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What Are 3 Intellectual Property Mistakes Often Made By Startup Business Owners?

Entrepreneurs Don’t Always Choose Distinct Branding and Trademarks

Generally speaking, a trademark (or service mark) is a name, word, phrase, design or symbol that allows entrepreneurs to easily identify and distinguish their goods or services from the goods or services of other entrepreneurs. Accordingly, one of the biggest mistakes that entrepreneurs make is not spending the appropriate resources in selecting, clearing and protecting their trademarks from the outset. If an entrepreneur intentionally or accidentally uses a trademark belonging to an existing business, they could end up paying that business all profits earned from wrongfully using that trademark. On the other hand, proper selection and protection of a trademark can form an important profit center of a startup business and ensure brand recognition.

Although entrepreneurs may conduct trademark searches themselves, it is important to have a qualified trademark attorney analyze the results. Additionally, it is prudent for entrepreneurs to engage a qualified professional to conduct more comprehensive searches, which often includes a common law trademark search, including non-registered trademark and trade name use searches.

Entrepreneurs Don’t Focus Enough on Ownership of Work Product

When an employee creates a work product (i.e., copyright) within the scope of his or her employment, it is generally regarded as a “work made for hire” under U.S. copyright law, and, thus, it is owned by the employer. However, a work product created by a third-party vendor (i.e., independent contractor) is only considered a “work made for hire” if the contract between the parties contains specific legal language identifying the work product as a “work made for hire” or it falls within one of a few very limited exceptions. Accordingly, it is important that startup business owners ensure they have appropriate “work made for hire” and assignment agreements, prepared by an experienced business attorney, with their third-party various vendors, such as hardware, website and software developers.

Entrepreneurs Don’t Always Use Nondisclosure Agreements to Protect Their Intellectual Property

When entrepreneurs first begin their businesses, they often have to disclose their intellectual property to third-parties, such as venture capitalists, vendors and prospective employees. However, if business owners fail to protect their intellectual property with binding mutual nondisclosure agreements, they may be estopped from asserting that their intellectual property is a trade secret in the future. Additionally, a nondisclosure agreement is particularly crucial where an entrepreneur has disclosed sensitive information about customers, confidential business procedures or technical data that is not subject to patents, but is a trade secret or proprietary in nature. Entrepreneurs should ensure that all parties sign a mutual nondisclosure agreement before any discussions regarding intellectual property or proprietary information occur.

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