Securing Your Intellectual Property (IP)
- May 19, 2021
When an entrepreneur starts a business, one of the first things he or she must do is to secure their intellectual property (IP). He or she must determine the type of IP they want to secure and make sure they comply with the laws surrounding IP. EisnerAmper sat down with Vincent Smeraglia, Executive Director, Rutgers University Office for Research and J. Todd Abrams, Senior Director, New Ventures and Business Development, Temple University, to share how an entrepreneur goes about securing their IP. Interestingly, inventions created by university faculty are assigned to the university as a consequence of the Bayh-Dole Act. Thus, it is the university’s responsibility to secure the IP.
IP is a work or invention such as a manuscript or a design and the person or people who create it (or, as noted above, their employer) have the rights to it. Hence, they (the inventor or if applicable their employer) may apply for one of the three types of IP: copyright, trademark or patent.
IP is deemed valuable and can be sold, licensed, devised, stolen, infringed and protected. It is also subject to property, contract, tax, and anti-trust law in addition to specialized IP law.
Types of IP
Copyright: A form of protection provided to authors for their original work such as writing, music, art or drama. The owner has exclusive rights to reproduce, distribute and perform the work publicly. No registration is required and the owner will have protection in most countries.
Trademark: A sign that distinguishes a company’s product or services from its competitors and can take the form of a word, logo or slogan. The owner has exclusive rights to it and legally prevent its unauthorized use. A trademark is country-specific and lasts for ten years.
Patent: A patent is granted by the government to an inventor for the exclusive exploitation of their invention. The owner has legal rights to exclude others from making, using or selling it. Patents are country-specific and last for 20 years.
Patents must have:
- Utility: Invention must be operative and for a lawful purpose.
- Novelty: The claimed invention must predate art known, used or sold anywhere in the world; or patented or described in a publication anywhere. The prior art and claimed invention by the same person enjoys a one-year grace period.
- Non-obvious: The invention must not be obvious to a person having ordinary skill in the art relating to the invention.
When applying for a patent, contents in the application include:
- Specification: Explains how to make and use the invention.
- Abstract: Summarizes the invention.
- Claims: Defines the scope or boundaries of the patent.
Business and market considerations when patenting include:
- Determining the landscape of other patents in related filings, often called a freedom to operate analysis.
- Evaluating the interest and availability of capital to develop the invention.
- Making sure all paid vendors who work with the entrepreneur assign their copyright to the entrepreneur or the new company, including logos and/or graphic designs.
There are three different types of patents:
- Utility Patents: Cover the creation of a new or improved and useful product, process, or machine.
- Plant Patents: Protects a new and unique plant's key characteristics from being copied, sold, or used by others.
- Design Patents: A form of legal protection of the unique visual qualities of a manufactured item.
When entrepreneurs secure their IP, they must comply with IP law in order to be incentivized for their creation or invention. Also, this will help balance the interests of the creators/ authors/publishers; the investors/ manufacturers/publishers; and the consumers and public. Finally, this will provide legal protection against theft (when people might steal the entrepreneur’s ideas). Inventorship is also distinct from authorship in publications and is determined by IP law, and interestingly, the list of named inventors can change as they are “claim” dependent.
Specifically, patents are viewed as a license to sue for infringement, but it can be used to obtain opportunities for economic gain. U.S. patents are governed by federal law – Title 35 of the United States Code.
It is crucial when an entrepreneur starts their business that one of the first things they do is secure their IP (and determine which type of IP they will select). They must comply with all the laws surrounding it in order to be incentivized for their work.
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Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.
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