Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
UPSIZE STAGES: THE EARLY YEARS
05 :: Protecting intellectual property.
Start early to guard
trademarks, inventions
and other valuable IP
Intellectual property is a complicated field. There are subtle differences between trademarks, patents and copyrights, and there are attorneys that specialize in each individual area.
Trademarks, for example, protect names of companies or products, and are intended to prevent consumer confusion, while patents protect ideas. If you make a widget and put it into commerce, the only way to stop someone from taking the item apart, finding a new way to put it together and competing with you is to file a patent.
Copyrights protect works of authorship; you have a copyright the moment a work of authorship is put in tangible form, but until you file a copyright registration you?ll have no protection to enforce it in federal court.
While most often these subtleties affect companies that deal with intellectual property as their niche, there are instances in which start-up companies in any field need to be aware of the rules. For example, when you dream up your business and you want a logo for letterhead and business cards, if you don?t get a signed agreement taking control of the rights to those designs, the copyright stays with the artist. The same goes for the outside Web designer you hire to put up your site.
Regardless, the most important thing to remember when dealing with IP is to hire an IP attorney. These fields are specialized and you need someone with expertise in your specific area of need. Especially if the company will be filing patents to protect inventions, this should be a different person than your corporate attorney.
Once the early issues are resolved, if the company depends on intellectual property there are some basic steps that need to be taken. First, get assignment of invention agreements from employees. In most states, work done by the employee becomes property of the employer, but there can be ambiguities, so getting it in writing makes it clear.
Second, the protection of the idea or product itself most often will come down to filing patents. That generally falls in the purview of separate IP counsel ? again, not a general practice lawyer. You can really mess up a company if you don?t do things right upfront.
For example, with trademarks there are federal registrations and state registrations. If Business A starts a corner store with no plans to expand out of its location there is no need to buy a federal registration ? a state registration will provide the exclusive right to use the mark in that state. But if Business A plans to expand, it needs to first make sure the name isn?t taken federally, and then buy that registration in order to protect the name.
Similarly, if a company wants to file a patent, they should consult with a patent attorney. They need to conduct a patentability search to ensure their idea isn?t already protected by someone else. It?s an area of law that is changing fast. There used to be a one-year grace period for filing patents, but while legislation doesn?t say that?s going away, there is movement toward a first-to-file strategy that would be a major change.
While exploring starting your own business is perfectly reasonable, if you are an inventor it might behoove you to first attempt to explore the idea of patenting and then licensing your product to a company that already sells a complementary product. Instead of trying to find the capital, build the company, do the marketing, scale the product and taking on a number of other risks, many people have gone the licensing route and made tons of money with far less headache.
Partnerships with many big-box companies in the retail realm, for example, can result in painful terms and penalties when they deal with small companies that aren?t savvy. Fighting in court with mega-corporations for the money often takes a year or more.
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities. “We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.” The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations. “We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
