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Protecting your intellectual property

IntelProp

How to safeguard your company’s valuable information and minimize exposure to IP theft

By Erik Cassano

Think about all the things your company “invents.” Its name. Its mission statement. Its brand identity. Its growth and sales strategies. All of this information is legally considered intellectual property – and that’s before you consider creations that require a patent application.

Whether you operate in a high-tech field or not, you are exposed to the risk of IP theft from a wide range of sources. Protecting your business from that risk is not just a matter of filing for trademarks, copyrights and patents. Instead, it’s a task that requires ongoing involvement from everyone in your company, from implementing an IP protection strategy to communicating that strategy clearly and proactively to every employee before your risk exposure becomes widespread.

Four areas of exposure

Eric Osterberg, principal at Boston business law firm Osterberg LLC, divides IP risk into four main areas: trademarks, copyrights, patents and trade secrets.

Trademarks cover virtually everything surrounding your company’s identity – your name, brand, slogans and logo. When it comes to trademarks, protection is a two-way street. Not only do you have to take steps to protect your own company, you have to take steps to ensure your identity doesn’t infringe another company’s trademarks.

“When you’re branding or rebranding, check if anyone else is using the name you’ve selected,” Osterberg says. “It sounds so simple, and checking is sometimes as simple as a Google search, but you’d be surprised how many companies don’t do it. If you start using a name for your company without investigating it first, you run the risk of stepping on another company’s toes, and that can lead to many more legal headaches.”

Copyright laws pertain to published materials. That can include literature, photography, video and film, music or visual art. Once again, copyrighting IP is a two-way street. It’s important to file for copyright protection on any media content your company produces that will be disseminated externally – and that includes making the material available on your company’s website or social media accounts. But just as important, you need to educate your team about unauthorized use of material copyrighted by other companies.

“Published material is so readily available now, thanks to the Internet,” Osterberg says. “It’s easy to pluck a quote or a stock photo to use in your company’s own material. But it’s imperative to check whether that material is free to use. If you’re going to use anything that’s not explicitly listed as free-use, you need to obtain written permission. That’s something everyone at your company should know, if they’re in charge of developing any type of content.”

The third area of risk exposure is among the first to come to mind when discussing IP – patents. By law, patents are awarded to individuals, not companies, so a company can never truly hold a patent. However, your company can create a written contract in which an employee signs over any invention rights to the company as a condition of employment. It’s one of the most common forms of company IP protection.

“Patents can be issued for a wide variety of things,” Osterberg says. “It’s not just for physical inventions, like Thomas Edison and the light bulb. You can apply for a patent on a new process, or an alteration to an existing product.”

As with trademarks, however, first do your research.

“Companies are always looking to gain an advantage over one another by trying to figure out new ways to do things,” Osterberg says. “But there’s always the possibility that someone has already done it and patented it.”

A search of patent records with the U.S. Patent and Trademark Office will help you determine if a patent already exists so you can avoid patent infringement – and the associated legal ramifications.

The fourth area of IP is your company’s trade secrets, which, unfortunately, no piece of paper can completely protect. Keeping proprietary knowledge from falling into the wrong hands requires companies to coach employees, partners and other stakeholders on what information they can and can’t share with the competition.

“One of the ways you can protect your information from loose lips is to tell your team information only on a need-to-know basis,” Osterberg says. “Keep written information away from people who don’t need to know it, and only disclose what you need to disclose when a new product goes to market.”

Noncompetes

Protecting your trade secrets overlaps with another popular tool in IP protection: noncompete agreements.

To protect proprietary knowledge about products and processes, companies will often mandate that employees who handle sensitive information sign a noncompete agreement upon hire.

“Noncompete agreements, simply put, are agreements that limit what information a former employee can take to a new job and use to compete against their former employer,” says Norman Hedges, the director of the IP law clinic at Indiana University’s Maurer School of Business. “The central idea is that it’s unfair for companies to train an employee and give him or her access to internal information and resources, only to have that employee turn around and use that against the company.”

That’s one side of the argument. The other side involves a person’s livelihood and how far a noncompete agreement can go before it hinders an individual’s ability to make a living.

“While noncompetes can protect a company’s interests, you can’t have an onerous agreement that restrains an employee’s ability to get a job,” Hedges says.

That is why the limitations of noncompete agreements must be narrowly focused on a specific time or geographical area.

“If I’m selling window blinds in Indiana, and I move to another company, my noncompete can’t say that I’m prohibited from selling blinds throughout the U.S. for the next 30 years,” Hedges says. “That’s inhibiting my ability to make a living. My noncompete might say I’m prohibited from selling blinds in the state of Indiana for two years. I can sell them in Ohio or anywhere else, just not Indiana. That helps protect the employer’s turf without unreasonably preventing the employee from making a living.”

These time and geographical restrictions can vary depending on the industry and the sensitivity of the information possessed by the employee. The bottom line is, the noncompete has to protect a company’s interests while still being defensible under legal scrutiny.

“If you tell an employee that they can’t work in the securities field in the U.S. for one year, you have to have sound reasoning behind restricting the employee for that amount of time, across the whole country,” Osterberg says. “It could be challenged in court, and the reasoning has to be defensible.”

In lieu of signed agreements, some companies put blanket noncompete stipulations in the employee handbook, which employees are expected to abide by as a stipulation of employment. However, companies should be aware that a noncomplete agreement that is not actually signed by an employee may not hold up well under legal scrutiny.

“As an attorney, I would be uncomfortable defending a company based only on a noncompete statement in the employee handbook,” Osterberg says. “If you’re potentially interfering with a person’s ability to make a living, the courts are going to take a really hard look at that. Noncompetes should always be signed agreements, which are much more apt to hold up in court.”

The fine print

Noncompetes aren’t the only documents that need to be specific. No matter what form your IP protection takes, you must clearly declare what protection you’re applying for – be it trademarks, copyrights or patents. Ambiguity in description can lead to application rejections on just about every front.

“With patents, for example, there is always going to be a back-and-forth between the patent office and the attorney,” Hedges says. “The ultimate goal is to get to a point where the property is protected under a patent, but the application isn’t getting too much protection.

“Say you invented the hand, which you define as a palm plus five digits. Animal paws were known and patented before you invented the hand. Paws also have a palm and five digits. So now you have to refine your description.”

By saying your hand is different because it has an opposable thumb, you’re narrowing the scope of protection, Hedges says. Then you can apply for a patent on a hand with a palm, plus five digits with an opposable thumb.

Both Osterberg and Hedges say the root of good IP protection is the ability to identify and specifically define the IP that your company possesses, then create policies and practices around the protection of that IP. A big part of success is partnering with IP experts, both internally and externally, who can help you create and enforce those policies based on sound legal reasoning.

“It starts with a mechanism for identifying the IP you create,” Osterberg says. “Whether it’s copyrightable stuff, your brand, your logo, your work or anything else, you as a company need to identify that. Beyond that, you need policies and procedures to govern all of that. When should you consult with an IP lawyer? When do you need to file an application for a copyright or a patent? What people within the company are responsible for the use of copyrighted material? Your plan should answer all of those questions.”

Finally, you should also have an understanding of how your company’s IP is protected under state and local laws. Regional, state and local laws cover IP to a degree, but without official documentation, you cannot expect universal protection nationwide or beyond.

“There is a small town in Illinois where the restaurant chain Burger King cannot expand, at least under that name,” Hedges says. “There was already a pre-existing Burger King restaurant in that town, and that restaurant’s name and brand are protected under regional law. But that restaurant didn’t file for trademark protection. If they had, their name would have been protected around the country, and the Burger King chain we all know would likely have had another name.”

There are many nuances to IP protection. To protect your company and the work it produces, ensure your company and its employees have a solid working knowledge of your IP risk exposure and that you know how to utilize IP law to manage that risk.

“It really boils down to people and protocols,” Osterberg says. “If you educate your people and implement the right protocols, you’ll have a sound base for protecting your IP. From there, it’s a matter of enforcing those protocols and partnering with good IP legal advisors who can keep you updated on the latest changes to IP law.”