7 Things Your Startup Needs to Know About Protecting and Defending Intellectual Property

Most startups are born from an idea, an invention, or some other creation from the minds of the company principals. These creations, while not necessarily concrete, are the intellectual property of the business and can be legally protected.

New business owners can reduce risks of trade secret theft or intellectual property litigation by understanding what the law considers intellectual property and how to protect yours.

Here are seven things you should know about intellectual property to avoid disputes and other harm to your business:

1. Understand The Types of Intellectual Property Your Business Owns
2. File for Protection
3. Ensure Your Confidential Information Stays Confidential With A Nondisclosure Agreement
4. Make Sure You Own What You Own With A Work-For-Hire Agreement
5. Monetize your Intellectual Property with a Licensing Agreement
6. Keep Trade Secrets Safe with Non-Compete & Non-Solicitation Agreements
7. Police your IP

Intellectual property (IP) refers to creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce. It is protected through patents, copyrights, trademarks, and trade secret laws which enable individuals and businesses to control and benefit from their intellectual creations or innovations.

Essentially there are four types of intellectual property (IP) with their own unique protections:

1. Copyrights. Copyrights protect original works of authorship, such as literary, artistic, and musical works. They grant the creator exclusive rights to reproduce, distribute, perform, and display their work.
2. Trademarks. Trademarks protect symbols, names, and slogans used to identify and distinguish goods or services in the marketplace. Registration of trademarks provides exclusive rights to use the mark in connection with specific goods or services.
3. Patents. Patents grant inventors exclusive rights to their inventions for a limited period (usually 20 years). They are typically granted for new, useful, and non-obvious inventions.
4. Trade secrets. The Texas Uniform Trade Secrets Act (TUTSA) defines a trade secret as information, such as a formula, pattern, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers, that derives independent economic value – actual or potential – from not being generally known or ascertainable by other persons who can obtain economic value from its disclosure or use, and is the subject of reasonable efforts to maintain its secrecy.

Identify the unique aspects of your business that need protection. Then take steps to protect that valuable IP.

Register your patent, trademark, or copyright as applicable.

In Texas, trademarks are protected by both federal and state laws. Under Texas law, you do not have to register your mark as you do with copyrights to protect your rights, as Texas recognizes certain common law rights in this regard.

However, Texas does have a process to register your mark with the Secretary of State. Registration enhances your ability to enforce trademark rights and prevents others from using your brand name in Texas for the same class of goods or services.

You can also register your trademark with the U.S. Patent and Trademark Office (USPTO) for nationwide protection.

Copyright protection is automatic upon the creation of a qualifying work; there is no need to register the work with the U.S. Copyright Office to receive copyright protection. However, registering a work with the U.S. Copyright Office provides additional legal benefits and remedies, such as the ability to sue for statutory damages and attorney's fees in case of infringement.

Registering a patent involves a formal application process with U.S. Patent and Trademark Office. Obtaining a patent can be complex. While Hendershot Cowart P.C. does not offer assistance registering a patent, our intellectual property attorneys can help enforce patents or defend against patent infringement claims.

Consult with the IP attorneys at Hendershot Cowart P.C. to ensure your intellectual property is properly registered in your jurisdiction and adheres to legal requirements.

A non-disclosure or confidentiality agreement is a legal contract, usually between a business and an employee, requiring that confidential information be kept secret. The agreement needs to clearly identify who operates under it, the property protected by it, and other terms such as the length of time it is in effect and any agreed upon exceptions. Clear communication of the agreement terms protects both the property owner and the subject employee.

Work-for-hire agreements protect the intellectual property of companies created by their employees. Under copyright law, a work-for-hire employee does not retain authorship of any unique work. Legally, the employer is the author. Like any employee agreement, understanding ownership is important and helps prevent future legal problems.

Many startup businesses own valuable intellectual property but lack the ability to monetize it. Once you have registered your copyright or trademark, you have the option to license this work to others as a way to get your product or idea to consumers.

Under a licensing agreement, you can allow a third party to use your trademark or copyright in exchange for a fee. The agreement further clarifies that while a third party can use the work, they are not the owner of the mark.

Employees often have access to company trade secrets. Before current employees become former employees, you need to protect yourself with non-compete agreements.

Non-compete agreements prevent an employee from seeking employment by a direct competitor for a time after termination. Employers can include a non-compete agreement as a provision of an employment agreement.

To be enforceable in Texas, a non-compete agreement must meet these requirements:

• Be ancillary to an otherwise enforceable agreement, such as an employment agreement
• Be in exchange for “consideration” (i.e. something in return, such as specialized training or confidential information)
• Be reasonable in scope of activity
• Be reasonable in geographic area
• Be reasonable in duration

If a court deems any of these elements to be broader than necessary to protect the interests of the business, the court can reform or nullify the agreement. For this reason, have a business lawyer draft a non-compete agreement specifically tailored to your business and competitive environment.

Closely related to non-compete agreements, non-solicitation agreements prevent former employees from soliciting or “poaching” clients or current employees from their former employer. Employers use these agreements to prevent departing employees from immediately joining a competitor and taking clients or coworkers with them.

Similarly, businesses entering into partnerships or joint ventures may also want to include a non-solicitation clause in their agreement to safeguard valuable employee and client relationships.

Regularly monitor the market for potential infringement of your IP. Take swift and appropriate action if you discover any violations, which may include sending cease and desist letters or taking legal action.

Failing to protect intellectual property or trade secrets may indicate to the courts that your IP is not valuable, and may limit your ability to contain and be compensated for infringement or trade secret theft.

Protect What Is Yours – Work with the Small Business Lawyers at Hendershot Cowart P.C.

Your brand, creative content, trade secrets, and innovations give your business a distinct competitive advantage.

At Hendershot Cowart P.C., our award-winning business attorneys help clients protect intellectual property and contain and obtain redress for any infringement as well as the misappropriation or theft of trade secrets. Our business legal team has the knowledge of both Texas and federal law to confidently assert or defend your rights in any type of IP dispute.