Thursday, February 26, 2009

Protecting the Business of Your Business

We're going to take a short break from fighting with Congress about the damaging things being done to SBIR, and talk about something that will be a bit more uplifting. But if you really came here to find out about the sneaky and underhanded SBIR lockout from the NIH's Stimulus money, click HERE to see that SBIR Coach's Blog posting. But promise to come back later and read this one -- it's important!

Recently, my friend, Charles Moster, invited me to contribute a guest column about SBIR on his Springboard Blog - Create Momentum. Since the February SBIR Coach's Newsletter (and a subsequent update to it) discussed protection of SBIR Data Rights, and, since Charles is, among other things, a respected IP attorney, I invited him to stay on theme, and do one for us on the importance of looking at protection of intellectual property from the perspective of its contribution to your business model...

Protecting the Business of your Business

Imagine that you just stepped off the elevator having traveled 30 floors talking to the CEO at your top prospect. You gave the most stirring elevator speech in the history of elevator speeches, and captured her imagination with your tale of cutting-edge technologies and memorable branding.

Much to your surprise, the CEO gets off the elevator and calls her friend at a company across town and now you have a new competitor. Have you protected what makes you so unique? Have you protected the business of your business?

This may sound like lawyer-speak or the turning of a phrase which would be the nightmare of any fifth grade English teacher. However, I have been a lawyer for over 22 years and have represented clients including Uncle Sam, huge corporations, small startups and 100’s of emerging businesses in nearly every industry from technology to trucking. I have found that all too often companies fail to understand and appreciate the critical importance of protecting their intellectual property rights – the business of their business.

By “intellectual property” I mean the creative products of your imagination. I’m a lawyer but I’m also an inventor, playwright and composer so I understand the intrinsic value of creating something that never existed before. However, I also know that you need to take steps to protect your novel idea, brand, technology before you can translate that value into sustainable revenue.

When talking with our clients we first define what intellectual property is and what they can and cannot legally protect. Patents, copyrights, trademarks and tradesecrets are all in the mix. Then we discuss the role the IP will have in their business model and how it will affect their ability to create revenue. It is important that we scale their level of protection and legal investment based on their current needs and growth plans because not every company needs everything filed at once.

Having secured your IP rights allows you to work both offensively and defensively. Sadly, some people are born with what I call “perforated halos”. Their business model is to steal your technology and employees, trade off the goodwill your brand creates in the market, and essentially grab whatever they can.

Don’t let them get away with it! Protecting your IP allows you to be offensive in your pursuits of infringers. I’m not advocating suing everyone who comes along because litigation is very rarely the best option, but if you haven’t taken the steps to protect your assets your position of strength is diminished. Plus, not every dispute ends in lengthy and expensive litigation. Many companies strike win-win licensing deals with former infringers and create new revenue streams.

Protecting your IP rights also lets you be offensive in your pursuit of business and strategic/channel partners, licensees, investors, and acquirers. Anyone who has talked with a potential partner, licensee, investor, and acquirer knows that whether or not you have protected your IP is always an initial question, if not the very first one. Your ability to garner interest from these groups and negotiate a higher price, royalty, valuation goes part in parcel with the investment you’ve made in your patents, copyrights and trademarks. If your technology isn’t camera ready, have you considered a provisional patent and the “Patent Pending” label you can use? If your product launch isn’t for several months would an Intent to Use trademark application ease your concern about losing the name in the interim?

Intellectual property is also a tremendous competitive advantage. Novel, patented technology can create high barriers to entry, and if you combine it with a strong, trademarked brand you can intensify customer loyalty and improve your ability to charge price premiums.

Our firm is focused on being a positive force and avoiding the focus on fear – there’s plenty of that to go around already. However, the defensive value of IP is just as important to help you avoid costly and sometimes catastrophic issues.

For example, before you invest the time, emotion and thousands of dollars into a new brand and marketing campaign consider a trademark search and filing. Unfortunately, on several occasions clients have come to us with a growing business (great news) but also a nasty cease and desist letter from a lawyer halfway across the country threatening our client with infringement (not so great news). Sometimes we can prevail but sometimes the client has to completely scrap their name – along with the untold value of the brand they’ve worked so hard to create! Uggh.

There are countless reasons to protect the business of your business, more so than the word limit on this post. Intellectual property is a complex area of law, but the rationale for pursuing the protection it affords is not.

Charles Moster, Senior Partner
MosterWynne; Austin, TX

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