By Matthew Fenselau, Senior Counsel, Foley & Lardner, LLP

In an age of rapidly advancing technology, intellectual property (IP) is of ever growing importance to businesses.  For many young companies, IP is among the most valuable of assets.  However, as with any asset, your company must take the proper steps to develop and protected its IP. Missteps in the process can lead to irrevocable damage to your company’s value. Building your company’s IP portfolio is a significant undertaking, but the following tips will help you get off on the right foot and avoid some common pitfalls.

1) Consider all types of IP

IP is sometimes mistakenly equated with patents.  Patent protection is absolutely critical for some companies, but not all.  In addition to patents, other types of IP including trademarks, copyrights, and trade secrets may be valuable components of your IP portfolio. For example, if your company is less focused on technical innovation but will provide uniquely high quality products or services, protecting your brand image and goodwill in the marketplace by acquiring trademark or servicemark rights may be of primary importance. In addition, trademark rights are far less expensive and time consuming to obtain and maintain.

The basic types of IP include:

Patents - A patent for an invention is the grant from the government of a property right to the inventor.  In the U.S., the right conferred by the patent grant is "the right to exclude others from making, using, offering for sale, or selling" the invention in the United States or "importing" the invention into the United States for a limited time in exchange for public disclosure of the invention when the patent is granted.

Trademarks - A trademark protects words, names, symbols, sounds, or colors that distinguish goods and services from those manufactured or sold by others and indicate the source of the goods. Trademarks, unlike patents, can be renewed forever as long as they are being used in commerce. Registration of a trademark is not required in the U.S., although there are many benefits to obtaining a state or federal trademark registration.

Copyrights - A copyright is a form of protection provided to the authors of "original works of authorship" including literary, dramatic, musical, artistic, and certain other intellectual works, both published and unpublished. Registration of a copyright is not required in the U.S., although there are many benefits to obtaining a state or federal copyright registration.

Trade Secrets - Generally, a trade secret can include a formula, pattern, compilation, program, device, method, technique or process that is used in one's business, and has independent economic value that provides an advantage over competitors who are not aware of it or use it.  To maintain a trade secret, a company must take measures to maintain its secrecy.  Trade secrets do not provide protection against independent discovery by others.

2) Partner early with good IP counsel
You must act early to avoid pitfalls that can result in the loss of your IP rights.  You must begin developing your IP strategy long before any public disclosure of technology you have developed or any product launch.  To help navigate these issues, you should partner early on with good IP counsel.  Your IP counsel should not be a mere service provider used to handle procedural filings, but a true strategic partner committed to advancing your business goals.  Choose IP counsel who is eager to understand your business and competitive landscape, and who has the proper technical background to understand your technology.

3) Build an IP plan that furthers your business goals
Your IP portfolio is not an end, but a means to business success.  Work with your IP counsel to develop an overall IP strategy that furthers your business goals. Clearly explain your business strategy and competitive landscape to your IP counsel, and work together to tailor all of your IP activities to advance your business.

The IP strategy should list all of your company’s products and intellectual assets, and identify the types of IP (e.g., patents, trademarks, copyrights, or trade secrets) that will provide the most valuable protection.  A good IP strategy should include a budget and a schedule of action items.

4) Have a realistic IP budget
Protecting IP can be an expensive, but can result in assets that form the core of your start-up company’s value.  You should develop a realistic budget for your IP.  Be sure to budget a realistic dollar amount toward protection of each of the types of IP within your global strategy.  The budget should project out over several years.  Patent filings, particularly international filings, typically require significant investments over the course of several years before maturing to a granted patent.  You should ask your IP counsel to provide detailed cost projections, to avoiding wasting money on filings that you cannot afford to see through to completion.

5) Don’t put off trademark availability and domain name clearance searches
There are few more frustrating events for a start up company than finding out you do not have the right to the company or product name your have selected.  Changing names mid stream can be extremely costly and time consuming, and can alienate your existing costumer base.  Conduct trademark, service mark, and domain name availability and clearance searches early on, before inventing significant time or effort in developing any company, product, or service name.

6) Beware incomplete provisional patent applications
Provisional patent applications may be an integral part of your company’s overall IP strategy. Provisional patent applications have less stringent formal requirements than non-provisional applications, and allow for deferral of a significant portion of the patent filing fees for up to one year.  However, a hastily drafted provisional application that fails to cover the full scope of your inventions, or fails to describe your inventions in sufficient detail may be worthless. Relying on an improperly drafted provisional application to provide protection of inventions that are subsequently publicly disclosed can result in a complete loss of patent rights to the invention.  You should involve your IP counsel in the preparation of any provisional patent application avoid these pitfalls.  Your IP counsel will be able to help you balance your need to manage costs with the requirements for drafting an effective provisional patent application.

7) Be aware of your competitor’s IP
Even if you own a patent or trademark related to a product, don’t assume that your company is entitled to market and sell that product.  Your competitors may hold patents or other IP that cover one or more features of the product.  For example, even if your company holds a patent on wireless transmitter for a mobile device, other companies may hold patents that cover the device’s processor or copyrights on the software used in the device.  Before designing and manufacturing a commercial product, you should determine if you have freedom to operate (FTO) by reviewing your competitor’s IP.   FTO searching and monitoring should be a part of any IP strategy and budget.

Implementing all of these tips will be easier if you work with a trusted partner who has experience navigating the IP issues common to small businesses.  Your SCORE advisor can assist you by sharing their experiences, helping you evaluate your IP needs, and facilitating the process of finding good IP counsel.  I encourage you to discuss IP issues with your advisor early, so that you can develop a strong plan to protect what may be among your company’s most valuable assets.