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Crowdfunding and Protecting Your IP: Issues with Public Disclosure and Idea Theft

Crowdfunding is commonly used by inventors and entrepreneurs looking to market new products, as well as “wantrepreneurs” in need of capital to support their ideas. Crowdfunding is widely popular due to the ease and efficiency it provides to generate and access funds while simultaneously promoting the project and building hype. Although crowdfunding has given rise to new opportunities and marketing strategies, care should be taken to maintain IP rights for new ideas and brand names.

Public disclosure, such as discussing an invention or project online, can start the deadline for filing for patent protection. In the U.S., an applicant for a patent is given a one-year grace period to file for a patent after a public disclosure or offer for sale. Further, a public disclosure could also jeopardize foreign patent rights as well. A wantrepreneur or other crowdfunding user should carefully decide what information should be shared and what should be kept confidential to avoid jeopardizing patentability. Utilization of non-disclosure agreements for conversations with partners, manufacturers, or other service providers about the concept is advised. Once an idea hits the crowdfunding site, others can copy and potentially undercut someone’s business. Likewise, misappropriation of trademarks or copyrighted materials by others can dilute the brand. Filing for patents and registering trademarks and copyrights prior to disclosing an invention on a crowdfunding site are great ways to maximize protection and minimize potential threats.

Filing a provisional patent application with the USPTO would establish an early filing date and provide a year to file a non-provisional patent application. During this year, it is possible to test the waters and raise funds while ensuring the invention is protected. If a crowdfunding campaign is successful, and the plan is to bring the product to market, a non-provisional application can be filed based on the provisional to pursue full patent protection. Obtaining a patent allows the patent owner to enforce IP rights against infringers.

Also, registering trademarks for the brand name, logo, and product names prevents others from entering the market with a similar mark and confusing backers and customers. Brand recognition equates to identity in the market, and protecting that identity is crucial. Trademarks do receive common law rights naturally without registration. However, Federal registration allows for greater protection and enforcement, and permits the filing of a trademark application prior to beginning sales. Therefore, it is recommended to file with the USPTO to secure ownership of trademarks and prevent others from infringing with similar marks. Likewise, registering video clips, photos, and written text descriptions of campaign goals, and any other copyrightable material created as part of a crowdfunding campaign with the U.S. Copyright Office adds a layer of protection and gives standing to bring copyright infringement lawsuits.

It is important to share just enough information to get backers interested without revealing the essential details to preserve IP. Such information should focus on what the product does (i.e., its benefits and features) rather than how it does it (the potentially actionable technical details). Innovators should keep tabs on the internet, and especially monitor crowdfunding sites, to look out for unauthorized uses of IP. If unauthorized use is spotted, take action immediately, whether it means issuing a cease-and-desist letter to the infringer or filling out a form on the online platform.  A platform that keeps its terms of use and IP policies well posted should provide fair warning to would-be infringers.

Whether the project involves simple manufacturing or complex algorithms, it is vital to shield intellectual property to ensure the long-run viability of innovation, business, and hard work. Taking the correct steps pre-, during, and post-campaign will maximize legal protection for inventions and artistic creations, and an IP attorney can help provide guidance through the minefield of crowdfunding. Ideas are any person’s greatest asset, and should be protected as such.

Category: Copyrights, Intellectual Property, Patents, Trademarks