The Need for Protecting Intellectual Property
For organizations both large and small, Vic’s experience articulates the fact that one of the most important possessions a company has is their reliance on their IP, “People say when you ask them what are your most valuable assets they tell you it’s their ideas, and in this world of growing business it is their most valuable asset.” This being the case, a company founder must pay close attention to their business environment to determine just how volatile their IP position is, and what opportunities there are for others to breach one’s security, particularly in an small business venture, “The small business world works in an amazingly volatile and prolific arena.” This is particularly true with employees in a small start-up fueling their own desires to start a venture from the knowledge they have gained from their employer, “Small companies face the problem of having employees leaving and competing with new companies with allegedly taken ideas. This happens all the time because of the ‘He can do it, I can do it’ mentality.” What this presents to the entrepreneur is the aspect of do they know if an employee has the right to leave with an idea or not, and what has the entrepreneur done to ensure the idea can be proven that it is theirs and protected?
There are many other types of IP protection issues such as the one mentioned above, and what they all foster is the need for considering how much time and effort has been placed on properly protecting ones bread and butter, “When you ask people in business what resources have they put towards protecting themselves on these fronts, often they are spending more on the little man in the lobby for guard service rather than the correct protection!” Even if a company realizes the need they have for legal work to protect their IP, it can go ignored because of other reasons and priorities, “People know what they should have done and just don’t pay attention to it.” What does this mean towards the overall integrity of the organization with its protection for its IP, “To me this behavior does not seem completely rational in terms of what a rational economic business decision should be in protecting their assets.”
So why does a company not take the proper steps to establish correct legal protection of its assets and IP? The reasons can depend on the size of a company and point on the life cycle that it is at, but often boils down to the immediate benefits that can be realized from this investment versus other investments, “Small start-ups are going hand to mouth so any extra expense they can reduce, they do it – it’s typical in small business. Large companies like Digital have their own staff doing what needs to be done. But even now I have clients that are of large size that are lax in this area. You see their problems now, look at what should have been done beforehand, and they have not done it all. This is an obvious area for money to be shunted away from because it does not generate immediate and positive value in someone’s head.” Evidently the priorities that are placed on the protections and insurance of a company and its assets do not always take into consideration the pitfalls of breached IP when considering what priorities are to be invested in first, “There are companies that would never cancel their key-man insurance policies, but will let their IP stuff slip. It’s not at the forefront of what people think about.”
Your IP has been Contested – What can happen?
Once an IP breach has occurred, the ramifications on the organization that has lost its idea or trademark can be extensive and even company threatening. These affects span many facets of the business in both the value of its product or service, the value of its identity and uniqueness in the marketplace, and the integrity of the strategy and business concept that the company was founded on and intended to grow with, “Once it’s done, it’s done. You either have trademarks and trade secrets or you don’t. If you’ve put money into a trademark, and lose it, there is a physical cost of re-doing all your promotional brochures, and it only starts there.”
Quite frightening but true that the ideas, images and identities that a small business has struggled to establish and promote can be contested and lost due to improper handling of these assets or improper protections. And when the court rules on such decisions, the ruling is firm and binding, “The law business is funny because it’s a lot of paper pushing and sometimes you forget to realize that at the end of the day these courts enter legal rulings! In a trademark and copyright dispute the court says ‘stop the use of that trademark’ or ‘you have one month to use up the rest of your brochures’ and you have to do it. No one waits for the damage ruling.” It’s an amazing concept to grasp that when a company is founded and embeds its identity and image into its products and services, the loss of these elements can serve to undermine and destabilize the entire organization and what all its businesses are, “Imagine being a small company that has worked for several years building a product, making sales, and getting recognition for your name. Having to then stop using your name that is attached to that recognition can cause major upheavals in your operations. The economic impact is underestimated in my opinion. Just think that you have to redo everything.”
Other areas of damage to a company in a situation such as this are not as tangible as brochure and packaging recalls. Aspects of the company’s identity and how they are perceived in the marketplace are affected as well, “You also have the good will. Despite a small company not having that much good will, telling a company you can no longer use your name can cause a lot of physical cost and potential identity problems. Clients have suggested that credibility gets damaged. Being forced to stop using a mark casts a cloud over what the problem is. When it comes to trademarks I don’t believe a change is as easy to make as people think.”
The Preliminary Injunction – “It really is that’s that”
According to Vic one of the b eneficial things about the preliminary injunction, which is a court proceeding utilized in disputes about IP, is that these cases are tried quickly and generally not drawn out for years and years, and the decisions can be severe and swift, “The orders can be really major efforts such as pulling back all the software and manuals you have sold, and redoing the program and collateral material. They are taken very seriously.” Here is Vic’s overview of the preliminary injunction regarding IP matters, “Generally you’re before a judge and you can go in without discovery, with just your own affidavits, and make the other side demand discovery. The amount of discovery in this litigation is far smaller than a full trial. This context is helpful to small companies that couldn’t last long in a large case when it can go on forever and people demand all kinds of pleadings. For example, with damages the idea is to prove what damages were incurred. A preliminary injunction is a strategic strike. You get something in a relatively short period of time, and the courts will hear the cases relatively expeditiously and then make a decision. For IP cases the preliminary injunction won’t wait six months because courts realize it’s important to business.”
A question that often arises in legal matters is what is the level of commitment and resources that go into such a proceeding for an organization? Again, that can come down to the size of the company, the complexity of the issue, and the resources available to the company, “Big companies have deep pockets and the little entrepreneur typically doesn’t. A big company often has a real edge within practical realities in this kind of fight. However, the world has historically sided with the little guy which poses a potential problem for the organization that is representing the large company. In the end, the advantage typically goes to the side with deeper pockets.” As stated before with the preliminary injunction, the expediency that these proceedings are conducted in function to benefit the small business with less resources, and generate a decision as timely as possible, “There is a time issue that largely dictates the level of effort in a case. A couple of months lets you concentrate on key issues and get depositions, and so forth. Three year long cases means more money spent and more work to be done. Not to say it will be cheap for a small company, but time allotted will help gauge the scope of the case.”
Once a court has made a decision, the opportunity to appeal the decision to change the verdict appears to be less likely in these preliminary injunctions according to Vic, “The company that has lost the injunction and must cease will always appeal to seek what is called a stay. The stay would halt the injunction while it goes up to the first circuit which will hear the appeals in a reasonably fast time frame. However, the fiber of the preliminary injunction ruling is that the company that won did so because of the potential of being irreparably harmed if the competition continues. So, going to an appeal that has that weight in the case of the group that is appealing, they rarely get the stay.”