Recently, I was asked, “What are the most common mistakes that small businesses make?” There are several, but the first two that came to mind within the intellectual property arena are:
(1) failing to make sure they own all rights in their content, whether it’s creative work (web content, logo, software, etc.) or their identity (business name, logo, etc.), and
(2) misusing others’ copyrighted materials.
Failing to Own All Rights
As for the first mistake, too often, small businesses start out doing business on a handshake, rather than getting important agreements detailed in writing. For example, offering a friend “a stake” in the business in exchange for “sweat equity” contributions of marketing, programming, web design, etc. Or simply paying a web designer or marketing professional to create content, without ensuring there is a written “work for hire” agreement in place before the work begins. Verbal agreements open the business up to disputes over what “a stake” means (a share of the company? Membership and voting rights?) and who owns the creative content and right to control use of the intellectual property inherent in such materials.
Unless the person is an employee of the business, the copyrights in the materials vest in the creator, not the company, unless appropriate written agreements are in place. This puts the small business at risk for the person to resell, reuse or otherwise compete using the very materials created for their venture. Therefore it’s important to make sure you have written agreements with writers, designers, web designers, programmers, etc. BEFORE they begin working on your project, both identifying the project as a work for hire AND assigning all intellectual property rights to your company.
Using Copyrighted Materials from Others Without Permission
The other key mistake business owners often make is using copyrighted materials from others without permission. For example, copying and using photos or blog posts from the internet without permission can be copyright infringement. Simply attributing the photographer or the source of your content is not sufficient to protect your business from potentially significant liability. There are some limited exceptions, such as “fair use” for criticism, commentary, news reporting, teaching (including multiple copies for classroom use), scholarship or research. But, it’s a particularly fraught area to navigate, so you should consult with a lawyer before you rely on any such defense if you think you can use some portion of someone else’s created work without permission. As a rule of thumb, unless a bit of content was created by you, your employees or someone who’s signed a contract to create content for you, do not use it without written permission from the owner.