April 2013

IP for the Small Business

by Preston Frischknecht

In addition to working with larger businesses, I’ve had the absolute privilege to counsel with garage inventors, start-ups, and small businesses.  Let’s be honest, they are my favorite.  Their enthusiasm, courage, and innovation are contagious and provide a breath of fresh air to a stiff suit like myself.  As I’ve counseled with smaller companies, I find often myself focusing on a few key intellectual property (IP) principles that I’d like to share. 

First, start-ups should know how intellectual property fits within their overall business objectives. 

Pursuing a patent or a trademark can be expensive, and overall business objectives need to first be carefully thought out.  For example, pursuit makes more sense for a core part of the small business than for a “satellite” product, which brings in less revenue.  Also, it is very important to do due diligence and determine the likelihood that a patent or trademark can be obtained.  Then, if a patent or trademark can be obtained, it is important to understand whether it will offer broad protection (helpful) or very narrow protection (not so helpful).  Importantly, small businesses should ask themselves whether money would be better spent on other aspects of the business such as marketing or advertising---a good attorney should help you with that analysis.  On the other hand, pursuit of intellectual property makes a lot of sense if a small business is entering a highly competitive market as a challenger brand, where a bigger competitor is likely to copy.  Often, low-cost options for protection are available, such as non-disclosure agreements and provisional patent applications.    

Second, the use of company and product names requires due diligence.    

Many businesses think that if they register their company with the state or obtain a web domain name, they are good to go.  More needs to be done.  Before any name is used, a trademark clearance search should be conducted to determine whether that name, or one that would be confusingly similar with it (see an attorney) is owned by another.  Many times, businesses will sink precious resources into branding and marketing a name, only to find out later through a nasty “cease and desist” letter, that it is, in fact, trademark infringement when viewed against the name of another.  Then comes the expensive name change, rebranding, and remarketing.  Small businesses should strongly consider involving an attorney in their naming, and timely filing federal trademark applications for the marks that they clear.  Interestingly, it is not unusual for a company to apply for the trademark of another, particularly where the latter has not sought federal registration.  Where this happens, it can be expensive to try to fight or undo the application of another when you consider that a timely registration would have been preventative.        

Third, understand the “first to file” rule.

 In the last year, there has been a BIG change in patent law.  Basically, where our system used to give rights to the first person who invented something, it now gives rights to the first person who files for the patent application at the patent office.  Smaller companies now need to seriously consider filing protective, low-cost provisional patent applications to avoid being boxed out of the market.  They should also closely monitor bigger competitors.  If a bigger competitor files for a smaller businesses’ product, there are ways to fight it, but if it isn’t caught early, it becomes more and more expensive. 

Preston P. Frischknecht is an intellectual property attorney with Peck Hadfield Baxter & Moore.  He helps clients successfully navigate competitive business issues. As a registered patent attorney, he helps clients by obtaining, maintaining, and enforcing intellectual property—including patents, trademarks, copyrights, and trade secrets. He also analyzes and evaluates the rights of others—including competitors—and defends clients against claims of violations.