What Investors Look for in an Intellectual Property Protection Portfolio?

Investors loan money to businesses because of their belief that the value of the business will grow.  This belief is often based on the value and quality of a portfolio of intellectual property protection assets.  Specifically, the contents of a portfolio of intellectual property protection assets is used by many investors as an indicator of how well a business will be able to maintain exclusivity in the market place.  Accordingly, when a business is analyzing its growth potential to attract investors, a hard look must be taken at the strength of the protection obtained for the most important items of the business’ intellectual property.

The first step for a business is to identify its intellectual property.  Most important is to identify the technology that is used to match a business’ key products and services to the needs of its consumers.

Second, determine what factors provide the business an advantage over its competitors.  Such advantage may come from a variety of different factors, to include technological leadership, a strong brand, efficient manufacturing techniques, extraordinary customer service, or a well-refined supply and distribution network.

Once the key technological or marketplace advantages have been identified, the third step is to determine how the technological or marketplace advantages have been protected.  Herein, a good investor will ask how the business has used the idea protection tools provided by both U.S. and foreign intellectual property laws to seek patent protection, apply for trademark or copyright registration, or guard its trade secrets.  Unfortunately, many of those who seek to evaluate the value of a portfolio of intellectual property protection assets fail to take advantage of the protections provided by patents, patent applications, trademark registrations, trademark registration applications, copyright registrations, copyright registration applications, or maintaining the trade secret business.  This is a big mistake.

Some may remember that Indiana Jones and others have admonished an adversary to never bring a knife to a gunfight – a good lesson when putting together an intellectual property protection portfolio.  Intellectual property protection assets aid in the execution of a plan to grow and increase the values of a business.  But if the protection provided for the individual assets in an intellectual property protection portfolio does not support the goals and strategies set forth in a business plan, the individual intellectual property assets are like a knife at a gunfight.

For example, if the plan of a business it to capture a larger share of the market with a new technology, then at least one patent should be in place protecting that new technology from counterfeiters or those who would seek to design around the new technology.

If a strong brand identity is the key to growing the sales of a product or service, the protection obtained for that brand must be broad enough to protect the brand from look-alike brands on the same or similar products and services in existing and predicted markets.

If there is no correlation between the business’ vision of where it wants to be in five years, the strategy to get there, and the strategy for protecting key assets in a business’s intellectual property protection portfolio, a major weakness exists.  This business weakness will drive away most investors.

The creation and molding of an effective portfolio of intellectual property protection assets is a dynamic process.  Applications for intellectual property protection should be refined and focused while they are still pending.  This important step is often forgotten.

If an infringer is discovered while applications for intellectual property protection are pending, the pending applications should be revised to focus on the activities of the infringer.  Such focus can lead to a quick resolution of an intellectual property infringement dispute without having to resort to litigation.

If what was thought to be a second-tier product or service gains an increased level of importance in the market place, then the attention paid to the applications for intellectual property rights describing such second-tier products or services should be increased accordingly.  Similarly, if a top-tier product or service becomes less important, the priorities regarding the portfolio of applications for intellectual property protection of the top-tier product or service should be adjusted to reflect this change.

When a business budgets to protect its intellectual property capital by acquiring intellectual property rights, the business must be prepared to answer the very basic question – what will be done with the intellectual property rights that are obtained?  The answer provided to this question can go a long way in convincing an investor that the intellectual property protection plan adopted by a business will support business growth and add to business value.  Specifically, there should be a well-thought-out and easily understood business reason behind each asset in a portfolio of intellectual property protection assets.

When to Apply for a Copyright Registration

The vast majority of copyright owners do not apply for or obtain a copyright registration.  Those who do seek to apply for and obtain a copyright registration are generally those who publish large numbers of a particular work.  The publication of many copies of a creative work indicates that the creative work includes content under demand by many users.  For example, the demand for the creative work may be satisfied by book publishers, music publishers and movie production companies.  Thus book publishers, music publishers and movie production companies typically seek a copyright registration for creative works made available to the public.

There are two important reasons that motivate publishers to seek a copyright registration for a creative work.  The first reason is that a copyright registration is a prerequisite to a copyright infringement lawsuit.  The second reason is that when a creative work which is the subject if a copyright registration application is filed within three months of publication of the creative work of before the copyright infringement begins, the eligibility to receive a damage award defined by the copyright laws is retained.  This type of damage award for copyright infringement is called “statutory damages”.  While the size of the statutory damages is not a large amount of money, the total award can become sizeable if a large amount of infringing copies of the creative work are made.

Does the foregoing mean that those who do not seek a copyright registration have lost rights to their creative work?  The answer is no.  The author, artist, or musician who makes a creative work obtains copyright rights to the creative work when the creative work is affixed to a tangible medium.  For writers this means putting a creative work on paper or in a computer readable memory.  For artists, this means putting the creative work in a medium where it can be observed by others.  For musicians, this means recording a musical composition in a form where it can be heard by others.

The copyright rights which come into being when a copyright is created are the following:

•     The right to make copies
•     The right to distribute copies
•     The right to create derivative works or adaption
•     The right to perform
•     The right to display

If someone other than the creator of the creative works seeks to usurp one of the foregoing rights belonging to the creator of the creative work, this act is called copyright infringement.  If the infringement of the copyright persists then the owner of the copyright may file an action in U.S. Federal District Court.  The prerequisite for filing an action for copyright infringement is a copyright registration.

Making a creative work with the © symbol along with the date of the publication and the name of the owner of the creative work is a good idea.  There is no requirement that a copyright be registered before the © symbol or the notation “all rights reserved” can be used in a creative work.

Some believe that if a creative work does not carry the © symbol or the notation “all rights reserved”, it is free for the taking.  This is not true.  Before using the creative work of another, it is always a good decision to request permission – even if the portion used is but a small fraction of the complete work of another.