Innovation drives business and changes our world. From small, home-based businesses to global corporations, a new idea or concept is created every day. If you’re in business, it’s important to understand the value of your intellectual property - and how you can protect it.
What is Business Intellectual Property?
Your intellectual property includes the ideas, concepts, and processes that your business owns.
Consider the mouse whose ears are one of the most recognizable cultural icons in the world; the Colonel’s “secret recipe” of 11 herbs and spices; the Swoosh that adorns millions of pairs of athletic shoes.
Each of these examples is a concept of intellectual property (IP).
What are the 4 Types of Intellectual Property?
“Intellectual property” is a broad term that covers four different types of property, including:
- trade secrets
All inventions typically start out as a trade secret. Trade secrets are information - like a search engine algorithm, mechanical design, or a company’s prized recipe.
A trade secret is any information that is valuable to your company, not publicly known, and of which you have taken “reasonable steps” to maintain secrecy.
If your secret donut recipe - containing a surprising ingredient and passed down for generations - is kept it under serious lock and key, you’ve likely got a trade secret.
If your “secret recipe” is printed on your website, shared with customers, and provided to all of your employees - it may not fit the legal definition.
Trademarks protect brands. Anything that brings your product to the mind of consumers can be trademarked, from wordmarks, logos, slogans, sounds. and packaging.
A jewelry company’s iconic blue box, a soda company’s bottle shape, the shape of an apple (minus a bite) - these are all examples of brand elements that have been trademarked.
Copyrights protect tangible works. Copyrightable works can include books, articles, music, software, videos, photos, movies, and art.
From the time a work is fixed into a tangible form (typed into a document, sketched on paper, saved to a drive, recorded in a studio), it has earned copyright protection.
- If you are an artist who creates an original painting, you automatically own the copyright for your work.
- If you create something under the capacity of your employment - such as an animation artist working on a film for a movie studio - the copyright ownership belongs to your employer.
- If you purchase a work of art, be it a completed painting, drawing, or animated movie, you have not purchased the copyright for that work. The rights remain with the creator.
Patents protect inventions that are new and useful or any new and useful improvement to an existing invention.
Patents either protect an invention’s function (how the invention works) or its design (how the invention looks).
Take a quick look at your mobile phone. Patents protect both the external design of your phone, as well as its functionality - like swipe features, facial recognition, and fingerprint security.
Investing in a vacation rental home requires extra insurance protection to ensure your property, guests, and income are all protected.
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Why is Intellectual Property Important?
The ideas, concepts, secrets, designs, processes, and inventions of your business can be critical for your success.
Your inventions, methods, processes, designs, trade secrets, and creative works can all give you a competitive advantage. Your IP could be the difference between surviving and thriving in your industry.
Protecting IP is not only important for business owners seeking a leg up on the competition but is also valuable for preserving culture and encouraging innovations that benefit everyone.
“Intellectual property protection is critical to fostering innovation. Without protection of ideas, businesses and individuals would not reap the full benefits of their inventions and would focus less on research and development. Similarly, artists would not be fully compensated for their creations and cultural vitality would suffer as a result.” - Stopfakes.gov
How do you Protect Your Intellectual Property?
Now that you can identify your own intellectual property assets and understand why it’s important to protect them, let’s talk about how you can keep your ideas and concepts safe from theft and infringement.
Protect your intellectual property with registration and insurance.
Registering Your IP
Some types of intellectual property are not in need of registration, while others require a registration process to be fully protected.
Patents: registration required.
If you market your product without applying for a patent, your idea will be dedicated to the public after a certain amount of time (typically after a year).
Copyright: registration not required, but recommended.
Registering your copyright brings advantages in the event of an infringement. Your works are automatically protected by copyright when you create them, however, registration can help you go after greater statutory damages on an infringer.
Trademark: registration not required, but recommended.
Trademark registration can protect your brand from infringing upon someone else’s existing trademark as well as protect against someone else using your trademark.
Trade secrets: registration not required.
As long as you are making an effort to keep your trade secrets… well... secret, you have protection against nefarious or wrongful attempts to acquire your them. Once the cat’s out of the bag, however, your protection is up.
Insuring your IP
Registration alone doesn’t stop intellectual property theft, infringement, or misappropriation from happening. If you are the victim of an IP crime, you’re going to want to have intellectual property insurance in place.
Intellectual property insurance can also protect you against an IP risk that you may not even be aware is lurking - the threat of an IP lawsuit against you.
It’s not unheard of for a larger company with more resources to attack a smaller competitor with an intellectual property lawsuit, knowing that the resulting litigation costs could very likely derail production, scare away investors, or even drive the “little guy” out of business.
It may sound insidious, but intellectual property can be a deadly weapon in the war against the competition.
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How Does Intellectual Property Insurance Work?
Just like other types of commercial insurance, intellectual property insurance is designed to protect you against the high costs of litigation.
The costs of winning an IP fight are high, but the costs of losing are even higher.
An IP lawsuit involving Microsoft and Stac Electronics had a price tag that estimated $120 million. You may not be a Microsoft-sized company, but that doesn’t mean an IP lawsuit won’t cost you hundreds of thousands - or even millions - to defend.
Intellectual property insurance policies typically come in three types: defense coverage, abatement (also known as pursuit) coverage, or a combination policy.
- Defense policies: covers settlements and judgements resulting from an IP lawsuit against you.
- Abatement policies: allow you to sue intellectual property infringers.
- Abatement and Defense: full protection for all IP litigation scenarios.
Are Your Protecting Your Intellectual Property?
Intellectual property is one of your business’s most valuable assets. It’s been estimated that 80% of your company’s value resides in your IP holdings.
Don’t leave the most valuable part of your company vulnerable.
Talk to an experienced attorney and your trusted insurance provider about ways you can protect, register, and insure your intellectual property today.