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.

Resources for Globally-Minded Small Businesses

Image: http://ow.ly/XPGH302jHgz

On May 25, 2016, I attended "Startup Global Seattle" in Seattle, Wash. Sponsored by Microsoft Accelerator Seattle, the Global Innovation Forum, the U.S. Department of Commerce and Silicon Valley Bank, the forum's focus was on exploring "the opportunities and challenges for startups and small businesses in the global marketplace and to discover resources to help your globally-minded business succeed." This event featured several panelists discussing key topics such as navigating international compliance and protecting intellectual property, succeeding in the global digital economy and global e-commerce, and understanding how to access the resources to reach new markets.

I agree with the remarks made by Jeremy Snodgrass, an attorney specializing on IP licensing at Microsoft, that startups and small businesses should understand the full range of their IP assets. In my experience of advising business owners and entrepreneurs, many are aware of patents as an IP asset but they overlook (or underestimate) the valuable role trademarks and copyright provide to their company's IP asset portfolio. While it is necessary to retain legal counsel in navigating the IP filing process to protect a company's invention or brand, I recommend that every entrepreneur take advantage of the excellent resources that the United States Patent and Trademark Office provide with respect to patents and trademarks.

Diana Mooney, Director of the U.S. Commercial Service Seattle, noted that many small business owners can find useful information through Export.gov, which "provides trusted market intelligence, practical advice and business tools to help U.S. companies expand in global markets." Throughout my professional career, I have routinely used Export.gov as a primary resource in learning about the opportunities and challenges of doing business globally. Small business owners and corporate executives alike will find value in many of the export guides available through www.export.gov/Export-Guides.

For example, Country Commercial Guides, which are prepared by trade and industry experts at U.S. embassies worldwide, provide important information such as market conditions, opportunities, regulations, and business customs for over 125 countries. These guides are an excellent starting point to find everything you need to know about doing business overseas, detailing eight important factors to help you decide if a market is right for your product or service: 

1. Doing Business in ...: Provides a broad overview of the market and the top reasons why U.S. companies should consider exporting here. Recommends strategies for entering the market and summarizes challenges or barriers for U.S. companies;
2. Political and Economic Environment: Links to the State Department's website for background information on the country's political environment, its bilateral relationship with the U.S. and the country's membership in international organizations;
3. Selling U.S. Products and Services: Provides guidance and best practices for selling U.S. products and services in the market, includes typical use of agents and selling to the government. Provides steps for establishing an office or joint-venture/licensing partner, and conducting due diligence. Discusses the state of e-commerce, franchising, and direct marketing;
4. Leading Sectors for U.S. Exports and Investment: Identifies the top industry sectors that have potential in the market. Provides a general overview of each sector, including trade data, challenges, sub-sector best prospects, and a list of relevant websites and trade shows;
5. Trade Regulations, Customs and Standards: Describes trade regulations, customs and standards in the market. Provides information on import tariffs and documentation U.S firms should be aware of when exporting, including any prohibited items or temporary entry procedures;
6. Investment Climate Statement: Describes the country's openness to foreign investments and provides information on the country's investment policies, the labor market, political violence and levels of corruption. Describes foreign trade zones and laws for protecting property rights;
7. Trade and Project Financing: Describes the country's financial system and how U.S. firms typically get paid. Describes the banking system and provides information on foreign exchange controls in the market. Describes important sources of funding for project financing; and 
8. Business Travel: Describes relevant business travel information and business customs, includes any special visa or entry requirements, potential health risks, travel advisories and information on travelling around the country.

My colleagues and I at ROI3, Inc. regularly refer to the China Country Commercial Guide as we develop mobile applications for smartphone and tablet users in the world's largest mobile phone market. We are also utilizing the Country Commercial Guide for other countries as we explore new business opportunities in Southeast Asia, South Asia, and sub-Saharan Africa.

As a startup entrepreneur or small business owner, what resources do you utilize as you prepare to expand into foreign markets?

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.