The matter of legally protecting your intellectual property can get quite complex -- and expensive. You likely don't want to spend endless hours sorting through legalisms with attorneys and paying huge fees to do so. On the other hand, you certainly don't want to leave yourself legally exposed or squander a competitive advantage because you didn't do what was legally necessary. So here are some tips for maximizing your protection at the lowest possible cost.

Patent only what is important. Filing for a patent can be a tedious and time-consuming task if you are not prepared. Generally speaking, a patent attorney needs background on the invention, information on what you want to protect, and a list of the advantages of your invention. Ask the attorney in advance what documentation you should gather to support your claims. With proper preparation, you may complete much of the work during a two- to three-hour conference with an attorney.

Without legal complications, the process of filing a patent application in the United States will likely run $2,500 to $7,500 in legal fees; if you seek patents in major countries around the world, the legal fees can easily total $25,000 to $30,000 or more. If there are challenges made by patent office examiners or competing individuals or companies, the U.S. legal fees can soar. When new superconducting materials were discovered that could make possible the production of electricity without resistance, several companies filed patent applications covering the same formulations, and it was left to patent officials to sort things out. After the patent is awarded, there can be future court cases challenging the decision.

Government Sources of Protection
To file a patent or register a trademark or service mark:
U.S. Patent and Trademark Office
2021 Jefferson Davis Highway
Arlington, VA 20231
(703) 557-3158
For information on copyright protection and to register a copyright:
U.S. Copyright Office
Library of Congress Bldg.
Dept. DS
Washington, DC 20402
(202) 783-3238

As a result, entrepreneurs are well advised to seek patent protection only when it is truly warranted. You must conclude, first, that you need the protection and, second, that you will recover much more than your expenditure in additional long-term sales.

Cover yourself internationally. As I suggested in the previous point, you should be examining your patent possibilities not only in the United States but overseas. With global competition as pervasive as it is, you must assume that what you want to protect in this country you will also want to protect in Europe and Asia.

While the patent application process has become more standardized in recent years, there are still important differences. One major difference between the U.S. procedure and that of many other countries involves application timing. The U.S. process recognizes the "first to invent," while the Japanese process recognizes the "first to file." Thus, in the United States, you must be able to document that you came up with the invention before others; in Japan you have to get to the patent office first. When there are possible competing claims for the same invention, as in the case of superconductivity noted earlier, such timing distinctions can be significant.

International considerations extend to trade secret and trademark protection as well. If there is any chance that you could sell your product or service overseas during the next few years, or if foreign competitors would be interested in selling your product overseas, by all means explore the options for international protection.

Generally speaking, you will keep your total costs down if you anticipate potential international considerations early so they can be dealt with together with domestic matters.

Get the best trademark protection as early as possible. Some entrepreneurs assume that because they expect to operate locally only -- say, have one store serving a single town or a service covering a particular county -- they have all the protection they need when they incorporate with the state corporation office. Indeed, a business may operate for months or even years before a company in a neighboring town, county, or state with the same or similar name finds out about it -- and sends a cease and desist letter. At that point, an entrepreneur faces two grim prospects: an expensive legal battle or changing the company's name or other aspects of its trademark.

Registering a trademark is a much simpler procedure than getting a patent. A trademark search can usually be done for a few hundred dollars; if there are potential conflicts discovered during the search, the legal costs can rise, but if not, the total process needn't exceed $1,000. And a change in the trademark laws makes it possible to apply to register a trademark before you are using it.

Choose the right form of protection. Don't assume that because copyright protection is cheaper to obtain than patent protection you should automatically go the less expensive route. It's widely assumed, for instance, that computer software can be protected only by copyright. In fact, it is possible to obtain patent protection for some software. The up-front cost for the patent will be greater than for the copyright, but it could turn out that the patent offers greater security from encroachment by competitors. The same applies to dress designs, new plant strains, and a wide variety of other items. Spend the $200 or $300 it might cost to get sound legal advice.

Warn potential violators that you are serious. Let individuals who become involved with your company know that its intellectual property is very important. This applies to new employees in particular as well as to suppliers and consultants. You should warn everyone who has access to important information that the nondisclosure and other agreements they sign are not just a formality. If someone does cross you up, be prepared to take legal action to set an example that will become known to others. Your readiness to back up your intellectual property rights will serve as a deterrent to those who try to take advantage of you.

Plan for information protection. In the start-up phase, be prepared for the various disclosures of important information that you will need to make. That information may be contained in a business plan, lists of prospects, supplier names, production specifications, and various other data essential to starting your business.

As you begin to make contacts with potential investors, suppliers, and employees, be prepared with the right agreement, letter, or statement that each must sign. Obviously, you can't anticipate each need immediately, because some may develop as you build your business.

This material was excerpted from Chapter 4 of How to Really Start Your Own Business by David E. Gumpert.
Copyright 1996 Goldhirsh Group Inc.