Intellectual Property Lawsuits, Becoming a Thing of the Past?

Tucked away in a side bar of the latest issue of Bloomberg Businessweek (December 18-22) is a quick summary of the H.R 3309 Innovation Act penned by Joshua Brustein. It documents the damage done by “patent assertion entities” and hopefully a bill to curb their actions. These companies build their business on threatening legal action for patent infringement knowing most companies will simply settle rather than fight a costly litigation. The fact that such companies exist demonstrates the need and value of a clear intellectual property plan. Even small businesses need to protect their assets to retain and build sustainable value.

Defining intellectual property

Everyone has heard about copyright, trademarks, and patents but may not truly understand the difference. At a high level, copyright focuses on the action of distribution of a particular asset for a specified length of time. Trademarking defines a particular entity through the use of “marks” that distinguish it as a singular source. Finally, patents protect inventions so they may be disclosed to the public. In each case tangible assets are created and as such, have value. But why bother with this process if litigation and the process itself are so expensive and difficult to defend? The answer lies in taking advantage of the product life cycle.

Patent Basics

Procuring a patent generally falls under either a utility or design process. In each case, temporary protection is given during the review process. This allows businesses to benefit from the protection during the rigorous evaluation process. The critical data to remember is any patentable invention must not have been known or used by others in this country; been previously patented or described in print; or been sold or used publicly within the last year. Any violation of these rules denies right to patent. Additionally the invention must be tangible and not simply an idea. Usually an actual prototype or detailed description of a working model is necessary. As a best practice, don’t forget to use non-disclosure agreements for all interested parties who review the invention.

Struggling with IP

Unfortunately patents are viewed as a “big business” attribute and not for small businesses because of cost, limited resources, and return on investment. This is wrong! It is true significant investment is necessary to build out an intellectual property portfolio but can become extremely valuable when a small business matures and looks for expansion capital. Cost of a basic copyright starts at $35, trademarks – $275, and provisional utility patents – $1,000+. Patents are more expensive because of the search process and should be filed with a patent attorney or qualified representative. Business owners have to assess the value of their ideas and resources to defend against infringement. As mentioned early in this post the defense costs can outweigh benefits of obtaining protection. As a best practice, business owners should review options by conducting a feasibility analysis prior to execution. Feel free to contact me if you need assistance.

About the Author: Kristian Hohenbrink

Kristian Hohenbrink is the president of KandH Consulting, a regional small business consultancy stimulating controlled growth and enhanced value in small businesses, start-ups and reorganizations. He has over 30 years experience in creating and managing successful businesses and is an avid writer, presenter, sales trainer, and business mentor.

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