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What New Entrepreneurs Should Know About Intellectual Property

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What New Entrepreneurs Should Know About Intellectual Property

By Hunter Amato — Guest Writer, Inland Empire Business Journal

Delving into the world of entrepreneurship can be a daunting task. The independence and freedom that entrepreneurship offers open up significant opportunities that cannot be found in a more standard workplace, but with more independence comes more responsibility. As an independent business, it is crucial to sort out the important legal aspects that companies have to deal with on a regular basis. Intellectual property law definitely falls into that category: complex, scary to some, but absolutely vital for entrepreneurs. Here, we break down some intellectual property basics, and how they affect you as a new entrepreneur.

Intellectual Property; What is it?

According to the World Intellectual Property Organization: “Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.” Obviously, “creations of the mind” is an extremely broad term, but IP law is actually a very broad field by necessity. As we will cover later, there are many different categories of IP that require different types of protections.

Physical property laws are pretty straightforward. If someone steals physical property, the victim suffers a loss and can claim damages. Intellectual property, on the other hand, is more complex. Theft of intellectual property doesn’t necessarily mean that the victim loses what they have. If someone steals your logo design, you still maintain possession of it.

In this case, however, intellectual property theft lessens the value of what you already have. Duplicate logos on the market can confuse customers and lead to brand incoherence. Copyright infringement can undercut the licensing profits of a creative artist. Stolen inventions undermine the research and development payoff of entrepreneurs, driving down incentives via competition.

IP violations can often be hard to prove as well. Most legal frameworks for protecting intellectual property require thorough documentation and disclosures of the work done since it is impossible to determine legally when someone had a mental breakthrough or initially thought of a concept. Even the boundaries between improving upon an existing invention and violating a previous patent can be hazy.

In the entrepreneurial field, intellectual property is one of the most valuable assets of any company. Startups exist because someone at the helm created or invented something useful and wants to manifest it into the market. Good ideas are what separate good companies from bad ones, and so it’s crucial to incentivize those ideas and protect them. That is where IP law and IP protections come in.

IP Law Categories

A broad range of intellectual property requires a broad range of IP laws. Let’s take a look at the four main categories of intellectual property in the United States: copyrights, patents, trademarks, and trade secrets.

A copyright grants protection to creative works of the mind. This can include writing, music, paintings, and other creative endeavors. Copyrights last for a long time—70 years after the death of the holder—and allow litigation in cases of infringement. This also enables the copyright holder to license their work for use by others and collect a royalty. Of course, fair use exceptions enable the use of copyright material for some not-for-profit purposes, including education.

Patents are the most significant category for new entrepreneurs. A patent allows a company to be the sole producer and seller of a specific invention or process for up to 20 years. This essentially grants a monopoly during that time span. Patents are crucial for entrepreneurs and inventors because they enable a realistic timeline for production and development, and ensure a good chance at a profit once the product is brought to market. Without patent protection, small businesses might never make any returns on their investment and are at risk for predatory companies copying them and even beating them to market.

Trademarks serve as brand identifiers. Trademarks can encompass features such as logos, brand names, slogans, and even jingles. Registered trademarks are required for any branding disputes across state lines, and given modern reliance on e-commerce, that applies to almost all businesses today.

Finally, trade secrets, as their name might suggest, encompass confidential information that aids in the competitive market success of a company. From supplier lists to secret recipes to drug testing protocols, these trade secrets can all be strengthened legally under IP law if there has been a reasonable effort made to ensure their secrecy (via confidentiality agreements and the like).

Entrepreneurship and IP

Much of what makes IP law important is directly applicable to entrepreneurship. New entrepreneurs should be well aware of how IP can help and hurt their business.

In today’s market, brand identity and name ID is more crucial than ever for capturing consumer attention and loyalty. Online reviews and ratings are a prominent part of e-commerce that develop consumer brand association. This is why trademarks are vital for new entrepreneurs; a good brand name and logo, without confusing imitators, can go a long way in leading to the success of that brand. Head to the official government page for trademark info and application instructions for your next steps.

As an entrepreneur, make sure to identify which of your internal mechanisms may count as trade secrets. This means examining what information or methods provide a benefit specifically by remaining secret. Then, implement confidentiality agreements and contract clauses to legally ensure that they stay that way. This enables recourse under intellectual property law later on if trade secrets are divulged by employees or stolen by competitors.

Entrepreneurs who develop any of their own public creative work should review the copyright protections and licensing opportunities available to them. U.S. law applies the principles of copyright to any creative work that is manifested in recording or release, but possessing a copyright filed with the U.S. Copyright Office can grant much better recourse and IP protection in the legal system. Of course, every business should be very aware that it is not itself infringing upon the copyrights of others and risking penalties.

Out of all the IP law types, patents are by far the most significant for entrepreneurs. Since many entrepreneurial ventures are based around inventing something new or making a substantial improvement upon an existing process, patenting should be a primary goal quite often.

The United States Patent and Trademark Office outlines the requirements that should be met in order to be eligible for patenting, which are extensive. One eligibility requirement is being sufficient novel, or unique and new. In order to determine this, a very thorough patent search is necessary. A patent search can illuminate both whether your idea is indeed new, and what that niche in the market looks like (if it is heavily saturated with related patents, for instance).

Processes and production methods can also be patented, as can nonfunctional design and aesthetic elements. This enables companies to protect their novel contributions to a preexisting market where a patent may have expired. 

According to J.D. Houvener of Bold Patents Chicago, many entrepreneurs are at risk for missing deadlines or waiting too long to get sufficiently informed about IP options. “The same go-it-alone attitude that makes many entrepreneurs successful can also lead to overlooking of key things like the one-year patent filing deadline from the first disclosure or offer to sell an invention,” says Houvener.

In Summary

As a new entrepreneur, you are most likely juggling hundreds of responsibilities trying to run or start a business. Intellectual property might seem like something to put off until later, and can be daunting at first glance. However, IP law can be crucial to the success of any new venture.

Entrepreneurs are valuable because of their intellectual contributions to projects, and those contributions can be governed and protected by IP protections as outlined in this article. Copyrights, trademarks, trade secrets, and patents all have their place in any new business, and many should be implemented as soon as possible.

Make sure to consult a qualified legal expert to see whether your company might be ripe for a patent or copyright. A patent attorney or law firm can point you in the right direction and potentially influence the way you approach your business strategy.

For more like this, head to our blog!

Hunter Amato is a content contributor for the Inland Empire Business Journal. Email: hunteramato1995@gmail.com

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

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Business

Partners in Action: How CalOSBA is bridging the gap in funding and resources for Inland Empire small businesses

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By Josaline Cuesta, California Program Director, Small Business Majority & IEBJ Content Contributor

For Tara Lynn Gray, Director of the California Office of the Small Business Advocate (CalOSBA), entrepreneurship has always been a core principle of her life. Her journey as an advocate for small businesses wasn’t built on textbooks, but on her family’s roots in small business ownership. As a young girl, she watched her grandmother empower and elevate Black women’s presences by styling their hair and instilling confidence in their personhood. She witnessed the direct impact of small businesses on community members in real time, and that’s always stayed with Tara.

As a key partner of Small Business Majority, she stands as a champion for the dreamers and risk-takers; the pillars of the communities across California and in the Inland Empire. I chatted with her to share more about her work at CalOSBA, what entrepreneurs can expect when they meet with a CalOSBA advisor, and the resources and community support available to help boost entrepreneurship in the Golden State.

Tell us about CalOSBA’s role in the small business community.

“California has the biggest small business community in the country, accounting for 4.1 million small businesses in 2023 alone. The overwhelming majority have no employees at all, except themselves, which means they don’t have a Board of Directors, expensive consultants, and they definitely don’t have lobbyists. I take my role as their advocate seriously, talking with and listening to small business owners from up and down the state. During the pandemic, we were under a very bright spotlight, administering nearly $5 billion in direct relief funding and we’re proud of the grant programs we still oversee. But that’s only a small part of what we do at CalOSBA.

My team connects small business owners to information and resources to help them get started, manage their business and, most importantly, to grow. If they’re looking for help, we want to be the first door they knock on. In addition, we offer Outsmart Disaster training, which focuses on how to mitigate risks associated with natural disasters and recovery avenues available to them. I always say the flagship of our office is our support for the statewide network of Small Business Centers, providing 1:1 business assistance and training for small business owners of all industries and in dozens of languages. In addition, supporting partners that deliver these services–all the federally funded centers like the Small Business Development Centers and the Women’s Business Centers but also Chambers of Commerce and other nonprofits—is a core function of my office. And a big source of pride because we know what a difference they make for their clients.”

What can small business owners expect from meeting with a California Small Business Center advisor?

“Small business owners can expect to meet someone who is fully invested in them. Our Centers cover the full spectrum of business needs, from writing a business plan and obtaining the right permits and licenses, to finding capital, planning a succession strategy and marketing to e-commerce. Our business advisors provide the experience and the objective perspective to help business owners optimize their best assets: ideas, energy, and ability to keep adapting and learning. And they do it because they love helping other people succeed. What’s more, business ownership can become isolating and it may be challenging for entrepreneurs to find assistance. But they don’t have to go at it alone–and they shouldn’t, when these no-cost and low-cost services are available to them.”

What’s the most rewarding part of your role at CalOSBA?

“I always say I have the best job in the state. And it’s because I frequently have the honor to watch someone’s dream come true. I love a ribbon-cutting ceremony–Every time, big or small. It means someone dreamed of accomplishing something and worked hard for it: They opened the doors to their business, they made a sale, and hopefully they will hire their first employee and then it’s off to the races. But no matter what happens to that business, that ribbon-cutting is a milestone they made happen for themselves. There are many other events I get invited to, where you can just see the hope and pride, and even fear in their faces. I’m often overwhelmed by the sheer emotion of it, and I’m always humbled that I get to participate in that person’s big milestone.”

What are some new programs that can benefit small business owners in the Inland Empire?

“The number one question my office gets asked is how to access small business financing. To help address this key need, we’re launching the Technical Assistance for Capital Readiness program this February. The program is part of a bigger effort to fill well-known funding gaps in the state to benefit very small businesses and Socially and Economically Disadvantaged Individuals (SEDI). Through investments from the U.S. Treasury, the State Treasurer’s Office and IBank, the program is going to support lenders to facilitate “high risk” loans that they normally would not approve.

In addition to supporting lenders, my office also received $25.3 million in U.S. Treasury funding to start the new Capital Readiness network. The Capital Readiness Coaches in this network will help business owners get ready for the lending marketplace, help them make the best choices in a high interest-rate environment, and optimize the use of the capital once they receive it. The network is also designed to help spread the word about this opportunity to these SEDI-owned businesses, and some of those partners will be focused on supporting the Inland Empire small business ecosystem.”

How can business owners get in touch with CalOSBA?

“That’s simple! Check out calosba.ca.gov and sign up for our monthly newsletter, where I write a column and showcase success stories from our network, along with deadlines and updates on grant and workforce support programs. We’re also on social media, so I would encourage business owners to check out all of our channels.”

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Opinion

BNBuilders’ Scott Augustine Leads the Company’s Expansion into the Inland Empire

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PEOPLE ON THE MOVE

Residing in the Inland Empire for nearly a decade, Scott seamlessly integrates his professional expertise with a personal dedication to regional progress. With an extensive 20+ year career in construction, he has played a vital role in shaping BNBuilders’ presence in the Inland Empire’s landscape. Notably, his impactful contributions to UC Riverside and his current involvement in the development of the Chámmakilawish Pechanga School for the Pechanga Band of Indians. This endeavor reflects his commitment to projects that not only enhance the built environment but also contribute to local education and well-being.

Since joining BNBuilders in 2020, Scott has brought valuable knowledge and leadership to the team. His impressive professional qualifications underscore his dedication to safety, sustainability, and maintaining the highest standards in construction practices.

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Career & Workplace

California’s Population Decline Continues to Hammer Labor Supply

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State’s Workforce Contracts Again In Latest Numbers; Unemployment Rate Ticks Up 

California’s labor market grew modestly in the latest numbers. Total nonfarm employment in the state expanded by 8,700 positions in September, according to an analysis released today by Beacon Economics. August’s gains were also revised down to 8,900, a 19,000 decrease from the preliminary estimate of 27,900.

As of September 2023, California has recovered all of the jobs that were lost in March and April 2020 (the beginning of the pandemic), and there are now 436,400 more people employed in the state compared to pre-pandemic February 2020. Since that time, total nonfarm employment in California has grown 2.5% compared to a 3.0% increase nationally. On an annual basis, California increased payrolls by 1.7% from September 2022 to September 2023, trailing the 2.1% increase at the national level over the same period.

California’s unemployment rate rose slightly to 4.7% in the latest numbers, up 0.1 percentage points from the previous month. The state’s unemployment rate remains elevated relative to the 3.8% rate in the United States overall. Moreover, California continues to struggle with its labor supply, which fell by 17,700 in September, a decrease of 0.1% on a month-over-month basis. Since February 2020, the state’s labor force has contracted by 216,300 workers, a 1.1% decline.

“Census figures released this week reveal the extent to which households continue to leave California,” said Taner Osman, Research Manager at Beacon Economics. “The state’s population has fallen by half a million people over the past three years and this is filtering through to the economy, where the labor force has shrunk and employers are struggling to find workers.”

Industry Profile  

  • At the industry level, job gains were mixed in the latest numbers. The Health Care sector led the way with payrolls expanding by 18,200, an increase of 0.7% on a month-over-month basis. With these gains, Health Care payrolls are now 9.6% above their pre-pandemic peak.
  • Leisure and Hospitality was the next best-performing sector, adding 11,300 jobs, a month-over-month increase of 0.5%. With these gains Leisure and Hospitality payrolls are now 0.4%, or 8,500 jobs, above their pre-pandemic peak.
  • Other sectors posting strong gains during the month were Retail Trade (3,100 or 0.2%), Construction (2,200 or 0.2%), Real Estate (600 or 0.2%), and Management (500 or 0.2%).
  • Payrolls decreased in a handful of sectors in September. Information experienced the largest declines, with payrolls falling by 7,300, a contraction of 1.3% on a month-over-month basis. However, this decline was driven by the strikes in the Motion Picture and Sound Recording sub-sector, which has shed 30,800 positions over the last year, a 18.2% decline.
  • Other sectors posting declines during the month were Professional, Scientific, and Technical Services (-5,900 or -0.4%), Administrative Support (-5,500 or -0.5%), Manufacturing (-4,600 or -0.3%), Finance and Insurance (-2,200 or -0.4%), Other Services (-1,100 or -0.2%), and Transportation, Warehousing, and Utilities (-500 or -0.1%).

Regional Profile

  • Regionally, job gains were led by Southern California in September. Los Angeles (MD) experienced the largest increase, with payrolls growing by 8,700 (0.2%) during the month. The Inland Empire (5,900 or 0.4%), Orange County (5,400 or 0.3%), San Diego (1,400 or 0.1%), and Ventura (800 or 0.3%) also enjoyed job gains. Over the past year, Orange County (2.1%) has seen the fastest job growth in the region, followed by Los Angeles (MD) (2.0%), El Centro (1.8%), Ventura (1.7%), San Diego (1.5%), and the Inland Empire (0.7%).
  • In the San Francisco Bay Area, growth was mixed. San Rafael (MD) (1,000 or 0.9%) and Santa Rosa (1,00 or 0.5%) enjoyed the largest increase during the month. Vallejo (600 or 0.4%) also saw payrolls expand. On the other hand, San Francisco (MD) (-4,100 or -0.3%), San Jose (-1,800 or -0.2%), the East Bay (-1,600 or -0.1%), and Napa (-300 or -0.4%) all experienced payroll declines during the month. Over the past 12 months, Santa Rosa (3.4%) has had the fastest job growth in the region, followed by San Rafael (MD) (3.0%), the East Bay (2.0%), Vallejo (1.9%), San Francisco (MD) (1.4%), San Jose (1.3%), and Napa (0.5%).
  • In the Central Valley, Sacramento experienced the largest monthly job gains with payrolls expanding by 2,200 (0.2%) positions in September. Payrolls in Bakersfield (700 or 0.2%), Modesto (700 or 0.4%), Redding (500 or 0.7%), Visalia (400 or 0.3%), Stockton (200 or 0.1%), and Chico (100 or 0.1%) also jumped during the month. On the other hand, Madera (-300 or -0.7%) and Merced (-100 or -0.1%) had payrolls decline. Over the past year, Yuba (2.6%) has enjoyed the fastest growth, followed by Hanford (2.4%), Fresno (2.3%), Sacramento (2.1%), Visalia (1.4%), Chico (1.3%), Bakersfield (1.0%), Madera (0.7%), Stockton (0.7%), Modesto (0.2%), Redding (0.0%), and Merced (-3.6%).
  • On California’s Central Coast, Santa Barbara (400 or 0.2%) added the largest number of jobs in September. Salinas (300 or 0.2%) and Santa Cruz (100 or 0.1%) also saw payrolls increase during the month. On the other hand, payrolls in San Luis Obispo declined (-300 or -0.2%). From September 2022 to September 2023, Salinas (4.2%) added jobs at the fastest rate, followed by San Luis Obispo (3.1%), Santa Barbara (2.9%), and Santa Cruz (1.7%).
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