Just like going to see the doctor regularly can limit the chances of illness, the same can be said if you consult with an attorney regularly about your business or intellectual property.
Before a contract is signed, you should consult with an IP attorney to guide you through drafting or negotiating any documents or paying any upfront costs for your business. Otherwise, you risk losing everything and can end up in court trying to salvage what you could have had from the outset.
Having an intellectual property attorney review all the contracts you have is always a good idea — and I mean every contract. A lot of details often get overlooked or misunderstood due to cross-references and legalese before someone signs the dotted line. It is not uncommon for a contract that has little or nothing to do with ownership to contain a provision that transfers IP from the original owner to another party or prevents the IP owner from asserting their rights.
A common misperception is the “niceness” of others or a willingness to help a friend out so a contract is signed without reviewing or none is put in place.
Other times, both parties are entering into an agreement that is so full of legalese that neither side knows what it says — except the attorneys. If and when disputes happen between parties, a legal review by a trusted attorney that understands your goals may give you the upper hand.
This is only one of a variety of circumstances where promising businesses are offset by a poor decision. Obtaining quality legal guidance from the outset, instead of when it is too late, can prevent this catastrophic event.
Here are some examples of what to look out for before you start running with an idea:
Nondisclosure Agreements
You told a friend about your invention or took a meeting to see if you could get investors, a manufacturer, or a distributor. When you met, you didn’t get any nondisclosures in place because they seemed like good guys.
Unfortunately, that meeting or discussion just gave your invention away, and your ability to stop your would-be partners from exploiting it.
Even with having a pending patent notice attached to your invention, getting a nondisclosure in place is a valuable layer of protection until you know you are in a healthy business relationship with a party.
Obtaining legal counsel before and throughout disclosing proprietary information is the best practice. Failure to do so can lead to losing everything before you even get started — in all seriousness.
Employment Contracts
Many new or small businesses do not have contracts, such as a noncompete or nonsolicitation with their employees. Sometimes it is because they have at-will employment and other times it is because they don’t want to run their business “like that.” These are the same people that have their business partner or long-time employee leave, and when they do, they take a copy of the customer list or other critical information or open up shop across the street. It happens more than you would believe.
Tailored contracts prepared by an attorney can avoid these situations, even though they are a lot less dramatic. If you are worried about perception, ask your counsel to come in and explain why it is necessary.
They might cost a little up front, but the benefit is well worth it.
Patentability and Freedom to Operate Searches
Just because you can’t find your invention online (or your friends and family have never heard of it) doesn’t mean that the product or method is not patented, pending patenting, has been described in a forum, or uses one or more patented elements. Remember, patentability depends on whether anyone has ever posted or published a description of your invention.
Doing professional searches can limit exposure and provide insight on where to take a product to avoid infringing on other patents. Searches can also expose areas prime for obtaining a patent or trademark, which means you have a limited monopoly on the invention for up to 20 years or any area to build a brand.
By getting a professional opinion, you can focus on moving your product forward rather than being tied up in costly litigation.
Work Made for Hire
These are considered magic words. Let’s say you hired a developer to make a new mobile app for an idea you have. You start paying to advertise it on Google, Facebook, and Twitter. A couple of weeks in, the developer contacts you asking why you are promoting their app.
Wait, what?!
Unfortunately, your contract did not contain a Work Made for Hire provision. This means that the developer owns the code to your program and you cannot use it without a license. The license is going to be costly, and you may not even be able to get an exclusive license, which means you might be stuck competing against the developer for the app you came up with and paid to be developed.
Before you outsource, ask an IP attorney to review contracts and make sure they reflect the true intentions of the parties involved.
Trademarks
Many businesses will adopt a name that they think is unique for their product or service. In doing so, many do not have a formal trademark search conducted. This can lead to receiving a cease and desist to stop use or even a notice that a lawsuit has been filed.
The worst is that all the materials that use the infringing mark must be changed. Depending on how advanced the business is, this can be a crippling endeavor. Take a restaurant; you may have to change your signage, billboards, uniforms, napkins, promotions, menus, etc., simply because another company registers the name.
Another related issue is the business that decides to expand, but they never bothered to get a federal registration for their mark. Between the time they started the business and decided to expand, another competitor may come along that has the same brand, which can limit the expansion of the brand to the competitor’s market.
Conducting a trademark search and securing the trademarks that a business intends to use can stop a major headache that can destroy a business.
