Intellectual Property Basics for Businesses

Intellectual property (IP) plays a crucial role in driving innovation and success for businesses worldwide. IP rights—including patents, copyrights, and trademarks—safeguard intangible assets and allow companies and individuals to capitalize on their creative and intellectual efforts.

In the modern digital economy, investments in intangible capital often exceed those in physical assets. However, digital technologies and the internet have introduced new challenges for IP protection, making it easier for intellectual property to be unlawfully copied, shared, or replicated online. Therefore, having a well-planned strategy to protect your business’s IP and ensure you avoid infringing on others’ IP rights is vital.

Types of Intellectual Property Rights in the United States

In the U.S., intellectual property rights are primarily divided into three categories: patents, trademarks, and copyrights.

Patents: These grant inventors the exclusive right to prevent others from making, using, or selling their invention for a limited time. The U.S. Patent and Trademark Office (USPTO) issues three types of patents: utility patents, design patents, and plant patents.
Trademarks: Trademarks protect words, phrases, symbols, designs, or a combination of these elements that distinguish one business’s goods or services from another’s. While registration is not mandatory, filing a trademark with the USPTO strengthens IP protection.
Copyrights: Copyrights give creators of original works—such as literature, music, films, and artwork—the exclusive right to commercialize and distribute their works. Copyright is automatically established when the work is created, but registration with the U.S. Copyright Office offers additional legal protections.

Additionally, trade secrets—confidential business information like formulas, customer lists, and processes—are protected by both federal and state laws. These secrets hold value because they are not publicly known and remain protected as long as reasonable efforts are made to maintain their confidentiality. Examples of famous trade secrets include the Coca-Cola recipe and the Google search algorithm.

Steps to Protect Your Intellectual Property

To protect your business’s intellectual property, the first step is identifying and cataloging the IP that may require protection. The USPTO provides an IP identifier tool to help businesses recognize their intangible assets, and an attorney can assist with conducting a comprehensive IP audit.

Once your IP has been identified, the following steps can be taken to safeguard these assets:

Patent Protection: Apply for a patent to secure exclusive rights to use your invention for 15 years (design patents) or 20 years (utility and plant patents) from the filing date.
Trademark Registration: Registering your trademark with the USPTO provides various benefits, including nationwide recognition of ownership and the right to use the ® symbol. This enhances your legal position in case of infringement and deters others from copying your brand.
Copyright Registration: Registering copyrights with the U.S. Copyright Office is required to file an infringement action in federal court. Registration offers added protections, including the potential for statutory damages and attorney’s fees in the event of infringement.
Protecting Trade Secrets: Trade secrets are safeguarded through a combination of federal and state laws, as well as contractual agreements like noncompete and nondisclosure agreements (NDAs). However, businesses should note that the Federal Trade Commission (FTC) announced a rule in April 2024 banning noncompete agreements for most employees, independent contractors, and volunteers. This rule is expected to take effect in September 2024, but legal challenges have already been filed. If the rule goes into effect, companies relying on noncompetes will need to adjust their IP protection strategies accordingly.

Avoiding IP Infringement

While protecting your own intellectual property is essential, avoiding the infringement of others’ IP is equally important. IP violations can lead to significant financial penalties, reputational damage, and legal action. For instance, in cases of copyright infringement, penalties may range from $750 to $30,000 for unintentional violations—and up to $150,000 for intentional violations—per infringed work. Criminal fines and imprisonment may also apply, along with attorney’s fees and court orders to halt infringing activities.

To avoid intellectual property infringement, consider implementing the following strategies:

Check for Protection: Before using media, such as images or music, verify whether it is protected by copyright, trademark, or other intellectual property rights.
Obtain Licenses: Do not copy or reuse content from the internet without obtaining the appropriate licenses and written consent from the IP owner.
Understand Fair Use: Certain uses of copyrighted material may fall under the fair use doctrine. However, it’s best to consult an attorney before relying on fair use.
Look for Royalty-Free Content: Some media is royalty-free, meaning a one-time fee is paid for its use without additional payments.
Use Public Domain Materials: Materials in the public domain can be used by anyone without restrictions.
Create Original Content: Whenever possible, use original content, designs, music, or other media. If hiring freelancers to create content, ensure contracts clarify that the business owns the rights to their work.
Educate Employees: Train employees on IP best practices to reduce the risk of accidental infringement, as companies can be held liable for their employees’ actions.
Consult Legal Experts: Regularly seek legal advice to develop IP policies and strategies that mitigate infringement risks.

Consult an Attorney

An effective intellectual property strategy focuses on both protecting your business’s IP and avoiding the infringement of others’ rights. If your intellectual property has been compromised or you are accused of IP theft, it’s critical to consult an attorney immediately to mitigate potential legal consequences.

For assistance in developing a robust IP strategy, or if you need legal support for IP infringement issues, contact our team of experienced IP attorneys today.