June 14, 2012
By Neil S. Ende and Susan E. Colman
In thinking about the importance of protecting corporate assets, a cartoon from The New Yorker magazine comes to mind. Published on Dec. 8, 1928, this cartoon depicts a mother and her young daughter seated at the dinner table with plates of food before them. The mother says, Its broccoli, dear.” The young tyke snarls out in response, I say its spinach, and I say the hell with it.”
Its not unusual perhaps its only human nature to resist doing things that, like broccoli and spinach, are good for us” in the long term, but may be unpleasant at the moment of consumption.” If you havent paid attention to your valuable assets, you can lose them quickly or, even if you are able to save them, it can be very costly. So, yes, with apologies in advance, here is a short lecture on the importance safeguarding your business operations.
Form a Business Entity. As you all know, but some of you ignore, it is essential that you operate your business through an entity that is separate from your personal assets. In the old days, this meant engaging in the cumbersome and expensive process of setting up a corporate entity. However, with the advent of Limited Liability Companies and the like, now even single-member organizations can create a corporate shell” around their business operations quickly and for very little cost. In short, there is no longer any excuse and there was never any good reason for operating a business in your personal name. Just dont do it.
Create a Brand. Once you have an operating entity in place, you need to find and establish a brand: a name for your company and your products, a logo and perhaps a slogan that will distinguish your company and your products. This is vitally important you want your prospective customers to discover your company and your products and to remember them with high regard.
Brands are protected under trademark law. The function of a trademark is to associate in the minds of the purchasing public your brand, and the goods and/or services you offer in association with your brand, with you and with no other company. You also should want your brand to be distinctive, rather than descriptive of what you offer.
Branding is a critical issue not only on the offense i.e., to make sure someone else isnt pirating your brand but also on the defense to make sure youre not unknowingly pirating someone elses brand. Indeed, infringing on another partys trademark, even if it is innocent, can be extremely costly.
Protect Your Intellectual Property. Your corporate assets also include other kinds of intellectual property, such as written materials (printed on paper or electronically) and software. These assets can be very valuable and should be protected through copyright and software licensing agreements and the like. Of course, you should also consider trying to patent any new processes and products that you invent.
Require Employment Agreements. Your employees are also a substantial asset of your business. As such, their activities should be governed by appropriate agreements that ensure that their activities are for the benefit of the company and that they do not take and utilize your trade secrets” against your interest should they depart. This also holds true at the outset, when hiring new employees, to make sure that they are not bringing with them into your company their previous employers trade secrets or other proprietary information or products. These matters can be handled through appropriate language in an employment agreement or similar document.
Seek Balanced Supplier Agreements. Finally, it is critical to keep in mind that your business relationships are, perhaps, your greatest business assets. Your agreements are the foundation holding up every other corporate asset and you need to build and safeguard your business on a foundation of clear, comprehensive and balanced written agreements.
Neil S. Ende is the managing partner and Susan E. Colman is Of Counsel to
Technology Law Group
, a Washington, D.C.-based telecommunications law firm.
Coleman has 30 years of experience in intellectual property (trademarks and copyrights), as well as computer law and IT law. She can be reached by email at
. Ende can be reached by email at
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