How to Use Your Intellectual Property to Grow Your Business

Your intellectual property (IP) may be your business’s most important asset, especially if you’re operating in the technology space. According to Forbes,

non-tangible assets are over 80% of the average business’ value. When it comes to startups, the number is even higher. That value is the number you are using to raise money, sell your business, or attract financing.

But how can you leverage that IP to help your business survive and grow?

You can start by understanding the types of IP that you have – or COULD have – and the different ways it can be monetized.

What IP do you have?

The main types of IP are:

• Patents
• Copyright
• Trademarks
• Trade Secrets

Patents cover things like designs, processes, or physical inventions like machines, drugs, and new types of plants and animals. In relatively rare cases, patents can cover business methods.

To get a patent, you need to file an application with a governmental organization such as the US Patent and Trademark Office (USPTO). (Other countries and regions have their own patent offices.)

Filing and prosecuting a patent is a complex process for which most inventors hire a patent attorney.

Once filed, the patent will be examined by the USPTO to see if it meets the requirements for patentability.

As the USPTO explains,

…for a patent to be issued, your invention must meet four conditions:

1. Able to be used (the invention must work and cannot just be a theory)

2. A clear description of how to make and use the invention

3. New, or “novel” (something not done before)

4. “Not obvious,” as related to a change to something already invented

Filing an application is no guarantee of eventually getting a patent. In fact, a 2022 USPTO study showed that only 62% of patent applications (that were unrelated to previously filed applications) were ultimately allowed.

As we discussed in this blog, the USPTO has issued guidelines for the patentability of AI-assisted inventions.

Copyrights cover works of authorship like books, movies, music, architectural drawings, and computer software.

Copyright exists from the moment something is “fixed in a tangible medium of expression,” such as written on paper or saved in the cloud.

However, to be able to sue someone for infringing your copyright, you need to register the material with the US Copyright Office first. This is a relatively simple and inexpensive process that doesn’t require a lawyer, but you may feel more confident with a lawyer’s help.

Copyright doesn’t cover things like single words and short phrases, so you don’t copyright the name of your business or products.

To be protected by copyright law, work must be “original” – but this is a low standard.

As the Copyright Alliance explains,

To be original, a work of authorship must merely be independently created. In other words, it cannot be copied from another. There is no requirement that the work be novel (as in patent law), unique, imaginative, or inventive. A work need only demonstrate a very small amount of creativity in order to meet the originality requirement. Very few creations fail to satisfy the minimum creativity requirement.

As we explained in this blog, copyright doesn’t protect works generated by artificial intelligence (AI).

Trademarks include words, symbols, and phrases that identify the source of a product.

As we explained in this blog,

Many people seem to think that they can get “first dibs” on a common word or phrase by filing a trademark – and then sell the mark for a lot of money.

But it’s a lot more complicated than that.

Trademarks can be either “common law,” in which certain rights are acquired by use in commerce, or registered with state and national trademark offices like the USPTO.

Trade Secrets include processes, practices, formulas, recipes, etc., that aren’t public and provide economic advantages to their owners.

Trade secrets aren’t registered with any governmental entity, but the owners need to use reasonable efforts to protect them from disclosure.

If you’re not sure what IP you have (or could have), it’s a good idea to arrange a consultation with an IP attorney.

You may also want to consult experts in IP valuation, taking into account your entire IP portfolio.

How can you monetize your IP?

There are several ways to monetize your IP. For example,

• You can sell products that embody your IP rights and use legal challenges to try to prevent competitors from selling similar products.
• You can sell IP outright, just as you would resell equipment you don’t need. For example, you may not need certain IP rights anymore if you’ve pivoted to a different line of business.
• You can license your IP. This means you give another company the right to use it for a defined period of time on defined terms. Often, these terms will include royalty payments to you for each product the licensee makes using your IP.
• You can cross-license your IP. This means you give another company the right to use some of your IP in return for the right for you to use some of their IP. Such a cross-license may be part of a strategic partnership with another company.
• You may be able to get loans based on the value of your IP as collateral.
• You can use the value of your IP portfolio to attract equity investment.

How can you protect your IP?

Since IP is such an important asset, it’s vital to protect it. Here are some ways to do that:

• Make sure you have IP assignment agreements with all of your employees and contractors so that your business owns all of the IP they create on the job. Also, make sure to have confidentiality agreements with them so they don’t disclose your trade secrets.
• Train your employees and contractors about the different types of IP and why they’re valuable to your business. You may want to invite your IP attorney in to do this or recommend resources – like our blog.
• Ensure you have physical, electronic, and procedural safeguards to protect your IP – especially your trade secrets.