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Intellectual property


"Intellectual property" refers to the set of rights granted to intangible creations of the mind.  In plain English, this means that certain ideas, creations, works of authorship, inventions, and meaningful symbols can be controlled exclusively by the person/company that owns them.  There are three primary forms of intellectual property: copyrights, trademarks, and patents. There are other forms of intellectual properties, such as trade secrets, which protect business methods or data so long as they are kept confidential.  However, trade secrets and other forms of intellectual property are less common, and have rights that vary state by state.

Not all businesses own inventions that can be registered as a patent.  By contrast, copyrights and trademarks exist regardless of registration, and virtually all businesses own copyrights and trademarks, even if the owners do not realize that fact.  That said, it is only those copyrights, trademarks and patents that hold potential value that should be protected.  Otherwise, the costs of protection may not be justifiable.

Here is a brief summary of these different types of intellectual property:

Copyrights exist in anything that required a modicum of creativity to create, as long as that something was stored in a way that is was not transient.  For instance, an artist who sketches a portrait in a sketch-pad has just created a copyrighted work.  Or, the computer programmer who types in code and saves it to disk has also created a copyrighted work.  These rights exist as of the moment they are created and stored, even without registering them.  However, registration enhances rights that might not otherwise exists in those copyrighted works.

Patents exist only if they are federally registered.  In order to become registered, the thing being patented (any new, useful and non-obvious invention, method, process or idea) must not have been shown in public for more than one year prior to the application date.  Thus, prototyping must be done in secret, or within the one year period. The rights you get with patents are defined by the writings contained within the patent application itself.  Thus, poor drafting of an application can be harmful or even disastrous.

Trademarks are any "thing" that helps consumers identify and distinguish one company's products from another company's.  Trademarks and brands are essentially synonymous concepts.  If anything such as color, sound, designs, words, etc. are used by a company to help distinguish themselves in the marketplace, that thing may become a trademark. See our companion site, for extensive information about trademarks.

Trade secrets only exist if you take sufficient steps to keep them confidential. Some trade secrets may be patented.  However, trade secret protection is lost when you register a trade secret as a patent.  That is because trade secrets cease being secret upon registration as a patent, because all patents are published.  Thus, not all patentable ideas should be patented.  The advice of a reputablepatent attorney should be sought if you believe you may have a patent.

Contract Law Overview

A contract is a legally binding obligation between parties. Just becuase it's not a formally drafted document with "contract" at the heading doesn't mean the legal impact is any less significant.  Whether you realize it or not, you're entering into contracts all the time. 


When you go online and click on the "Terms of Use"  box when signing up for FaceBook or Netfliex, etc., you're entering into a contract.  When you pass emails back and forth with a potential client about a job you might do for them, you're forming contract terms. 


Often, the terms of the contract are not even understood by you.  Maybe in the personal consumer context, those risks are not large enough to worry about reading the terms.  In part, this is becuase the courts tend to be more sympathetic to inividuals who didn't read or understand the contracts they entered into.  Thus, you probably haven't heard from neighbors or friends how they were taken to court over fine print in a contract they didn't realize they had agreed to.  (although, many of the bad ARM mortgages people signed during the pre-banking crises and recession is an example of how that isn't always the case).  For the most part, the courts realize people don't read the terms of their contracts, and so they tend not to enforce outrageous terms and conditions that nobody would ever sign if they knew what they were signing. However, in the business world, that all changes.  Contracts are not as standardized, and courts aren't as sympathetic to the claim that you didn't read or understand your contracts.  You're held to a higher standard as a business owner in these matters.


Beyond merely understanding contracts that other people make you sign, now that you're in business, you should probably have your own contract.  Contracts are, first and foremost, tools for clearly communicating rights and duties.  The process of creating the contract is itself a useful exercise, because it requries you to anticipate all sorts of  "what if" scenarios.  It helps you create clarity and new understanding, and thus prevent a future misunderstanding that may be challenging to work through at best, and may bankrupt your business, at worst.


For these reasons, it behooves you to take a new interest in understanding contracts, now that you're a business owner.




The word "incorporate" means literally, "to form a corporation."  However, in recent times this word has come to be used to form not just corporations, but also Limited Liability Companies, Non-Profit entities, Limited Liability Partnerships, etc. 

In short, what we mean by "incorporating" is to form any of the business entities that the law recognizes as having the benefit of limited liability protection.  This excludes creating a sole proprietorship or general partnership. 

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