A place for intellectual property

Zooming out a bit, patents are just one element of something larger and more important, and that is intellectual property. Intellectual property generally consists of trademarks, copyright, trade secrets, and patents.?

As mentioned earlier, rural communities put too much emphasis on patents. I spoke about this with Wilson Fay, intellectual property expert and Venture Associate with WiSys, and patents headline a myriad of misunderstandings about intellectual property.?

Too often a patent is pursued by a team with no entrepreneurial firepower that treats the patent as though it were a child going off to college, where the child will study up and figure out a career path. Even when the patent has no business application, the team sort of treats this like a minor hiccup that will work itself out. But unlike a kid going to college, who will eventually turn their degree into a job, the patent isn’t just going to naturally turn into a company. This creates a problem. If there is no business application for the patent, what is it for? The only reason something is worth stealing, thus worth protecting, is that it has monetary value.?

Sometimes the problem is personnel-based. It is very common that a professor or scientist will pursue a patent, but with no idea whether there is any market value. I worked with a? rural innovator once who was pursuing a patent for his research. When asked what the product was, he listed off 5 or 6 options that ranged from women’s beauty products to a motor oil supplement. As the old saying goes, this was a solution looking for a problem.?

Herein lies a gap. In most cases, a patent needs an entrepreneur. But finding an accomplished entrepreneur to build an entire company around a patent is an incredibly difficult undertaking.

Probably the simplest way to understand the value, according to Wilson Fay, is that patents must be protecting something people want. So whatever the patent is protecting, it must be protecting something that is essential for a product that solves a problem people are willing to spend money on. In other words, there is a long ways to go before that patent is actually valuable. And even when a clear product is devised, the patent must be backed by a team that can take it to market.?

There are other important aspects of intellectual property, and all of them are a much smaller hurdle. These include trademarks, copyrights, and trade secrets. Let’s talk first about trademarks: a peeve of mine is that people think brand simply means logo. When I talk to entrepreneurs about the word “brand” they often don’t think beyond what colors and images their logo should contain.?

I could write an entire book about brand, but in short, I think of a company’s brand as what customers feel about their products, and how those products makes them feel about themselves. When people see the Canva logo, Canva wants them to think of themselves as creators, wants them to remember how that birthday party or bake sale had that little extra dollop of special because of the design they used in Canva. Robinhood wants customers to see their logo and associate it with financial success.?

When I think of why logos matter, I think of Treebeard from Lord of the Rings (the books, not the movies). After Treebeard meets the Hobbits Merry and Pippin, he gathers up all the Ents to decide what they should do about the threat of Saruman. The Hobbits wait patiently for hours as the Ents talk in their deep, murmuring language. Finally the Hobbits ask Treebeard if they’ve made a decision. No, he replies. They have just finished saying “hello.”?

Hello is like a logo, because if a company were to attempt to convey the entirety of their brand to customers, it would be like listening to an Ent say “Hello.” The logo is simply the image that people associate with that brand.?

Trademarks protect logos. Trademarks weren’t actually designed for businesses, they were designed as consumer protection, so that customers wouldn’t be deceived by a knockoff (my favorite knockoff is McDowells, the farcical McDonalds ripoff from the movie Coming to America).?

Once a startup you are working with does have a company and a logo, you should certainly encourage them to get it trademarked. Unlike patents, trademarks are fairly simple and won’t be a drain on an entrepreneur’s time or finances.?

Early on, that trademark won’t matter much. For an early stage company with little recognition, protecting the company’s logo might not seem like a priority. But it’s a great thing to do early on, rather than putting it off until it becomes a problem.?

What about copyrights? I think of copyrights as patents for artists, but much easier and cheaper to pursue.?

And finally, there are trade secrets. Many startups don’t have trade secrets, or will only develop them over time. Seldom have I ever met someone at the idea stage for a company who already has an impressive trade secret.?

What are trade secrets? Examples might include formulas, designs, software, industry expertise, an expansive list of customers, knowledge, and highly coveted information.?

Trade secrets cannot be protected in the same manner that trademarks and patents can protect something. Probably the most common way of protecting a trade secret is through NDAs and non-compete clauses. Less technically, they can be protected by…well, keeping them secret. By only sharing them on a need-to-know basis. Every startup idea can be pitched without giving away trade secrets.?

As with patents, there is an ocean of misunderstanding around trade secrets. I have worked with thousands of entrepreneurs and I cannot tell you how many times I have had to confront some kid who refused to share any details about his or her startup, or insisted on never sharing anything without everyone signing an NDA.

While running a startup workshop in San Antonio, I had to deal with a guy who absolutely refused to share his idea until everyone signed an NDA. This was simply not practical, and worse, it was pissing everyone off. After a lot of intervention and hassling, I finally convinced him to share his idea with me.?

“Alright,” he said, “it’s a platform where people can talk smack about each other’s college teams.”

“Isn’t that just… Facebook?” I asked him.

He went to great lengths to explain to me why a separate platform was needed for his idea. You might notice that in the above list of all trade secrets, “super cool idea” is not listed. When the guy eventually shared his idea, he ended up indeed having a problem. But the problem wasn’t that someone wanted to steal his sports smack talk platform idea. It was that nobody cared.?

As a matter of fact, having heard thousands of ideas, I cannot recall a single time someone eventually shared an idea that was indeed worthy of protecting like a trade secret.

If a company in your community has a formula, code, design, or some highly coveted knowledge, by all means, they should protect it. But a cool startup idea does not count.? ?