Blog article written by: Cole Sadkin
When a creative idea is had, it is good practice to protect it. However, there are many misconceptions regarding what constitutes intellectual property (IP) and the rights it should be afforded. This unnecessary complication adds more work to the already busy schedule of an entrepreneur. So, what are some of the common myths surrounding IP?
Myth: Filing a Patent Guarantees Protection
Much to the surprise of many young business owners, simply filing a patent is not enough to guarantee the protection of their ideas. A patent pending status does not grant complete patent rights until it is approved, and not every application becomes a patent. It is wise to keep business-changing ideas secure until proper protection is granted, otherwise, anyone can claim the idea as their own. However, even after a patent is granted, there’s no entity that actively protects IP from infringement. This is the responsibility of the owner. If a conflict arises, the route to a resolution is not a simple process, as the entrepreneur will need to file a lawsuit. Even with a patent, it is possible for the inventor to lose the case if their IP is discredited. A strong defense acts as a deterrent, which will prevent most competing businesses from stealing ideas, as well as serve as an invaluable resource if a lawsuit arises.
Myth: IP Protection Can Wait Until the Product/Service is Popular
It is a common belief among young business owners that they will not need to protect their ideas until they begin production, or until the product/service grows popular. Proactivity is the best defense, and IP should be protected early and thoroughly. Work with a business attorney to identify which aspects of the company need protection, and which categories of IP they fall under (patent, trademark or copyright). Different forms of IP require their own processes to obtain protection.
Myth: Every Business Needs a Large IP Budget
Entrepreneurs do not need to spend vast amounts of money on building a robust IP portfolio. A protected idea grows useless if the business does not have the capital to produce the product or services at a profitable level. Identify what needs protection and move forward with other internal forms of security, such as nondisclosure agreements. These will help keep key business ideas protected without the costs and lengthy processes of registering IP, although both forms of security are strongly recommended.
Myth: Patents Should Be Owned by the Company
When IP is owned by a business, others within the business are able to make changes to it. For example, if a new board member or investor takes part of the business’ equity, they now have access to the company’s IP. Ownership rights grow more complicated if the owner plans to sell the company. This is imperative for entrepreneurs to pay extra attention to when purchasing a business. Any IP registered by the company’s founder will remain in their possession, even after they leave the business. Scrutinize the ownership rights of a business’ IP, as it will have an impact on the future of the company.
Intellectual property is a little-understood topic for many young business owners despite its significance to the long-term success of the company. Being proactive with IP protection, and ensuring the portfolio is up-to-date and organized can prevent and lower the risk of lengthy, expensive court battles and other detrimental situations.