Whether you’re a new or existing business, take precautions to protect your inventions. Entrepreneurs are well-advised to consider ways to avoid legal entanglements over their inventions and intellectual property.
If you don’t take steps to protect a valuable invention, you risk two possible consequences:
1. You might face a lawsuit by a company claiming you stole its intellectual property (IP).
2. You might be victimized by a company stealing your ideas.
If you Google the term, patent lawsuit, you can find as many as 130 million search results.
Surf the term, patent trolls, and you can find as many as 623,000 results. A patent troll has a negative connotation. That’s a large company that scoops up patents, only to turn around to hunt for other companies to victimize – suing them for alleged patent infringement.
The sole purpose of a troll is to fill its company coffers.
Patent troll lawsuits have been hurting small to medium-sized firms – in excess of $29 billion in 2011 according to a Boston University study.
Small companies that legitimately develop their IP usually have to settle cases to their detriment because they lack funds – even though the trolls present trumped up evidence in court.
But technology trolls were being put on notice by two congressmen, who introduced a bill: “Saving High-tech Innovators from Egregious Legal Disputes Act.”
This would have penalized the companies that “buy the patents solely to sue the American tech startups that created the products,” says the bill’s co-sponsor, Rep. Peter DeFazio (D-Ore.). Unfortunately, the bill died.
So, patent lawsuits are a huge problem.
To protect yourself, spend an hour with a good patent attorney to consider implementing these six tips:
- Determine which of your company’s ideas that might need a patent.
- Create and distribute an information-disclosure form to each member of your firm. This will help insure everyone is on the same page.
- Make sure you retain the rights on inventions by anyone connected with your firm. That goes for independent contractors, too. So, methodically evaluate your employee and independent-contractor agreements. You’ll want everyone to give you the rights because they created the invention on your dime.
- If your company is large enough to have several departments – engineering, finance, management, marketing and sales – pick someone from each to hold patent-strategy discussions. Do a cost-benefit analysis to determine whether an idea is worth a patent application and expensive lawyer fees.
- Be meticulous in organizing a paper trail. You’ll need it for your own benefit, especially if you seek investors. Documents should include but not be limited to information-disclosure forms, employee and independent-contractor agreements, patent applications or issued patents, and licenses.
- Even though you’ll be retaining the patent rights, consider how to compensate your employees and/or independent contractors for their participation in applying for a patent and when your submission is approved.
From the Coach’s Corner: In IP protection, patents are needed for five reasons, and entrepreneurs face five common problems, as I explained in this Biz Coach article: “Risk Management – Lawyer Explains Basics in Protecting Intellectual Property.”
Here are more legal tips:
Checklist – 10 Legal Basics for New Entrepreneurs — Thinking about legal matters can be tedious when you have a lot of details on your plate. But laws and regulations are important when establishing and operating your company.
10 Tips for Hiring the Right Attorney for Your Business — In running a successful business, you typically need the services of three professionals — a good tax accountant or CPA, insurance agent and an attorney. Know that talent and skill levels are crucial for your success.
“I’ve got a new invention. It’s a revolving bowl for tired goldfish.”
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.
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