Counseling Clients With Texas Intellectual Property Issues
Our clients come from a wide variety of industries and sizes. We help advise clients about the best ways to protect their existing intellectual property rights. This involves a broad range of services that ranges from business formation, contracting and licensing, and contract drafting and litigation.
We can summarize our Texas intellectual property practice in these three areas:
- Counseling: Finding and advising on the best strategies to protect the intellectual property of each different client. At the Eldredge Law Firm, that includes conducting searches on trademarks proposed by clients and counseling them on the availability of those marks. It can be advising a new start-up of what corporate structure would help it best achieve protection of its patents.
- Protecting: Protecting a client’s intellectual property involves registering their trademarks, patents, or copyrights to maximize their rights. Our intellectual property lawyers file and prosecute patent applications and register trademarks and copyrights. At the Eldredge Law Firm, we have filed thousands of patent applications.
- Enforcing: When third parties infringe on clients IP rights, the enforcement of their property rights. That can involve litigation in federal and state courts in Texas.
Business Formation in Texas
When starting a new business in Texas, it is advisable to seek legal assistance to look at the different business structures available. In the State of Texas, these structures are set out in the Texas Business Organizations Code and administered by the Texas Secretary of State. The options include: C Corporations, S Corporations (which has to be filed through the IRS), Limited Liability Companies (LLCs), as well as other entities for professional partnerships and non-profits. A corporation is formed by filing a certificate of formation with the State of Texas Secretary of State. If you have an existing corporation in another state, you can register it to do business in Texas.
Intellectual Property Advantages to Incorporating
These entities offer different advantages/disadvantages from legal and taxation standpoints, so it is always good to consult with a CPA besides a lawyer. One of the most popular business structures is the corporation because it protects the individual owners from being personally liable for the debts and responsibilities of the company.
In the case of intellectual property, incorporating offers inventors, creators, and entrepreneurs advantages for protecting their copyrights, patents, and trademarks. It puts the public on notice that the holder of the registered trademark or patent is a corporation or LLC in Texas. Since corporations in good standing, federal trademarks, and patents are electronically searchable, it means both competitors and potential partners can easily find who the legal owner of the intellectual property is. For litigation purposes, it means that there is little confusion over ownership for any party conducting a due-diligence search.
To illustrate how important incorporating a business can be, ask the simple question of who owns the intellectual property in the business? Does it belong to one owner? To three shareholders in a partnership? To the contract software developer who wrote code or an employee who did the work? Does the company hold a license? In the case of a shareholders’ divorce is the IP part of the marital assets? Who gets the IP in a corporate bankruptcy?
Corporate Ownership of Intellectual Property
Setting up a corporate structure can help clarify the rights to business intellectual property. A corporation can hold the patents, copyrights and trademarks created by the partner(s) and/or employees of the company. An independent contractor hired to produce software can sign an agreement assigning all IP rights in his work product to the corporation.
Then you may have a really common scenario. A company’s founder contributes his patents, trademarks or copyrights to the company assets at formation. In a sole proprietorship that might be the only assets of the company at formation. If he/she has partners, they might bring in capital. Think of businesses started based on one invention or program. A start-up where the developer brings his app or program and partners supply investment capital. Or, new partners buy into an existing corporation through purchase of stock in the company.
This just goes to show the type of complexity that can surround the formation of a business where intellectual property is one of the main assets, if not the main asset!
The Importance of Proper Business Formation for IP
Having a proper corporate structure is critical in all these scenarios. It keeps all the assets of the company under the ownership of the corporation and not individuals. That ensures that the corporation’s rights and obligations are legally tied to the company and not to individuals. The corporation and not owners/investors individually are liable for the debts of the company. If there is litigation, the corporation itself has standing to bring suit or be sued, instead of individuals.
Having shareholder, partners, owners with clearly spelt-out roles and ownership interests allows for more certainty and less confusion. Contracts and licenses can even be included into the operating agreements or incorporation papers filed with the state, creating a record.
Many corporate entities require a board of directors or partners meetings—with a record taken of the proceedings and filed. Changes in ownership structure must usually take place at these meetings. They often require special notice—like with weeks of notice through certified letter. These conditions can be set during the incorporation process by counsel with agreement of all partners.
The advantages of formally incorporating a new or existing business are many. For owners of intellectual property, it is even more critical. Whether it’s for transparency, certainty, or for standing, the benefits clearly outweigh the downside.
Our law form can help you choose the right type of business structure to protect your company and its intellectual property.
Intellectual Property Litigation In Texas
At Eldredge Law Group, our full-service IP practice offers Intellectual Property Litigation in Texas state court, federal courts, and administrative agencies. Our experienced litigators handle a wide variety of IP litigation, including patent, copyright, and trademark infringement. Our experienced litigators handle a broad range of intellectual property property actions at the state and federal level. We handle copyright, patent, and trademark law, including USPTO Trademark Trial and Appeal Board proceedings. Protect your intellectual appointment and schedule a consultation in our Houston or Dallas office.