When a potentially business-changing idea is formed, it is good practice to protect it. To keep their ideas safe, entrepreneurs must possess a strong understanding of the limits and rights of intellectual property (IP). However, there are many misconceptions regarding what constitutes IP and the rights it should be afforded.
Myth: Pending Patents are Covered
Frequently, business owners believe that simply filing a patent grants the individual or company full rights. However, while it is under review, it is placed in pending status, which does not offer the full range of protection until the United States Patent and Trademark Office (USPTO) confirms the application. Additionally, not every request is approved, as it does need to meet the necessary requirements. While the patent is pending, the applicant does possess provisional rights to ensure security from potential infringers. Unfortunately, these rights do not offer the full range of protection. Limit the number of people who know about the idea by requiring employees working within IP to sign nondisclosure and noncompete agreements.
Myth: IP Needs a Large Budget
Protecting intellectual property is a strong, proactive business strategy. However, going through the proper channels to do so can be time consuming and expensive. Avoid over allocating cash to protecting IP, as a company’s ideas are useless if the business does not have the capital to produce the product or service at a profitable level. It helps to be able to identify which ideas need protection, and to create a budget that fits the financial and legal needs. These tactics can help keep an IP portfolio robust without draining resources.
Myth: IP is Owned by the Company
There is a common misconception that all IP created at a company is registered under the business, but that is not always true. Depending on the original documents, the patent belongs to whomever it is assigned to, which can be an individual. The management of IP grows more complex if the owner plans to sell the business and the property is under an individual’s name. This can cause challenging, lengthy court battles if the company wishes to regain the IP. Additionally, if the property is registered to the business, others within the company are able to make changes to it. For example, if a new board member or investor is granted a portion of the business’ equity, they now have access to change the IP.
Myth: Patents are Awarded to Whomever Had the Idea First
Even if someone believes they are the first to reach an industry-shaping concept, there may be other entrepreneurs out there with a similar idea. While uncommon, patents may be denied if they are too similar to another or previously approved application. In 2013, the USPTO changed their regulations from “first-to-invent” to “first-to-file,” which means patents are granted to those who file for the application first, not who had the idea first. It is important to note that simply filing first does not guarantee protection. As mentioned above, pending status does not grant full rights, and there is a chance the patent is not approved by the USPTO. This adds more significance to the strong practice of being proactive with a company’s IP portfolio.
Intellectual property is not as black and white as many may believe, which can potentially lead to detrimental situations. The best way to manage a company's IP portfolio is to remain proactive and knowledgeable. Working with a business attorney can alleviate parts of the time-consuming process, as well as uncover new opportunities and prevent infringement.