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Common IP pitfalls every business can avoid

published in McAfee & Taft tIPsheet | October 1, 2015

By Clifford C. Dougherty, III

As a business owner or manager, you have probably experienced or at least heard about costly and disruptive intellectual property infringement lawsuits. You may also be very concerned about protecting your company’s customer lists and other valuable proprietary information and know-how from misappropriation by employees and consultants. Indeed, avoiding infringement of intellectual property owned by others and safeguarding intellectual property owned by the company can seem overwhelming at times. However, all companies, including start-ups with limited budgets, can avoid many serious intellectual property issues just by proactively taking a few simple steps.

Typical intellectual property pitfalls that companies encounter include:

  • The failure to make sure the company name and trademarks are available. Nothing is more disruptive than having to change the name of the company or an important brand once the company begins to expand.
  • The failure to make sure employees agree to assign work-related inventions to the company. Contrary to popular belief, the company may not own employee inventions even if they are work related.
  • The failure to have consultants and other independent contractors sign “work for hire” agreements with respect to the work product they develop for the company. To put it mildly, it can be frustrating for a company to find out it cannot modify the drawings that it paid for and that the consultant re-sold the drawings to a company competitor.
  • The failure to make sure that the software used by the company is properly licensed. Having to deal with a demand for a software audit and/or a copyright infingement lawsuit can be disruptive and costly.

To complicate things further, the types of intellectual property problems that can arise and the ease in which they can occur have increased over the past several years. Due to the advancement of the Internet and social media, for example, we now have to deal with cybersquatting and other issues surrounding domain names, problems with keyword advertising, social media trademark and copyright infringement, and other Internet-related and website-related issues. More importantly, the types of platforms from which intellectual property infringement can occur have greatly expanded. For example, company websites and social media provide easy means for advertising and selling company products. However, these platforms also make it easy for a company to simply cut and paste and inadvertently use (including by re-posting, linking, framing and tweeting) trademarks and creative content owned by others.

The good news is that most if not all of the above issues can be easily addressed proactively before problems arise. Here’s a simple protocol to start with:

  • Have availability searches conducted and get legal opinions that trademarks are available (for example, before adopting new marks or expanding product sales to new territories).
  • Have employees agree in writing that the company will own all inventions made on the company’s dime.
  • Consider the need for freedom to operate opinions before developing and rolling out new products.
  • Consider and address intellectual property ownership in all agreements, including agreements with consultants and other independent contractors.
  • Make anyone and everyone (including employees, officers, directors, investors, contractors and consultants) who have or will gain access to company proprietary information agree in writing to keep such information confidential (also consider non-solicitation provisions as appropriate).
  • Conduct internal software audits on a periodic basis (good software is available for facilitating such audits).
  • Reserve and maintain all domain names (including derivatives and commonly misspelled names) that the company does not want a competitor to own.
  • Take steps (for example, obtain agreements and/or releases) to ensure that the company has the right to use all photographs, images, music and other creative content, both in print advertising and on the Internet.
  • Do not use a college or professional team name, logo or colors or otherwise imply affiliation with or sponsorship by the team without a license.
  • Do not imply that a celebrity endorses a company product if this is not the case.

A good company policy is: “If we create it, we need to protect it.” The corollary is also true: “If we didn’t create it, we need to make sure we have the right to use it.” A plaque with words to this effect should hang over the door to the company’s marketing department.

Most importantly, educate employees regarding these matters. For example, make sure that all employees understand that even though photographs and other creative content can be easily found on the Internet and seem to be in common use by others, this does not mean that such materials are in the public domain and free for use by anyone. In fact, the odds are high that they are not.

Most content on the Internet is owned by someone, often someone who regularly polices the Internet for infringement and hopes to make a quick dollar off your mistake.