Business Law: Surefire Ways to Lose Your
Intellectual Property

By Nina L. Kaufman, Esq

Collaborating with another company on a project can give your business a powerful boost in visibility, creativity (sometimes, two heads really are better than one), and potential clients. But in their excitement, many small business owners overlook the fact that, in the process, they are creating something new. And just as human children need our protection, our "brain child" - or intellectual property - also needs our protection. Unfortunately, entrepreneurs often don't realize (before it's too late) that (1) they had protectable intellectual property and (2) what they could have done to protect it.

For example, "Vivienne," is a former school psychologist who has spent many years working with disadvantaged children. She has often given talks in schools to help children learn better life skills. One day, Vivienne was having coffee with her fiend Fiona, the owner of First Financial, Inc., which provides books on financial education and financial management for adults. Vivienne was complaining to Fiona that more and more, she felt she was having difficulty conveying the information to the kids in a way that "resonated" with them. "I know that standing up and lecturing to them doesn't do it," Vivienne said, "But they have attention spans like fruit flies: one second they're here, and the next, they've flitted off to something else. I'm not sure know how best to get the message across." "Have you thought about including 'how to get the "bling" and other things you want out of life' in your workshops?" Fiona asked. "Maybe adding a "Show me the money!" component would keep their interest," she added. Given her background in showing adults how to overcome resistance to learning about money, Fiona was eager to help Vivienne do the same for children. And Vivienne, who had experience dealing with children, was very happy to have Fiona's assistance and knowledge when it came to the money issues. Over the next couple of months, Vivienne and Fiona met regularly to develop this idea. Ultimately, they sketched out the plan for an interactive workshop and board game, called "Hard Knocks," which they considered having manufactured.

The collaboration hit a bit of a snag when Vivienne mentioned that she wanted to use Hard Knocks for her own project with at-risk adults. Vivienne had been approached by "Welcome Home," a mission that helps adults who are homeless and suffering from addiction, to use her "Hard Knocks" approach with their clients. At that point, Fiona realized that "Hard Knocks" - if used with a general adult population - might steal First Financial's thunder . . . and profits. At that point, Fiona started to pull back from the project, which left Vivienne wondering if Fiona still wanted to be a part of it.

So how can they untangle this web to move forward smoothly?

1. Maintain open communication. In the ideal, self-preservationist world, Fiona would have thought through the ramifications of collaborating before she started freely sharing her wonderful ideas. But life is rarely ideal.
   
   The solution: As Fiona's first step, she should sit down with Vivienne and explain her concerns. Working out a fair, written agreement concerning your intellectual property is always better belatedly, than never.

2. What's at stake. Even if Fiona and Vivienne never have a written agreement, copyright laws provide them with some measure of protection. A copyright protects an original artistic or literary work (such as a workbook for the workshop). Because they created Hard Knocks jointly, they are known as "joint authors." This means that each has the 100% right to use Hard Knocks as if they were the sole author . . . so Vivienne could use it with the Welcome Home group without needing Fiona's permission. But Vivienne would have to account to Fiona for any money that she made. Still, this can get awkward - and prickly -- if Fiona demands to see Vivienne's books and Vivienne refuses. At that point, Fiona might be confronting expensive litigation.
   
   The solution: Rather than go down that road, they should set clear parameters on how and where each of them can use the Hard Knocks program. They should also decide whether either of them can make any changes to the program without the other's consent.

3. Think about what the future may hold. "Hard Knocks" could spawn its own industry and become known through its own trademark (a "mark in trade" - by definition, a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others). In addition to the board game and workshops there may be spin-off books, teleclasses, coffee mugs, workbooks or notebooks, and a host of other products and related services for which Vivienne (or Fiona) could obtain a trademark (on the products) or service mark (on the services). This would generate a number of trademark issues, the first and foremost of which is "who owns it?" The solution: Fiona and Vivienne can stave off a potentially ugly legal battle by agreeing on the trademark ownership and context of use.

4. Protection against other interlopers. Assuming Fiona and Vivienne move forward with the project - for example, by having the board game commercially manufactured - they need to be sure that no one misuses the Hard Knocks trademarks and design.
   
   The solution: They can do this in several ways. First, they could formally apply for copyright protection for the game (there's a lot of great information and forms available on the U.S. Copyright Office website, http://www.copyright.gov). Second, they will want to ensure that any designer they hire (for the game and any other Hard Knocks graphics or website) will create the designs as a "work for hire." Why? Because rights in a design belong to the creator (designer), unless there is a written agreement that they have been created for the benefit of another (called "work for hire" in copyright terminology). Finally, in dealing with the manufacturer of the game, Fiona and Vivienne will want to confirm all of the pricing, quantity, and quality terms, plus ensure that the manufacturer will keep their game confidential. This is important because, while they cannot protect the general idea (of a board game that teaches life skills), they are entitled to protect their particular expression of the idea. So, confidentiality provisions are key.

Luckily, Fiona and Vivienne were good enough friends that they could take a step back and address all these issues in an amicable way that satisfied them both. But other entrepreneurs may not be so fortunate. Know that whenever you're in a collaboration situation, there may be intellectual property issues lurking around. Make sure you're protected by consulting with an attorney. Otherwise, you leave your "brain child" vulnerable to kidnapping by someone else.

© 2004-2009 The Legal Edge LLC. Nina L. Kaufman, Esq. is an award-winning business attorney, author, and speaker. Under her Ask The Business Lawyer umbrella, Nina offers easy-to-understand business law resources that protect small businesses and save them money. To learn more, and receive our FREE "LexAppeal" ezine, visit http://www.GreatBusinessLawTips.com  or contact Contact Us. This article is for your general information only. Be sure to consult with an attorney regarding your particular situation to make sure you get the specific advice you need.

Nina Kaufman, Esq. Award Winning Business Lawyer, Author & Speaker