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Starting a tech business? Step 1 is minding the intellectual property

Madison, Wis. - So you want to start a business? And it's going to be a high-tech business! Where do you begin?

The idea usually comes first. Is it Biotech? Software? Before raising any money, hiring an employee, or forming a business entity, protecting this commercial idea is critical because it is most likely intellectual property.

But what type of intellectual property is this? Patentable? Copyrightable? Trade Secret? Can it be identified by a trademark, a brand, or a trade name?

In Step 1 you should decide whether you are going to explore this business opportunity before you protect it from others. That is, are you going to protect your idea so that no one else can use it?

A few definitions:
Patent: The right, granted by the federal government, to prevent others from practicing an invention.

Copyright: Copyright protection applies to "original works of authorship, fixed in a tangible medium of expression." Copyrightable subject matter includes literary works, music (including lyrics), graphic works, motion pictures and other audiovisual works, sound recordings, software and software documentation, other technical software documentation, and web page layouts. Copyright gives the copyright owners the exclusive right to copy and sell copies of a copyrighted work.

Trade Secret: A plan or process, tool, mechanism, or compound known only to its owner and employees he or she confides in.

Trademark: Generally speaking, a distinctive mark of authenticity through which the products or services of particular merchants may be distinguished from those of others. It may consist of any symbol or in any form of words, but its function is to distinctively point out the origin or ownership of the articles or services it identifies.

Once you decide what type of intellectual property you have, it is essential to protect it. There is information available to help you. I have found the Nolo series of books to be quite helpful. If you choose not to go the self-education route, then you should hire legal counsel to help you.

The essence of these protections can be summarized as follows. For patents, you must file a patent application after doing research at the United States Patent and Trademark Office (PTO) to discover what other similar patents exist. The patent application, ordinarily prepared in concert with an engineer and a lawyer, will be accompanied by a fee. Once it has been issued, it is your property.

Regarding a copyright, the best protection is to register the copyright with the PTO. This is not required, but it is a good idea. Filing it grants you greater rights than if it is not filed. The federal government does not check to see whether there are any copyright violations. In other words, the copyright holder is responsible for protecting the copyright.

Trade secrets are protected by not disclosing them to anyone. Companies protect their own secrets. This is done through company non-disclosure agreements and other legal agreements, together with appropriate security measures.

With respect to a trademark or a brand, these ordinarily are protected by filing an application to register the trademark in the PTO, after searching to see whether the trademark is available. This process usually runs several hundred dollars to search for other marks and to have a lawyer opine on whether a trademark is available. You can bypass this by beginning to use the mark.

However if you do not check to see if there is a conflicting mark, you may run into problems later, including claims of trademark infringement by those claiming prior rights to the trademark. Furthermore, not protecting the mark, even if it is available, may mean less legal protection if there is an issue later.

Protecting technology also means making sure that associates - or anyone to whom you disclose information about the technology - do not use the technology, themselves, except in their business relationship with you. It also means preventing them from transfering the technology to someone else without your consent. This is done through confidential disclosure agreements. Again, these documents can be found in various sources, including the books referenced above or by contacting a knowledgeable business attorney.

So here you are - you have a business idea. It is intellectual property that now is protected, and you have a non-disclosure agreement in place. Next time, we will discuss Step 2.

Previous article by Joe Boucher

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Joseph Boucher is a CPA and an attorney with the Madison law firm Neider & Boucher, with expertise in estate planning and business law, including early-stage business formation. He has a law degree and an MBA from UW-Madison and a bachelor's degree from St. Norbert College.

The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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