By Staff Writer | 04/08/2025
There’s a reason why Coca-Cola® is famous for keeping its recipe a secret. Intellectual property (IP) is the ultimate competitive advantage.
Whether you’re about to launch a startup or you currently run a small business, understanding your IP rights – and how to protect them – is a must.
What Is Intellectual Property and What Are Intellectual Property Rights?
The U.S. Department of Commerce’s International Trade Administration (ITA) provides this explanation of intellectual property and intellectual property rights: “Intellectual property…refers to creations of the mind: inventions; literary and artistic works; and symbols, images, names, and logos used in commerce. Businesses are often unaware that their business assets include IP rights.”
What Is IP Protection?
Since intellectual property always stems from someone’s imagination, IP can take many forms. In fact, we see examples of intellectual property all around us every day. Everything from your favorite literary works to the car you drive is a product of someone's intellectual property.
Still, there are four main categories of IP protection that preserve the rights of people's intellectual property: patents, trademarks, copyrights, and trade secrets.
What Are Patents and What Do They Protect?
Patents allow inventors to protect their intellectual property. Dr. Gary Deel, a lawyer and a professor at American Public University’s Dr. Wallace E. Boston School of Business explains, “Patents grant inventors exclusive rights to new inventions, and these rights exclude others from making, using, or selling them for a set period of time, which is typically 20 years.
“They protect processes, machines, compositions of matter, and improvements thereof. Generally, however, patents do not protect mere ideas – only tangible applications.”
The U.S. Patent and Trademark Office (USPTO) states that there are three different types of patents:
- Utility patents – for inventing a new or improved and useful process, machine, article of manufacture, or composition of matter.
- Design patents – for inventing a new, original, and ornamental design for an article of manufacture.
- Plant patents – for inventing or discovering and asexually reproducing any distinct and new variety of plant.
How Long Does Each Type of Patent Protection Last?
Utility patents usually remain in effect for 20 years from the date the patent application is filed, according to the ITA. However, the ITA notes that “periodic fees are required to maintain the enforceability of the patent” throughout that timeframe.
Design patents issued before May 13, 2015, provide 14 years of protection. Since then, all design patents now provide 15 years of protection from their date of grant.
Lastly, plant patents provide IP protection for 20 years from the date of filing the patent application.
What Does It Mean When a Patent Is Pending?
Filing patents isn’t like filing your taxes; it can take years to process the paperwork. In fact, the USPTO averages over two years to process each patent application.
The “patent pending” status refers to patent applications that are pending approval from the USPTO.
As a consumer, you may see products advertised with the phrase “patent pending.” However, the USPTO says that this phrase offers no legal protection. Instead, it merely informs the public that a patent application exists.
“Patent protection does not start until actually granted…. ‘Patent pending’ language may impress consumers, but businesses must exercise caution when using this wording in marketing materials,” says the USPTO. Falsely indicating that a company filed a patent “is prohibited and subject to a fine.”
Moreover, companies that use language like “patent applied for” or “patent pending” inappropriately run the risk of being sued by competitors.
What Are the Limitations of Patent Protection?
While it’s true that patents protect intellectual property, there is some confusion among the general public about what that protection entails. Perhaps the biggest misconception is the idea that a patent’s mere existence prevents others from copying a product or trademark.
It is imperative – especially for startup founders – to understand the limitations of patents before filing a patent application. A patent is simply a legal document that provides its holder with the grounds to sue a person or company who engages in IP infringement.
This legal protection can be beneficial for new startups. Nonetheless, business owners must keep in mind that protecting IP alone won’t ensure a company’s success.
“Patents do not guarantee success of products in commercialization or prevent others from inventing similar, competing products,” says Dr. Deel.
What Is the Difference Between a Copyright and a Trademark?
“Copyrights protect creative works such as books, music, and computer code,” observes Dr. Deel. “Trademarks protect brand identifiers – such as names, logos, and slogans – that distinguish goods or services.”
“A copyright grants its owner the exclusive right to reproduce, distribute, and perform the work publicly,” Dr. Deel adds. “Still, securing a copyright for your intellectual property does not prevent someone from independently developing a similar work.”
A trademark, on the other hand, protects the phrases, symbols, and designs that identify goods and services, according to the USPTO. The agency notes, “A trademark is used for goods, while a service mark is used for services.”
As the USPTO also points out, you do not need a registered trademark to establish trademark rights. Instead, using your trademark to provide goods and services provides you with limited rights.
Those rights, however, “only apply to the geographic area in which you’re providing your goods or services,” per the USPTO. Conversely, a registered trademark provides “stronger, nationwide rights,” the USPTO states.
Nevertheless, a trademark can only protect so much. “It does not prevent others from using similar words descriptively, and the protection is only within the industry in which the trademarks are used,” says Dr. Deel.
How Long Does Copyright Protection Last?
A copyright protects IP for a limited time, which varies depending on several factors. According to the ITA, copyrights for works created after January 1, 1978, remain in effect “for 70 years after the death of the author.” For works published prior to 1978, the U.S. Copyright Office states that copyright protection varies.
There are also nuances regarding copyright protection for works for hire. As the ITA notes, “the copyright lasts for a term of 95 years from the year of its first publication or a term of 120 years from the year of its creation, whichever expires first.”
How Long Does a Trademark Last?
According to the USPTO, a trademark registration can last quite some time. It remains valid for as long as its owner continues to keep up with post-registration maintenance paperwork.
The USPTO also warns, “If these documents are not timely filed, your registration will be cancelled and cannot be revived or reinstated.”
What Are Trade Secrets, and How Do They Differ from Patents, Copyrights, and Trademarks?
A trade secret is a type of protection for intellectual property that meets specific criteria. As the USPTO states, intellectual property that qualifies for trade secret protection must meet certain guidelines. It must:
- Be information that has either actual or potential independent economic value by virtue of not being generally known
- Have value to others who cannot legitimately obtain the information
- Be subject to reasonable efforts to maintain its secrecy
Patents, copyrights, and trademarks give their respective owners the power to take legal action against infringing parties. Trade secret protection, however, grants companies the opportunity to keep their competitive advantages under wraps.
“Trade secrets are generally protected under State law,” according to the USPTO’s Office of Policy and External Affairs. It adds, “every state recognizes some form of trade secret protection.”
You can find dozens, if not hundreds, of examples of trade secrets at your local grocery store. Just look at any packaged good that names “fragrance” as an ingredient.
As the FDA explains, “Fragrance and flavor formulas are complex mixtures of many different natural and synthetical chemical ingredients, and they are the kinds of cosmetic components that are most likely to be ‘trade secrets.’”
Patent, copyright, and trademark paperwork is all public record. Unsurprisingly, trade secret protection depends entirely on confidentiality.
When Should Startup Founders Consider Investing in Patent Protection?
Obtaining a patent can be quite expensive. Since the patent application process is relatively complex, businesses usually consult patent attorneys. The resulting legal fees only further add to the cost of the patent application process.
However, a patent can be a valuable asset for a company. “Founders should consider investing in IP protection if their technology provides a competitive advantage and is likely to be copied by others,” says Dr. Deel.
“Patents are also particularly valuable if they make the company attractive to investors, create the possibility of licensing, or erect a market barrier to others,” he adds.
How to Determine Whether an Invention May Be Worth Patenting
There are several key factors to consider before filing a patent application.
“First, you must consider whether the invention is novel and non-obvious,” says Dr. Deel. “If the USPTO does not consider the invention to be unique or original, it may not approve the patent application,” he warns.
Next, Dr. Deel recommends comparing the cost of obtaining a patent as it relates to the overall expected earning potential of the IP.
“Patent filings can cost in excess of $10,000 and may take years to complete, so startups should be sure that they are willing to endure these costs. Also, they have to be financially capable of pursuing enforcement if infringement occurs,” Dr. Deel states.
The time and expense of securing a patent can hinder startup operations and business planning. Fortunately, Dr. Deel has a solution.
“It’s worth noting that filing provisional patents first can be a cost-effective way of securing a filing date while determining commercial viability for an uncertain product or technology,” he says.
When Does a Startup Company Benefit from Forgoing a Patent?
Patents require full public disclosure, which may not always be preferable. Instead, says Dr. Deel, other means of IP protection may be advantageous.
He describes four alternative options startup owners may prefer:
- Trade secret protection – Keeping proprietary information confidential can safeguard IP (e.g., formulas, processes, computer algorithms, etc.) indefinitely.
- Non-disclosure agreements (NDAs) – “These tools can bind employees, partners, and vendors to secrecy through legal means, thus protecting trade secrets,” Dr. Deel states. He also points out that non-disclosure agreements are only enforceable against signers and can’t prevent independent discovery.
- Defensive publications – This tactic doesn’t rely on secrecy; in fact, it takes the opposite approach. “The creator of a tangible idea publishes the details into the public domain in order to prevent others from patenting the invention,” Dr. Deel explains.
- Technical complexities – Some companies protect their proprietary assets by producing IP that’s too difficult for competitors to reverse-engineer.
“Ultimately, for many startups, a combination of NDAs, trade secrets, and selective patenting can provide a good balance of protection and confidentiality,” Dr. Deel observes.
What Do Startup Owners Need to Know About Patent Litigation?
Lawsuits, particularly those involving IP rights, are a serious concern that startup owners can’t afford to overlook. “Patent litigation can be complex, expensive, and time-consuming,” says Dr. Deel.
“This type of litigation often carries a price tag of millions of dollars in legal fees, and it can last several years. It can also be financially devastating to defend even a frivolous suit,” he adds.
Worse yet, the legal system is rife with opportunists who abuse it to target businesses.
“Companies have to be vigilant to look out for patent trolls. These people are non-practicing entities who purchase patents solely to sue for infringement,” Dr. Deel states.
To help combat this threat and mitigate risk, he recommends startup owners conduct freedom-to-operate (FTO) analyses.
An FTO analysis is a proactive measure that companies use to research existing patents prior to launching their own innovations. By completing this step, business owners reduce the likelihood of infringing on the rights of others’ intellectual property.
“Companies should also keep in mind that the United States is a first-to-file system, and so startups have to file patents early if they want to block competitors,” says Dr. Deel.
“Founders should be aware of injunction risks,” Dr. Deel adds. “Losing patent cases can lead to court-ordered product bans that involve costly redesigns or licenses.”
As Deel explains, patent cases often settle outside of court. Common resolutions can include licensing agreements, mediation, or arbitration.
“Litigation should be the last resort. However, startups should still seek the counsel of good IP lawyers at the onset, in order to develop an IP strategy that is aligned with their business goals,” he advises.
Entrepreneurship Degrees at American Public University
Intellectual property law has a widespread effect throughout our economy. It impacts millions of business owners and consumers daily.
American Public University (APU) offers online degree programs suited to learners interested in entrepreneurship:
Taught by highly experienced faculty members, courses in these degree programs feature a range of topics, including innovation design and prototyping, practical law for the entrepreneur, and technological innovation. Other courses include legal practices for entrepreneurs, ideation, and the fundamentals of business analysis.
These programs have also received specialty accreditation from the Accreditation Council for Business Schools and Programs (ACBSP®). This accreditation ensures that both programs have been rigorously examined and held to high academic standards.
Interested in learning more about these entrepreneurship degrees? Visit APU’s business and management program page.
Coca-Cola is a registered trademark of The Coca-Cola Company.
ACBSP is a registered trademark of the Accreditation Council for Business Schools and Programs.
