Momentum

Protecting the Business & IP

As entrepreneurs, you must make sure that your company remains safe by ensuring that nothing enters it that could harm the business and nothing leaves that reduces the value. This entails choosing the best business entity, protecting intellectual property, and complying with governmental regulations. This was the topic of this week’s Business Lunch. Tom Williams from McGarry Bair stopped by to give us the scoop on intellectual property protection and choosing the right entity.

Tom Williams is an intellectual property and litigation attorney. He specializes in successful resolution of intellectual property and general business disputes. He encourages his clients to seek IP protection for the following reasons:

• Allows you an exclusive right to use your intellectual property (a legal monopoly)
• Failure to protect your intellectual property may result in abandonment
• You have limited recourse against an infringer if your intellectual property is not protected
• You can license your intellectual property to other companies and profit from it (royalties)

Tom explained the five types of intellectual property: Patents, Trade Secrets, Trademarks, Trade Dress & Copyright.
Patents
• Utility Patent, which protects any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement. It is valid for 20 years from filing date – if maintenance fees are paid.
• Design Patent, which protect the ornamental appearance of an article of manufacture. It is valid for 14 years from issuance as a patent – no maintenance fees.

Trade Secrets
• A formula, practice, process, or design not generally known or reasonably ascertainable – not disclosed to the pubic
• Allows a business to obtain an advantage over competitors
• Can be protected through non-compete and non-disclosure agreements
• Example: Coca-Cola® formula
 
Trade Marks/Trade Dress
• A name, word, slogan or device that distinguishes your product or service from someone else’s
• Need to be renewed
• Include: Words, Logos, Shapes (Coca-Cola® bottle), Slogans (“Just Do It”), Colors (Owens-Corning’s pink insulation), Sounds (NBC’s chimes)

Copyright
• Provides protection to the authors of original works of authorship, including, Literary works, Musical works, Dramatic works, Sound recordings, Architectural works
• Owner has exclusive right to reproduce the work, distribute copies, perform or display the work publicly
• Copyright exists from the time the work is created in fixed form
• Copyright lasts for the life of the author + 70 years

Tom also explained the various types of business entities:

Sole Proprietorship
• Owned and operated by an individual
• No legal separation between the individual and the business
• Owner benefits from 100% of profits but is 100% liable for the debts and liabilities of the business

General Partnership
• 2 or more people operate the business
• The partners share the profits
• Each partner is liable for all the debts of the business

Limited Partnership
• 2 or more people operate the business, but there are two types of partners
• A general partner has the same rights as in a general partnership
• A limited partner gets a share of the profits, is typically not liable for the business debts, but does not have a voice in the management of the business

C” Corporation
• A legal entity having its own rights, privileges and liabilities separate from those owning the corporation
• The most complex form of business organization

“S” Corporation
• Allows a corporation to be taxed as a partnership or sole proprietorship

Professional Service Corporation (PC)
• A corporation made up exclusively of licensed professionals

Thanks to Tom Williams for stopping by and sharing his expertise with us!