuckerberg, to develop a website connecting students from different universities. Although the trio had an oral confidentiality agreement, it proved ineffective. The Winklevoss’ alleged that Zuckerberg stole their idea and established his own company – Facebook. Had the Winklevoss brothers signed a written contract with Mark Zuckerberg, he may not have laid his hands on the twins’ project that easily.
Here are some legal tools you can use to protect your idea with an attorney’s help:
An NDA is a mutual agreement between parties on your team vowing not to share information with a third party. As a result, all parties are legally bound not to disclose sensitive information to anyone outside the company. This prevents employees, partners, and third parties from cutting you out of your business. An attorney can help you draft an NDA. Check for state-specific exemptions on NDAs, as several states have begun passing new legislation invalidating non-disclosure agreements.
Having employees sign a non-compete agreement can prevent them from starting a similar business of their own. A non-compete agreement is usually limited to time and location. For example, if you own a barbershop, it can temporarily prevent your employees from opening an entity in direct competition with you across the street.
A non-solicitation agreement is a less restrictive version of a non-compete agreement. It does not prevent employees from starting their own ventures in the same industry. However, the agreement prevents employees from soliciting their employer’s customers. This can protect your client base, which is especially helpful if you operate in a specialized field with a narrow customer base.
This agreement is helpful if you hire someone to help improve your business idea. Under a work-to-hire agreement, any ideas they develop for your business legally become yours. However, if you file for a patent, you must reference them as a co-inventor. Nevertheless, this will not give them any rights to the patent.
There are five types of registered protections under state-federal law, including copyrights, patents, trademarks, trade dresses, and trade secrets. Each of these offers different types and lengths of protection. These protection techniques are not compulsory but can allow for legal intervention in case of infringement.
Copyright is a federal registration that grants you rights to your original work. Your business must meet the following criteria to obtain copyright protection: have an original work that was created by you and expressed in a tangible form.
Copyright is only granted to tangible products, not ideas or strategies. For instance, copyright protection can be given to photographs, videos, writing, or computer codes.
For instance, if you're developing a video game, you cannot copyright the game's rules or the plot. Instead, you can acquire copyrights for elements like the computer code, the graphics, or the layout. Similarly, the concept of a social network cannot be copyrighted. However, you can copyright the design or computer code of the website.
You can register your work with the U.S. Copyright Office. The registration is done online, costing around $50 to $100, depending on your product type. In most cases, copyright is granted for the duration of the creator’s lifetime plus 70 years after their passing.
Patents grant federal protection for using, making, and selling an invention. Patents are provided by The U.S. Patent and Trademark Office (USPTO). An idea itself cannot be patented, but a particular design or method of business can.
Patents usually take up to two years to acquire. They can be costly, with pricing up to $45,000. If you're applying for a utility patent, consider the Provisional Patent instead. It provides a 12-month "patent pending" and a priority filing date if you wish to continue patenting it fully. During these 12 months, your invention will have some protection while you continue to test and apply changes to it.
USPTO outlines the requirements of a patent and how to patent a business method. There are three types of patents you can apply for:
Design patents protect the ornamental, non-functional design of a product. This can refer to a small feature of an overall product or an entire design. Design patents require applications with the USPTO and are only applicable for a limited time. A design patent is typically valid for 15 years from the grant date.
Design patents are exclusively for non-functional elements of a product. For instance, Apple cannot patent the screen of an Apple watch because it is deemed “functional.” Still, it can patent the designs of internal features, such as app designs, signature colors, and features like the “Apple Library” or home screen layout.
Utility patents cover new or improved functional products. This can include pharmaceuticals, machinery, technology, and other manufactured goods. Utility patents only cover the specific functionality of an item, like the motor of a vacuum.
Companies may apply for both utility and design patents to protect a product’s design and technical features. For instance, iRobot holds a patent on its Roomba vacuum design and a utility patent for the functional design of the vacuum.
Utility patents typically offer 20-year protection, and applicants can register on the USPTO website.
The third type of patent is a plant patent, which protects all invented and discovered plants. To qualify for a patent, the plant must be capable of asexually reproducing a natural, genetically identical offspring. Plant patents offer protection for 20 years.
Plant patents cannot be applied to products that achieve any feature through direct intervention. For instance, Zentsuji square watermelons are not eligible for a plant patent because their shape is achieved through box growing; the box, however, is patented.
Trademarks protect your business's marks from unauthorized use by other companies. You can trademark a word, phrase, or symbol that identifies and distinguishes your business from others. Trademarks include brand names, logos, and slogans, but you cannot trademark an idea.
One of the most publicized trademark infringements was between the French luxury brand "Louis Vuitton" and a South Korean fried chicken restaurant called "Louis Vuitton Dak." Because the name "Louis Vuitton" was trademarked by the fashion house, the court ordered the South Korean company to change its name and pay penalties. The case shows how important trademark protection can be for a company's reputation.
Trademarks can operate at a state or federal level, and federal trademarks offer a stronger legal front against the opposition. For instance, if a state trademark conflicts with a federally registered trademark, the federal protection will likely trump the state trademark. However, federal trademarks are typically more expensive and exclusive.
Registering a trademark is not mandatory in the U.S. as trademarks are protected by common law, meaning they are inherently protected once used in commerce. However, you can register with the USPTO to access additional protections. However, trademark registration is usually more complicated than copyright and can take months or even years. Trademark protection is valid for 10 years and can be renewed.
A trade secret is typically a formula, pattern, compilation, program, device, method, or technique that holds economic value and isn’t known by the public. Trade secrets protect the inventor’s exclusive right to valuable intellectual property. As a result, keeping your ideas confidential can be one of the most effective ways to protect them from theft.
A trade secret may qualify for protection if it has actual or potential economic value that isn’t generally known by others. Additionally, the inventor or company must make reasonable efforts to maintain secrecy.
A trade secret will only be granted if all the requirements are met. The trade secret certificate loses its significance if one requirement is no longer valid. Otherwise, there is no expiry date for trade secrets.
Unlike patents, trade secrets do not make your information public. One of the most famous examples of a trade secret is Coca-Cola. The company has kept the drink’s formula unknown for over a century by maintaining a trade secret certificate.
Trade dress offers protection for the physical appearance of a product. This can include its unique shape, packaging, or combinations of color schemes with other design elements. Most trade dress is inherently protected and thus does not require registration. However, you can register for trade dress with USPTO.
A product must be determined to have a distinctive look to qualify for trade dress protection. Additionally, this distinctive look must hold an inherent secondary correlation to the brand.
A recognizable example of trade dress is the Converse All-Star sneaker, which has a registered trade dress for its shoe design. This means that any shoe found with a similar design can be forced to halt production and sale of that product.
Trade dress is primarily targeted at known, established products. If someone is looking for protection for a design that has yet to be released or is in production, a design patent is more appropriate.
The Winklevoss brothers ultimately sued Mark Zuckerberg for stealing their business idea, but it was already too late. Zuckerberg did pay them $65 million in cash and Facebook shares, but he is still the sole individual accredited to Facebook’s superstardom.
Anyone can threaten your business idea with intellectual property theft if it's not protected. This article showed three basic steps you could take to protect your business from infringement. First, legal agreements could protect you from people working inside your company. On the other hand, patents, copyrights, trademarks, trade secrets, and trade dresses could prevent outsiders from copying your idea.