Intellectual property is a valuable business asset, provided you protect it
By Anna Cook, Cox & Palmer
Many small businesses in Canada have a valuable asset that they probably don’t even think about as an asset: their intellectual property (I.P.). Intellectual property is an umbrella term that covers such things as:
Patents: protection for new inventions (including new and useful improvements on old inventions)
Industrial designs: protection for the unique visual appearance of a product (shape, configuration, pattern, ornament, or a combination thereof)
Copyright: protection for original literary (including computer code), artistic, dramatic, and musical works
Trademarks: protection of signs (including words, logos, colours, and more) to distinguish goods and services from others in the marketplace
Trade secrets: protection for valuable business information that derives value from its secrecy
Copyright and trademark tend to be the most common of the group for Canadian entrepreneurs
Although it is intangible, a company’s I.P. can be pledged as collateral; it can be bought and sold, and it can form a significant component of the business’s overall value and worth, attracting customers and investors alike. But in order for a company to leverage and benefit from its intangible assets in this way, it needs to take steps to protect them as early as possible.
Whether your business has trade secrets, inventions, original works, distinctive branding, packaging ideas, or other innovations of the mind, here is what you need to start thinking about today.
1. Make sure you own your I.P.: This is a two-part analysis. First, many businesses unintentionally violate the I.P. rights of others. Before you start using a brand name, a logo, or some other creation, do a little research to make sure that your ideas are actually original to you and available for your intended use. Otherwise, you may find that you have spent a lot of time and money developing something that you will be legally prohibited from using. Second, when employees or consultants help with the development of your ideas (e.g., you hire a graphic artist or a website designer), make sure that all rights associated with those creations have been legally yours. If you don’t, those creators—whom you paid for their efforts—may retain some rights to their ideas and, as a result, they may be able to legally restrict what you can and cannot do with the work.
2. Keep your secrets secret: Make sure you have confidentiality and non-disclosure agreements in place with employees, contractors, consultants, and anyone else you permit to have access to your I.P.—in particular for trade secrets. The competitive advantage you have gained from your “secret sauce” will evaporate once it is publically available, so it is important to keep trade secrets secret indefinitely or for as long as possible. Once a patentable idea has been publicly disclosed, you have one year to file for patent or industrial design protection.
3. Register your ownership: Register your I.P. through the Canadian Intellectual Property Office and similar offices in other countries where you carry on business. By registering, you are not only giving notice to the world that this idea is exclusively yours and that you—and only you—are entitled to use it, but you also gain additional substantive rights in association with your intellectual property, which can make enforcing your rights against infringers much easier and more effective.
With this in mind, you will be well positioned and well protected as you move through a growth cycle, a commercial financing, or a sale of your business.
By Anna Cook
Anna Cook is a partner at Cox & Palmer, St. John’s, where her practice focuses primarily on corporate and commercial, employment and labour, and privacy law. She handles matters including commercial financings, commercial real estate purchases, financing and leasing, share sales, asset sales, mergers and acquisitions, and joint ventures. She has extensive experience acting for clients ranging from small-business start-ups to large multinational and international corporations and has advised businesses at every stage of the business cycle. A strong supporter of women in business, Anna is an active NLOWE member and a presenter for the NLOWE Entrepreneur of the Year Awards.