Troy, Mich.—August 6, 2020—The onset of the pandemic has created rapid change in business practices, as enterprising companies and individuals seek ways to bring innovations to the virtual business world. But in their zeal to bring new products and services to market, are the in-person best practices of the not-so-distant past being forgotten?
Dickinson Wright PLLC intellectual property attorney Andrea Arndt, who regularly works on new business deals, often with a variety of attorneys in other specialty areas, cautions business deal makers and inventors–and especially novices–to follow a comprehensive check list to protect the ownership of their new products and services prior to disclosing them to a third party.
“In-person meetings where new business deals are being forged are often organized by a detailed agenda, with a series of papers to sign, body language to be read, and a format that is more conducive to conversation, trust building and what-if scenarios centered around the use and ownership of the new product or service,” said Arndt. “These are missing in online or virtual settings, so it is a situation that can be fraught with potential business and financial losses, especially for the newer entrepreneur or start-up company.”
Arndt cites the risks of business deals that are formed solely online through Zoom or other virtual service vendors:
- The ability to record and share the online conference, risking the loss of proprietary ideas and confidential information
- The inability to fully know who is on the other end of the online conference, out of sight, perhaps, but viewing and/or listening in on the meeting through a colleague’s access
- The difficulty of monitoring the number of parties who are receiving information without having signed a non-disclosure agreement
In industries that are exploding as a direct result of COVID-19, there are numerous ways that propriety innovations can be pirated away. Arndt turns to telehealth as the perfect example.
“Telehealth has been around for years, yet the pandemic has made online access to physicians and healthcare providers an urgent initiative,” Arndt said. “Companies who are facilitating these services, whether they be providing software, electronic medical records, virtual treatment, or another new offering in this space, may find themselves playing catch-up on their IP protection as they race to meet current needs. When a product or service that was not expected to mature for five to ten years is now seeing record demand, new business risks from competitors can arise quickly.”
Start or diversify a business – securely – with these 5 best practices
This is an excellent time to introduce a product or service through the virtual business world, as prospective buyers and business partners may be willing to enter into deals more quickly than usual to capture a new or growing market segment. Arndt offers five best practices before entering new business discussions and sealing new deals, whether virtually or in person:
- Protect your patent rights for your new product or service prior to disclosing your invention to a third party. An intellectual property attorney will be able to assess the patent rights of your product or service and may recommend filing a patent application prior to the disclosure. Consider not only protecting your invention, so that competitors do not pirate your product or service, but also make sure you are not infringing any other party’s patent rights. Skip this step and you risk losing your patent rights in the U.S. and/or foreign countries.
- Secure your brand name. Make sure the name you choose for your product or service is available for use. Use an intellectual property attorney to conduct a trademark search to confirm that the name under consideration is not the same or too close to another party’s registered trademark to avoid infringement concerns; and also to provide an opinion as to the likelihood of success in obtaining a registered trademark to prevent other parties from benefiting from the goodwill of your brand. If you skip this step, you may end up investing time and money into a brand name that will need to be changed in the future.
- Protect your Trade Secrets. Before disclosing innovative details of your product or service, have a confidentiality agreement in effect. Confidentiality agreements can be unilateral or mutual. Often times, a boilerplate and/or one-sided agreement is offered; however, the terms do not reflect the best interests of the other party. It is very important to read and understand the terms of the agreement and to what extent, if any, your confidential information is being protected.
- Protect your marketing materials and website. A copyright protects your original works of authorship including designs, books, source code, and graphics, and provides the exclusive right for the copyright owner to make, use, distribute, and publicly perform the copyrighted work. Obtaining a registered copyright is generally a fairly quick and inexpensive process, and an intellectual property attorney can assist with registering your work with the U.S. Copyright Office. Failing to do so can make it more difficult to prevent people from copying your works.
- Determine a proper business structure. If you currently have a business, it may be in your best interest to restructure it and/or create a new entity for your product or service. If you do not have a business, it may be worthwhile to form one for reasons of personal liability, tax liability, and fundraising ability. A corporate/tax attorney will be able to advise you of the business structure options and the tax implications for each. Failing to consider different business structure options could negatively affect the financial stability of the business and/or individual with the new product or service.
About Dickinson Wright PLLC
Dickinson Wright PLLC is a general practice business law firm with more than 475 attorneys among more than 40 practice areas and 16 industry groups. Headquartered in Detroit and founded in 1878, the firm has 18 offices, including six in Michigan (Detroit, Troy, Ann Arbor, Lansing, Grand Rapids, and Saginaw) and 11 other domestic offices in Austin and El Paso, Texas; Columbus, Ohio; Ft. Lauderdale, Fla.; Lexington, Ky.; Nashville, Tenn.; Las Vegas and Reno, Nev.; Phoenix, Ariz.; Silicon Valley, Calif.; and Washington, D.C. The firm’s Canadian office is located in Toronto.
Dickinson Wright offers our clients a distinctive combination of superb client service, exceptional quality, value for fees, industry expertise, and business acumen. As one of the few law firms with ISO/IEC 27001:2013 certification and one of the only firms with ISO/IEC 27701:2019 certification, Dickinson Wright has built state-of-the-art, independently-verified risk management procedures, security controls and privacy processes for our commercial transactions. Dickinson Wright lawyers are known for delivering commercially oriented advice on sophisticated transactions and have a remarkable record of wins in high-stakes litigation. Dickinson Wright lawyers are regularly cited for their expertise and experience by Chambers, Best Lawyers, Super Lawyers, and other leading independent law firm evaluating organizations.