They may not be listed as assets on your balance sheet, but your small business probably owns several forms of intellectual property.

Registering a trademark provides greater protection against both deliberate imitation and unintended confusion.

In the information age, it’s just as important to manage your intangible assets as it is your facility, equipment, and inventory.

Let’s explore the main types of intellectual property and how you can protect them to maintain your competitive edge in the marketplace.

What is Intellectual Property?

Intellectual property (IP) refers to the products of original human thought and creativity.

Brand names, product designs, manufacturing processes, software code, client lists, and online content are all common examples of IP. Whether they’re retained as integral components of your business model or strategically leveraged through sales or licensing agreements, these can be highly valuable business assets. As such, they can be legally protected to prevent competitors from profiting from your ideas.

Trademarks

Trademarks are recognizable symbols, words, or phrases that represent a specific product or firm.

They are usually designated by the symbols ^® or ™ (or sometimes ℠ for service marks). Suppose you run a bakery. Trademarked elements might include your company name, logo, and names of certain distinctive products. Some trademark rights can be secured simply through consistent and public use of that symbol or phrase within a particular geographic area. But registering a trademark at the federal and/or state level provides greater protection against both deliberate imitation and unintended confusion.

Federal trademark registration (accomplished through the U.S. Patent and Trademark Office) is valid indefinitely as long as you continue to use the trademark in interstate commerce and keep up with the various required forms and fees. You can also use the Madrid System for registering trademarks in up to 130 countries with a single application and fee.

Patents

Patents give inventors the exclusive right to make, use, or sell novel and useful creations.

They are often identified by a patent number, like Pat. US 334,823. As a bakery, you might be able to obtain a patent for a unique kitchen appliance, food production process, or decorative cake design that you’ve developed. Like trademarks, patents are specific to a given territory, but there are streamlined methods for filing applications in multiple countries simultaneously.

Patents require a thorough analysis of pros and cons. They can keep competitors from duplicating your invention for an extended period – commonly 15 to 20 years from the filing date. But the process can be cost- and time-intensive, and you have to publicly disclose the inner workings of your innovation.

Copyrights

Copyrights protect creative works in physical form from unauthorized sale or distribution.

Commonly, copyrighted works include the symbol ©. Your bakery’s website and social media content, menus, and packaging graphics would generally be eligible for copyright protection. In most cases, corporate copyright protection lasts 95 to 120 years. For individuals, it’s the author’s lifetime plus 70 years. While U.S. copyright laws are robust, the “fair use” doctrine allows for limited sharing of copyrighted material for the purpose of reviews and commentary, news reporting, research, teaching, and some forms of artistic expression.

It’s a common misconception that you have to register your work for it to be copyrighted – it only needs to be “fixed” in a print or electronic medium. That said, registering your work with the U.S. Copyright Office, which involves a nominal fee, can be helpful if there’s ever an infringement dispute.

Other Forms of IP

Trademarks, patents, and copyrights aren’t the only types of IP that a business might have.

IP that’s mission-critical and isn’t made public may fall under the umbrella term trade secrets. These could include recipes for your signature baked goods, as well as customer lists, vendor contracts, and training materials. Logically, trade secrets can’t be registered with a government office and still remain secret, so they have to be protected with different strategies. Legal tools include nondisclosure agreements (NDAs) and noncompete clauses to prevent employees from revealing insider info.

Internal security is also important – like implementing cybersecurity measures to avoid loss or theft of sensitive data. In some cases, trade secrets may be insurable to limit the financial impact of unwanted disclosure.

Understanding Your Rights

IP law is a complex and ever-changing field, and it’s essential to seek out expert guidance.

Once you’ve crafted a sound strategy for managing your IP, integrate it into your overall business plan and financial reporting. Whether you plan to sell your business or keep it long-term, knowing the value of your intangible assets will be key to your success.

Protect Your Assets

For more personalized advice on optimizing your business assets, consult your financial institution.

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