A common telephone call I receive from potential clients relates to intellectual property protection for an Internet-based startup company. Typically, the caller states that he or she has come up with a great idea and name for a company, and has commenced development of a website by hiring third parties such as web designers and graphic artists. The caller then asks what he or she needs to do to protect themselves, their idea, the name of the company and their website. This is what I generally tell them: Incorporate. Since this article deals with intellectual property issues, I will not delve into the pros and cons of forming a corporation over an LLC. That decision should generally be left to corporate counsel and the clients accountant. With that said, either entity provides a corporate shield which can protect the clients personal assets. Part of incorporating includes choosing a name for the company. In many instances, the name of the corporation will also serve as the name of the online business. This raises trademark and service mark issues, which are discussed next. Conduct a trademark search, fi le a trademark application, and register domain names. A trademark is a word, phrase, logo, symbol or design, or a combination thereof, that identifies and distinguishes the source of goods of one party from goods of another. A service mark identifies and distinguishes the source of services. Before incorporating, it is important to determine whether the name the client has chosen for his or her business has been previously used for the same goods or services. Trademark and service mark rights are derived from use. As such, an individual who has commenced using a mark first is generally the owner of the mark. This is true even if that person does not have a trademark or service mark registration. And, even without a registration, that person may enforce their common law rights through federal and state unfair competition laws. Even if the clie nt performs a Google search or a search on the United States Patent and Trademark Office website () to determine if there has been prior use of a mark, the prior use may not be discovered. In numerous instances, clients have come to visit me after they have started operating their business under a certain mark, and have subsequently received a cease and desist letter from a prior trademark user/owner. In many cases, the clients are forced to change their name, and invest substantial money to re-brand. This can be avoided in many instances if a proper trademark search is completed through companies such as Thompson Compumark. We also recommend the drafting of an opinion letter. If the search report is clear, the client may then use that name for incorporating their company. We also recommend that a client file a federal trademark application, as well as register domain name extensions for the mark since a domain name can also function as a trademark. Important extensions are. com,.net, and.biz.File a patent application. A patent grants one the right to exclude others from making, using, offering for sale, or selling an invention. In order for an invention to be patentable, the invention must be new, useful, and non-obvious. We recommend that a client meet with our patent prosecutors to determine whether or not their idea or invention is patentable, or if it infringes on another partys patent rights. Even if the clients idea is not patentable, the client can potentially protect the idea as a trade secret via Nevadas Uniform Trade Secrets Act and through non-disclosure and confidentiality agreements. Additionally, the client may be able to protect their websites source code and content through via copyright law.File a copyright application. Copyright law protects original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture. As opposed to patent law , copyright law protects the expression of ideas rather than the ideas themselves. Compared to filing a patent application, the cost of fi ling a copyright application is much less expensive and easier to accomplish. Again, a client can copyright their website and source code via a copyright application, in addition to other original works of authorship. While a copyright registration is not a prerequisite to obtaining copyright rights in a work, it is a jurisdictional prerequisite to fi ling a copyright infringement action in the Ninth Circuit, where Nevada is located. Also, if copyright infringement occurs prior to registering a copyright, a client will most likely not be able to recover attorneys fees or statutory damages. As such, we strongly recommend that a copyright application be filed as early as possible. Have independent contractors and third parties sign agreements. As discussed previously, potential Internet startup clients hire third parties to assist with the creation of their websites. Most of the time, these individuals are not employees, but instead independent contractors. As it pertains to copyright law, absent an agreement to the contrary, the person who actually creates the work is the owner of the work. As such, even if the client pays the independent contractor to perform work, the client might not be the owner of the work itself the independent contractor will be. As such, independent contractor agreements including work for hire and assignment clauses should be prepared and executed to protect the clients ownership rights in the given work. Additionally, clients like to pitch their idea to third parties. In order to protect their trade secret rights, and other intellectual property rights, the client should have such third parties execute a non-disclosure agreement prior to disclosure. The foregoing represents some of the common issues raised by potential Internet startup clients, and is in no way meant as an exhausti ve discussion of these issues or as legal advice.For More, please visit
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