Innovation@work: Creating an IP Portfolio on a Startup Budget
By: Kristin Mendoza
All startups begin with an idea and as the founders begin to figure out how to bring that idea to market, intellectual property (inventions, creative works, designs, symbols and names) is developed. As the brand grows, and the superior qualities of the startup’s goods and services become more widely known among consumers, the startup’s intellectual property (IP) becomes a more valuable asset. So how does one go about protecting this potentially valuable asset when starting a business? Here are a few simple steps:
It Starts with a Name
Whether it’s the name of your company or the name of your product (or both), you need to be sure that no one else is using your name with identical or similar products/services.
Step 1: Do a Google search of your chosen name
In fact, do several searches with as many variations on your name as you can think of, including foreign equivalents if you plan to sell your products/services overseas.
Step 2: Search the U.S. Patent and Trademark Office’s (USPTO) online trademark database
The USPTO has a searchable database of all registered trademarks and pending trademark applications. The Trademark Electronic Search System (TESS) can be found here. Similar to your Google search, do several searches with as many variations on your name as you can.
Step 3: Check the Secretary of State records where you are thinking of incorporating, as well as where you plan to have your principal place of business
The laws of most states (if not all) prohibit someone from using an identical name as other business already registered to do business in that state. Check to see if the Secretary of State has an online database of registered businesses and run a search for your name.
Secure the Domain Name and Social Media Accounts
You may not think of them as such but the domain name for your startup’s website as well as its social media accounts can be critical elements of your IP portfolio. After all, these accounts are likely going to be the primary means of potential customers interacting with your brand. The good news is that securing these important names can be done very inexpensively. Most startups will want to secure the same name across multiple platforms so that the domain name is the same as the startup’s Twitter username, Instagram username, etc. It may take several attempts to find a name that will work across all platforms.
Register the Trademark
A trademark is a word, slogan, picture, sound, color or any other symbol used by a business to identify and distinguish its goods from others in the marketplace. The function of a trademark is to let consumers know that your startup is the maker of the product/service that you are selling and to certify that the quality of the product/service – whether the consumer is buying one or many – will be the same. For example, when purchasing a beverage sold under the name COKE®, a consumer knows immediately who the maker of the beverage is and generally what the characteristics and quality of the product will be (e.g. color, flavor, appearance, etc.), whether that beverage is purchased in Boston or Los Angeles.
Registering a trademark is done through an online application process on the USPTO website. The filing fee is $325 for registration in a single class of goods or services and registration can take roughly 12 months. If your startup has taken the time to develop a logo or unique name for your brand, taking the additional step of registering the logo or name as a trademark is generally worth the cost.
Protect Your Invention
If your product is truly new and unique in the marketplace, patent protection should be considered as a necessary part of building your IP portfolio. However, there is no denying that the patent application is a long and expensive process. For the startup founder on a budget, the temptation may exist to file a provisional patent application on your own and then save funds to hire an attorney to submit a non-provisional patent application within the 1-year deadline.
However, the first step that a startup founder should plan to take is to hire a patent attorney to do a patent search to determine that the product really is new and unique and, equally important, that it does not potentially infringe upon someone’s already registered patent. Fees for a patent search can be in the range of $1,000 to $2,000, depending on the complexity of the invention. Fees for a provisional patent prepared by an attorney can be in the same range of $1,000-$2,000. Fees for the non-provisional, full patent application can exceed $10,000. Patents can be a budget buster when building an IP portfolio but they can also add tremendous asset value. Whether you pursue a patent may largely depend on your industry. Patent protection in the biomedical field is routine but is becoming increasingly less common in the software industry.
Keep Your Secrets…well, Secret
A trade secret is business information that is kept confidential and has value because it is not generally known to others. The element of secrecy is a key requirement to maintaining a valid trade secret property right in business information. This means that the owner of the business information must take reasonable steps to preserve the confidentiality of the material. For instance, printed information should be marked as “Confidential and Proprietary” when possible and access to the printed and electronic information should be limited to only those within the organization who have need to know it and only to outsiders who agree to be bound by a confidentiality agreement. Keeping trade secrets requires discipline and processes for limiting access to information; however, the monetary cost can be confined in the early stages of a startup with simple approaches like password-protecting documents and equipment that contain sensitive information.
Protect Your Creative Works through Copyright
A copyright is a federal right owned by every author of a creative work to exclude others from doing any of the following:
- Copying the work
- Adapting the work
- Distributing the work to the public
- Performing the work in public
- Displaying the work in public
Copyright does not protect an idea; it only protects specific expressions of an idea. It is therefore entirely possible for two startups to have the same idea for a product or service and each one to have copyright protection in the product that they create, as long as they have produced their product independently. Take, for example, Uber and Lyft. Both companies offer ride-sharing services through a mobile app. Even though their business ideas are similar, the underlying software and the user interfaces of each business are different, and each company has copyright protection in their version of their software and their GUIs.
Registration with the U.S. Copyright Office is rather inexpensive ($35) and the process is fairly simple. Moreover, the legal benefits of registration far outweigh the cost.
Whether a creative work is registered with the U.S. Copyright Office or not, it is good practice to include a copyright notice on original works in which your startup asserts copyright protection. The standard notice should be as follows:
© [YEAR OF CREATION] by [NAME OF OWNER]. All rights reserved.
Overall, with some good planning and a modest budget, startups can take steps from Day 1 to build an IP portfolio that can grow in value over time.
Interested in learning more? Click here to subscribe and receive updates whenever new content is posted!