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Intellectual Property Rights for Startups in the USA

If you are a startup or looking to do business in the USA, it is essential to know how to enforce the rights you have over the intellectual property (IP) that your startup owns.

This article explains intellectual property (IP) rights in general and gives guidance on how to apply these principles in the USA market. It describes the issues you may face with intellectual property (IP) infringement in the USA, offers advice on how you can effectively tackle these, and provides links to sources of further help.

What are Intellectual Property Rights?

Intellectual property (IP) is a term referring to a brand, invention, design, or another kind of creation, which a person or business has legal rights over. Almost all businesses own some form of Intellectual property (IP), which could be a business asset.

Common types of Intellectual property (IP) include:

  • Copyright - Copyright protects written or published works such as books, songs, films, web content, and artistic works.
  • Patents - Patents protect commercial inventions, e.g. startups or new business products or processes.
  • Design right - Design right protects designs, such as drawings or computer models.
  • Trademarks - Trademarks protect signs, symbols, logos, words, or sounds that distinguish your products and services from those of your competitors.

IP can be either registered or unregistered

With unregistered IP, you automatically have legal rights over your creation. Unregistered forms of IP include copyright, unregistered design rights, common law trademarks, and database rights protection for confidential information and trade secrets.

With registered IP, you will have to apply to an authority, such as the Intellectual Property Office in the US, to have your rights recognized. If you do not do this, others are free to exploit your creations. Registered forms of IP include patents, registered trademarks, and registered design rights.

Importance of Intellectual Property Rights for Startups

If your startup or early-stage business has IP rights, you can:
  • Put the world on notice that you own those rights by registering them with the U.S. Copyright Office or the U.S. Patent and Trademark Office (USPTO), and by using the proper notice symbols on tangible materials that contain your IP (TM, and Patent Pending).
     
  • Prevent unauthorized third parties (infringers) from unfairly competing with you by reproducing your copyrighted works, using confusingly similar trademarks on their products, making/selling products similar to your patented products, or stealing your trade secrets.
     
  • Use your IP rights to generate revenue by, directly selling copyright, branded, patented, or other proprietary products and services, or Licensing your Copyrights, Trademarks, Patents, and Trade secrets to others in exchange for Royalties.
     
  • Build joint ventures and alliances with other companies to develop and sell new products and services by combining your IP rights with intellectual property owned by your strategic partners.

Registration of Intellectual property rights in the USA

Some types of intellectual property (IP) rights in the USA are automatic, but it is recommended that you always register them to protect yourself and make the most of your IP rights.
'Priority rights' under the Paris Convention can help in the local registration of trademarks, designs, and patents by allowing rights previously registered elsewhere to become effective in the USA if filed within a time limit.

As a signatory of the Paris Convention, the USA must also protect against unfair competition in line with the rules of the Convention.

Patents

To obtain patent protection, you must register your invention with the United States Patent and Trademark Office (USPTO), usually with the help of a patent attorney. You can either apply for:
  • utility patent - for innovations and technologies
  • design patent - for new and original designs
  • plant patent - for distinct and new plant varieties

Under US law, if your invention is publicly disclosed without a patent, you have a grace period of one year to register your patent.

The application process for patents is complex, and it is highly recommended that you seek advice from a patent attorney before going ahead. A patent attorney will help you make sure that your invention is not already registered by someone else, and will assist you in completing a patent application. You can find a list of registered US patent attorneys on the USPTO website.

The fee for patent applications can vary depending on your application, and the approval process can take a very long time and varies from each application. There is a 50 percent discount on official fees for registering a patent for small companies, non-profit organizations, and universities. There is also a 75 percent discount on fees for a 'micro entity, though these have strict criteria you must meet to be eligible.

For example, an investor must not:
Intellectual Property Rights in the USA
  • have an annual income of more than three times the average household annual income
  • have been named on more than four US patent applications
  • assign or license their patent to a company or person that has more than three times the average household annual income
  • There is no legal protection for a patent until it has been approved.
  • Once your patent is approved, you will need to pay a regular maintenance fee in each country that your patent has been granted.

Trademarks

In the USA, it is the first party who uses a trademark commercially that owns the rights for that trademark.
Trademark registration is therefore not a legal requirement, but it does hold several benefits.
To register your trademark in the USA, you can either register with the USPTO within the USA or use the Madrid
Protocol to gain unitary rights under national or Community Trademark registration systems.
Registering a trademark in the USA can be a complicated process, so it is recommended that you seek expert legal advice before proceeding.
If you register your trademark with the USPTO it can also be recorded with the United States Customs and Border Protection (CBP), a bureau of the Department of Homeland Security. This can be done electronically and will help the fight against fake and pirated goods being imported to the USA.

Copyright

No registration is required for copyright, both published and unpublished, but registering copyrights with the copyright authorities is advisable.
To register a copyright in the USA, you will need to complete the relevant application form, either online or by sending it to the United States Copyright Office, along with the appropriate fee.

You can also protect your work with a copyright notice - e.g. by displaying the copyright symbol (�), year of first publication, and your name as the copyright owner. It will further deter any copyright infringement of your work and help with any legal issues surrounding your copyright.

Enforcement of Intellectual Property (IP) Rights in the USA

It is your responsibility to protect your IP, though governmental authorities can help you take steps to prevent and stop any infringements. You should actively monitor the marketplace for any unauthorized use of your IP, and if you think that a business has unlawfully used your IP, you should take expert legal advice before contacting an offender or pursuing any sort of litigation.

IP law in the USA is complex and should only be used when other enforcement methods have failed to prevent an infringement. If litigation is necessary, then you should use a lawyer who specializes in IP law. Litigation takes place before either civil courts or administrative tribunals.

It is also possible to take action against foreign offenders either through the Federal court or by initiating investigations before the United States International Trade Commission (USITC).
If your copyright or trademark is registered it can also be recorded with the Customs and Border Protection (CBP). The CBP can use enforcement procedures to prevent the entry of goods that infringe your IP rights into the USA. This is a simple and cost-effective measure to protect and enforce your IP rights.

If you find unauthorized use of copyright material online, you can use the notice and takedown procedure to have this material removed. This only works for websites owned in the USA and involves contacting the internet service provider with a demand to remove or disable access to the unauthorized content.

With the help of a lawyer, you can also use a Cease and Desist letter. This warns an offender of your rights and asks them to stop any activity that may cause infringement.

There are also several Alternative Dispute Resolution (ADR) methods that can be used. These can involve mediation or arbitration and are often cheaper and faster than litigation.

You may also find business associations and other industry-specific associations that can represent you in any dispute you may have involving unauthorized use of your IP.

Protection of Intellectual Property (IP) for Startups

There are various things you can do to make it harder for infringers to copy your product. For example, you could:
  • Consider the design of your product and how easy it would be for somebody to reproduce it without seeing your original designs.
  • Have effective IP-related clauses in employment contracts for when you hire staff. You should also make sure you educate your employees on IP rights and protection.
  • Have sound physical protection and destruction methods for documents, drawings, tooling, samples, machinery, etc.
  • Make sure there are no 'leakages' of packaging that might be used by counterfeiters to pass off fake products.
  • Check production overruns to make sure that the genuine product is not being sold under a different name.


Duties of Lawyer towards Startups for IP Protection

  • Your startup will need a reputable lawyer who specializes in IP law to help you devise an effective strategy for managing and protecting your IP and avoid the common mistakes business people make that can have serious legal and financial implications.
  • Your lawyer can help you to figure out whether your ideas, concepts, inventions, names, and business processes qualify as potential patents, copyrights, trademarks, or trade secrets.
  • Ask your IP lawyer to draft a simple Intellectual Property Assignment agreement that ensures the company owns the IP even if the relationship turns sour.
  • You need to have your lawyer review all agreements. Ask your lawyer to read through all of your existing contracts to make sure that you haven't agreed to terms that grant more IP rights to your customers and suppliers than necessary.
  • You have to map out with your IP lawyer what patents, registrations, and other IP-related expenditures need to be prioritized over others. For example, you may decide that you will initially seek patent protection only for the company's primary product, and protect other inventions as trade secrets using confidentiality agreements.
  • To prevent employees and consultants who work for your company from stealing your valuable IP assets and disclosing them to competitors (or starting their businesses to compete with you), you'll need them to sign Non-Disclosure Agreement (NDAs) to keep company information confidential that is, not disclose company information to third parties. (Your lawyer can draft an employee/consultant agreement template for you.)

Where to get intellectual property help in the USA

Whether you're resident in and doing business in the USA, or trading internationally with the country, several professional organizations offer you advice and support:
  • The United States Patent and Trademark Office (USPTO) provides official patents and trademarks in the USA. (www.uspto.gov)
  • The US Copyright Office promotes business through copyright protection. (www.copyright.gov)
  • British American Business offers members the chance to develop their business through networking and marketing programs, business intelligence, and regulatory advice and influence. (www.babinc.org)
  • British American Chambers of Commerce can offer advice for visiting and resident British business people and a chance to meet others through networking events. (www.britishchambers.org.uk/business/trading/internationally/international-contacts.html)
  • The British Embassy in Washington provides help for British nationals wanting to do business in the USA. (www.gov.uk/government/world/organisations/british-embassy-washington)
  • Chambers and Partners USA guide the US legal profession. (www.chambersandpartners.com/USA)
  • Stop Fakes offers information on IP rights and protection in the USA. (www.stopfakes.gov)
  • Transatlantic IPR Portal offers access to information and resources on IP for business. (ec.Europa.eu/enterprise/initiatives/ipr/)

Related websites you might find useful
  • Intellectual Property Rights in the USA
  • Application for Intellectual Property Rights e-Recordation on the United States Customs and Border Protection website
    https://apps.cbp.gov/e-recordations
  • IP infringement information on the US International Trade Commission website
    http://www.usitc.gov/intellectual_property
  • Mediation and arbitration on the World Intellectual Property Organization website
    http://www.wipo.int/amc/en/index.html

Conclusion
Intellectual property is important for startups as a safeguard. Without proper safeguards in place, one company's ideas are replicated by another company and used for its acquisition. Hence registration and protection of your intellectual property are very important so one should not misuse them. You should have an IP lawyer to give the right advice on strategy and different ways to protect your IP so that you can use IP systems to your advantage.

Award Winning Article Is Written By: Mr.Aashish Vijaykumar Chimnani, (B.B.A LL.B), follow my Instagram legal page @legal.lexis.
Awarded certificate of Excellence
Authentication No: AR210381317548-13-0422

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