Intellectual property (IP) is woven into the fabric of a business. Whether protectable via patent, trademark, trade secret or copyright, this property can be a valuable asset when properly maintained.
IP rights can be created before a business is formed. For example, advances in technology can give rise to patentable inventions, and company names and/or brand names can give rise to trademark rights. As a business develops and grows, these IP rights may grow and develop along with the business.
It is critical to properly identify IP as it is created, and take continuous steps to protect the rights that arise with it. Failure to do so can compromise your rights. Many large companies have mechanisms in place to continuously monitor and secure IP rights. However, for many medium- and small-sized companies, and particularly start-ups, this task can seem daunting.
In my practice, I have often observed companies of various sizes overlook IP ownership records – both for their own intellectual property, and for property they purchase from others. This has the potential to create complications for the IP portfolio, or in the case of trademarks, could even destroy rights.
Here are 5 important steps your company can take today to maintain clear IP ownership records and maximize value:
1. Periodically review your business to identify patent, trademark, know how, and/or copyright that is valuable to your company. Depending upon your business, this review can take place at regular intervals to allow you to identify intellectual property before it becomes public. Decide how you want to protect that IP, keeping in mind that a combination of patent, trademark, copyright and/or trade secret may provide the best protection.
2. Obtain assignments promptly when IP is created. Employment contracts should include a clause obligating the employee to assign any IP created during their employment with the company. Under this umbrella obligation, there are certain triggers that should cause you to review ownership records for innovations:
3. When a business transaction occurs that may impact IP, do your due diligence to identify all IP impacted in the transaction. Take stock of all IP, including patents, patent applications, statutory invention registrations, trademarks (or service marks), trademark/service mark applications, copyright, trade secret and know how. Determine the scope of rights to be conveyed in the transaction, in terms of technology, geographic scope, market, and the like. Will this be a license or assignment? It is important to have intellectual property counsel assist you with the IP aspect of larger business transactions; your IP counsel can work with your business attorney so that IP aspects are adequately addressed in your overall agreement.
4. When a business transaction includes IP agreements (such as patent or trademark assignments), include those IP agreements as schedules, and have those IP agreements executed concurrently with the main business transaction. A separate schedule for each IP agreement is ideal, for reasons noted below. Executing all relevant agreements involved in an asset purchase (or other business agreement) at one time makes the entire process much more efficient, since the parties are at the table and executing the overall business transaction. If the IP agreements are put off until later, it may be more difficult to track down the required parties.
5. Record any IP assignments promptly with the relevant IP Offices. It is important to file assignment documents in the USPTO, U.S. Copyright Office, and other IP registries to maintain updated chain of title for all IP assets. The requirements of IP registries for recording assignment documents vary across jurisdictions, so you may need to coordinate with local counsel in each applicable jurisdiction to ensure the assignment documents comply with all formalities. For example, if the IP portfolio includes rights in foreign countries, you may need to engage counsel in each of those countries to assist with recording ownership rights. Once an assignment has been recorded in the USPTO, the records become public. Because of the public nature of assignment recordation, and the requirements unique to patent versus trademark assignments, I prefer to keep each agreement as a separate schedule. Recordation is a simple procedure, and it creates a public record that clarifies chain of title to the property.
Careful monitoring of intellectual property rights and ownership records can help you maximize these important business assets. These 5 steps can be a good start.