Choose your weapon
by Jim Martyka Intellectual property. The whole concept is daunting for many small-business owners who spend enough time, energy and money on marketing, staffing, budgeting, buying, selling and all the necessities.
What is intellectual property and what qualifies? Is it really important to protect it and how does one do that? How does one defend it? Supposedly the process is expensive and time-consuming, so is it really worth it?
Those are the questions that may cause owners to put off or ignore their intellectual property altogether. But what many don’t know is that protecting intellectual property could mean protecting the future of the company. Even further, it could mean helping the business grow, building a reputation and even opening up new business venture opportunities.
“Yes, it is absolutely worth it,” says John Dragseth, an attorney with the Minneapolis office of Fish & Richardson. “You need it for protection, for building awareness of your company and your brand and for simply building a better business. With all the help that’s available, there’s no reason a company shouldn’t be protected.”
Piracy, or stealing of a small business’s intellectual property, has become a major business problem. According to the United States Patent and Trademark Office (USPTO), theft of intellectual property cost American businesses more than $250 billion and about 750,000 jobs last year alone. Unprotected small businesses were and continue to be a main target, partially because they are simply unaware of the necessities of intellectual property protection or intimidated by the process.
Experts don’t dispute that the process can cost a small business thousands of dollars and take years to complete. There are hours that need to be spent on patent searches, research and writing up the patent request. Then there is the cost of legal fees, filing fees, prototypes and even mailing the request. After that, it’s pretty much a waiting game. And all this for a patent that may not even be granted.
But experts say a lot more is patentable than people think.
“People think that obtaining a patent requires a quantum leap and that’s not true,” Dragseth says. The USPTO “issues a couple hundred thousand patents a year and most of them are minor improvements on existing products.”
A patent can cover anything from a new machine that’s going to rid the world of smog to a new bolt on a car. Patents can cover non-tangible things, such as business processes and methods. That opens the door for many small businesses to be patent-eligible.
Not that badAccording to many small-business owners, the process really isn’t that bad.“After the first one, it gets a little easier,” says Mehrak Hamzeh, owner of Globaltel Media Inc. Hamzeh is awaiting approval on his first patent request revolving around his new technology to help cell phone users download more content from the Web onto their phones. His firm is in the process of drawing up nine more patent requests
“The tricky part is putting down your idea in words, describing every single detail so the patent office can see your vision. That’s really all you need to do, other than wait. But in the end, when everybody’s using your technology, it’s worth it.”Especially when one considers that patents, trademarks and copyrights are the only defense against copying.
“We live in a country that encourages businesses to copy, assuming the product isn’t protected, because it helps boost competition, which in the end is better for consumers,” says Paul Savereide, an attorney with the Minneapolis office of Patterson Thuente Skaar & Christensen. “That’s why patents are so important.”
The same is true with trademarks and copyrights. Small businesses often run into trouble when they don’t consider everything that could use a copyright, such as publications, product documents, plans or even internal memos.
“You need to put that little ‘c’ with a circle around it on everything,” says Holly Newman, a small-business attorney with Minneapolis-based Mackall, Crounse & Moore. “The bottom line is that if any documentation you put out doesn’t have that copyright protection, someone can take what’s inside. Put it on everything, even on documents you can’t imagine anyone would want.”
This is a problem that small businesses often run into: Employees will jump to bigger companies. And if materials, specs, plans, whatever aren’t protected, technically the employees can take them along. Of course there are other ways to prevent document theft, such as having employees and prospective clients sign confidentiality agreements. Still, copyrighting everything is a big step toward overall protection.
Business boostersBut protecting intellectual property is about more than just protection. It also opens the doors for a wide variety of opportunities that can boost the business if used correctly.
First of all, a patent or a trademark instantly gives a small business legitimacy, sources say. It shows a level of professionalism that not only intimidates competitors, but also attracts customers — and before them, investors — who see they are getting a “cutting edge” product. Small businesses are encouraged to mention the patent as often as possible, especially in advertising.
Also, patented products help a small business that’s looking for strategic partnerships. Many times, a small business will look to piggyback on a larger one to get help with manufacturing, advertising or distribution. A patented product once again offers legitimacy and ensures the small business that they have leverage in any sort of partnership. (On a side note, pairing up patented technology with a bigger firm is a great form of patent protection as a bigger firm has the resources to legally protect it).
Small business can also license out the product to other firms after it’s been patented.
“That’s going to be our bread and butter,” Hamzeh says. “Once we get approved, we’re going to license out this product as much as possible. The patent gets us paid.”
And where small businesses can really profit from protecting their intellectual property is by thinking long-term.
“You need to think of how your product or method applies to other industries, other products, other markets,” Savereide says. “Think of all the applications you can and protect them all. That will open up a lot of doors.”
Still, patents, trademarks and copyrights are mainly going to be used for protecting the company’s interests. Often, the simple presence of protection will ward off pirates, or at least give them pause. However, there are times when a company (especially a bigger one) will try to infringe on that protection, banking on the fact that small businesess won’t have the time, money or energy to defend the property.
“It’s really sad, but we see it happen all the time,” Newman says. “Still, if you think a company is infringing, investigate it thoroughly and contact them, let them know they’re infringing and ask them to stop. Sometimes, this is enough. Even if they don’t comply, contacting them will look better for you if it does go to court.”
Many say going to court should be the absolute last option because it can drain both time and money. In fact, the average patent suit that goes all the way through trial will end up costing a business more than $1 million in expenses, Dragseth says.
For some, the cost is worth it, especially if the entire company depends on one technology, for example. If that’s taken away, there goes the business.
Not everyone agrees. In fact, several small-business owners interviewed for this story say they didn’t feel the entire patent process was worth it. A good example is St. Paul-based Huot Manufacturing, which spent more than two years and thousands of dollars obtaining a patent for new packaging for drill bits. A couple of years later, company officials are calling it a bust.
“We easily spent $10,000 trying to patent the product and then we didn’t even sell $1,000 worth of the damn thing,” says John Huot, president of the firm. “I’m not saying patents aren’t relevant because they are, sometimes. But the process is labor-intensive and expensive so you better make sure it’s worth it.”
The bottom line is that the process of protecting intellectual property is, well, a process. As such, analysis and research is necessary. And a good intellectual property attorney doesn’t hurt either.
“More often than not, you’re going to want protection,” Dragseth says. “It’s just too important for a small business to protect itself in this competitive market. And patents, trademarks, copyrights — they’re all weapons to help a small business do that.”
[contact] John Dragseth, Fish & Richardson: 612.337.2550; dragseth@fr.com. Mehrak Hamzeh, Globaltel Media Inc.: 858.699.6163; mehrak@globaltelmedia.com. John Huot, Huot Manufacturing: 651.646.1869. Holly Newman, Mackall, Crounse & Moore: 612.305.1450; hjn@mcmlaw.com. Paul Savereide: Patterson Thuente Skaar & Christensen; 612.252.1550; savereide@ptslaw.com
