January 3, 2021

What Is Intellectual Property and Why You Should Protect It

The value of many businesses may be found in its intellectual property (IP), which include patents, trademarks, copyrights and trade secrets. Protecting your IP by filing the necessary application with the U.S. Patent and Trademark Office (USPTO) is crucial to protecting your creativity, idea or brand. Understanding the USPTO's complex application system, however, can be overwhelming. Adam Philipp, Founder of AEON Law, an intellectual property law firm focused on patent, trademark, copyright, trade secret, and related IP matters, presented "VIPs: Very Important Patents" to the Seattle Entrepreneurship Club (SEC). His presentation brought clarity to defining intellectual property and how a business should protect its invention or brand.

Organized in 2008, the SEC is a nonprofit organization that offers a variety of services to help entrepreneurs, investors, and professionals succeed in Seattle and throughout North America. The Medina, Wash.-based organization also cooperates with organization in different industries and fields to promote the exchange of enterprises, talents, and culture between China and North America. While I recommend watching Mr. Philipp's presentation in its entirety via this link or in the embedded video at the end of this post, here a few takeaways entrepreneurs and investors may find of value on why and how they should protect their IP.

Mr. Philipp presented six reasons on why you should file for a patent:
  1. Marketing: Good for public relations. "There is a stamp of legitimacy, particularly in the U.S., if a consumer hears that they are using patented technology";
  2. Defense: Prove possessed of the invention. "Let's other companies know that you have been working on this technology at a provable point in time and it puts them on notice that they shouldn't threaten you if you were ahead of them";
  3. Access: Leverage to others' IP. "A more sophisticated way of using intellectual property is patents are a special kind of tool that can be a force multiplier. So a small company with a strong patent can get the attention of a much larger company to get access to that larger company's IP. If the larger company is either threatened or wants access to the patented technology from the smaller company, the patent can be a lever that will move in otherwise much larger adversary or potential partner";
  4. Monetization: License the patent for money. "You can use your patent like you would any other piece of property; it's like your car or house. You can give permission for other people to use it in exchange of something of value, usually money";
  5. Offense: Sue for money or injunction. When your patent is infringed upon, "you can sue for money or damages, or you can sue for injunctions," which is "getting a court to tell somebody to stop doing something"; and
  6. Value: Patents are assets. "Many companies value the use of patents as a barrier-of-entry tool that keeps competitors from getting into the same marketplace and boosts the value of the company that owns the patent. So patents are seen as company assets and can boost the valuations or the perceived value of the company."
Mr. Philipp talked about one additional reason on why you should file for a patent. The calendars of most investors, myself included, are full with meetings with entrepreneurs who are trying to raise capital for their business ventures. These entrepreneurs often request investors sign nondisclosure agreements (NDAs). But most investors will rarely sign one because doing so creates an undue burden on the time and cost of negotiating and monitoring the multitude of NDAs (a point that I address in my post, "There Is No Such Thing as a 'Standard NDA'"). Therefore, according to Mr. Philipp, an investee who has an interesting invention should obtain a patent before soliciting funds from an investor. "Revealing a trade secret without some form of confidentiality agreement (e.g., NDA) destroys the trade secret."

When I started my career in the early 1990s, it was common for the USPTO to take five or more years to examine a patent application. The long period of time often deterred companies from going through the patent application process. Today, through the USPTO's Prioritized Patent Examination Program (also known as Track One), Mr. Philipp encouragingly noted the examination process has been shortened to 4-10 months. "This has been dramatically changing how people think about IP protection, particularly patent protection with startup companies because once you have an enforceable tool that can keep people out of the marketplace, that can be a powerful tool with the right kind of investment."

Trademarks, Mr. Philipp explained, is a word, phrase, logo or other identifier (e.g., brands) of a source of goods or services. In the U.S., trademarks are used in commerce and they protect against other companies using a confusingly similar mark or similar goods or services. As for when a company should register its trademark, the time to consider trademark protection is when the company dedicates $5,000 or more in its marketing or brand enhancement strategy. "Why spend all that money only to find out someone has beat you to it beforehand?" asks Mr. Philipp.

While it is advisable to retain the services of a U.S.-licensed attorney to file the patent or trademark application with the USPTO, I encourage you to become familiar with the government agency's website to learn more about the patent application and maintenance process as well as the basics of trademarks.

What aspects of Mr. Philipp's presentation did you find of value? What has been your experience in protecting your company's IP?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

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