Establishing Internal Corporate IP Policies and Patenting Strategies

For most companies, IP policy is initially handled on an ad-hoc basis. The company is not developing that many new products or brands, and the future development of the company is too uncertain to warrant the investment of time and money involved in establishing official policies related to intellectual property. So the founders handle IP issues individually as they arise.

But as a business grows, formal rules and procedures for handling the internal development of intellectual property become more and more important. At some point, management has to stop bringing in the IP attorneys only when there is a specific need, and start looking at high-level IP issues proactively.

IP policies should scale with the size of your business, starting out simple and increasing in breadth and detail as IP matters proliferate and responsibility becomes more diffuse. Here is a short list of six major components of internal corporate IP programs, with brief descriptions and recommendations for the timing of their implementation:

1) IP-related Provisions In Employment Agreements

It is critical that you ensure all employment agreements include language protecting your business’s intellectual property rights and limiting the potential for litigation. This is an issue you should handle before hiring your first employee.

Common IP-related clauses in employment agreements include the automatic assignment of employee patent rights to your company, mandatory disclosure of all existing patent rights and other intellectual property, and non-disclosure and non-compete agreements, particularly as they interface with your company’s trade secrets.

2) IP-related Provisions In Vendor Contracts and Other Agreements

IP always comes into play when relying on a third party to assist with any aspect of product development, marketing or branding, and the like. Every contract should be reviewed with an eye towards preserving IP rights and reducing the risk of litigation.

Copyrights must be explicitly addressed in any agreement with an independent contractor regarding creative works, and may warrant a separate work-for-hire agreement. The automatic assignment of any patent rights developed by a vendor during the course of your project is also critical. Non-disclosure provisions and other clauses to protect and handle trade secrets should also be included.

3) Employee Handbook/Policies

Any of your employees may encounter situations where they have to decide how to handle intellectual property. They need clear rules directing them to the proper actions to avoid exposing your company to litigation or a loss of intellectual property rights. Potential issues include the proper handling of third-party trademarks and copyrighted matter in marketing materials, use of open-source and third party code in company software, and guidelines regarding disclosure of potentially patentable subject matter.

4) Invention Disclosure Program & Inventor Incentives

Once your business is undertaking enough research and development activity, it becomes difficult for upper management to keep track of all the areas in which individual employees are conducting research, and even more difficult to keep track of the daily progress of such investigation. At that point, a formal invention disclosure program becomes a necessity.

You want decisions about whether to patent an idea or keep it a trade secret, and whether and when to allow publication, to be handled by upper-level personnel according to your company’s patenting strategy. And to ensure that decision-making personnel always know about the latest ideas and developments, a formal disclosure program coupled with inventor incentives for disclosure and successful patenting activity should be maintained.

5) Patenting Strategy

As your business grows, you will need a principled basis for determining whether to patent new developments or keep them as trade secrets, whether and where to file internationally, whether to file provisional patent applications, and the like. These decisions should be made at a high level and should be guided by the company’s business strategy, priorities, and competitors.

Developing a formal strategy to be implemented throughout your organization ensures that valuable intellectual property is not discarded and that resources are not wasted on filings that do not support the revenue-generating portions of the business.

6) Branding and Marketing Procedures

When your company has dedicated marketing personnel and develops new brands on a regular basis, trademark law principles should be integrated into the process for developing new brands. Your marketing department should be developing protecatable trademarks for your new logos and product names and should be clearing them of conflicts at an early stage to limit litigation risks and support branding campaigns. Marketing personnel should be educated on the proper and consistent usage of your trademarks to maintain strong trademark rights.

Effective internal IP policies encourage the development of new and valuable IP assets, ensure that your company is identifying potentially protectable IP it is creating already, assist with determining what IP to protect, and how, on a rational basis, and reduce litigation risks at all stages of development. Implementing these high-level intellectual property policies will pay substantial dividends over the life of your business.