Traci Ellis
Launch Therapy

Traci D. Ellis is a practicing small business law attorney, entrepreneur and speaker with a passion for working with entrepreneurs. Known for telling it like it is, she likes to “keep it real” with new business owners while sharing practical wisdom and refreshing insights on legal and business issues related to starting, running and growing small businesses.

Traci Ellis

Patent Protection 101 For The Small Biz

Ideas are a dime a dozen. New ones are generated every day, all day long. But, the person who takes the first step to protect that idea by filing a patent application is usually the one who gets to lay claim to the idea. Unlike a trademark or copyright, in patent law, the first to file, wins. So, if you sit on your idea, and someone comes along and thinks of the same idea (or simply steals yours), and that person files a patent application first, you've just lost out on your potentially lucrative business idea. You can avoid that by filing a patent application.
A patent is a right to exclusively make, use and sell an invention for a limited period of time. Exactly what is patented is set out in what are called "claims". The inventor makes claims about what is unique about the invention.
In order to secure a patent, the invention has to be industrially applicable, usable and new. Securing patent protection for your invention prevents others from making, using or selling the patented invention for twenty years from the date of filing the application. It generally takes, on average, two to three years to secure patent approval. Patent protection is one of the most expensive intellectual property protections to secure, mainly because of the extensive pre-work that must be done prior to filing the application.
First, patent law is a highly specialized area of the law, and attorneys who want to practice in this area must be additionally licensed as a member of the federal patent bar. So, when seeking an attorney for help with your patent application, you will need one of these specialized attorneys.
Second, an extensive review of existing patents (pending and approved) must be undertaken prior to beginning to write your patent application to make sure that none of your "Claims" infringe on the "Claims" of another patented invention. Even if the entire invention is different than any other invention, if there is one Claim in your invention that infringes on a Claim in another invention, the patent application can (and likely will) be denied.
So, the best way to avoid that is to file a "provisional patent application", which gets you a priority filing date, since if a patent is ultimately awarded, it is effective as of the date of filing your provisional application. It's also the cheapest, fastest way to file a patent application. Once filed, you not only secure your priority filing date, but you also then have 12 months to perfect your product, begin marketing it, tweaking it and making any upgrades or design changes that are needed before having to file a "non-provisional", full (and more expensive) patent application. Obviously, this is valuable time to assess whether your product is viable, and worth spending the money on full protection.
And the best part is that during this 12 month "provisional" period, you can market the product as "patent pending", which puts the world on notice of your priority claim. This also tells the world that anyone who dares to think about copying your idea risks being sued for patent infringement. It's a great way to get the protection you need while perfecting your product.
As long as you file your "non-provisional" patent application prior to the end of the 12 month provisional period, your priority filing date remains the date on which the provisional application was filed. However, if you fail to file within that 12 month period, then you will lose that earlier, priority filing date. So, if you ultimately decide that your idea is not viable, you can simply abandon the process by not filing the non-provisional application within the 12 month period, and save yourself a lot of money of the full application process.
So, there you have it - trademark, copyright, trade secret and patent protection in a nutshell. It's a safe bet that at some point in your business life-cycle, you are going to need to consider one or more of these protections.

Know Trade Secret Protection

Protecting your company's intellectual property is critical for small business owners. Now that we've talked about trademark and copyright protection, let's discuss trade secrets. Trade secrets are often overlooked by small business owners when considering intellectual property assets. Trade secrets consist of information that your company does not want divulged because of the competitive advantage the secrets give your company. Your pricing, client lists and processes are all examples of potential trade secrets. The formula for Coca Cola is arguably the world's most famous trade secret.

At the risk of being obvious, in order for something to qualify as a trade secret, it must be...well...a secret! So, publicly available information, or information which is generally known, cannot qualify as a trade secret. So if it has to be a secret, exactly how many people can know about it? Well, certainly you as the business owner, and as many of your employees as you believe need to know. Additionally, you can share your trade secrets with third parties, outside of your company, provided that these third parties have an obligation to keep the information secret.

That is a key point about trade secrets. Not only do they have to be secret, they also have to be treated as secret. How do you treat your trade secret as secret? There are various ways to demonstrate that trade secret information is being treated as a secret, none of which is required by any statute, but all of which, taken as a whole, show that you as the business owner, really believe this information should be treated as a trade secret. They are:
• The extent to which the information is known or available outside of the company
• The extent to which the information is known inside of the company
• The ease of obtaining the information outside of the company
• The extent to which efforts are made to keep the information secret

Unlike trademarks, service marks, copyrights and patents, there is no "application" or "approval" process for trade secret protection. Rather, trade secrets must be protected by non-disclosure, typically through non-disclosure agreements. If your company has trade secrets, you should make the effort to protect those secrets by requiring that all new employees sign a non-disclosure agreement.

Additionally, independent contractors and other third parties doing business with your company that will have access to any of your trade secrets should be required, in the agreements you sign with them, to protect the confidentiality of your trade secrets. You also should not share the secrets with people who don't absolutely need to know them – even if they have signed the NDA – because of the risk that your secrets may be revealed. Once the secret is out, the NDA can be enforced, but you'll still lose out by having your business secret revealed. It's like winning a lawsuit in a personal injury case. You got paid, but you are still suffering from a bad injury.

So there you have it. Trade secret protection in a nutshell. At some point during the life of your business, you are going to need to protect your intellectual property. Failure to do so could cost you far more than it costs to protect it in the first place.
Traci D. Ellis is an attorney, speaker and business "therapist" to entrepreneurs. She is also the author of "The Top 10 Legal Issues: The Stuff That Stalls Startups" and "20 Pearls of Wisdom: Wise Lessons That Will Keep Business Owners in Business". Traci focuses her law practice and coaching business on the needs of small business owners. Email her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit http://www.traciellis.com for more information. Follow her on Twitter @launchtherapy and on Facebook at "Launch Therapy".

Make sure you understand copyright protection

Last week we talked about trademarks. Now, let’s focus on copyrights.

Copyright literally means the “right to copy”. Books, reports, songs, websites, lyrics, melodies, pictures, software, poetry and other original, creative expressions can all be copyrighted (protected) by filing an application for registration with the U.S. Copyright Office.

However, these original works are protected whether you actually file the copyright application or not. In fact, your artistic work has copyright protection the moment it is created and converted to a tangible form. So, once you write it, it’s copyrighted. Once you paint the picture or draw a diagram, it’s copyrighted. And, once you take a photograph, and convert it to a tangible form, it is copyrighted. Get it? You can choose to use the © symbol or not, although I highly recommend using it.

The advantage of filing the application is that in the event that someone violates the copyright protection on your intellectual property, then you have a right to statutory damages and attorney’s fees. Without the official copyright registration, if your copyright protection is violated, you are limited to the damages you can actually prove (which will likely be difficult and costly to prove); and you will still be required to file the copyright registration prior to bringing a lawsuit against a potential infringer.

Copyright protection on your original, creative expressions lasts for your lifetime plus seventy years. During that time, nobody can use or profit from your copyrighted material without your prior, written permission (with a few exceptions). Copyright is one of the cheapest forms of intellectual property protection available. The application form can be downloaded from the U.S. Copyright Office website and the filing fee is about $35.00. It takes about two months for approval.

Copyright protection through the U.S. Copyright Office is so inexpensive that I urge you to take the time to file for protection with them. However, even if you choose not to do so, remember that your material is protected as soon as you create it, so don’t forget to put the world on notice of your ownership by using the © symbol like this:

As with trademark protection, this is all a part of protecting your business assets and establishing a solid legal foundation. So, get your creative swerve on! Assuming it’s your original expression, it’s copyrighted.

Wondering how to protect your client lists, recipes, marketing plan, financial information and business strategies? Next time I’ll tell you exactly how to do that.

, or visit http://www.traciellis.com for more information.

Protect your intellectual property

What do your logo, your tagline, your website, your client list and the industry white paper you wrote all have in common? They are your company's intellectual property and should be protected as if your business depends on it, because it very likely does.

How? It depends. Let's start with trademarks. If you want to protect logos, taglines, and/or graphics, for example, then you file a trademark application with the United States Patent and Trademark Office ("USPTO") (Note: if your business provides services rather than products, then instead of filing a trademark application, you file a service mark application).

Have you ever noticed a small "TM" or "SM" at the end of a tagline or name? That means that the owner is claiming ownership of that name or phrase via a trademark or servicemark. The "TM" or "SM" means that the actual application with the USPTO either hasn't been filed yet, or has been filed and is pending. Even if the actual application has not been filed, use of the "TM" and/or "SM" puts the world on notice that ownership is claimed.

Before filing your application, you have to decide whether the mark is a standard "character mark" or a "design mark". A character mark is simply any combination of word(s), letter(s), or number(s) with no design element and without claim to any particular font, style, size or color (e.g. "BocaJump Elgin").

If you have a design mark (e.g. a drawing of some type), you have to decide whether you are claiming color as part of the mark. In general, you don't want to claim color because you get broader protection for the mark if the mark can be any color. Instead, you want to just claim the drawing (e.g the "jumping man" design next to BocaJump Elgin).

Another type of design mark is sometimes referred to as a "mixed mark" because it has both a design element and a word. In these cases, I often advise clients that they should file a separate application on both the design and the word for the broadest protection (e.g. the "jumping man" design and the words "BocaJump Elgin").

Next you must decide which type of application to file. If your mark is already being used in commerce, then you would file a "Use" application, which indicates that the mark is being used. Otherwise, you would file an "Intent to Use" application which means that you haven't used the mark in commerce yet, but plan to do so, and want to protect it as early as possible.

It is important to note that your mark is not considered registered until it is actually in use with the intended product or service. Therefore, you are not allowed to use the ® until the mark is registered.

Once the application is filed, it is published by the USPTO in order to give notice to any interested parties who may have a claim of ownership to that name and therefore, want to object to the USPTO's approval of a trademark for you. Keep in mind however, that just because someone doesn't object, doesn't mean that the trademark will issue. The Trademark Examiner does his/her own investigation into the appropriateness of your proposed trademark.

If there are no objections by others or the USPTO, then you can reasonably expect the trademark to be registered in approximately one to two months. The entire process can take 8-9 months or longer. In the meantime, protect your intellectual property with the appropriate symbols, and seek legal guidance if you have any questions.

This is very brief overview of a rather complex process. The preliminary search, selection of International Classes and response to USPTO "Office Actions" are also critical parts of the trademark protection process.

But, protecting your trademarks is vital to protecting your business assets and establishing a solid legal foundation for your business. Don't underestimate its importance to your success.

Next week we'll take a look at copyright protection.

, or visit http://www.traciellis.com for more information.

How To Get Clients To Pay You (And What To Do If They Don't): Part II

At some point, you will have to deal with delinquent invoices. Clients who fail to pay, or pay slowly are serious threats to a small business, so they must be handled swiftly and directly. Here are my recommendations.

First, as soon as the invoice goes past due, call the client. This should be a gentle reminder that the invoice is past due, with an offer to re-send the invoice if necessary. Be sure to get a verbal commitment from the client to make the payment on or before a certain date. Obviously, that date should be in the next few days.

Second, if the phone call doesn't get payment, it's time to take it up a notch. Send a letter (either certified, return receipt requested or overnight with signature required). The tone of this letter should be firm, but polite. Remind the client about your written fee agreement, particularly the part that covers delinquent payments. Be straightforward, and do not make idle threats. I also believe in being transparent. In other words, let the client know that his failure to pay is having a serious effect on your business. This emotional appeal may work. Nothing wrong with guilt.

Also, be sure to give a date by which you would like payment, but be reasonable. It is not likely that even the best-intentioned clients are going to drop everything they're doing and hand-deliver you a check, or even mail it that day. So, don't demand payment within 24 hours or 3 days or some other unreasonable timeframe. It will only alienate the client, and further aggravate you when that date comes and goes. On the other hand, don't drag this out. Give them 7 to 21 days maximum, to make the payment.

If this doesn't work, send another letter. Be a little more aggressive – professional and polite – but aggressive nonetheless. You might consider hiring an attorney to write this one. Often, getting an official "demand" letter on attorney letterhead convinces delinquent clients that you are serious about collecting this debt and to avoid having to deal with your attorney, the client will pay up.

However, if you decide to write the letter yourself, as before, do not make empty threats that can come back to bite you. Be very clear that you are ready and willing to engage an attorney, or pursue the matter in court if payment is not made within 5-7 days (but only if you really are). The client is now on a very short leash.

When all else fails, consider these possibilities:

1. Offer (in writing) to re-negotiate the terms of the fee agreement. Propose a payment plan that is attractive enough to tempt the client, but not so generous that you end up suffering.
2. Settle the debt. Offer to take less than what is owed in exchange for payment by a fixed date. Getting a partial payment is much better than getting no payment, and continuing to expend time and money to pursue it. Remember, money now beats money later in most cases.
3. Turn the debt over to a collection agency or take the client to court. If you're going to pursue this option, ideally you'll do it within 90-120 days of the delinquency date. There's nothing magic about 90-120 days, except my strong belief that the longer you drag out collection efforts, the less likely you will get paid. Debt is not like wine. It does not get better with age.

In spite of your best efforts, sometimes you just won't get paid. If it's uncollectible, face it, fire the client and move on. Your time is better spent on building up paying clients, so that a non-paying client every now and then (it will happen), won't ruin your business.

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