Understanding Intellectual Property Rights
Matt Walsh, senior partner at Hinshaw & Culbertson LLP in Chicago.
Intellectual property rights protect the unrealized assets of your business and turn your business's image, name, and creativity into profit. Not only are your salon's appearance, name and innovations profitable, but the law protects those assets.
Protect is the key word. Yes, you can turn intellectual property into profit through licensing or brand recognition. But, another prominent (if not the most prominent) feature of intellectual property is the right to prevent third-parties from using your brand, innovations, and assets. Without intellectual property protection, another company could freeload off your business's brand and resources.
What is intellectual property? In general, intellectual property consists of patents, copyright, and trademarks. Broadly speaking, patents protect innovations, trademarks protect a name or slogan, and copyright protects an artistic expression or image.
For example, if you hypothetically invented a new styling gel. You would use a patent to protect the invention itself (i.e. the chemical composition of the gel/manufacturing process). You would trademark the name and logo to protect the brand. And, you could use copyright protection for advertisements and the catchy jingle in your commercial.
How does intellectual property apply to my business?
For the salon industry, copyright and trademark are probably the most relevant. Although, do not disregard patents. If you believe you invented a novel business method, constructed a novel design (think machine construction, not artistic design), or created a useful product then consult a patent attorney.
To maximize profits, there are three types of intellectual property you should consider protecting:
2. Trade Dress
Trademark: The law requires a few elements for a valid trademark – it's NOT as easy as registering your trademark with the United States Patent and Trademark Office (USPTO). So, what can you do to strengthen your trademark?
1) Establish that your trademark is an active use. Active use only means entering your trademark into the marketplace to identify goods or services – you don't actually have to sell the goods or services.
2) Establish a geographic market. The courts generally look whether another similar trademark dilutes or confuses the consumer. But, this is restricted to the geographic area where your trademark holds market power.
3) Register your trademark with the USPTO. Registering strengthens your legal support. But beware, when you register with the USPTO, you're making your trademark public. Third-parties use this information to "poach" relevant URLs from businesses. Be sure to purchase a URL before registering you trademark.
Trade Dress: This form of intellectual property protects the visual appearance of a product or packaging. Or, even the actual design of a building. Typically, trade dress applies to "commercial image" of a product or service. But, the "commercial image" must be distinguishable or unique from other "commercial images" – i.e. you can't claim trade dress protection for a brown packaging box. Protecting trade dress is accomplished the same way as protecting a trademark. Consult a lawyer to determine whether your product or packaging's "commercial image" is distinguishable enough for trade dress protection.
Copyright: Copyright ensures that your original "works of authorship" are protected – like artistic designs, songs, or literary works. To be clear, your "work of authorship" must be on a tangible medium – meaning, you can't copyright an idea or something you plan on creating. Although copyright protects different innovations than trademarks, they're protected in a similar way.
In conclusion, intellectual property rights can bring actual profits to your company through brand protection and licensing. But, more importantly, intellectual property rights prevent a third-party from leeching off your brand recognition and resources. Consult an attorney to ensure that you're properly protecting your business's assets.
Matthew Walsh is a Chicago-based senior partner at Hinshaw & Culbertson LLP, a full-service national law firm with more than 500 lawyers. He represents hair care industry clients—and businesses around the country—in litigated and other legal matters, including business, employment and product-related disputes, and in contract negotiations.