What Every Entrepreneur Must Know About Intellectual Property Before Starting a New Business - Purple Fox Legal

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What Every Entrepreneur Must Know About Intellectual Property Before Starting a New Business

By Purple Fox Legal

February 23, 2022

Starting a new entrepreneurial endeavor can always feel overwhelming, especially when understanding intellectual property law and protecting the intellectual property you create. 

But, if you want your business to remain competitive, relevant, and financially secure in the future, it’s vital to develop a strategy and make moves to implement it quickly. This article explains four essential tips every entrepreneur should know about intellectual property rights. 

Entrepreneurs must be able to distinguish the different types of intellectual property.

If entrepreneurs genuinely want to protect themselves and their business, they must know what intellectual property is. Put simply, intellectual property refers to the rights you have over the intangible creations from your mind when they are fixed into a physical form or utilized. 

These rights give the creator (you!) exclusive rights over your creations and protect them from being copied or stolen by others. How you plan to use your creations helps you distinguish the type of intellectual property protection you need, whether it’s a trademark, copyright, or some other legal right. 

Three Types of Intellectual Property

  1. Trademarks and Service Marks

By definition, a trademark is any name, symbol, sound, color,  phrase, or combination of signals that indicate the source of a good or service. A trademark represents a company’s brand, identity, and reputation. Most businesses also use trade names, slogans, and taglines as trademarks. The U.S. Patent and Trademark Office (USPTO) handles trademark registrations, and it generally accepts two main types, trademarks and service marks. 

Trademark: Trademarks identify physical products and label manufactured or produced goods before delivery to buyers.

Service Mark: As the name suggests, service marks identify services and other intangible commercial activities. 

Regardless of the trademark type needed for your business, a federal registration doesn’t grant you total ownership over those specific words or phrases. You don’t own them and can’t prevent everyone else from using them. Instead, a trademark grants you the right to prohibit others from using them in connection with goods or services listed on your federal trademark registration.

  1. Copyrights

While a trademark is responsible for protecting words, phrases, and symbols, copyright protection covers every complete work of authorship. What this means is that copyright protection can be used to protect original works, like poetry, novels, music, and computer software, but it does not protect facts, systems, or methods. The key to remember is copyright protection covers the expression in its tangible form, not the underlying idea. 

For instance, pretend you’re writing a play about a specific trip to New York. You can copyright your expression of that trip (the physical papers or digital file of the play you wrote), but not the facts of the journey itself. 

Copyright protection exists the moment an original work of creativity is fixed into a tangible medium. You don’t have to register a copyright, but if you ever want to enforce your copyright, the U.S. Supreme ruled that copyright registration is required to initiate a copyright infringement suit.

To help differentiate between a trademark and copyright, think of the words “Coca-Cola” as a trademark for soft drinks versus Beyonce possesing a copyright to the lyrics of her song “Halo.” Coca-Cola’s trademark prevents others from using the phrase “Coca-Cola” in the context of soft drinks and other beverages. In contrast, Beyonce’s copyright prevents others from copying or performing the lyrics of her song “Halo.” The primary difference is what is being protected. By keeping this distinction in mind, you can protect yourself and your intellectual property. 

  1. Publicity Rights

Sometimes referred to as “NIL” by the media, the right of publicity is a misunderstood type of intellectual property. In fact, many companies infringe on individuals’ publicity rights because the companies are either completely unaware of this right or do not understand it.

The right of publicity is responsible for protecting a person’s commercial use of their name, image, likeness, and other characteristics. No federal right of publicity exists. However, most states recognize it through statute or common law. In Tennessee, there is a statutory right of publicity granting property rights to all individuals to prevent others from using their name, picture, or likeness for commercial purposes.

A typical example of how individuals enforce this right involves a celebrity or influencer suing a business using their publicity rights in an advertisement without consent.

For instance, in 2015, a grocery store was sued by Michael Jordan and lost. The grocery store paid $8.9 million in damages because it used characteristics, such as Michael Jordan’s name and jersey number, unequivocally identifying him in one of its advertisements. It didn’t matter that the advertisement intended to congratulate Micahel Jordan for being inducted into the Basketball Hame of Fame. The only fact that mattered was the grocery store used Michael Jordan’s publicity rights without his consent for a commercial purpose.

However, it’s important to note that you don’t have to be famous to possess publicity rights. In fact, the first cases involving the enforcement of publicity rights were initiated by ordinary citizens, not celebrities.

Entrepreneurs must know the different types of intellectual property their startups may develop to create an intellectual property protection strategy.

When planning out your startup, you need to go through all of the different products and services you plan to create as part of your business in the short term and long term. This includes the processes involved in developing and enhancing those goods and services. The last thing you want to do is start your business without any protection. You shouldn’t have to fight an expensive intellectual property battle years after operating your company because you didn’t do your due diligence when you started.

Creating an intellectual property protection strategy generally involves three key steps: identify what you want to protect, how you want to protect it, and what jurisdictions you want to protect it in.

While going through these steps, think about the different elements of your business and the types of intellectual property it may develop. From there, you can identify the options that exist to protect it. It is also imperative to consider where you want to protect your company’s intellectual property as there are different laws regarding intellectual property throughout the world. Sometimes, what is true in the United States may not be somewhere else. To give your intellectual property the most protection, location is an important consideration to make.

For more information on intellectual property and the different ways you can protect it, contact an intellectual property attorney and schedule a consultation appointment.