One of the hottest buzzwords in today’s business environment is innovation.
It’s an important concept, but not a guarantee of instant success or profitability — remember all those dot-com start-ups? But innovation can be profitable to companies that keep in mind certain business basics. Revenue streams and correct pricing aside, legal analysis and agreements are required to protect innovative products and ideas.
Here are five points to consider.
* When you think of an idea or new product, talk to your attorney before talking to manufacturers or developers. You may have intellectual property that needs protection under federal copyright, trademark and patent laws.
If outside contractors help you develop the product and you fail to obtain the necessary waiver of their rights to claim the intellectual property, you may find yourself in a dispute over ownership rights. If your attorney is unfamiliar with intellectual property law, ask for a referral.
* If you have a product that needs innovation, seek the assistance of NASA Glenn Research or nearby academic institutions.
There is an abundance of talent in these sectors willing to engage in problem-solving. But again, obtain confidentiality and nondisclosure agreements before sharing proprietary information. Also, use development agreements to provide a clear understanding of the relationship between the parties and their roles, rights and responsibilities.
These institutions and others have technology that is developed but not commercialized. Technology transfer may be a useful vehicle for a business without a research and development department seeking new products to take to market.
* Licensing agreements permit one party to use the ideas or innovations of another, usually for a royalty or fee. A license agreement should be carefully considered and crafted, and requires the input of the company and its attorney.
The company needs to be actively involved in providing input to the attorney as to the business issues and considerations, so the terms of the agreement are reasonable and practical for implementation.
* Before commercializing new technology, perform a risk/liability analysis to determine the necessary business entity or entities that own the technology, manufacture the product, and distribute and sell it. An attorney familiar with this type of analysis and with experience in business entity formation should be involved.
* It is essential to engage legal counsel early in the product development process to review applicable laws, regulatory rules and regulations, and to determine the costs of legal compliance to factor into the profitability analysis. That may include state, local, federal and international laws and treaties.
If a client only calls an attorney when encountering a problem, the attorney is confined to solving only that dilemma. And although this may lead to the resolution of future problems, the client is missing the opportunity to tap into his or her attorney’s creative — and perhaps innovative — legal side to minimize or avoid legal problems. Linda L. Bluso is a partner in the Cleveland office of Brouse McDowell. Reach at (216) 830-6830 or [email protected].
