Shielding your innovations is almost as crucial as the innovations themselves. Here’s how to do it.
1. You snooze, you lose
Eighty-eight percent of big companies’ value is based on their brands, methodologies, content, training systems, and other innovations, and the same holds true for many smaller players, says attorney Andrew Sherman, a partner at Jones Day and the author of Harvesting Intangible Assets. Unfortunately, he says, many firms are “asleep at the switch” and don’t protect their assets — to their peril. Do an intellectual-property audit with your attorney to prevent rivals from monetizing your ideas.
2. Speed counts
Until 2013, you had to prove you invented something first to own it. Now, under the Leahy-Smith America Invents Act, the first to file for a patent usually wins, says Dallas intellectual-property attorney Russ Schultz. To beat lumbering Goliaths, apply now for provisional patents, which you can write in a week, to get a year’s protection, says Doug Hall, CEO of Cincinnati-area innovation systems company Eureka! Ranch. “To the nimble go all the rewards,” he says.
3. Lock down contracts
Insist that contractors for creative projects like writing software sign an ironclad work-for-hire agreement that says you own the copyright. Otherwise, the law assumes that they own it. Also, have staffers sign employment contracts that assign you ownership of their inventions. Have you forgotten to do this? “Now is the time to get it fixed,” says Sherman — especially if you plan to sell the firm. Prospective buyers will walk if you’re missing this paperwork.
4. Play offense
Jeremy Brandt, whose Dallas real estate investing firm We Buy Houses owns the trademark to its brand, knows he has to stop infringers so he doesn’t lose control of the trademark. He has a team of legal interns track unauthorized uses — and the company’s efforts to stop copycats — in its customer relations management system. Once warned that they’re infringing on a federally protected trademark, some violators ask to license the brand. “This has helped our sales process,” he says.
5. Hire legal veterans
You’ll be better off with seasoned pros in a boutique law firm than with inexperienced associates in a giant firm. “The quality is better and cost is lower if you can work with senior partners who have been doing patent prosecution for a long time,” says Andrew Levi, founder of Dallas digital marketing and analytics firm Blue Calypso. He has used that strategy to obtain and protect five patents, with six pending — vastly increasing the firm’s value. (For more on patents, see “RPX: Taking on the patent trolls.”)
Verne Harnish is the CEO of Gazelles Inc., an executive education firm. Read more:
Five ways to make it in the U.S.A.
How to bust through barriers to business growth
What Costco can teach you about cash
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This story is from the March 17, 2014 issue of Fortune.