New Company? Intellectual Property Issues Are Growing

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Oftentimes, intellectual property (IP) is considered the most valuable asset of technology companies.  As a result, timely action is necessary to ensure ownership and protection of a company’s intellectual property portfolio.

The types of intellectual property focused upon in this article are trademarks, service marks, domain names, and trade secrets.  Many technology start-ups are surprised to learn that they  do not, in fact, own the intellectual property rights in the technology that form the very core of its business.

The potential legal issues in the early stages of a technology company’s life include situations where intellectual property is developed by individuals who are considered to be independent contractors.  Without a written agreement between the company and the contractor that states that a work product is a “work made for hire,” the contractor is considered the owner of the intellectual property rights to the work product.  This is true even if the company paid the contractor for the work.

It is of paramount importance that all work involving intellectual property be performed by employees of the company or by contractors working under a written agreement that assigns all of the contractor’s right, title, and interest in the intellectual property to the company.

The issue of what is or is not a “trade secret” is a ubiquitous one within the interactive advertising space.  In short, a trade secret is any information that derives its independent economic value to a company from not being generally known to others and that is the subject of efforts that are reasonable under the circumstances to maintain the information’s secrecy.  Items that may be protected as trade secrets are, for example, technology that is not patented, customer lists, financial information, marketing plans, and technical know-how.

Given that trade secrets are a critical component of a technology company’s business model, perhaps even more so for start-ups, the design and implementation of strict secrecy procedures are mandatory.  A single public disclosure can cost a company trade secret protections.

A trade secret protection program should be fairly simple to implement with the assistance of competent legal counsel.  Elements of such a program include binding non-disclosure agreements, maintaining lists of all trade secret information, identifying the degree of sensitivity of various trade secrets for employees, establishing procedures for ensuring the security of trade secrets, implementing computer usage policies, and interviewing departing employees to ensure that no trade secrets are unlawfully destroyed or removed from the business premises.

A trademark or service mark identifies, brands, and distinguishes the goods or services of a company.  Marks can become protected simply by use in commerce.  However, federal registration is the preferred method of protection and start-ups should work closely with an intellectual property attorney who can assist with securing federal mark registrations.

A federally registered mark grants the owner the exclusive right to use the mark as associated with the particular goods or services throughout the United States.  Federal mark applications can be based on actual use of the mark in interstate commerce.  Alternatively, and perhaps more important for a start-up, federal applications can be based upon a bona-fide “intent to use” the mark.  If an “intent to use” application is filed and accepted, evidence of actual use in commerce must be filed with the United States Patent and Trademark Office within six months.  The six month limitation may be extended if good cause is established.

Domain names are obviously valuable assets for technology companies.  A frequent issue that arises is when a trademark that a company has worked so diligently to register is not available as a domain name because it is being used by a third-party.  Unfortunately, ownership of a registered trademark does not guarantee that a company will get the corresponding domain name.  Thus, mark development efforts should be coordinated with corresponding domain names.

 

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