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University of Massachusetts Amherst

Family Business Center

How to Protect Your Intellectual Property

by Shel Horowitz

Jim Duda, head of the intellectual property (IP) practice group at FBC sponsor, Bulkley Richardson and Gelinas, came to the Center's March meeting to brief members on copyright, trademarks, patents, trade secrets, and licensing.

Whenever you have a piece of IP created for use or sale by your firm — and that includes custom software — you need to be very clear about who owns it and who has what rights.

In many cases, the correct formula to address these questions will be a licensing agreement. Duda remarked that it's "like a prenuptial agreement: it spells out who owns what, how income will be distributed, what happens if the license ends."

Licensing allows the licensor to maximize the value of the IP while maintaining ownership and control, and lets the user maximize the income from using it without having to develop products from scratch. For family businesses, there are some extra issues. For instance, “Frequently, family businesses are started by a founder who later incorporates—that creates a new entity under the law. Does the founder or the corporation own the mark?” That can become an issue if “the founder dies, or there’s a split up in the business, and you have a[n ownership] claim from someone else. That type of problem comes to us more than just once in a while. The founder never figured out what the IP was and who owns it.” And if the business is sold, these questions can have a big impact on the selling price.

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