Getting Business Licenses & Protecting Intellectual Property

September 30, 2019
Posted in: Uncategorized

Table of Contents

 

If you’ve been following our Guide to Launching Your Business series, let’s see what you’ve accomplished thus far. You’ve written a solid business plan? You’ve come up with an inspiring business name? You’ve registered the business structure that provides you with the flexibility, liability protection and tax advantages you need? You’ve acquired the necessary federal and state tax ID numbers? If you answered all of these questions with a resounding YES, it’s time to put your marketing plan into action, right?  Well, not quite.

Depending on the state you’ll operate your business from and your industry, there may be federal, state, and local licenses and/or permits you’ll need to obtain before you can officially open for business. We’ll take a look at the licenses and permits that are most often required. 

Next, we’ll discuss how to use trademarks, patents, and copyrights to protect your unique business ideas. You put a lot of thought into choosing the ideal name for your business so you’ll want to protect it and any other intellectual property.

 

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What Licenses or Permits Do I Need?

To ensure that your business is off to a good start, don’t overlook the importance of getting the licenses and permits required for your location and industry. You don’t want to run afoul of the federal or local government. Doing so could have serious consequences and even lead to your business being shut down.

All businesses need some type of license or permit to operate legally. And, depending on the business’s location and the nature of the business (industry), some will need to apply for multiple licenses/permits. Because license and permit requirements vary from state to state and differ among industries, it’s not possible to provide an exhaustive list.

However, the following list should give you an idea of the types of licenses and permits that are most often required by federal and local governments. Keep in mind that not all listed will apply to your business. You’ll need to contact your state and local governments for the specific requirements for your business.

  • General business license – Any business type, including home-based businesses, must obtain a city or county business license. This license grants you the right to operate a business in the city or county you’re located in. The city planning or zoning department will ensure that your area is zoned for the purpose you intend to use it for. If you’re operating your business from home, some residential neighborhoods may restrict business use of the home.
  • Home occupation permit If you’re planning to operate a business from your home, you may need to obtain a home occupation permit. In some residential areas, commercial activity is regulated to ensure that the activity doesn’t create significant traffic, noise or other environmental concerns such as dust or odors.
  • DBA license If you’ll operate your business under a name other than your legal name, your local government (often the county) may require you to register the “doing business as (DBA)” name.
  • Federal and State tax ID numbersSole proprietorships and single-member limited liability companies (LLCs) that don’t have employees aren’t required to apply for a federal employer identification number (EIN). All other business structures must apply for an EIN. Your state may require that you also obtain a state tax ID number.
  • Sales tax permitIf your business involves the selling of taxable goods or services, your state may require you to collect sales tax from your customers. For this, you’ll need a sales tax permit, also known as a seller’s permit or certificate of authority. This would apply to online businesses as well. The definition of a taxable service varies by state so you’ll need to research the rules that apply to the state in which you operate.
  • Zoning permit If you plan to operate your business in an area that local zoning regulations have determined isn’t zoned for that particular business type, you may need to obtain a variance or conditional-use permit. To get a variance, you’ll need to present your case before your city’s planning commission.
  • Fire department permit If your business uses flammable materials or if customers will be on the premises, you may need to get a permit from your local fire department. In some areas, you’ll need to get the permit before you can open for business. Other areas don’t require a permit but you’ll need to pass periodic inspections to ensure that you’re meeting fire safety regulations.
  • Health department permit If your business involves preparing and handling food either directly (as in a restaurant) or in a wholesale capacity (sold to retailers or restaurants), you’ll need a permit from your county’s health department. The cost varies depending on your business’s size and the type of equipment you own. Your facilities will be inspected before the permit can be issued.
  • Air & water pollution control permit If, in the course of your business, you burn any materials, discharge environmental contaminants into the air or waterways, or use products that produce gas, you may have to obtain a special permit from your local air and water pollution department.
  • Construction permit Environmental protection regulations may also require you to get approval before making any structural changes to your place of business. You may need to obtain a building or construction permit from your local agency.
  • Sign permit Some localities have sign ordinances that restrict the type of sign you can place outside of your business (size, location, lighting) while some require that you obtain a permit before installing a sign.
  • Occupational/Professional licenses — Some states require that businesses in certain professions or industries (i.e. medical care, child care, tax preparation, auto repair, cosmetology, legal services) obtain a special license in order to operate.
  • License or permit for federally regulated activityIf your business involves an activity that’s regulated by a federal agency (i.e. aviation, alcohol, broadcasting, firearms, mining), a license or permit may be required. Check this list of commercial activities that generally require a federal license or permit.
  • License or permit for state regulated activityIf your business involves an activity that’s regulated by a state agency (i.e. lottery tickets, gasoline, firearms, alcohol), a license or permit may be required. Note that the sale of alcohol and firearms is regulated at both the state and federal levels.

 

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Protecting Your Intellectual Property

Intellectual property is defined as “a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, etc.”  Your intellectual property can include something you’ve invented, your catchy business name, or software you’ve developed. 

Trademarks, copyrights, and patents protect different types of intellectual property. Whether you need to apply for a patent, copyright or trademark will depend on the type of intellectual property you need to protect. Let’s take a look at these three protection methods and discuss what each protects and what rights each bestows on the owner.

 

Copyright is the exclusive right given to the creator of a creative work to reproduce the work. The creative work may be in a literary, artistic or musical form. Copyright is intended to protect the original expression of an idea in the form of a creative work, but not the idea itself. For example, if you’ve developed a software program, the actual program is protected once it’s actually produced but not the idea of writing the program.

 

What Does a Copyright Protect?

Copyright is a form of intellectual property law that protects both published and unpublished original works of authorship that are fixed in a tangible form of expression including: 

  • Literary works such as poetry and novels
  • Musical works such as compositions, including any accompanying words
  • Artistic works such as paintings and sculptures
  • Dramatic works such as movies and plays, including any accompanying music
  • Pantomimes and choreographic works
  • Architectural works

Original works of authorship are works that are independently created by human authors and that involve at least a minimal amount of creativity. A work is considered to be “fixed” when it’s captured (either directly by the author or under the author’s authority) in a sufficiently permanent medium such that it can be perceived, reproduced, or communicated for more than a short period. In the United States, copyright protection begins from the time the original work of authorship is fixed.

 

What’s Not Protected by Copyright?

Copyright doesn’t protect:

  • Ideas, systems, processes, or methods of operation, although it may protect the way these things are expressed.
  • Works that aren’t fixed in a tangible form (i.e. choreographic work that hasn’t been recorded or notated)
  • Titles, names, short phrases, and slogans
  • Familiar symbols or designs
  • Listings of ingredients or contents
  • Variations of typographic ornamentation, lettering or coloring

 

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What Rights Does a Copyright Owner Have?

From the time the creative work is captured in a permanent medium (fixed), the copyright owner has the exclusive right to:

  • Reproduce the work in copies or phonorecords (cassette tapes, CDs, or albums)
  • Create derivative works based on the original work
  • Distribute copies or phonorecords of the work to the public through sale, or other transfer of ownership or by lease
  • Perform the work publicly (literary, musical, dramatic, choreographic, pantomime, movie, or other audiovisual work)
  • Display the work publicly (literary, musical, dramatic, choreographic, pantomime, pictorial, graphic, or sculptural work)
  • Perform the work publicly via a digital audio transmission (if a sound recording)
  • Authorize others to exercise these rights within statutory limitations

Although a work is considered to be copyright protected from the time it’s fixed in a tangible medium, it’s recommended (not mandatory for works of U.S. origin) that an author register his/her creative work with the U.S. Copyright Office.  Before registering, check the copyright database to ensure that what you want to register isn’t infringing on something already registered. If you register online, it can take up to nine months for your claim to be resolved.

Applying the copyright symbol © or the word “Copyright” along with the author’s name, and the year will provide practical and legal benefits. Should copyright infringement occur, this extra step will enforce the exclusive rights of the author.

 

How Long Does Copyright Last?

For works created on or after January 1, 1978, the copyright term is the life of the author/creator plus seventy years after the author’s death (or after the last surviving author’s death if a joint effort). For works made for hire and anonymous or pseudonymous works, the copyright term is 95 years from publication or 120 years from creation, whichever is shorter.

 

Poor Man’s Copyright

You’ve likely heard of this method of protecting intellectual property. You mail a copy of your written work to yourself via registered mail and leave the envelope unopened. This is supposed to establish that the material was in your possession since a particular time (the date on the registered mail). The concept is based on the notion that, if the written work were to be misused by a third party, the “poor man’s copyright” would establish a legally recognized date of possession. This date of possession would be before any date that the third party would try to present as proof. 

It’s important to note that there is no provision in U.S. copyright law that gives any value to the poor man’s copyright as a substitute for registering a creative work with the U.S. Copyright Office.

 

 

trademark

 

Trademark

If you’re confident that the business name (and catchy slogan?) you’ve chosen will resonate with your customers, grow with your business, and help build a strong company identity, you’ll want to prevent other businesses from using it. 

If you’ve already registered your business structure with the appropriate agency, no other business within a certain area should be allowed to use your business name. However, there are instances (especially as it relates to corporations) where the waters get a bit murky. For absolute protection of your business name and slogan, you’ll need to file for a trademark.

According to the U.S. Patent & Trademark Office (USPTO), “A trademark is a brand name. A trademark or service mark includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.” The trademark owner can be an individual, business organization, or any legal entity. A trademark may be located on a package, a label, a voucher, or on the product itself.

Although registering a trademark with the USPTO provides many benefits (see below), it’s not required. You can establish what’s called “common law” rights based solely on use of the mark in commerce. For example, let’s say you open a floral shop named “The Rose Garden” and your store’s display window and walls feature a unique motif of roses and angels. In this instance, you would use the letters “TM” next to the name (the method for indicating ownership when a mark is registered only within your state or not at all). If another local shop used the same name and motif, you could sue them for trademark infringement, even though you haven’t officially registered the name and motif. 

 

Benefits of Registering a Trademark

  • Ward off competitors – Registered marks are listed with the USPTO’s register of trademarks which others will see when searching for available marks. Also, registered marks are allowed to use the registered trademark ® symbol. Together, these should make businesses (especially counterfeiters) think twice before infringing on your mark.
  • Valid nationwide – Registered marks are presumed to be valid nationwide, rather than just in your immediate geographic area. This will be important if you’ll later expand to another state or sell your products or services online. If you expand internationally, however, you’ll need to get a trademark in each country (non-U.S. territory) where you do business.
  • Entitlement to additional damages – The use of a registered mark will shift the burden of proof to the defendant should you need to file an infringement lawsuit. You’ll also be entitled to certain damages if you prevail.
  • Stop import of counterfeit goods – Registering a trademark gives the owner the ability to file with U.S. Customs to prevent counterfeit goods from entering the country.

After applying to register your trademark, you’ll have to wait a few months for your mark to be examined and any problems identified. After examination, there’s a 30-day waiting period during which other businesses are allowed to challenge your right to register the trademark.

 

What Does a Trademark Protect?

A trademark protects the owner of a mark (name, logo, symbol, or phrase) by ensuring that the trademark owner has the exclusive legal right to use the mark to identify their goods or services. The trademark owner also has the legal right to give someone else permission to use their trademark in exchange for payment.

Trademarks are essential for building brand recognition. When you hear the name “Kleenex”, you immediately associate it with facial tissues. There may be other facial tissue brands but, because of the registered trademark symbol ®next to Kleenex’s brand name, none can call themselves Kleenex. If another company attempted to do so, Kleenex could go to court and seek an injunction – a court order preventing further infringing activity.

 

What’s Not Protected by a Trademark?

Trademark is primarily a protection of your brand, but not all aspects of your brand are automatically eligible for trademark protection. Trademarks must be distinctive. Using a particular color on your company letterhead and website, for instance, doesn’t mean that other businesses can’t use it, even if they directly compete with you.

You can keep other businesses in your industry from using your trademark, but not different industries. If you sell shoes under a particular name and another company sells tile under that same name, you have no legal recourse.

 

How Long Does a Trademark Last?

Unlike patents and copyrights, trademarks don’t expire after a set term. Trademark rights come from actual “use”. Therefore, a trademark can last forever as long as you continue to use the mark in commerce to indicate the source of goods and services.  A trademark registration can also last forever as long as you file specific documents and pay fees at regular intervals.

 

patent

 

Patent

Ingenious entrepreneur that you are, you’ve invented a new gadget and want to prevent others from exploiting it.  A patent will give you the right to keep infringers from making, using, selling, or offering to sell your invention in the United States or importing your invention into the United States.

Patents protect the mechanisms, principles and components surrounding an entrepreneur’s ideas and are granted by the USPTO for new, useful and nonobvious inventions. U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. If you want patent protection in other countries, you must apply for a patent in each of those countries.

 

What Can be Patented?

The first step in knowing how to patent your invention is knowing if your invention is patentable. The USPTO issues three different kinds of patents: utility, design, and plant.

To qualify for a utility patent (the most common type), your invention must fall into one of the following categories:

  • Process – A process is a series of steps that bring about a useful, tangible result. Processes also describe complex systems such as an investment strategy.
  • Machine – A machine is comprised of moving parts or circuitry. A vacuum cleaner, photocopier, and smartphone are patentable machines.
  • Article of manufacture – A manufacture is a new material made by combining other materials. Examples: tire, transistor, garden tool
  • Composition of matter – Compositions of matter often require advanced knowledge of chemistry. Examples: a new drug, genetically altered lifeform, or detergent

In addition to fitting into one of the above categories, the invention must:

  • have a degree of utility (usefulness), no matter how small
  • be novel (different from previous inventions in a significant way)
  • be nonobvious (surprising and significant) to someone knowledgeable in the area

For design patents, the design must be novel, nonobvious, and nonfunctional. For example, a new shape for a vacuum cleaner or car part that doesn’t improve its functionality would qualify for a design patent.

Plants may qualify for a patent if they are both novel and nonobvious. Plant patents are issued less frequently than any other type of patent and are granted to someone who has invented or discovered and asexually reproduced a distinct and new variety of plant.

 

How Long Does a Patent Last?

U.S. utility and plant patents are generally granted for 20 years from the date the patent application is filed; however, periodic fees are required to maintain the enforceability of the patent. A design patent is generally granted protection for 14 years from the date the design patent is granted.

 

Final Thoughts

To determine the specific licenses and permits that apply to your business and industry, visit your state and local government websites. Since some licenses and permits expire after a certain time, keep track of when you need to renew them. Renewal is often easier than reapplying.

When it comes to protecting your intellectual property, the methods discussed above are intended to protect your ideas and uphold your brand. You don’t want to invest copious amounts of time creating ideas and products only to have unscrupulous competitors infringe on your rights as the owner.  You also don’t want there to be confusion in the marketplace resulting in your reputation being sullied by counterfeiters offering inferior goods.

More ways to protect your intellectual property:

  • Document your ideas – For added legal protection, use photos, drawings, and prototypes to document your ideas and inventions.
  • Use the appropriate symbols – Show others that your ideas are protected by using ©, “TM”, and “patent pending”. You can use the registered trademark symbol ®after you’ve registered your mark with USPTO.
  • Be careful sharing your ideas – Of course, you’re proud of your idea or invention but be careful sharing it before you’ve taken steps to protect it.

If you’re confused about whether you need a copyright, trademark, or patent, consult an intellectual property attorney for guidance. 

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