When running a service-based business, protecting your intellectual property might be the last thing on your mind with everything else happening. However, it should not be the last, but the first thing you do, maybe even when starting your business.
What is Intellectual Property?
It’s everything you create for your business – the company name, logo, branding, products, and services. However, it doesn’t stop there.
Your unique systems, processes, frameworks, studies, and more are also part of your intellectual property.
Finally, it is also everything else you crafted that can bring in sales and help with business growth.
The Risks of Unprotected Intellectual Property
If you leave your intellectual property unprotected, your competition can easily snatch it up, resulting in lost revenues.
Then, there is also the rise of AI and automation, making it easier than ever to copy someone’s work accidentally. The line between innovation and imitation is more blurred than ever, and protecting your creations is vital.
So, what is the process of protecting what you own?
Where do you start?
Is it better to copyright, license, or trademark your goods and services? What are the differences?
And how can you maximize your intellectual property to help grow your business?
Erin Austin: An IP Expert’s Perspective
In this episode, our guest Erin Austin and I discuss intellectual property and how to use its different categories. She’ll also share insights on how to get started with intellectual property protection for your business and how they can help you grow.
Table of Contents
Timestamps for this week’s episode
03:55 The difference between the four US intellectual property categories: copyright, trademarks, trade secrets, and patents.
08:06 How copyrights work
12:19 AI-generated content and copyright laws
27:47 Presenting experiences from individuals who navigated the process and its transformative impact on their businesses
35:59 Actionable steps to take over the next weeks to get started on protecting your business intellectual property
The difference between copyright, trademarks, trade secrets, and patents.
There are four intellectual property categories in the United States, namely copyright, trademarks, trade secrets, and patents. Each has its unique characteristics and are applied to different things.
- Protect expressions of ideas in tangible forms.
- Gives you the exclusive rights for copying, distribution, public performance, and more.
- Applies to creative works like books, art, music, and software.
- Preserves the creators’ rights to their original content.
- Safeguards brand identity and the origin of goods/services.
- Prevents consumer confusion because it identifies the company, product or service.
- Protects logos, names, symbols, and other unique and distinct elements.
- Ensures consistent recognition and reputation in the marketplace.
- Goes beyond standard confidentiality agreements or clauses to offer a higher level of protection.
- Includes confidential business information that is of significant value.
- Requires strict security measures and limited disclosure.
- Tailored protection is based on the value of the secret.
- Covers new, useful, and non-obvious inventions.
- Grants exclusive rights to the inventor for a limited period.
- Prevents others from making, using, selling, or importing the invention.
- Encourages innovation by rewarding inventors with exclusivity.
How Copyrights Work
Copyrights act like a safety net for creators. They were initially designed for writing, such as songs and books, but now cover various creations, including coding. They automatically belong to the creator or the “author” legally.
When you create something – spoken words recorded, text saved on a computer, or a photograph – it’s protected by copyright.
Here’s the key: You’re the owner of what you create. If someone tries to use your creations without permission, you have the right to stop them. But, if you officially register your creation, you get more protection. You can also ask for monetary compensation if someone uses your work without permission.
Now, not everything needs registration. Podcast episodes or newsletters, for example, might not need it. But getting that extra layer of protection is wise for valuable things that generate revenue for you/your business, such as songs, books, courses or proprietary business processes and frameworks.
“The value is in our expertise or how we provide value to our clients. What are we selling to our clients? What are our clients paying us for? And that is the thing that we want to protect.” — Erin Austin
AI Generated content and copyright laws
Because of how fast AI is developing, copyright laws are struggling to catch up, which can result in major challenges to copyright claims. AI models like Chat-GPT have reservoirs of information that they use to answer questions or prompts without guaranteeing that what they generate is completely free of copied or “lifted” content.
Now, if you use what AI generates as is and post it on a website or publish it as part of a book, that content is not eligible for copyright protection. This is because copyrights don’t apply to things created by machines but only to things created by humans or have had some kind of human intervention.
But if you ask the AI to generate an outline for you and then use your human intellect to flesh out and write an article from that outline, that content would most likely be copyrightable because your human intervention added a layer of creativity and originality on top of the AI-generated materials.
How protecting your IP can transform your business
Erin shared the story of a client she once had, a social skills educator catering to neurodivergent children in person. With strategic IP utilization, she crafted a licensable curriculum, expanding her impact across locations. Now, she earns from her expertise and the distribution of her curriculum.
This is one example of business growth through IP. It can help liberate services only you can provide from barriers such as time and physical location. Instead of stretching herself out too thin by taking more clients or turning down clients full stop, Erin Austin’s expertise in intellectual property transformed her expertise into a product that others can use.
Start by thinking about what makes your business unique. Maybe it’s your products or services or your efficient systems and procedures. Include all your original materials, how you get things done, and how you deliver value to your clients.
Next is to start drafting assets that might be useful down the road. It could be templates, courses, or maybe even a book. These are the building blocks for potential revenue streams that aren’t tied to the clock or don’t require that you deliver these services physically or face to face.
Then, it’s time to cover your bases. Start protecting your brand with trademarks. If it’s copyrightable, get it registered. Don’t forget to review your contracts, especially when collaborating with contractors. Make sure everything’s spelled out—what’s yours, what’s theirs. You also need to think about your clients. Insert clauses that limit how they reuse the materials you give them.
- Copyright, trademarks, trade secrets, and patents differ in how they protect creative works, brand identity, confidential information, and inventions.
- Copyrights provide creators automatic protection, expanding from writing to coding and various creations; registering your work brings a higher level of protection and will allow you to seek compensation for using your property without permission.
- The rapid advancement of AI poses challenges to copyright laws as AI-generated content might lack copyright protection. Yet, building on or manipulating AI-generated material can lead to copyright eligibility due to the creativity and originality added by your human intellect.
- Through the strategic use of intellectual property, it is possible to transform your expertise into a licensable product, curriculum, process, framework and more to create a scalable source of income.
- Actionable steps for IP protection include identifying your USPs, creating valuable assets, registering copyrightable items, revising contracts, and safeguarding client interactions with your work.
Well hello there and welcome back to another episode of Help My Business is Growing – a podcast where we explore how to grow and build a business that is healthy and sustainable. I’m your host, Kathy Svetina, a fractional CFO and founder of NewCastle Finance, a company where we believe that everything that you do in your business will eventually end up in your finances. And to get to healthy finances is to have a healthy business.
Well, how do you get there? This is where this podcast comes in – to help you. You know, when growing a service-based business, protecting your IP or intellectual property can sometimes take a backseat to everything else that’s happening in the business. This could lead to a very costly problem down the road – actually multiple costly problems. Especially if you’ve crafted products and services that can expand your business, your competition can easily snatch them up for themselves and you lose potential revenue.
Then there’s also the growing influence of AI and automation, which can unintentionally replicate and spread your offerings. So the line between innovation and imitation is more blurred than ever. And protecting your creations at this moment is vital – absolutely vital.
So we’re going to be talking about intellectual property in this episode. First, we’re going to talk about what exactly is IP or intellectual property. Then, how do you go about protecting what you own? And what exactly can you copyright, license, or trademark – and what are the differences between those three? And how can you maximize your intellectual assets to supercharge your business growth?
As a quick reminder, all of the episodes on this podcast, including this one, come with timestamps for topics that we discuss and each one has its own blog post. So if you’re interested in reading versus listening, go ahead and click on the links there in the show notes.
My guest today is Erin Austin. She is a strategic lawyer and consultant who uses her 25 years of practicing law, including roles as a CEO and General Counsel at large and small IP-driven companies such as Warner Brothers, Lionsgate, and MGM, to help female founders of expertise-based firms build and protect saleable assets so that the business is ready to sell when the founder is ready to exit.
She is a graduate of Harvard Law School and her experience as a lawyer and as an executive at the intersection of business and the law informs the elevated legal and strategic business advice she provides to her clients. Erin is passionate about using her expertise to create an economy that works for everyone through her “Hourly to Exit” podcast and her consulting practice, Think Beyond IP.
Erin guides women on transforming their businesses from unscalable income generators into saleable, wealth-building assets. Her special talent is helping women meet their growth goals by creating IP-based revenue streams. In her spare time, Erin likes to clear brush on her farm, meditate, search for the perfect gluten-free baguette, and work on her backhand.
Erin, thank you so much for being on the show.
Thank you for having me. I’m very excited.
I’m super excited because this is selfishly a topic that I am exploring right now. So it’s very relevant for me. But you know, it’s also relevant for other growing businesses. Because when businesses are growing, there’s obviously a lot of plates that they need to juggle in the air. And one thing that they might forget about is protecting intellectual property. And if you’re not doing that, it can cost a lot of money to forget that aspect of business.
And we’re going to be talking about intellectual property, specifically intellectual property in service-based businesses. So Erin, let’s first talk about this – what actually falls under the umbrella of intellectual property?
Yeah, so in the US, and by the way, when we’re talking about US law here only, although it does apply to many other places around the world, but I am in the US and I work with US intellectual property laws. So in the US, we have four basic categories of intellectual property: copyright, trademarks, trade secrets, and patents. And I’ve already told Kathy not to ask me anything about patents! But for our audience, you know, the copyrights, trademarks, and trade secrets are going to be the most relevant.
So copyrights – they protect the expression of your ideas. So when something has been put in tangible form, and tangible form means anyway that somebody else could perceive it other than like listening to it, you know, firsthand or seeing it firsthand, but in a way that can be copied – so on paper, in a notebook, on canvas, on film, on a computer – when something is put down in an expressive form and it’s original and it has some degree of creativity, it is copyrightable under US copyright law. And that gives you a bundle of rights under your copyright – the exclusive right to make copies of it, to sell copies or distribute it, to perform it publicly like performing a song, to display it like artwork, to create derivatives like turning your book into a movie. So these are exclusive rights you get as the owner of a copyright.
And so in our businesses, that would be our podcast episodes, blog posts, the books we write, the courses we create, our workshop materials – those are all elements that would be eligible for copyright protection, assuming they’re original creations.
So then we have trademarks. Trademarks give you exclusive ownership of the source of your goods or services. A trademark tells the consumer – it’s really about protecting the consumer as much as it is about you – so the consumer isn’t confused about the source of a good or service. So nobody else can use McDonald’s trademarks, because if somebody sees the golden arches, they know exactly what the source of those goods is. If somebody sees the FedEx logo trademark, they know exactly who’s providing that service. So trademarks do not protect your expression, they protect the origin of your good or service to make sure nobody else can confuse the marketplace by using your trademark.
Then trade secrets are interesting. Many of us probably use non-disclosure agreements or have been asked to use NDAs to help protect confidential information. Trade secrets are like confidential information on steroids. To get intellectual property law protection for trade secrets, they can’t just be protected with NDAs – you also need lots of other protections, like keeping it under lock and key, disclosing it only on an as-needed basis, or having some key to access it. You also need to have protections consistent with the value of the secret – if I’m Coca-Cola and my secret formula is worth billions, the protection I use will be different than protecting my personal financial information that nobody wants.
So those are the main three buckets. Patents protect useful inventions that are not obvious – you can patent your invention so others can’t steal it. Those are the four main areas.
So if we return to copyrights – do you have to apply for a copyright? Or is it given to you automatically when you create something? How does that work?
Yeah, copyrights vest in the creator, or the “author” as it’s called in law, at the time of creation. So the moment I speak into this microphone and it’s recorded, that material is copyrightable. Whoever owns the podcast, in this case you, the copyright attaches at the moment of creation. When I write my newsletter on my computer, copyright attaches then. If I take a photo, copyright attaches at the moment of creation.
Registration comes into play because there are additional remedies available if someone infringes your copyright – if they steal that photo and pass it off as their own, it has to be registered for me to sue for damages. That’s why we register. What we choose to register depends on the value of the work. I write every day but don’t register it all for copyright. Frankly, I don’t register my podcast episodes or newsletter pieces – I only register high-value things I derive revenue from directly, like courses and books. Things you share with others who derive revenue, those are the types of things I strongly encourage registering.
And how enforceable is it? So I see this a lot and actually use that in my content as well. So usually I do see copyright, Newcastle Finance, 2020, whatever, three, four, whatever the years. How enforceable is that? And is that a good practice? Or is that just kind of redundant? I mean, how useful is that to begin with?
Yeah, it is useful at the end of the day, especially with how much stuff is online. Just put people on notice that they scroll down to the bottom of your website, or on your graphic, or on your podcast site. They see that copyright notice. So that puts them on notice that there is someone who claims copyright ownership in this work. And if you don’t have it, it doesn’t mean that you lose your copyright protection. You have it the moment it is created, whether you publish it, whether you write the great American novel, and you stick it in your drawer, and it never sees the light of day, you still have the copyright protection on that. But putting the world on notice that you’re claiming copyright protection is helpful.
And, frankly, if somebody wants to contact you, like, “Oh, I really liked this, and I want to use it in my book or in my workshop,” then they can see who to contact. So it’s helpful in that way as well. And as far as being enforceable, again, if you have somebody steal content from your website, you notice it, you send them a cease and desist letter, and most people will just take it down, right? So in that way, you’ve put them on notice, “Hey, that’s mine, I see you, take it down.” And if you take it down, then this doesn’t go any further.
Let’s say they go, “Haha, I’m keeping it because it’s selling tons of stuff. I’m not taking it down.” And you need to then enforce it. So enforcement, that means suing them. So, yes, if you have a registration, and you can show – that means you have to prove that they copied it, and that they’ve infringed one of your rights (copying, distribution, performance), and they violated when they infringed one of your rights, then yes, you can enforce that.
So you know, this actually, I think of AI at this point, right? So AI is not really creating new things. But what if someone copies the content that you have, let’s say they copy the website, and then put it into the AI, and the AI actually just rephrases it a little bit? So meaning that the content is a little bit different, but it’s not exactly a word-for-word type of copying someone directly copying and pasting, does that still fall under the copyright law? Or no? How does that work?
Yeah, it can. And by the way, you know, I didn’t preface this. But of course, this is information, like your specific circumstances, you should talk to a lawyer about them. But generally, so AI, what copyright protects is copying your original expression. So can something be changed enough? That it’s not exactly your expression, it’s your idea, but not your expression, probably, they can get away with that, if it’s like, let’s say, your expression is creating a new world that is so original and so creative, that there’s no other way for them to have created a similar world without having used your work. So what they’ve done is created a derivative of your work. And when you have a copyright, you have the exclusive right to create derivatives. So the question is, have they created a derivative of it? Or have they just used the ideas and created their own? And that would be kind of what you’re fighting about?
So, if they created derivatives from your original body of work that was copyrighted, is that still eligible for a cease and desist letter? Or no?
Yes. So, one of the buckets of rights that you have with copyright protection is the exclusive right to create derivatives or to authorize other people to create derivatives. I can’t take someone else’s book and create a sequel from it. I can’t take someone’s book and create a movie from it. I can’t take someone’s book and create a workshop with it. That would be creating a derivative of their work. And if they do that without permission, they are infringing their copyright, and they would have the right to ask them to stop doing it. Or if they don’t stop doing it, or if they’ve already hurt them.
Let’s say I’ve sold the motion picture rights. They come after me for damages. I’d like to talk a little bit more about AI because I see this all the time, people creating content with AI. It’s really challenging because who actually owns that copyright? It is? Because it’s not you that’s creating it; it’s AI creating it. What is your thought on it? Are there any legal guidance about this yet?
Yeah, you know, it’s still, as you can imagine, changing daily. I had a conversation with the copyright office a couple of weeks ago about this. And the answer was, “it depends.” Basically, the current AI, and this is, I think, what most of us have access to like the GPT-3s of the world, they have a reservoir of information that’s been fed to them, right? And then we ask them a question, they mine their reservoir of information and come out with an answer. They do not guarantee that they haven’t just lifted something completely. So you don’t know whether or not it is infringing. But let’s just say it isn’t. Let’s just say they’ve grabbed information from all over their database, and they’ve come out with what is generally, frankly, pretty bland output. Yeah, and you take that and so let’s say they take that and they write an entire blog post with it. And you say, “This is great, I don’t need to do anything with it.” And you just post it on your site, which is not copyrightable. Copyright only applies to things that are from humans, that require human intervention. Machines are still not human, I think. So that would not be eligible for copyright protection. And so if you were to try to register that in the copyright office, and you honestly said that it was from AI, they would kick that back and say that’s not copyrightable. Just like if you have an elephant paint a painting, you know, even though, no matter how beautiful and creative we may think it is, it’s not copyrightable because it was not created by a human.
Now, let’s say you ask AI to create an outline for you. And they create this outline, and then you take that outline, and then you use your own human intellect to flesh it out and write the article from that outline. That would most likely be copyrightable because that then has your human intervention that has put the layer of creativity and originality on top of the AI-generated materials. So how the Copyright Office is parsing this, I don’t know, I mean, they’ll tell you that they won’t collaborate the first but they will the second. But how they know that, that I don’t know, like without someone disclosing it on their own, although I do know that there are programs that can kind of look at some output and determine whether or not it was AI-generated. I know, obviously, colleges and things are using these. And maybe they’re using something like that. I don’t know. I mean, that would be a lot because there’s an awful lot of volume there. But that’s kind of the general. That’s where they are today. And that could change.
Yeah, it seems like it’s an ever-evolving field. I mean, the way how we saw GPT explode last year, I believe it was in October or November, and we’re recording this in 2023. And it exploded in 2022. And already things have changed completely from what they were 6 months ago. So it feels like the law hasn’t really caught up to it yet. And it might, hopefully, in the future because it seems a little bit fuzzy at this point.
Yeah, I mean, again, you know, it is copyright registration. The application is mostly self-reported. So if one does ask you to certify that everything you say in the application is true. And you do certify that this is my original material, and I’m the one who created it. If you are being truthful, then on its face, if they see the material, and it looks like it’s not just a list of names, that it is an original and creative work, then it will generally be registerable or copyrightable, I should say. But what you do if you’re not, if you’re gonna lie about it, that’s the big issue with all AI-generated stuff, whether it’s for school, work, or registration. That’s the big issue. Oh, and while we’re here before I forget, is that one of the issues that you will find, if you are using a third party to create something and deliver something to you, like let’s say you hire a copywriter to create a post for you, do you want to have some restrictions in there about their ability to use GPT? On the one hand, if you’re happy with how it reads, then you’re happy with how it reads? Or is it really important to you that it’s something that they use their kind of own creativity before, or if it was assisted some but not all the way? These are just things to consider.
Yeah, that’s good guidance, especially when you’re using a marketing agency. And I know that a lot of marketing agencies now are actually using AI to generate content for the clients. We’ve even had a couple of people on this podcast talking about it. How do you do that? And how do you actually make sure that they’re doing good work doing it if they’re using it versus just charging you a tremendous amount of money for GPT-type of stuff? So yeah, there’s a lot of things to think about there. But let’s talk about trademarks now. So we’ve talked about copyrights. And let’s talk about trademarks. I know that trademarks have two distinctions that can be TM or ®. What is the difference between those two, and is one better than the other?
Yes, one is better than the other. Basically, like copyrights, you can have a trademark without registering it. So we have what we call common law trademarks. So let’s say my business is called “Think beyond IP.” It is not a registered trademark. But I can claim common law protection of it. I can say like, I use this name, and I am creating a reputation and positioning in the marketplace with this name. And I have the URL, and I publish with it. And I appear with it. So I could use the TM where I’m claiming common law trademark protection for the trademark. And that’s really only good on a state level. So someone across the street from me couldn’t say their “Think beyond IP.” But it does nothing for me on a national level.
When I register the trademark with the US trademark and patent office, that is under federal intellectual property laws. I can get a federal trademark registration. If I go through that process, there’s an application process and an application fee. It’s generally something that you would use a trademark lawyer for to help search to make sure that there’s no conflicting trademarks. And they may be conflicting common law trademarks as well. And then if you go through that process, it goes to the trademark office, they will do their own analysis to see if there’s any other confusing marks, any other registered marks that your mark could be confusing with. And if they say, “Okay, there’s no confusion here,” and they give you the registration, then you can use the ®. So the ® means that you’ve gone through the federal trademark registration process vetted by the trademark office, and you have a registered trademark. Then you put it in the arm of the circle. But you can use the TM at any time you claim, this is my trademark, including while you’re waiting to hear back from the trademark office.
So in the journey when you’re turning your expertise into intellectual property, whether using copyrights, trademarks, or trade secrets, if someone is on this journey and has no idea where to start, like they’re not sure if they should even use this or not. Is it worth it to do it? Because it’s not just a timely process where for trademarks, I believe it could take anywhere from six to 18 months, correct? Correct. And if you’re using lawyers, it can be expensive. So how do you go through that criteria, whether it’s worth it to you to even do that or not?
Well, there are a couple of things to consider. From my perspective, the order of value in most service-based businesses, professional services businesses, and so we’re our clients are other businesses, and we’re not selling to consumers, is the value is in our expertise. And by that I mean how we provide value to our clients, what are we selling to our clients? What are our clients paying us for? That is the thing that we want to protect, and that we protect with copyrights. You don’t protect that with trademarks. Trademarks protect it so that when someone mentions your name, they know you from somebody else, but that trademark does not provide value to the client. The client actually doesn’t really care about your trademark. The client cares about the transformation that you provide to them, the value that they get from you. And they get that value from the work you do for them, the deliverables you provide for them, the transformation that you provide for them. Those things are the things that are protected with copyrights. These are your workshops, your trainings, the frameworks that you use to provide the service.
Rejecting those things to me is always going to be the first thing, and it’s not always about registration. Again, when we are creating something, as soon as we create it, if it’s original, we are creating something that is copyrightable. So we have the copyright protection, assuming that we are putting it in tangible form and it’s original. I encourage anyone who’s developing an expertise-based business to think about it. Maybe you come out of corporate, you start your own consultancy. And as you move through and are developing your expertise, you start to notice some commonalities among your clients, maybe you have a specific niche that you’re working with, maybe there’s a specific type of problem that you’re working with. And as you continue to develop your niche and your expertise, you will find things that are original to you. You have your own ideas about this is a better way to do it, you have original ideas about these are the things that my clients are unique to my clients. And you’re starting to create original materials based on your own experiences with your clients.
As we create those things, by creating materials that are protectable under copyright law, we’re writing them down, and we’re putting them in the form of written materials, workbooks, courses, and processes that are documented in a way that we can more effectively deliver our services. If we have employees, then of course, we need to have systems and processes so that they can effectively serve the clients as well. And if we are using subcontractors, of course, we want to also make sure that we have our intellectual property protected so that they can’t use it without us. Even with our clients, not that clients are not good people, but if we haven’t protected our intellectual property through the use of contracts, then they can take your training and use it without you. That is the way that we sometimes lose control of our intellectual property when we aren’t using agreements appropriately to make sure that we are controlling our intellectual property, controlling the reuse of it, whether or not someone else can make derivatives from it, whether or not someone can use it without you. These are all things that we have the benefit of when we have intellectual property rights and we’re using our contracts in connection with that.
You know, one of the things that I like to do on this podcast is I like to have stories, what I call stories from the battlefield from people that have been through the process with you, and how did their business come out at the end. So do you have a story like that where a business owner came to you, like a service provider came to you that wasn’t really sure whether they should do it or not? And what did they end up selecting to trademark? And how did that even transform their business? Do you have any examples of that?
Yeah, let me just clarify, I am not a trademark lawyer. So I’m a copyright lawyer. I work with copyright, and I help protect your expertise through the use of copyrights and contracts. People who do trademarks generally have a logo or business name that they want to protect. A trademark lawyer would tell you that if there is a name or a logo that would just crush you if you lost it, then go ahead and make the investment in it. But at the end of the day, when we’re talking about businesses, especially those with corporate clients if for some reason you lost your trademark, there will always be another name. It starts with the value, and then you attach the name to the value. It doesn’t go the other way. You don’t create the value with the name; you create the value and then you stick a name on it. Once you choose to attach a name to it, then you want to make sure they’re connected.
Regarding protecting your intellectual property to create new revenue streams, that’s my favorite way to work with service-based businesses. Taking them from an hourly-based revenue stream, where income is tied to their time, to using their intellectual property to create more profitable revenue streams. This can be more efficient to deliver, or it can be delivered without them physically showing up. I have a client who provides social skills teaching for neurodivergent kids. She used to do this in person, one-on-one with kids in her location. She wanted to allow others to provide the same social skills training to kids in different locations. We created the intellectual property and a licensing program for her, enabling other people to deliver her expertise using her curriculum. She receives a license fee for this, generating revenue from her expertise without having to be physically present. This is my favorite way to work with people.
Wow, that’s amazing. So how does licensing work in the realm of intellectual property? Because right now, we’ve talked a lot about copyrights, and trademarks, and we’ve talked about trade secrets too. But where does licensing fall under that umbrella? Or is that a completely different side of intellectual property?
Licensing is essentially giving permission to a third party to use your intellectual property, whether it’s copyrightable material, like giving a license for someone to deliver your workshop. So let’s say I have a workshop, and I’m doing it one-on-one, but I have a colleague who says, “I’d love to use your workshop with my clients too.” I license my workshop materials, which I first protect and register with the copyright office. Then I licensed my workshop materials to my colleague, and now she can go and deliver them. In exchange, I receive a license fee.
Licensing also applies to trademarks. For example, franchises are trademark licenses. If I buy a McDonald’s franchise, I get a license to use their trademark, trade dress, and all their processes. So that is a trademark license. A trade secret license would involve, for instance, developing a new formula like Coca-Cola and then licensing it to Coca-Cola while keeping it protected as a trade secret. In the case of patents, if someone invents a pharmaceutical or a piece of machinery and obtains a patent for it, they can license it to a manufacturer and distributor.
The license is the legal document we use to give permission to a third party to use some or all of our intellectual property. For instance, a publishing agreement is essentially a license. If I’m an author, I write a book, and my publishing agreement is a license to the publishing company. I retain the copyright; I don’t transfer ownership. But I grant the publishing company a license to make copies and distribute the work. I might also grant a license to create derivatives, such as translations into other languages. I could grant a license for selling the motion picture rights or retain those rights and separately license them to a movie studio. You can break up different pieces of your copyrights and grant licenses to various parties. These licenses can have different durations and conditions.
For the service-based businesses that you work with and the ones that have licensing in place, is there a particular way that they commonly structure their licenses? Do they typically have ongoing licenses with monthly or yearly fees, or do they opt for one-time fees with set durations? How does this relationship typically work?
The structure of licensing and its terms can vary depending on the nature of the work being licensed. There are multiple ways to structure licensing agreements. For instance, if a pharmaceutical company is licensing a groundbreaking drug, it might be a long-term license with a continuous fee structure. On the other hand, if it’s a license for someone to use a workshop, it’s more likely to be an annual license or a one-time fee. It can also be structured with monthly fees or per-person fees.
I personally prefer licensing arrangements based on time periods, like monthly or annually, as it helps you predict your income. For instance, knowing that you’ll receive a fee at the beginning of every month, regardless of how often the licensee delivers your workshop, allows for better financial planning. If you choose a fee structure where the licensee only pays when they deliver the workshop, it can become more challenging to ensure you’re compensated correctly.
There are various ways to structure licensing agreements, and you can tailor them to your specific needs. Some agreements may involve a percentage of the licensee’s revenue as well.
So Erin, we’ve talked a lot, there’s a lot of stuff that we covered. If someone is looking into a service-based business or business that’s considering copyright, trademark, and potentially even licensing, what’s the next step they can take in the next week or two? There are many moving pieces and parts. What’s the next step to get closer to protecting their business’s intellectual property?
I want them to start thinking about what they have in their business that is original to them, and they’re starting to document that. I like to think of it as an inventory of what we have, that we work with every day, sometimes just in our heads. And you know, as a lawyer, you know, having reviewed, you know, I don’t know how many managed services agreements in my career, like a lot of that review process is in my head until I finally kind of put it down and the standards and procedures process, start to document thing like how do you do things, any original materials that you want to put together and start creating inventory of ways that you provide value to your clients, so you can start creating assets that you may be able to sell someday, you know, by that sell, I mean, as you know, say, as a template, or as a course or a book. And then you’re creating systems so that you can become more efficient. And so that you can use less expensive resources such as subcontractors to help you deliver those services, and protecting them, either through registration, if it’s something that’s copyrightable, or through the use of contracts, you know, when you’re using your contractors, make sure you have agreement so that anything they deliver to you, you, um, and that is clear that the things that you have shared with them, they’re not going to reuse without you make sure that when you’re spending those client agreements, that you have restrictions in there about how they can reuse the materials that you delivered to them. And then so just build an inventory of intellectual property so that as it grows, you will have a body of work that you can pull from to create those leveraged revenue streams that are independent from time.
Awesome. Erin. Thank you so much. Where can people find you?
I am at Think Beyond IP. And also from there, you can sign up for my newsletter, but I also have a podcast called Early to Exit and LinkedIn.
Yeah, and I highly recommend listening to Erin’s podcasts because it really is very insightful, even if you’re not an hourly business, because there’s a lot of good stuff out there that we just talked about good ideas how you can make your business into your scalable income generator as you’d like to say, Erin, thanks so much for being on the show, Erin.
Thank you for having me.
About guest – Erin Austin
IP Expert and Attorney
Think Beyond IP
A graduate of Harvard Law School, Erin Austin is a strategic lawyer and consultant who uses her 25+ years of practicing law, including roles as COO and general counsel at large and small IP-driven companies, including Warner Brothers, Lionsgate (formerly known as Artisan), MGM, Teaching Strategies, and M3 USA Corp, to help female founders of expertise-based firms build and protect saleable assets so that the business is ready to sell when the founder is ready to exit. Erin’s experience as a lawyer and as an executive–at the intersection of business and the law–informs the elevated legal and strategic business advice she provides to her clients.
Erin is passionate about using her expertise to create an economy that works for everyone. Through her Hourly to Exit podcast and her consulting practice, Think Beyond IP, Erin guides women on transforming their businesses from unscalable income-generators into saleable wealth-building assets.
Her special talent is helping women meet their growth goals by creating IP-based revenue streams. In her spare time, Erin likes to clear brush on her farmette, search for the perfect gluten-free baguette (all leads are appreciated!) and work on her backhand.
About host – Kathy Svetina
Kathy Svetina is a Fractional CFO for growing women-owned businesses with $1M-$10M in annual revenue.
Clients hire her when they’re unsure about what’s going on in their finances, are stressed out by making financial decisions, or need to structure their finances to keep up with their growth.
She solves their nagging money mysteries and builds a financial structure with a tailored financial strategy. That way they can grow in a financially healthy and sustainable way.
Kathy is based in Chicago, IL and works with clients all over the US.