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Stop Your Competitors From Stealing Your Innovations

Date

April 1, 2006

Read Time

5 minutes

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If you are a small corporation or major company and you desire to grow, developing and protecting your intellectual property (IP) assets is a must. Intellectual property assets include patents, trademarks, copyrights, and trade secrets. Look in the Chicago Tribune’s business section every Monday, and you will find a list of patents and trademarks granted to local businesses, as well as a list of the technology licensed by the businesses. These license agreements provide for revenue and additional business opportunities for both the licensor and the licensee.

A business protects its IP assets to create a market niche for itself, and it protects its name or, more appropriately, its trademarks and technology, for identification purposes. The technology may be covered by patents, copyrights and trade secrets. Patents protect your technology, copyrights protect your expression, trademarks protect your brand, and trade secrets help protect your know how.

How are IP rights different from general property rights? Generally IP rights are exclusionary – rights used to block another from being able to do something. This is similar to a property owner building a fence around his property to block others from trespassing without his permission.

But obtaining IP rights is not a given just because you invented something or gave something a name, and the standards for each right differ – it is not just a matter of filling out a form. Forms are involved and are required as part of the process, but like taxes, if the forms are not prepared correctly, the loss is yours. Each type of intellectual property has principles and criteria setting forth what can be protected, for how long, and the strength of the protection. The procedure for achieving the protection is set out by the various government agencies that administer the rules and procedures.

Intellectual property assets can be valued by different methodologies, and therefore, the creation of IP assets should be weighed in terms of their potential risk and reward. A further look at the news headlines today illustrates how the risk and rewards for failing to adequately protect your IP can be great in either creating a market, disrupting one, or being shut out of the market. The recent litigation involved with Blackberry highlights this point.

You may chose to pursue a primary form of IP protection that you believe is the most commercially valuable. But that does not mean the other forms of IP protection should be ignored or dropped. For example, a patent requires precise legal language to cover the description of the invention. Some broadening of the language is available, but using trade secret protection surrounding the use of the patent and related know-how helps to advance the value of the patent. Other forms of protection can provide additional coverage when the primary form of protection will not work.

Once these IP assets are created, they need to be guarded and protected. Policing these assets is not cheap. How you intend to protect and use these assets should be part of your overall strategy. Ask yourself, are you adequately protecting yourself when dealing with third parties, such as confidentiality agreements, and labeling the materials that are to be kept confidential? Additionally, if you have an eye towards foreign markets, related protection is available.

As the owner of IP rights, you can sell, license, mortgage, and/or assign any or all of the rights in respect to the property interests discussed. These rights can help limit or control your competition, protect your market niche, and help you develop a greater presence in the market place.

Asset Protection

Most Fortune 500 companies guard their intellectual property zealously, and for good reason – it is their most valuable asset. As such, ensuring that insurance protection and risk management solutions are in place, should your company’s intellectual property rights be challenged, is as equally important as the creation and protection of that property.

The insurance industry is constantly changing to meet the needs of corporate America. Thus, new and different policies are often offered by carriers depending upon what is occurring within the business and legal communities. In addition, carriers can draft unique language into a policy in order to cover, (or not), certain situations. There are a number of insurance policies that may offer protection for IP claims such as, comprehensive general liability policies, certain umbrella contracts and policies specifically created to provide IP coverage. Whether protection exists depends upon the language of the insurance contract and the law construing the provisions of the policy, in conjunction with the facts of a particular claim.

It is imperative that companies tender IP claims and litigation to their insurers to protect their interests. Once tender is made, the carrier is then obligated to respond to the insured company by advising that it will either: 1) provide a defense; 2) provide a defense subject to various reservations of coverage positions or 3) decline coverage and not provide a defense to the company. It is crucial that a company immediately submit an IP claim or litigation to its insurer(s). If a delay in submitting or tendering a claim or litigation to the carrier ensues, the company may lose some or all of the coverage to which it was entitled.

For instance, most policies contain express provisions mandating prompt notice of a claim. In some jurisdictions, even a one-month delay may be enough to foreclose the coverage which would have existed had the company promptly provided notice of the matter to the carrier. In other jurisdictions, the carrier cannot deny coverage unless it proves that, in addition to the late notice of the claim, the carrier was somehow prejudiced by not finding out about the claim sooner. In addition, it is a generally well accepted principle that a carrier will not pay for any expenses incurred by the company in defending against the claim prior to the time the carrier actually received notice of the claim.

Asset protection is key to your corporate bottom line. Levenfeld Pearlstein stands ready to help your company protect its assets.


Filed under: Intellectual Property

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