The Magnificant Ten:what IP pitfalls to avoid

Today is the beginning of a ten part series on issues of which entrepreneurs should be aware with respect to intellectual property (IP). The first five topics address common pitfalls of entrepreneurial businesses which I have observed hundreds of times in my practice. The second five topics address cost effective strategies by which small business owners maximize security of their intellectual property. I will address one topic each week, so stay tuned if these topics catch your fancy.

The initial common boondoggle is: entrepreneurs do not implement a line item in their annual budget for preventive intellectual property maintenance. IP preventive is similar to that for your teeth when you visit the dentist annual for a checkup. That is, for relatively small fee to the dentist you prevent two unfortunate future events: loss of your teeth altogether or payment of large sums for crowns and bridges to preserve what is left of them. Similarly IP maintenance can be inexpensive and yet preserve your IP from dissipation or theft by competitors.

Here is a recent example from my practice. A potential client had been a partner in a business which recently dissolved. During the duration of that business the client had developed a formula which was very popular with the customers. The client now desired to copyright the formula (because the patent filing deadline had expired). However, under United States copyright law the business is the owner of the formula if the partner developed it in his scope of employment as well as ownership in the business. Consequently, he cannot file a copyright registration application without ‘buying out’ his former partner, and his form partner will not sell because of animosity.

In my office, the attorney fee for a partnership agreement, with an exit strategy which addresses intellectual property allocation, would be a flat $500.00. If the partners had retained an attorney to draft a partnership agreement with an exit strategy, then this client would be now able to register the copyright application. As an aside, the attorney could also have advised of the patent application filing deadline, because a patent would have been a much better protection.

Next week we will address how to take an inventory of your business’s IP, and which you can transact on your own for at least 70% of your assets. I will also provide a list of the best search locations in your own business infrastructure as well as your product and/or services lines.

Copyright 2010 Adrienne B. Naumann

Ms. Naumann does not endorse or sponsor the advertisements at


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