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Intellectual Property

The clinic can be of considerable assistance to the new client by providing advice about its intellectual property. This is frequently a two-edged sword: (a) how does the client protect its intellectual property, and (b) is there any infringement risk in using it?

An entrepreneur frequently wishes to exploit intellectual property that is the same as, or similar to, what has been exploited by his current or former employer. In such a case, it may constitute a violation of the entrepreneur’s contractual or fiduciary obligations to do so. This possibility requires the clinic to have a full and candid discussion with the entrepreneur about the genesis of his or her business and product offerings. The matter is particularly fraught with danger if the entrepreneur has in his or her possession anything taken from the place of employment.

Similar problems can arise if the entrepreneur has worked with a partner (who is no longer involved in the business), or with a Web site designer or other individual who has arguably contributed something of value to the enterprise. In some cases, it is difficult if not impossible to unwind these relationships so that the entrepreneur can proceed with a reasonable degree of confidence that no claim will be asserted.

On the other edge of the sword, the clinic will probably be asked to advise the client what can be done to protect its own intellectual property. If the entrepreneur has an invention that he or she wishes to commercialize, there will be an immediate problem because very few law school clinics have sufficient expertise to conduct patent searches or to file and prosecute patent applications. Consequently, some general advice about patents along with a referral to a patent lawyer or patent agent may be necessary.

If the entrepreneur is a student or member of the faculty at the university which supports the small business clinic, and if the university claims ownership of inventions conceived of on-campus, any involvement by the legal clinic in the patentability decision making process can present an additional ethical problem.

While most patent lawyers would recommend against the process if the invention is truly valuable, one possibility for the client with limited financial resources is to file his or her own application for a “provisional patent” which is relatively inexpensive and which provides some minimal protection for the invention for a period of one year (see the U.S. Patent and Trademark Office for more information). This is sometimes done when the inventor needs time to test the marketplace and does not have the $10,000 or more which might be required to file and prosecute a standard utility patent application.

Notwithstanding its limited role insofar as patents are concerned, a general business clinic should nevertheless be able to provide valuable advice and assistance regarding trademarks, copyrights, and contractual protection for intellectual property.

Trademarks can be registered with the U.S. Patent and Trademark Office once the trademark has been used commercially or in advance of actual commercial use if the applicant has a bona fide intention of commencing use within the near future. Alternatively, the trademark can be registered with the Secretary of State in the company’s home state. The latter process is less expensive and not nearly as rigorous as a federal trademark application, but provides a degree of protection for the client. Trademarks and trade names can also be protected under general common law doctrines even if not registered. An explanation of these doctrines may satisfy the client if it does not have the funds necessary to file an application for registration.

Copyrightable material (like artwork, literary material, photographs, and music) is also protectable without registration. In fact, the copyright “springs into existence” as soon as the work is embodied in some tangible form as in a Web site design or brochure. The client may then follow up at its leisure and register the work with theU.S. Copyright Office on the payment of a modest registration fee if it is felt that the work has significant long range value to the business.

On the contractual side, the clinic may be called upon to draft a non-disclosure agreement that the client can use when it presents its proposed product or business plan to prospective investors or others, or an agreement with a third party that is providing creative material on a “for hire” basis. For samples of such agreements, see Business Contracts and Internet and Web site.

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