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What Small Business Owners Need to Know About Patents, Copyrights, and Trademarks

Intellectual property includes creations such as inventions, literary or artistic works, designs, symbols, names and images used in business. Patents, copyrights and trademarks are legal devices designed to protect intellectual property and allow people to earn recognition or financial benefits from their inventions and creations.

Intellectual property law can be especially helpful for small business owners trying to get an edge on competitors or larger companies, said Keith Kupferschmid, CEO of the Copyright Alliance.

“You need to make sure a competitor doesn’t take your invention or copyrighted work. Intellectual property law is what protects you from the competitors,” Kupferschmid said. “That’s why these laws are so important to the little guy. It puts a small business on equal footing with a big business.”

Continue reading to learn more about how patents, copyrights and trademarks can affect your business.

Patents, copyrights and trademarks: What’s the difference?

Patents, copyright and trademarks protect varying elements of intellectual property. In general, patents protect inventions, copyright protects creative works and trademarks protect brand names and logos, said Andrea Hence Evans, a Maryland-based intellectual property attorney.

To understand the differences, remember that you would patent a TV, trademark the TV’s brand and copyright the script of a TV show, Evans said. Though there may be some overlap, the details of each protection are distinct.

Original, creative work receives copyright protection as soon as it is completed. There is no requirement to register copyrighted work with the U.S. Copyright Office or to place a copyright notice on your work. However, a copyright would need to be registered before you could sue someone for copyright infringement, Kupferschmid said.

Copyright gives you the right to control the reproduction of your original work, the public display and distribution of your work and the making of derivative works, such as turning your book into a screenplay.

Under certain circumstances, the fair use doctrine of the Copyright Act permits the use of copyright-protected works. Noncommercial and nonprofit educational uses are typically considered fair.

“Fair use allows people to use small portions of copyrighted work that don’t harm you,”

Unless it’s within the limits of fair use, replicating or using a copyrighted work, knowingly or not, could result in copyright infringement. You must be able to prove that you are the owner of the copyrighted work and demonstrate that the defendant had access to the original work and that both works are substantially alike. The copyright holder could seek monetary damages and profits, an injunction to prevent further infringement or destruction of the infringing products.

Patents

The U.S. Patent and Trademark Office (UPTO) issues patents, which grant the property rights of an invention to its inventor. Per the UPTO, utility patents are granted to those who invent or discover “new and useful processes, machines, articles of manufacture or composition of matter.” Design patents are reserved for inventors of “new, original and ornamental designs,” and plant patents are granted to anyone who discovers or produces a new, distinct plant variety.

Patents prevent anyone else from making, using, selling or importing a protected invention, typically for 20 years from the date on which the patent application was filed. Patents require hefty application and maintenance fees, which we’ll discuss further in a later section. Once you receive a patent, you are responsible for enforcing it.

Business method patents are also available to inventors of new ways to complete tasks or provide services, Evans said. Business method patents are a subgroup of utility patents, and include software and mechanical or electrical engineering inventions, she said.

To be patentable, an invention must be novel or new, useful and nonobvious, Evans said. If you’re simply changing details of something that already exists, like color or shape, you wouldn’t be eligible for a patent, she said.

When applying for a patent, you must write a number of claims explaining what you want the patent to protect. Your claim language should be specific yet broad enough to protect against a range of potential infringements, Evans said. Consider hiring a patent attorney to help draft your claims, so you avoid writing statements that fail to protect the invention or could be used against you in court.

“Ignorance of the law is not an excuse,” she said. “It’s better to seek the help of a qualified attorney.”

Trademarks

A trademark is a word, name, symbol or other device that identifies the source of goods, such as a business. A service mark is similar, except that it refers to the source of services rather than products.

Trademarks must be registered with the USPTO. Businesses cannot use confusingly similar trademarks, but businesses can produce similar goods or services using different marks. For instance, a newspaper and a law firm could use a similar trademark, as consumers likely would not confuse the two, Evans said. But a shoe company and a sock company would probably need different trademarks to avoid confusion.

Once you submit your trademark application, the USPTO would compare your proposed mark with those that are already registered to determine the likelihood of confusion. From there, you would be responsible to monitor your own trademark, Evans said. Some law firms offer monitoring services, or you could take a less expensive route and set Google alerts for your trademark or conduct regular online searches, she said.

Claiming trademark infringement can be tricky, Evans said, and you may not want to send cease and desist letters alleging infringement to any business using a similar trademark. Drawing attention to your trademark could backfire if infringement isn’t actually taking place, she said.

“If someone can prove they used the trademark prior to you, they can silence you and take away your trademark,” Evans said.

You must maintain your trademark registration to keep your protection. Maintenance documents are due to the USPTO between the fifth and sixth year after registering your trademark. Though you are responsible for policing your own trademark, the USPTO would prevent any new businesses from registering a similar mark.

Trade secrets

Trade secrets are another type of intellectual property that consist of formulas, patterns, compilations, programs, devices, techniques or processes used in business that give companies an advantage over competitors who do not know those secrets.

“A good example is the Coca-Cola recipe,” Evans said. “The company has taken precautions to make sure no one knows exactly what that is, even the people who work at the company.”

Trade secret disputes are typically handled at the state level, Evans said. Nondisclosure agreements are common tools to protect trade secrets and other confidential information within businesses.

When and how to protect your intellectual property

Small business owners often think they shouldn’t apply for a patent, copyright or trademark until they start generating revenue, Evans said. But it’s best to protect your intellectual property from the start rather than waiting until the business is established, or until something goes wrong.

“Don’t wait until you have millions of dollars,” she said. “It’s better to have it than to scramble.”

Registering a copyright

Copyright protection is the simplest to obtain. You would have rights to your original work as soon as it’s completed, Kupferschmid said.

“Most creative works are protected by copyright,” he said. “It’s very rare for a work not to be original.”

Registering your copyright is not legally required but would be necessary if you ever need to sue someone for copyright infringement. The sooner you register your copyright, the better protected you may be, Kupferschmid said. If you wait to register until someone infringes on your copyright, you may not be able to receive as much in a settlement.

You can submit an online application to the U.S. Copyright Office. You must include copies of your work, which wouldn’t be returned. Your work doesn’t have to be published to have copyright protection, but registering a copyright creates a public record that includes all the information you provide. Generally, you can only register one piece of work per application. Some work, such as photographs, can be registered in a group, Kupferschmid said.

Costs

The standard fee to file an online application is $55, though you may owe as little as $35 to register one work with one author.

Applying for a patent

Submitting a patent application is a complex process and typically requires the help of an attorney, Kupferschmid said. You wouldn’t have any rights to your invention until the USPTO issues a patent, so starting the process as soon as possible would be ideal.

You could file a nonprovisional or provisional application for a patent. A provisional application requires less information, but only secures “Patent Pending” for your invention for up to 12 months. After that time passes, you would need to file a nonprovisional application to protect your invention.

A nonprovisional application, which is the regular patent application, requires a written document describing your invention and the claims explaining your desired protection. You may need to submit drawings of your invention as well.

Costs

Patent applicants must pay filing, search and examination fees. You could face additional fees if you include more than 20 claims in your application. Applicants that the USPTO considers small or micro entities, such as an independent inventor, may owe smaller fees.

For a regular patent application, the basic filing fee is about $200. Search fees can be as high as $660, and examination fees range from $600 to $760. A number of other fees can be added depending on the nature of your application.

The cost of hiring a patent attorney would depend on the skillset and services of the person you choose to work with, Evans said, though you could complete the process on your own.

Registering a trademark

Applying for a trademark from the USPTO would clarify whether or not another business is already using your proposed mark in a way that would cause confusion, Evans said. You may want to find that out before settling on a business name, logo or other branding.

Although an attorney could assist you with a trademark application, you would only be required to hire legal counsel if your residence or place of business is located outside of the U.S. Otherwise, you could navigate the process on your own.

You can file a trademark application online. Your application would need to include your name and depiction of the mark, which could be a drawing, as well as information about the goods or services your business sells. You would also need to describe your basis for filing, such as your intent to use the mark in commerce, and you may need to provide a physical example of the mark beyond a drawing.

Costs

The online filing fee ranges from $225 to $400 depending on the details of your application. You could incur extra fees to show additional use of your trademark. After five years of use, you must pay at a fee of least $125 to maintain your trademark protections.

Which is right for your small business?

Protecting your intellectual property as a business owner could contribute to your overall success. Protections such as patents, copyrights and trademarks would stop competitors from copying or stealing your work, Kupferschmid said.

Whether you seek a patent, copyright or trademark would depend on what you need to protect. Patents protect inventions, while copyright shields creative work and trademarks guard business names and logos.

Obtaining a patent would be an expensive endeavor, as application fees could quickly add up. The process to apply can be challenging, and you would likely need to hire legal help to navigate the process, Kupferschmid said. Applying for a trademark could also be difficult, but business owners can typically handle it on their own.

Copyright protection is the easiest to obtain. Protections are automatically in place when you finish a piece of work, he said. However, paying the fee to register your copyright could be worthwhile, particularly if someone infringes on your intellectual property rights.

With protections in place, you could sue a competing business for infringing on your copyright, patent or trademark, Kupferschmid said, and potentially earn money in a lawsuit.

“I don’t know of any business, large or small, that doesn’t have competitors,” he said. “That’s why it’s such a smart investment for the small business owner.”

 

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