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Protecting Proprietary Information

Some of the most valuable property owned by your consulting business includes knowledge about the unique services you provide and the name you give your company. While most of us purchase insurance to cover our physical property and assets, many consultants neglect to adequately protect proprietary information (that which you have exclusively developed) and intellectual property. It is this type of property that is often irreplaceable in monetary terms.

Protecting your information

It can be a challenge to protect your proprietary information. Usually, when we want to protect something, we keep it confidential. But, to market our services we have to disclose information. This is a bit of a conundrum: protecting our proprietary information while at the same time getting it out in front of our target markets.

There are different kinds of intellectual property and each one is protected by a different set of rules. Federal law governs copyrights. Trademarks and service marks are protected under federal law, state trademark statutes and common law. Trade secrets are protected by contractual agreements, state statute and common law.

Protecting your name

You probably spent a lot of time deciding on a name for your consulting firm … I know I did! Have you taken any steps to assure that no one else is using the same name? Have you taken any steps to keep others from using your name in the future?

Your trade name is the name under which you do business. Your trade name and the name of your company are usually the same, although they don’t have to be. If you incorporated your consulting business, your Secretary of State’s office checked to make sure that there were no other businesses using the same name. But that doesn’t mean that no one else can adopt your trade name. If you want to protect your trade name, you must register it with your Secretary of State and/or local county registrar, pay a fee, and publish notice. Trade names are creatures of state and common law and there is no official federal designation or method for protecting them.

What can be protected under federal law are trademarks and service marks. These include names of products and services and anything that is capable of being distinguished in the marketplace, such as a logo or slogan. Federal registration is the best way to ensure that no one else can use the same or similar marks to sell similar products or services. Most likely, your trade name can be registered as a trademark or a service mark under federal law.

If you are a small business with a local client base, you probably do not need to register a trademark or service mark. If you cross state lines, you should look into registering federally.

It is important to note that ownership of a trademark or service mark grows out of usage, not registration. You can only register a mark that is actually in use, although there may now be a system for reserving marks for up to three years. If you stop using the mark for two years, you will be deemed to have abandoned it and you may not be able to prevent others from adopting it. All of your advertising and other written materials should be carefully reviewed to make sure you are using the mark correctly and have identified it as a mark by use of the proper symbol (usually TM or SM).

Further, not all names qualify as trademarks. The following cannot be protected under trademark law: generic or merely descriptive names, geographic designations, names of living persons (unless they consent), any insignia of the United States, etc.

Also, each country has their own system of registration, recognition and protection so if you consult internationally, you will want to register your marks in each of the countries in which you do business.

Copyrights

My first experience with copyright was many years ago and related to photography. I found then that the way in which copyright protection is secured is frequently misunderstood.

Here’s the bottom line: registration does not create a copyright. Copyright arises automatically by operation of law. That is, copyright is secured automatically when the work is created, and a work is “created” when it is fixed in a copy for the first time. “Copies” are material objects from which a work can be read or visually perceived either directly or with the aid of a machine or device, such as books, manuscripts, sheet music, film, videotape or microfilm.

“Ah,” you say, “so why should I bother to register a copyright?” Because, my friends, you cannot sue for infringement of your copyright unless it has been registered. And, if you file your registration more than three months after your work is made public, you cannot collect damages for any infringement that occurred prior to the registration.

Anytime a work is created for use by or in your business, you should be sure that ownership of the copyright has been addressed in a written agreement. It is not unusual for a company to create a particular work on behalf of a client only to have the client think that it is paying for the copyright as well as the result of the effort. For example, if you create a website for a client, who will be the owner of the site? If you put together a client satisfaction survey, is the client free to use the survey again in five years without your permission and without paying you?

How often have you downloaded information from the Internet? Have you ever adapted something you found on the web and used it in your own materials? If so, have you infringed on someone else’s copyright? A widely held misperception is that anything without a copyright notice is free for the taking. While it is in your best interest to put the copyright notice on protectable works, it is not legally required. If you are not careful, and if you are not aware of the wide reach of copyright protection, you may find yourself infringing on the rights of others.

Trade Secrets

A simple definition of a trade secret is any information that you believe could hurt you competitively if it were to fall in the wrong hands. For consultants to nonprofits, this could include process descriptions, procedures for doing something, business plans, financial information, customer lists, computer programs, etc.

In short, if the information is crucial to your commercial success and not already in the public domain, it can be protected under trade secret law. Once the secret is out, it cannot be protected, so it is important to take active steps to keep the information confidential.

If you have employees, you might have them sign confidentiality or non-disclosure agreements. Key employees may also need to sign non-compete agreements that restrict them for a period of time after leaving your consulting firm.

Summary

Protecting and using valuable intellectual and proprietary property presents a challenge to your consulting practice. The best way to solve problems is to avoid their occurrence. By careful planning, and with the help of your legal advisor, you can navigate the terrain of intellectual property law and reap the benefits for YOUR business.

Resources:
U.S. Patent and Trademark Office http://www.uspto.gov/
U.S. Copyright Office http://www.loc.gov/copyright/
National Association of Secretaries of State http://www.nass.org/

Fare well, and farewell for this week …

 

Mari Lane Gewecke

About the Contributor: Mari Lane Gewecke

A former fund development director and executive director, volunteer board member and consultant, Mari Lane Gewecke has 30 years of experience working with nonprofit organizations. Prior to launching aconsulting business in 1991, Mari held management positions in the nonprofit sector, state government and private business. Her career covers human services, public health, education and the banking industry.

Current professional associations include the Nebraska Chapter of the Association of Fundraising Professionals (AFP), which Mari served as president in 2000, and the Nebraska Partnership for Philanthropic Planning. Previous activities include serving as a faculty member of the Certificate in Fundraising Management Program at the University of Nebraska-Omaha in 1998-2000 and the Advisory Board for CharityChannel from 1998-2003.

Mari’s volunteer service has included roles as a board member and officer for Lincoln Children’s Zoo, Capital Humane Society, Leadership Lincoln and Lincoln Symphony Orchestra.  Mari also served on the board of directors of Rotary Club #14 and the American Red Cross-Cornhusker Chapter.

Current volunteer service includes the Advisory Committee of the Nebraska Women’s Leadership Network, the board of directors of Spring Creek Prairie Audubon Center as well as serving as the Project and Grant Evaluation Committee of Rotary Club #14.

Mari received the John F. “Rick” Akin Award from the Capital Humane Society in 1996 for significant contributions to the welfare and protection of animals. In 2015, she was named Alumna of the Year by the Nebraska Women’s Leadership Network of the Nebraska Alumni Association.

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