Despite frequent warnings about the importance of trademark protection and other intellectual-property rights, entrepreneurs often believe that larger companies or direct competitors have stolen their ideas.
And sometimes, they can't do much about it. A lack of understanding about what they can protect, and how to go about it, is to blame, says Nadine Jacobson, a partner at Fross, Zelnick, Lehrman & Zissu, a New York City law firm that specializes in trademark, copyright, design, and unfair competition law.
Smart Answers columnist Karen E. Klein recently spoke with Jacobson and Allison Strickland, another partner at the firm, about how small-business owners should approach these issues. Edited excerpts of their conversation follow:
Q: What should entrepreneurs know about intellectual-property (IP) protection before they start a company or pitch an idea to investors?
Strickland: They ought to educate themselves at least on the basics of the law. The biggest problem we see is misinformation about how the law works and what they can do to protect their ideas and their work.
There are some remarkable rumors flying around the country with respect to copyright, for instance. A number of people believe that if you copy something, it's O.K. as long as you give attribution to the original creator. That is not only incorrect but also just makes it easy for them to find you and come after you!
People also don't understand that owning something doesn't mean you have the right to make certain uses of it. For example, owning a painting doesn't mean you have a right to put a picture of the painting on your Web site unless the artist has granted you that right. As lawyers, we have to try to break through the misinformation to properly counsel clients.
Q: Where can a nonlawyer go to get some of that basic understanding?
Strickland: Actually, the government's U.S. Copyright Web site is a good start. It's a confusing area of the law, but they do a very good job of explaining it. For patents and trademarks, there's the U.S. Patent & Trademark Office site.
Q: What's the best way for an entrepreneur to protect his or her original creative output?
Jacobson: Here's where it gets confusing. Copyright vests in the creators at the moment they reduce their creation to a tangible form. So, you don't really have to get any sort of formal approval. The right to use the material is yours by virtue of your having created it. Now, once you start using the creative product commercially, you may want to register it legally to further protect it.
But people often have different ideas of what's theirs and what's protectable. For instance, I had a client who came up with the idea of wrapping some material around the poles in his garage so his car wouldn't get scratched if he accidentally hit one of them. Someone else later had the same idea and started marketing it.
My client thought they had infringed on his idea, but I told him that just having an idea was not the kind of thing that IP law could necessarily protect. In this instance, it wouldn't be an infringement unless someone actually infringed his trademark for the product or his exact design for the material or packaging.
Q: How do entrepreneurs get into trouble with copyright, patent, or trademark issues?
Strickland: I think for one thing, they listen to the urban myths that circulate. There's one that says if you write out an idea and put it in an envelope and mail it to yourself, it's copyrighted, and anyone else who uses it is infringing. That's widely believed.
Another one says that as long as you don't take more than 25% or 30% of someone else's work, you're not infringing. But neither of those things is necessarily true.
The problem is that IP concepts are confusing and somewhat sophisticated. It's a very confusing part of the law and easy to misunderstand. The safest thing for entrepreneurs to do is to step back from what they think they know and consult reliable sources to get a reality check.
Jacobson: A lot of times, people who are starting up new businesses are concerned about keeping costs down, and they don't want to hire lawyers. So they go to a family friend or a corporate lawyer who dabbles in IP and get free advice, but it's not exactly accurate.
Q: What steps can entrepreneurs take early on to protect their IP assets from being stolen by their competition?
Strickland: When you're forming your company, you should focus on who is the owner of the company's assets, including its IP assets. A lot of entrepreneurs file trademark applications in their own names, or the names of individual partners or officers. Unfortunately, when they do that, their companies aren't able to take advantage of the IP assets. Make sure the company is listed as the owner.
Jacobson: Also, once you're ready to file a trademark or other application, be careful that your filings are airtight and can't be attacked by the large corporations who have lawyers on staff very experienced in detecting key mistakes.
For instance, if you file a trademark application in the U.S. for a mark that you want to use in the future -- but haven't used yet -- you must declare in a signed document that you have a bona fide intent to use the mark on everything you're listing in your application. Don't list every use in the trademark classification you're applying for, though, or your whole application could eventually be invalidated. Make sure that you have a serious intent to use the mark on what you're listing.
Strickland: The Patent & Trademark Office is becoming much more stringent about this. In eight cases recently, trademark registrations were canceled because the companies weren't using their trademarks for everything they listed on the applications. The PTO ruled that they had committed fraud.
So, you may want to save money up-front by not hiring a lawyer, but in the long run it's really worth it. It's very easy to do something wrong accidentally and have to pay through the nose for it later on.
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