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Resources
February 7, 2024

How to Protect & Leverage Your Intellectual Property

Post By:
Melia Arnett-Archie
In-House Contributor
Founder, CEO
Modern Creators Law Firm, PLLC
Guest Contributor:

In business, success stories such as Apple's rise from obscurity to global dominance, are compelling and inspiring, yet elusive for entrepreneurs. What often goes unnoticed are the early strategic decisions companies like Apple make, with regard to their intellectual property. 

Some may make the mistake of thinking intellectual property is only a factor for tech and innovation companies, however this is something that comes into play for all businesses. Consider brands like Nike, or coaching programs like Tony Robbins’s. 

Making smart investments in your business’s intellectual property could be a game changer, especially in times of transition. 

So, what is intellectual property (IP), and why should business owners care enough to invest resources in management and protection of it? 

In the simplest terms, IP refers to things produced from your creative brain trust—ideas, inventions, artistic works, symbols, names, and designs used in business and commerce. It's the intangible asset that differentiates your brand from competitors, creating significant value for your business. 

While IP covers a broad spectrum, including patents, copyrights, and trade secrets, our focus is trademarks.

Trademarks are unique symbols, words, or combinations that identify and distinguish the source of your goods or services from others in the market. Your trademarks are what people see, recognize, and trust. 

Properly managed and protected, trademarks can become invaluable assets, serving as a powerful tool for establishing brand identity, driving customer loyalty, and even attracting investment. Here’s what you need to know to get started.

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Let’s take a closer look at one of my earlier examples and dive into Nike’s story.

The Birth of Nike's Swoosh

In 1971, Blue Ribbon Sports Company, co-owned by Phil Knight and Bill Bowerman, faced a pivotal moment. With financial challenges and the looming threat of losing their distributorship with Onitsuka Tiger, they decided to take a daring step: designing and manufacturing their own shoes.

However, they understood that success wasn't hinged solely on product development; it was about the power of the brand- in other words, the company’s intellectual property

Carolyn Davidson, a graduate student and graphic design artist, was enlisted to create a logo that would embody the essence of their new name, Nike. The result? The iconic Nike Swoosh. Carolyn's work was instrumental in shaping Nike's brand identity.

Remarkably, Nike invested only $35 in Carolyn's design, a small price for what would become a $35 billion return on investment. 

The Pivot: A Lesson in Thinking Big

Nike's success story doesn't end with Carolyn's design. They recognized the need for evolution to avoid stagnation. Investing early in brand development and protection was a strategic move. Nike filed its application to register the Swoosh with the United States Patent and Trademark Office (USPTO) in 1971. This marked the beginning of an extensive trademark portfolio that now includes over 200 trademarks.

This is a testament to the power of a well-thought-out brand strategy and the importance of investing in protecting the intellectual property within it.

How can you take Nike’s approach to maximizing your business’s IP?

1. Like Nike, Hire Freelancers with Caution

The decision to engage freelancers is a strategic one. However, to avoid potential legal complications, it's important to be specific and meticulous when crafting agreements. Here's why and how you should proceed with caution and a bit about the agreements you should consider when outsourcing your business’s creative work.

When you commission freelancers for critical tasks like branding, logo design, or content creation, the lines of ownership can quickly become blurred. Without a well-defined agreement, the freelancer often retains common law ownership of their work, encompassing elements like brand names, slogans, and logos. This opens the door to potential legal disputes.

Pro-Tip: Prioritize these agreements when hiring freelancers:
  • Work-for-Hire Agreements: Consider using work-for-hire agreements for creative work. These agreements explicitly state that the work created belongs to you the hiring party, establishing clarity on ownership from the beginning of the engagement.
  • Assignment Agreements: These contracts go a step further by transferring all intellectual property rights to you. They can be particularly useful for unique and innovative projects where intellectual property is a central asset.

While gig platforms like FIVERR or Upwork may offer options to transfer ownership rights for an extra fee, relying solely on these default terms can be risky. Such agreements might not align perfectly with your specific needs, potentially leading to unexpected legal issues in the future.

Failing to establish clear ownership and usage rights can expose your brand to infringement or misuse, resulting in damage to your reputation and costly legal battles.

To mitigate these risks, ensure that your agreements with freelancers are comprehensive. They should outline the scope of work, ownership terms, usage rights, payment terms, deadlines, and any additional considerations.

While freelancers can be valuable assets during a pivot, the key to safeguarding your intellectual property and avoiding unexpected legal disputes lies in meticulous agreement drafting. Utilize agreements such as work-for-hire or intellectual property assignment agreements tailored to your specific project needs. This contractual clarity empowers you to assert full control over your intellectual assets and ensure the success of your business transformation.

2. Formalize and Establish Ownership Quickly

When it comes to safeguarding your IP, speed is your friend. Specifically, when it comes to trademarks, registering them promptly is vital. 

Here's why and how you can enhance the value of your IP through early registration-- and a few thoughts on ways procrastination can limit your strategic options.

The Benefits of Protecting Your Trademarks Early
  • Establishing Your Exclusive Ownership: Trademarks are more than just symbols or names; they are your brand's identity. By filing for trademark registration promptly, you actively assert your legal rights. This not only prevents others from using similar marks but also ensures your exclusive ownership.
  • Enhancing Your Claim: In the United States, trademark law operates on a "first use" basis. This means the entity that first uses a mark in commerce holds priority rights. Timely registration not only secures your ownership but also provides a formal date for your claim, putting others on notice and fortifying your position.
  • Expanding Your Offensive Options: A registered trademark is a tangible asset that can be leveraged for various purposes, including securing loans and attracting investors. Financial institutions and investors often view registered trademarks as valuable collateral, which can enhance your borrowing capacity and facilitate fundraising efforts.
  • Protecting Your Brand Reputation: A registered trademark reinforces your brand's credibility and distinguishes it in the market. This enhanced reputation can make your business more attractive to potential partners, investors, and licensees, further expanding your growth opportunities.

Registration delays could expose your business to preventable risks like infringement and lost revenue. Competitors may adopt similar marks, potentially diluting your brand's uniqueness or causing confusion among consumers. Without registered trademarks, you may miss out on opportunities to license your intellectual property to third parties and generate additional revenue streams for your business.

Pro-Tip: 4 Simple Tips to Help Kickstart Your IP Strategy:
  1. Start Early: Initiate the registration process as soon as you begin using your mark in commerce or when you plan to use it within three years.
  1. Search Thoroughly: Before filing, conduct a comprehensive trademark search to ensure your mark is unique and doesn't infringe on existing trademarks.
  1. Engage a Trademark Attorney: Seek the counsel of a qualified trademark attorney who can navigate the intricacies of the registration process, increasing your chances of success.
  1. Maintain Detailed Records: Keep meticulous records of your trademark use and any supporting evidence that reinforces your claim to ownership.

Timely trademark registration not only safeguards your brand but also unlocks strategic opportunities. It allows you to use your intellectual property offensively as collateral for loans, attracting investments, and forging valuable partnerships. Don't underestimate the importance of securing your intellectual assets early to maximize their value and fortify your brand's success.

3. Prioritize Like a Large Business: Harness the Power of IP Licensing to Grow

Prioritizing IP protection can be a strategic game-changer for businesses aiming to scale and grow. Among the many benefits, a properly registered trademark can open doors to lucrative licensing opportunities. Trademark licensing is a legal agreement between the trademark owner (licensor) and another party (licensee) that grants the licensee the right to use the trademark under specific terms and conditions. This arrangement allows the licensee to associate their products or services with the established brand, leveraging its reputation and recognition.

Pro-Tip: How to Grow Your Business Through IP Licensing 

Industry giants like Nike have effectively utilized licensing to drive business expansion:

  • Product Diversification: Licensing allows companies to expand without needing in-house development. For example, Nike has licensed its brand for products ranging from apparel and accessories to sports equipment and even video games.
  • Global Reach: Licensing enables brands to reach international markets swiftly. By partnering with local licensees, businesses establish its global presence. 
  • Revenue Generation: Licensing agreements can be lucrative. Nike's licensing deals have not only generated substantial revenue but also bolstered its brand image through association with high-quality products and people.
  • Brand Extension: Licensing can extend a brand's influence beyond its core market. For instance, Nike's collaboration with fashion designers and celebrities has expanded its appeal to a broader audience.

For dynamic businesses, stories like Nike’s remind us just how important it is to make smart investments in the aggressive management and protection of our business’s IP.

Business owners must simultaneously play brand offense and defense in the market. Managing growth while mitigating risks can be exhausting, so investing in strong legal support to manage your IP portfolio is crucial. Defending and building your brand requires a strategic and holistic approach.

Integrating brand protection into our business’s overall strategy and plan may be the key to ensuring you outlast the competition-- and secure the long-term growth and success we all desire.