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Intellectual Property & the Business Plan

In today’s increasingly knowledge-driven and highly competitive economy, a business’ success depends more and more on the protection and growth of its intangible assets.

One of the most overlooked intangible assets for small and midsized businesses is the intellectual property (IP) generated in those businesses.  Regardless of a business’ industry, market share or location, virtually all businesses possess some form of protectable and valuable IP.  A good way to begin protecting your IP assets is to integrate your IP into your business planning process.

A business plan is a mechanism to ensure that the resources or assets of a business are applied profitably across all its activities for developing and retaining a competitive edge in the market place.  For a new business, it provides a blueprint for success, while for an ongoing business it provides an overview of where a business is at present, how the business is positioning itself, and how it seeks to achieve its objectives to become and/or remain successful.
Before drafting your business plan, you need to think over a number of issues.  One of those issues should include identifying the commercial relevance of IP assets, whether owned by you or to which you have authorized access, and the resources needed for obtaining and maintaining these assets.
Here are some key points relating to IP that you need to consider while preparing your business plan:
What Intellectual Property asset do you own?

  • Identify and classify your IP assets.  These assets can include:
    • Name brands
    • Confidential information
    • Trade names
    • Trademarks
    • Copyrights
    • Computer systems software
    • Customer lists
    • Business plans
    • Slogans
    • Visual and literary works
    • Identifying symbols
    • Creative expressions
    • Domain names
    • Utility models and patents for inventions.
  • Identify other intangible assets you have.  In this context, consider franchise, license and distribution agreements; publishing rights; and covenants not to compete.

What is the status of your IP portfolio?

  • Do you have a system for identification of your IP assets?
  • Do you have an IP portfolio?  When was it created and who created it?
  • Do you have IP assets that are registerable?  If so, are they or should they be registered?  Are they also registered in foreign countries/export markets?  Is the registration to be renewed?  If so, when?
  • Do you conduct or plan to conduct IP audits?

How do you plan to protect your IP assets?

  • If you commercialize your IP assets, do you have arrangements securing the ownership or co-ownership of your IP assets?
  • If you outsource a part of your business activities, do you have contracts in place that ensure your IP rights over the outsourced work and prohibit others from taking advantage or commercializing your product without your authorization?
  • How easy or difficult is it for others to properly acquire or duplicate your confidential business information?
    • What measures are taken to guard the secrecy of your confidential business information?
    • Have you included confidentiality or non-disclosure clauses and non-compete clauses in the employment agreements with your employees and business partners?
    • Have you ensured that confidential business information or trade secrets are not available or lost by display on or through your website?

Do you own all IP assets that you need or do you rely on IP assets owned by others?

  • Do you own the IP assets that you are using?
    • Can you prove it?  Do you have the records, registrations, contracts, and other proof that an investor, business partner or a court of law may require?
    • Have you identified any potential third-party claims on the IP assets that you own?
  • Are you sure you are not infringing IP rights of someone else?
    • Have you conducted a patent, trademark and/or industrial design search?
    • Have you verified if any of your employees, who have worked with a competitor in the past, is not bound by post-employment non-compete or non-disclosure confidentiality agreements by the previous employer?
    • Have you been granted the necessary license to use IP that is not owned by you?

While business owners remember to lock the doors, they often leave their IP vulnerable. By protecting its intellectual property, businesses can maintain and enhance the goodwill they enjoy with their customers, vendors, and other business partners.

Caitlin Bellum is a contributing author to this blog and has been admitted to practice law in the state of Washington.  She practices in the fields of intellectual property, litigation, trademarks and licenses at Hendricks & Lewis, PLLC.

Washington Trust Law Gets an Overhaul

On May 12, 2011, Governor Gregoire signed Substitute House Bill 1051 which enacted sweeping changes to Washington trust law.   These changes will have a significant impact on the administration of trusts, the duties of trustees and the rights of trust beneficiaries.  The new law will apply to all trusts created before, on, or after January 1, 2012.   If you have a revocable trust as your primary estate planning document, the new law does not require you to make any changes.   However, individuals may want to revise their estate planning documents in order to address issues that may arise due to the new provisions regarding notice to beneficiaries of the existence of the trust. Read more

Penalties for the Big Three in the Mortgage Industry

No one needs to be told this, as it may be the most obvious statement ever made: the mortgage industry, the real estate market and the United States economy are all in crisis-mode. Home values are down, people are underwater on their mortgages, foreclosure numbers are skyrocketing, the unemployment rate continues to rise, and there does not seem to be an end in sight. So what is being done by the government to punish the nation’s three largest mortgage companies for failing to comply with the current federal foreclosure-prevention effort? Read more

The Foreclosure Fairness Act

The Foreclosure Fairness Act, House Bill 1362, was signed into law by Governor Gregoire last Thursday, April 14th, 2011. The act gives homeowners the right to mediate before a notice of foreclosure can be issued.  With this new act in place, Washington became the third state to adopt a foreclosure mediation program, after Nevada and Maryland, which goes into effect on July 13th of this year.   Read more

2011 Changes in Tax Law

There were many political battles in Congress in 2010, but few were more heated than the debates revolving around the Bush tax cuts extension. The original Bush tax cuts, which were enacted in 2001 and 2003, were in serious jeopardy of sunsetting at the end of the year if Congress did not take action. This action would have caused virtually every American to experience a tax hike for 2011. Read more

Do You Know Where Your Real Property Stands?

There are a multitude of strategies to build your wealth, with advice coming from all sides.  Regardless of the strategy you choose to plan your future, like the overwhelming majority of people, the biggest investment you will make in pursuit of your dreams is right under your feet.  If you received legal advice prior to purchasing your home or property, you likely know EXACTLY what you received in exchange for that big mortgage you have been working so hard to pay off (or if you are lucky, have already paid off). Read more

A Debt Collector's Worst Nightmare

We all remember the scene in “Goodfellas” when Ray Liota is explaining the intricacies of a mafia-loan repayment plan. As he so eloquently puts it: “Business bad? Pay me. Oh, you had a fire? Pay me. Place got hit by lightning, huh? Pay me.” In the wake of the worst financial crisis since the great depression, debt collection agencies are springing up all across the country, buying up debt at pennies on the dollar. While some of these companies’ collection tactics are not quite as severe as the ones seen in “Goodfellas,” they are none-the-less illegal. Read more

The Sliding Scale that is the Mortgage Crisis

Since the start of the mortgage foreclosure crisis in 2007, the mortgage industry in the U.S. has changed significantly.

And, according to a recent piece in the Wall Street Journal, one of the latest changes being noted is a push by banks for larger down payments on mortgage loans. So the question becomes, does the requirement of more money down equal fewer people buying homes?

Down payments in 2010 are at an all-time high. An online real estate information base, Zillow.com, has been keeping track of median down payments required by lenders since 1997. This year’s median (22 percent of the home’s value) is the highest that number has been since the tracking began. The steep rise in required down payments has been especially rapid within the last five years. Sources report, that the 22 percent figure marks a doubling of the median down payment required from just three years ago. In other words, banks have reacted swiftly and decisively to the turmoil in the housing market.
It seems that lenders have largely driven the push for higher down payments as a reaction to findings that homeowners with more of their money on the line (i.e. those who make larger down payments up front) are less likely to default on payments or go into foreclosure than those with less money at stake. The Journal notes that, because many potential homebuyers cannot afford a 22 percent down payment, there’s been an uptick in applications for mortgage assistance programs designed to help select groups of people.

While owning a home has long been considered part of the “American Dream,” the real estate bubble’s devastating effects on the housing market has left some people questioning whether homeownership is in fact for everyone. In reality, when making the decision to buy a home you must be candid and honest with yourself. The consequence could be dire not only for you, but could have a ripple effect on the rest of your family as well.

Basil Ward is a contributing author to this blog and is currently serving as an intern for the Law Offices of Richard D. Seward.  Basil has been admitted to practice law as a Rule 9 Legal Intern in Washington State.

The New Economy and the Mortgage Crisis

The trouble with paying off the mortgage.

I recently learned of some friends who had paid off their mortgage on their home. In years past, that is not something that I would ever consider to be a risky transaction, but in today’s new economy, you cannot routinely expect that your money will be forwarded to the actual holder of your note, and you cannot expect to routinely receive the original note marked “paid in full” and you cannot routinely expect to receive a Release or Reconveyance of the Deed of Trust.

The problem is that the “note” on your home was likely sold by the originator that retained the servicing rights [1] then assigned to a Sponsor for securities underwriting, [2] and then ultimately to a New York Trust. In this process there was a lot of “double booking” of loans because these transactions were recorded by Mortgage Electronic Recording System (known as “MERS”) which relied on a “person” entering “info” into the system with no checks and balances to make sure the input data was accurate. People have been sued multiple times on single notes and other similar irregularities have occurred. Lastly, there is LPS or Lender Processing Services which is an intermediary between the loan Servicers and the lawyers who bring the legal action on defaults whether by non-judicial foreclosure or suit on the note. [3] One LPS employee recently testified in court that he signed “tens of thousands” of Notices of Default on properties where he had no knowledge that the debtor was actually in default. This is called “robo signing” which is just one factor that has destroyed the credibility of the process.

The lesson in all this is that in this New Economy it is more important than ever to be proactive in protecting your assets.You should not take the advice of a loan servicing employee that recommends that you stop or reduce your mortgage payments while your modification request is pending. The default will trigger late fees and other charges to the Servicer and your payments will be diverted to a suspense account held by the servicer and charged for these fees. They also are able to lend these funds in what are called “overnight loans” for huge profits. The lender will never see the money.

[1] Which is highly profitable and an industry which has come under considerable criticism for its questionable tactics which many say amount to fraud.  Expect more disclosures to surface in this area of the industry.
[2] The assignments were generally not legal under most jurisdictions as these notes are negotiable instruments and need to be endorsed and physically delivered to the endorsee to transfer ownership.  Most of these notes ended up in New York trusts which were used as bankruptcy remote entities to securitize the notes as mortgage backed securities.
[3] The legal process has been sloppy at best as large volumes of cases are handled by a few overworked lawyers that share legal fees (questionable ethics practice) with LPS for the case referrals.  The sloppiness is cause by the system that rates that lawyers based on the volume of documents filed with the courts.

Estate Planning for Your Pet

Everyone knows how important a properly executed estate plan can be. It can protect your assets, avoid a costly out-of-state probate proceeding, minimize estate tax liability and provide health care directives should you become incapacitated. But one area of the estate plan that many pet owners neglect to consider is what happens to your pets when you are no longer around. Read more