The Top 10 Questions Tech Entrepreneurs Ask

Here is a good summary of legal issues for tech entrepreneurs: The Top 10 Questions Tech Entrepreneurs Ask.

Chicago Needs More Angels (or Recognition of Them)

I attended midventuresLaunch this week.  The conference organizers designed the content to be informative and a rallying cry for entrepreneurship in Chicago and the Midwest.  I'm glad to see Chicago entrepreneurs gaining confidence unlike the situation in 2008 when I wrote this blog post.

Several initiatives came out of the conference.  Brendan Mulligan, founder of Artist Data, which was recently purchased by SonicBids, challenged 40 Chicago angel investors to sign up for Angelist by November 1st.  Chicago currently has only 8 angels on the list compared to Silicon Valley's 201 angels. 

Also, the members of the Keynote Panel entitled "The 3 Stages of Not Being Silicon Valley" started a blog to discuss the panel topic before the panel presented.  They had over 12,000 participants from all over the world participate in the discussion.

I'm going to add a suggestion to the mix.  Why not have a blog with a list of companies from Chicago/Midwest that get Angel/VC funding?  Freshwater Venture was a good start, but it hasn't been updated.  I'm thinking something simpler - just a list with Company/Angel/Fund names and amounts.  Maybe Chicago Tech Scene or the ITA could add a page to their current sites?  A comprehensive list really shows that Chicago firms are getting funded and highlights angels and funds that are active in the Midwest.

A page with listing exits would be great, too.  According to Matt McCall in a Fast Company article about start ups in Chicago:

I don't want to misspeak here, but for the last five years, there were I think $23 billion worth of exits out of Chicago and in this region in general.

Publishing a list or chart highlighting the successful exits could be a great boost to entrepreneurs here.

Maybe something like this already exists?  If so, comment!

Off to Potbelly (oh yes, another successful Chicago start up) to grab a sandwich for lunch.

Q&A with a Potential Entrepreneur - Intellectual Property

Recently someone who was considering hanging out his consulting shingle after a long career in corporate America contacted me with questions regarding intellectual property protection.

With the economy in the doldrums and unemployment at a such a high rate, I thought a general version of the questions might be useful to anyone else thinking about starting his or her own business.

Q: What does it mean by a $45 filing fee for copyright? Filed with what entity?

A: It is not required to register copyrightable works with the U.S. Copyright Office. You have a copyright in your work at the moment in it created (fixed in a tangible form). There are benefits to registering such as a record of the date of creation of your work and damages that are set by statute (you don't have to prove specific damages) plus the right to attorney's fees if you win your infringement case and the copyright infringement occurs after registration. Copyright registration is easy and only costs $45/work or $35 if you file online.

Q: Can I copyright the business model I created when I worked at with my last employer?

A: Unfortunately, a business method, itself, cannot be protected by copyright. Any presentations, reports or descriptions of the method are copyrightable by your employer.

Q: But my employer did not have me sign any agreement giving them the rights to any Intellectual Property I created while working there. So it is my property, isn’t it?

A: Under copyright law, any copyrightable work that is created and fixed in a tangible form (e.g., written down) during the course of your full-time employment is a "work made for hire" and is owned by your employer. The law is very clear on this point.

Patent law is less clear in an employment situation. Under patent law, the employee-inventor is considered to be the first owner of any patent rights. In theory, an employee must assign his/her invention to an employer for the employer to have any rights in the invention (including the right to obtain a patent). In practice, even in the absence of such an express assignment, an implied assignment is often deemed to exist, where an invention was made "in the course of employment". The courts have interpreted "in the course of employment" on the facts of each case. Some of the factors tending to support an implied assignment include:

* inventor is a director or an officer of the company;
* use of company funds or equipment to do R & D on the invention;
* development (e.g. software) done on company time;
* inventor was hired in research, engineering, or experimental capacity.

So, in most cases, if something was created or invented on the job, your employer owns the rights to it.

However, employers cannot claim ownership in generalized know-how, ideas, and concepts-"residual knowledge"-that evolve during the working relationship and that exist in intangible form mostly in the memories of the employees. You won't violate your formers employer’s rights if you can recreate your business method without copying any work you created during your employment or violating any confidentiality obligations with your former employer (again using "residual knowledge" is OK as long as you're not disclosing specific, confidential information of your former employer).

Q: Should I file for a copyright or a patent? I have business methods or techniques that I would like to provide as part of a consulting business.

A: Business methods can't be protected under copyright and are expensive and difficult to enforce under patent laws in the U.S. The Supreme Court is going to hear a case (the Bilski case) on the patent-ability of business methods next term. This is the first patent case heard by the Supreme Court in over 20 years. The status of business method patents is uncertain because of this case.

Many successful consulting companies don't rely on patent or copyrights laws to protect their "methodologies". They utilize trade secret laws in each state by requiring that each client sign a confidentiality agreement before disclosing any of their methods. You could have trouble enforcing a confidentiality agreement if your methods have been disclosed previously without an obligation of confidentiality. However, any improvements you make to your business method can be treated as a trade secret or confidential information. There is a nice, basic description of trade secrets here.

Finally, any report templates, questionnaires or consulting tools that you create to support your consulting business can be copyrighted and protected as a trade secret. Which leads me back to your first question on copyright registration - you are required to deposit a copy of your work with the copyright office when you register it. You may be able to redact portions of the item when deposited if is confidential. Another option is to forgo registration altogether (and the benefits of registration) if the work contains confidential information. You still have copyrights in the work and can rely on trade secret protection with the use of a confidentiality agreement.

Tech Cocktail 7

My law firm, Fitzgerald & Hewes, LLP, is one of the sponsors of Tech Cocktail 7. Stop by our table and say hello if you're there.

Details:

Date
Thursday, February 21, 2008

Time
6:30 pm CT - 9:00 pm CT

Location
John Barleycorn Wrigleyville
3524 N Clark St
Upstairs
Chicago, IL 60657

Be sure to register right away. The event is often fully booked.

Ignite Chicago

Last night, my law firm, Fitzgerald & Hewes, co-sponsored the first Ignite event in Chicago. Ignite events are happening across the country. Thanks to the efforts of Sean Harper and Jesper Andersen the Chicago entrepreneurial community showed up to the party in their party dress.

If you're not familiar with the Ignite events, here's brief description:

If you had five minutes on stage what would you say? What if you only got 20 slides and they rotated automatically after 15 seconds? Around the world geeks have been putting together Ignite nights to show their answers.

Last night's event was a cross between a tech event (with free drinks thanks to us sponsors) and a poetry slam. Very cool. You could feel the brainwaves and creativity in the air. My husband, Markus Giolas, founder and president of Real Talent, hopped right on the shadow sculpting contest. We'll see if he won.

Ignite Chicago - don't miss the next one.