What we're talking about
Intellectual property (IP) refers to those intangible ideas that your business creates. This could be your product design, logo, company name, software, content, design processes, algorithms… Naturally, you want (and, in some cases, need) to stop others from using these. To do so, there are different tools you can use that give you some legal protection.
The main three that a small business can register to protect themselves are trademarks (which protect ‘marks’, like logos, names and signs); copyright (which protects an original ‘work’, like an audio, visual or written creation); and patents (which protect inventions and processes). Here's a full rundown on each one. Ultimately, you need to understand what your IP actually is and what the necessary steps are to protect it.
IP laws differ from country to country – much of this guide applies worldwide, but the specifics are aimed at a US audience.
Why it's important
IP protection might not be the most glamorous part of running a business, but it's pretty essential. This is about protecting your competitive advantage: stopping (or, more likely, minimizing the impact of) others from ripping off or stealing your brand identity, products or processes, and upholding the value of your brand.
Tales of businesses suffering at the hands of copycats and counterfeit products are rampant. A recent study by security service Smart Protection found that four out of five small businesses had suffered from counterfeits and brand abuse on the internet, with the top sectors affected being fashion, electronics, sports, homeware, toys and beauty and personal care. Arming yourself with the right legal credentials is increasingly a minimum requirement.
Separate from that, to avoid a whole range of potentially messy problems to do with ownership later down the line, it's essential that anything created by employees for the business belongs to the business. External investors will also want to see that your business has taken all of the appropriate steps to secure its assets. The aim is to come up with an IP protection strategy that covers the essentials while being realistic to your business and its resources.
Things to note
There's no one-size-fits-all approach. Which type of IP protection strategy is right for your business (and when you might file for specific applications) will vary hugely depending on what you do and your exposure to risk. You'll need to consider your resources and options. For example, for certain businesses, funds might be better prioritized in other places, rather than a costly patent application. As much as you can do certain basics on your own, involving legal expertise can often make a lot of sense. Particularly if, say, you have a patented design process or you're hoping to expand internationally and need in-country specialist help. If you wait too long to file a patent or trademark, you may find that you're no longer eligible for this form of protection.
It won't stop copycats. No matter what you put in place, it's very unlikely that you'll be able to completely prevent a copycat or some misuse of your IP. But investing in protection is far more cost-effective than reactively fighting against it – especially if you need to take things to court. It'll make things a lot more straightforward if and when that time comes.
IP rights are territorial. It's worth bearing in mind that the rights you obtain in one country or region are likely to be valid only for that area. So, if you're planning on expanding or selling in other territories and you're not protected there, you'll be super vulnerable to imitators. There are a few international filing systems to explore here – such as the Madrid System for registering trademarks in lots of different territories via a centralized process.
Online retail platforms have tools, too. As mentioned, counterfeiters are one of the biggest problems affecting retail businesses, with product rip-offs a constant problem. Many platforms have programs – and resources – to help you protect your IP via the International AntiCounterfeiting Coalition. That includes specific initiatives with shopping giants Alibaba and Amazon.
Employee contracts are key. One essential part of protecting the IP of your business is to secure things internally. That's often done through something called an IP assignment agreement. This basically puts it in writing that any work created or done by an employee (or freelancer or contractor) while working for your business belongs to your business. It's often part of a wider contract of employment or any freelancer agreement, but you'll still want to make sure that you have this in place to avoid any legal issues or liabilities further down the line.
How to protect your business' IP
1. Audit your assets. It all starts by understanding the IP that your business currently has. This will be most effectively done by legal professionals but, if you want to create something in-house or get moving right away, the World Intellectual Property Office has a basic starter pack to get you going. Think of it like a stocktake, whereby you catalog all your intangible assets and how they're being used. This will also include checking whether certain assets, like logos or names, are already in use.
2. Reflect on your business' current situation. Ideally in consultation with the same professional, you should now determine which, if any, of your IP assets need to be protected and which are priorities for your business. It's a big decision – you need to take into account your sector, your risk profile, the impact of IP misuse on your business and the current time and cash at your disposal.
3. Think about your business' future plans. Of course, you also need to be looking ahead. In particular, will you soon be selling in new territories? If that's the case and international expansion is on the horizon, you'll need to create a plan for protecting those key assets wherever you plan on using them.
4. Consider what you can do in-house. If you're not seeking professional help, there may be certain basics that you can look after in-house – though, be careful. It's easy to make mistakes and waste valuable time and money on something that ultimately doesn't protect your assets. In the US, you can apply for trademarks here, copyrights here and patents here.
5. Consider professional help. Though you may have been enlisting the help of a general legal professional from the get-go, now might be the time to actively bring on a specialist in the area that you're seeking to protect. It's helpful to be as niche here as you can, to get the best help from experts who really know the nuances of their specialism. For example, the lawyer who can help you file a patent is unlikely to be the same lawyer who is best placed to help you file a trademark.
6. Make sure that your employee agreements are locked down. As mentioned, a key part of protecting your IP is ensuring that the work created by people at your business legally belongs to your business. With legal help, create IP assignment agreements (for both full-time and freelance work) that clearly state that the IP created by them while working for you belongs to your business. Law advice brand SeedLegals has a good template for starters.
7. Join any appropriate groups or associations. There are plenty of sector-specific trade groups and associations that are explicitly set up to help small businesses facing problems like counterfeiters. You can meet other companies in the same boat as you and learn how they tackled IP problems, while getting vetted advice on which programs and law agencies are worth speaking to. For example, for clothing and footwear brands, the American Apparel & Footwear Association has a whole section on brand protection.
8. Create a plan for monitoring the situation. Whether you've obtained IP rights for specific assets or are waiting for later down the line, you should regularly take time to monitor and note changes to your business' situation. You might, for example, need to keep yourself informed on what competitors in your market are doing by regularly consulting specific patent and trademark databases. As you create more IP, you'll also need to revisit whether that should be protected as well.
• IP protection isn't a perfect science – you're never going to be completely protected from infringements. It's about protecting yourself as much as your budget allows and seems reasonable for your specific business.
• External legal help can make a huge difference – from conducting an IP audit to filing the right applications when you need them.
• Beyond protecting yourself from counterfeiters and copycats, you also need to secure your assets in-house. You'll need contracts that ensure anything created by someone working for your business belongs to the business.
Perspective. In this piece from business magazine Forbes, the founder of a digital advertising company discusses how he stopped a bigger company from stealing his IP – and what he learned.
Example. This interactive guide from the World Intellectual Property Organization explains how to navigate IP as a startup – and the common things you need to think about at each step of the journey.