Technology Law Blog

Intellectual Property Rights and the Crowdfunding Platform

Intellectual Property words graphicCrowdfunding, some would say, is the new social networking platform of raising money from people online.  While crowdfunding is a relatively new term and concept, traditional principles of law still apply.  Artists, startups and online creators using this new platform are governed by Intellectual Property principles.

Intellectual Property (IP) refers to the creations of the mind; and most commonly include ideas or inventions, literary and artistic works, symbols that identify your brand, names, logos and/or competitive business ideas or information.  Under this broad umbrella of Intellectual Property, there are generally four categories that govern the use of Intellectual Property:

  1. Trademarks
  2. Patents
  3. Copyrights
  4. Trade Secrets

Before pitching or disclosing your concept to an online crowdfunding community to raise money these four categories of protection and the potential resulting consequences should be thoroughly examined.  Failure to do so could result in the inadvertent theft, infringement or forfeiture of your IP rights.  Let's take a deeper look at these four categories.

Trademark

A Trademark is a word or symbol that acts as a source identifier for goods or services.  The trademark is the brand of your product or service.  A registered trademark provides the owner the exclusive use of the brand in the jurisdiction that it is registered in.  Commonly recognized trademarks include: Nike, Microsoft, Facebook, Twitter, and Pandora.  When pitching your idea or concept on a crowdfunding site you should seek to first secure the rights to the brand through a trademark registration so as to preclude another from using or “hijacking” your unique brand identifier.  If you would like to be the exclusive owner of the name you should also register the domain name and any common variations of the name with an online domain registry.

Patent

Patent rights can also be put at risk when pitching investors.  A Patent is a legal right granted by the government to exclude others from making, using, or selling the invention.  When pitching your idea or concept online to secure monies, such as through a crowdfunding website, you may make certain disclosures that trigger strict patent filing deadlines.  For instance an inventor has only 12 months to file a patent from the date of publically disclosing the invention.  Thereafter, the patent filing would be rejected.  Therefore, if the inventor is making the first public disclosure of the invention on a crowdfunding website, then that inventor only has a 12 month window from the date of disclosure to file for patent protection.  A disclosure of an idea or invention may also trigger a patent infringement lawsuit if a patent holder deems the invention protected under his or her prior filed patent.

Copyright

Copyright applies to virtually all content found online.  A copyright is a work of original authorship fixed in a tangible medium of expression – in other words: pictures, music, news articles, text, graphics, as well as a website’s layout, design and backend source code. A copyright does not protect the idea but rather how it is expressed. A copyright is generated upon the work’s creation.  However, the owner of a federally registered copyright is afforded additional rights that include the ability to file a lawsuit to stop the unauthorized use (copying) of their copyrighted work and receive statutory damages that operate as a penalty to the infringer.  If you have created a website or are building a software application in conjunction with your crowdfunding project, that website or code may not be copied in whole or in part and used without your permission.

Trade Secret

A Trade Secret is information that has value, is not generally known and is subject to efforts to maintain its secrecy.  Common Trade Secrets are formulas, recipes, marketing plans, insider pricing information and/or customer lists.  When seeking funding for your project through a crowdfunding site you should be careful of how much, if any, of this information should be disclosed.  If this type of information becomes generally available through an open disclosure its protected status as a Trade Secret is likely to be forfeited.  Thereby, making the information available for anyone to use and commercialize.

Listen to Iris Linder talk about crowdfunding on Michigan Business Network

Crowdfunding is an exciting new platform to use to raise money in support of your project.  However, you should carefully review the Intellectual Property principles governing your project and disclosure to properly protect your rights and avoid any inadvertent theft, infringement or forfeiture.

Related Crowdfunding Articles

Categories: Copyright, Crowdfunding, Intellectual Property, Patents, Trade Secrets, Trademarks, Venture Capital/Funding


Shareholder
Lansing
T: 517.371.8103

Sam focuses his law practice in the area of intellectual property, specifically in trademarks, copyrights, trade secrets and software licensing. He currently leads the firm’s Information Technology Practice. 

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