Whenever a business owner collaborates with others in partnerships or joint ventures, they MUST consider the risk of sharing too much information. Certain documents can be critical to protecting your secrets or proprietary information. Bottom line, business owners need to be cognizant of the need to protect their ideas, property, customers, or other assets from misappropriation or from being challenged by competitors.
Depending on the nature of your business and relationship in the industry, some possible considerations may include the following:
Does your name, idea, design, or invention infringe upon the rights of an existing competitor?
For example, is there any conflict with an existing patent, trademark or copyright? If the success of your business depends in any way upon association with a particular name, idea, design, artistic creation or invention, it is important to determine whether anyone else already has established rights in this area, especially if you intend to market your business nationally or across the globe. The worst thing would be to begin a thriving business only to then receive a cease and desist letter from a law firm claiming that your business infringes upon the intellectual property rights of another business. With the availability of the internet along with third party research tools such as Thomson Reuters, researching your rights to intellectual property can be performed quickly and easily. Any questions regarding researching and/or your rights to intellectual property should be referred to an appropriate attorney practicing in that area.
Protect your own name, idea, design or invention as soon as possible from unfair competitors.
As suggested above, if your business is based on association with a particular name, idea, design, artistic creation or invention, consult with an intellectual property attorney as soon as possible to determine how to establish or protect your rights. Protecting your intellectual property rights is really a race to be the first. Similarly, there may be other information that enables you to be successful that you want to protect from getting into the hands of an actual or potential competitor. Examples of information that may qualify as a trade secret include customer lists, vendor or business contacts, business plans, know-how, or any other information that gives you a competitive edge because the information is not generally known. Businesses that rely on trade secrets must consider whether and to what extent policies and procedures should be implemented to ensure the confidentiality of the information (e.g. restricted access to trade secrets, password protection, security, etc.), as well as whether third parties (or even partners and employees) will need to executed confidentiality agreements to protect your competitive edge.
Monitor your intellectual property and enforce your rights at all times.
Any right is useless unless appropriate steps are taken to protect it when it is threatened. The fact that you may have established an intellectual property right as described above does not mean you can then sit back and rest on your laurels. You must also protect your property right from actual or potential third party infringers, and take appropriate steps to enforce your claim to exclusivity. Otherwise, the failure to enforce your property rights against third party infringers could be deemed to be a waiver, relinquishment or abandonment of that right. Establishing a property right itself is not sufficient if you don’t take adequate steps to protect that right. This can easily start with a ‘nasty letter’ from a lawyer, often referred to as a cease and desist letter.
Utilize a Non-Disclosure Agreement in all situations where you disclose private information about your business.
Certainly in the beginning stages of your business, you have to be absolutely careful about who may want to steal your idea OR share it with someone else. However, even if you have a well established business, there can be many situations where you share information that could be used against you in a business deal or project. Be careful to always use a comprehensive NDA (Non-Disclosure Agreement) to protect your rights if you have to force someone to be silent or compensate you for stealing your idea.
No business wants to become involved in unnecessary litigation, and some due diligence in the beginning and perhaps consulting the appropriate professionals will help ensure that your business will be adequately protected when it begins to take off.
Mark J. Kohler is a CPA, Attorney, Radio Show host and author of the new book “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP. For more information visit him at www.markjkohler.com.