- Define IP and how it affects entrepreneurs


[SLIDE 1]

Intellectual property (IP) describes intangible personal property created by human intelligence such as ideas, inventions, slogans, logos, and processes. Intellectual property law includes the copyright, trademark, and patent protections for physical and nonphysical property that is the product of original thought and that can, in some sense, be owned. Intellectual property is a valuable asset for which entrepreneurs need to create an IP strategy that supports and evolves with the business. Intellectual property rights (IPR) legally protect inventions.


[SLIDE 2]

Many startups are dependent on IP protection regardless of industry or line of business. From manufacturing to tech enterprises to restaurants, IP is essential to the survival of small businesses. Without it, powerful companies like Amazon, Google, eBay, or Staples would never have gotten off the ground.
 
Entrepreneurs and small businesses are becoming increasingly dependent on protecting their IP in order to bring their products and services to market. In fact, protecting IP has become more important to entrepreneurs than ever before. The late Steve Jobs realized the importance of protecting IP early on: "From the earliest days at Apple, I realized that we thrived when we created intellectual property. If people copied or stole our software, we'd be out of business."

IP is one of the most valuable assets for startups when it comes to transforming ideas and innovations into real market value. It is also one of the major things that investors look for in a startup. 

If the IP is usable and owned by the startup, not only will investors be more comfortable in investing, but it can also increase the valuation of the new venture. Protecting your IP also prevents competitors from trying to copy your products and services. 


[SLIDE 3]

However, IP can also be complex, confusing, and entirely misunderstood. In the flurry of setting up new ventures, many entrepreneurs neglect the issue of IP and fail to seek advice from experts. Yet, if the IP isn't in place, then the whole venture can collapse. 

Determining IP ownership is not straightforward. For instance, say you start working to create IP for a venture while still employed at another company, or when you have just left a job. In many employment contracts and under the law of most jurisdictions, the rights to inventions that substantially relate to the employee's old job description belong to the company. This means that your former employer owns the IP on your inventions, not you. It is fundamental in the early stage of a startup that you seek legal advice from an IP attorney and review employee contracts and applicable law to determine if there is anything that might prevent you from attaining IP ownership. 

Furthermore, a startup may use an independent contractor or a third party to help develop an innovation or trademark. Without a formal agreement in place, that third party has a right to a portion of any IP that results from her contribution, even though she may have been paid to create it.

Finally, be aware of the relationship between IP and hackathons -- events where software and hardware developers intensively collaborate to generate new ideas and inventions. A number of popular innovations, such as the ideas for Twitter and GroupMe, arose from hackathons. 

When organizations hold internal hackathons whose participants are their own employees, they automatically retain the IP of whatever creative innovations arise. However, taking part in an external hackathon is not so clear-cut, especially if you are already an employee at a tech organization. Developing a proof-of-concept prototype product at a hackathon and then disclosing it could destroy any chance of patenting it in the future. Even worse, with so many people involved, it is not clear who can claim IP ownership of the innovation. Similar issues can arise in the context of group projects in college classwork. 

In summary, it behooves you as an entrepreneur to educate yourself about IP and to seek legal guidance whenever appropriate. The table provides some sources of information that novice entrepreneurs can use to find information about protecting your business or idea.


[SLIDE 4]

Copyright is a form of protection provided to the creators of original works in the areas of literature, music, drama, choreography, art, motion pictures, sound recordings, and architecture. It is important for tech entrepreneurs to be aware that computer code is classified as a literary work for purposes of copyright protection. Another crucial thing to remember is that copyright does not protect ideas; it protects the tangible expression of the idea, such as in written materials or recordings. Generally, U.S. copyright lasts for the duration of the author's life plus 70 years. 

Copyright infringement cases can prove costly. Some limited uses of copyrighted material are allowed without the permission of the copyright owner; this is called "fair use." Generally, it must be shown that the work is of a type meant to be copied, the use is for a noncommercial purpose, it constitutes only a small portion of the work, and won't have a negative effect on the market for the work. Fair use is a "gray area" in U.S. law; there are no absolute rules or boundaries around what is and is not fair use. 


[SLIDE 5]

Any word, name, symbol, or device used in business to identify and promote a product is a trademark. Its counterpart for service industries is the service mark. Although the law affords some limited protection to trademarks without registration, a federally registered trademark generally lasts 10 years and, if still in use, can be renewed every 10 years thereafter. 

It is not always easy to determine trademark ownership For example, in 2009, Gucci filed a lawsuit against Guess in New York and Milan, citing trademark infringement, due to the similar "G" stamp that appeared on a line of Guess shoes. Four years later, the New York courts found in favor of Gucci, but the Milan courts ruled in favor of Guess. Gucci has challenged the Milan ruling. Trade and Service Marks are the legal basis of most branding campaigns. 


[SLIDE 6]

A trade secret is any confidential information that provides companies with a competitive edge and is not publicly known or accessible, such as formulas, patterns, customer lists, compilations, programs, devices, methods, techniques, or processes. Trade secrets last for as long as they remain secret; they are protected from theft under federal and state law. Companies can protect their trade secrets by having their employees and contractors sign nondisclosure, work-for-hire, and noncompete agreements or clauses. Famous examples of trade secrets allegedly include the recipe for Coca-Cola's beverages, KFC's ingredients, and the formula for WD-40. 


[SLIDE 7]

A patent is a grant of property rights on inventions through the U.S. government. It excludes others from making, using, selling, or importing the invention without the patent owner's consent. In order to be granted a patent, the product or process must present a new or novel way of doing something, be nonobvious, or provide some sort of solution to a problem. 

In the United States, the invention must not have been made public in any way before one year prior to the filing application date (the one-year grace period does not exist in most other countries). Laws of nature, physical phenomena, mathematical equations, scientific theories, the human body or human genes, and abstract ideas cannot be patented. However, it is possible for a mobile app to be patented if it meets the criteria of the U.S. Patent and Trademark Office (PTO). 

The duration of a patent is generally 20 years from the filing date of application and it can be costly to file a patent. The Beer Brella (Patent No. 6,637,447) is an example of a novel and arguably useful invention which provides shade for bottle of beer on a hot day.  It may not be a scientific breakthrough, but it qualifies for patenting. 

It is important to note that while copyright protects artistic expression and trademark protects brand, there is no way of protecting or patenting an idea. Of course, the whole innovation must begin with an idea, but an idea must be turned into an invention before it can qualify for patenting. This does not necessarily mean creating a prototype, but you must be able to meaningfully describe the invention, how it is made, and how others could use it. For example, the "beer brella" would have started out as an idea, but the inventors would have needed to flesh out the concept and create a sketch of it in order to explain its intended use.