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{Part 4} Dig A Business Foundation: Intellectual Property

{Part 3} Dig a Business Foundation: Intellectual Property | Oh My! Handmade

Also in this series: {Part 1: Website}  | {Part 2: Contracts} | {Part 3: Structure}

First off, I’m super proud of you for tackling each of the areas so far. We are going to wrap up with how you bring home the bacon: your business’ intellectual property.

For the vast majority of creative businesses, your intellectual property is your most valuable business asset. It’s how you get paid and the reason people love your brand. Because of this, creative businesses should have a process to regularly identify any copyrights or trademarks that have been created and to assess if registering them is in the best interest of the business, and if so, to complete the registration. Plus, once you’ve identified these valuable assets, you can start thinking about ways to monetize them via licensing, digital products, or service packages.

So what kinds of creations do copyright and trademark laws cover?

Copyrights

Copyright protects “works of authorship in a tangible form”. The tangible form part is easy, it just has to be memorialized in something that you can hold, view, or perceive (even if only for a few moments). The works of authorship part can be a little trickier.

I often like to back into it, by explaining some of the things that are not protected by copyright. As you’ll see there are times where parts of a piece do have copyright protection, while other parts do not.

  • Titles. Titles, names, short phrases, and slogans are excluded from copyright protection. So I could make a photograph called Necessary Silence and you could publish a book under that same name and neither of us could stop the other. However both my photograph and your book would have copyright protection, just not the title.
  • Factual Information. Another category not receiving copyright protection is works containing only commonly available information (think calendars, lists, or tables) and facts. Calendars are a great example of this; the 7×4 grid representing the month of June does not have copyright protection (because it’s a table). However, the calligraphy lettering and illustration that you pair with that grid would be protected by copyright.
  • Ideas. How you carry out your idea is what’s protected, not the underlying idea. For example, you can’t stop someone else from drawing animals riding bicycles. What you can prevent is someone tracing your illustrations, downloading them off your website and printing them, or buying a print from you and making copies of it.
  • Functional Items. The final area that trips up some creatives is that copyright does not protect objects that have a primarily utilitarian function. Common examples of this are clothing, accessories, and furniture. Once again, portions of the design could have copyright protection. For example, the elements required for a chair to work wouldn’t get protection (the back, seat, and legs). But if I carve an intricate pattern in the back of the chair, that design could gain copyright protection.

Trademarks

Like many of the laws we’ve covered in this series, trademarks are actually centered on consumer protection. This set of laws grants brand owners the exclusive right to use a word, phrase, or logo as a brand identifier. So that when consumers see that brand identifier they know exactly who is providing them the product or service.

For example, when we go under the golden arches into a McDonald’s and order a Big Mac we know that McDonalds Corporation is providing that service and selling us that product, not some random mom and pop burger stand.
Because of this, if you want to register a trademark there are a couple important rules to consider when adopting your brand identifier.

Cannot be generic or descriptive. Since you will be the one and only business allowed to use this identifier, you cannot be granted a trademark for a generic term (e.g. earrings) or something that only describes the products or services you are selling (e.g. design studio). However, this doesn’t mean that you can’t use a generic or descriptive term if it doesn’t apply to your products or services. Apple is a great example, apples are a generic term when applied to food; but we never associated apples with computers until Apple made that association for us.

First to plant the flag. The second rule is that trademark laws are playground rules. The first one to plant the flag gets the trademark, as long as they keep using it. So if I adopted and registered a trademark here in the United States in 2010, I could stop anyone from using that trademark that wanted to use it in the United States after me. But if I found out later that a small mom & pop had been using it since 1965, I wouldn’t be able to stop them. This also brings up the concept that trademarks are registered in individual countries, so just having a trademark here in the U.S. doesn’t prevent someone in Canada from adopting the same mark.

Cannot be confused with existing trademark. Finally, we have to check that your trademark cannot be confused with an existing trademark. For example, I wouldn’t be able to get a trademark for a clothing store called Anthro, because the trademark would easily be confused with Anthropologie. However, having a trademark doesn’t protect you for every product or service in the entire marketplace (think Delta – am I talking about water faucets, airlines, or dental insurance?). We only have to check for confusingly similar trademarks for related products or services. So if I wanted to open a gallery called Anthro, I’d probably be safe.

{Part 3} Dig a Business Foundation: Intellectual Property | Oh My! Handmade

Print out this worksheet by clicking here or on the image above and sit down with your favorite beverage. At this point I’m thinking you probably deserve a glass of wine.

As you work through the worksheet think about all the items you have created in 2014 that could be copyrighted or trademarked. Once you’ve got a list, then place a star next to anything that you’ve already protected with a registered copyright or trademark. If something is not starred and is critical to cash flow, then put that at the top of the list to register.
After you’ve done that, spend some time daydreaming about ways that you could create cash flow from some of these items: should you approach a new licensing agent, create digital products, design an e-course to teach your system to other business coaches?

Congrats! You’ve now reinforced four critical areas of your business foundation. If you didn’t drink a glass of wine before (or even if you did), reward yourself with one now.

I’d love to know in the comments below your biggest aha! moment from this series and what aspect of your business foundation needed the most TLC.

Kiffanie Stahle | The artist’s JD

artistsjd_2001Kiffanie Stahle is a lawyer, photographer, and small business owner. In April 2014, she created the artist’s JD, a place where creative business owners can get the tools and resources they need to tackle the legal aspects of their businesses. Kiffanie believes that the law doesn’t have to be scary or hard to understand. And she knows this to be true because she’s been practicing law since 2011. When Kiffanie is not creating art or running her business, you might find her concocting something in the kitchen, soaking up the sun, or plotting her next adventure.

WEBSITE | FACEBOOK | TWITTER | INSTAGRAM

This is final post in a 4 part series publishing every Thursday in January to help you dig a solid foundation for your business in 2015! Join us today for a special Q & A#OMHG chat with Kiffanie on Twitter, January 29th from 1-2pm EST. 

Also in this series: {Part 1: Website}  | {Part 2: Contracts} | {Part 3: Structure}

{Part 3} Dig A Business Foundation: Structure

{Part 3} Dig a Business Foundation: Structure | Oh My! Handmade

Also in this series: {Part 1: Website}  | {Part 2: Contracts} 

You are halfway through shoring up four critical aspects of your business foundation. Next we are going to focus on making sure your business structure is solid.

This group of tasks is my least favorite; they have very little creativity and involve lots of red tape! But I do them because keeping my business legit is my top priority, even when it involves tasks that I don’t like so much.

Business Type

Most creative business owners start by operating as a sole proprietor or a partnership. We do this because the cost is low and it’s easy to set up. Often the most difficult task in this process is a trip to City Hall to get a business license.
But as our businesses grow, operating as a sole proprietor or partnership often isn’t the best solution and many businesses opt to become a limited liability company (LLC) or a corporation. This is because of the legal concept of limited liability (Sorry, Canadians – LLCs only exist in the U.S.).

I like to think of the concept of limited liability as a fence. When in place, it puts a fence between your business life and your personal life.

Say your business gets sued. Maybe because someone slipped and fell during an open studio, because they had an allergic reaction to your products, or they took your e-course and implemented your ideas and their business tanked.

When you are operating as a sole proprietor or a partnership and they sue you and win their lawsuit, your business assets first will be used to pay the judgment. But if your business assets aren’t large enough to pay the judgment, then your personal assets must be used to make up the difference. This means that your home, your personal savings, and in some locations your spouse’s income might have to be used to pay that judgment.

However, if you are operating as an LLC or a corporation and they sue you and win their lawsuit, only your business assets can be used to pay the judgment. Your personal assets are off limits.

Determining when it’s time to make the switch is a balancing act. On one side you want to consider your risk of being sued, on the other your personal assets. If you have substantial personal assets, then even if your risk of being sued is low, changing over might be a good idea. If you have little personal assets then it would take a greater risk of being sued before the switch makes sense.

If you are not sure, pick up the phone and call your favorite attorney or accountant* and they can help walk you through how the switch will impact you and your business.

Appropriate Documents

If you are currently operating as an LLC or corporation, then pull out your business’ Operating Agreement or By-laws (If you don’t have this document, contact whomever helped you set it up and get a copy). These documents will list very specific items that you must keep in a central file. Often these are things like financial statements, tax returns, minutes of meetings, and the entity’s formation documents. Double check that you have all of the documents listed in your formation documents, and they are organized and easily accessible. If you’ve only got them electronically, make sure that they are backed-up regularly to another location or that you’ve got a printed backup.

The reason these documents are critical is they are required to keep the fence up around your business. These documents show that you are doing everything in your power to treat your business like a business, and not like your personal piggy bank. Keeping your business life separate from your personal life keeps the fence strong around your business.

Failing to keep these documents, holding meetings or other things that the Operating Agreement/By-laws require means you are poking holes in your fence. And if we poke holes, then when you get sued the opposing attorney will drive a bulldozer over your fence and your personal assets are once again up for grabs.

Licenses and Permits

Regardless of your business type, you probably need one or more license/permit to run your business. This could be as simple as a business license from your City. Or you may need a Seller’s permit so that you can purchase components at wholesale price and collect sales tax from consumers. I exclusively work with businesses in California, so this is my go-to resource for finding out what permits and licenses are required. Even if you don’t live here, it is a good jumping off point for thinking about the kinds of permits and licenses your business might need.

Team

At some point in your business, you’ll have to hire a team. If you are there, congratulations! This is a huge step.
As a business owner, hiring someone as an independent contractor and not as an employee sounds appealing. It eliminates the need for payroll, taxes, and worker’s compensation insurance. But calling someone by the wrong “name” can result in a huge tax bill and fines.

The rules vary a little country to country, but they all come down to the same principle: control.

They are an employee if you control how the work is done, what equipment they can use, and when they can do it. If they have the freedom to decide how to get to the final outcome, they use their own supplies, and they can do it at 2am or at 3pm; they are likely an independent contractor.

If you’ve currently got any independent contractors, evaluate who is the boss: you or them. And if you are, then switch them over to an employee.

{Part 3} Dig a Business Foundation: Structure | Oh My! Handmade

Print out the worksheet by clicking here or on the image above and pull out any business structure documents you can find: employee agreements, independent contractor agreements, formation documents, licenses, and permits.

As you work through the worksheet think about if any gaps exist between where your business is and where you want it to be. Maybe you need to talk to your CPA about switching over to a LLC, or you need to block off time to get your LLC paperwork in order. If you’ve got any gaps, take out your calendar and block off time to tackle these not-so-fun tasks.
Congrats! You’ve solidified your business foundation by getting your business structure secure. I’d love to know in the comments below the first gap you are going to tackle. Or if you are all squared away, let us know so we can give you a high five.

Kiffanie Stahle | The artist’s JD

artistsjd_2001Kiffanie Stahle is a lawyer, photographer, and small business owner. In April 2014, she created the artist’s JD, a place where creative business owners can get the tools and resources they need to tackle the legal aspects of their businesses. Kiffanie believes that the law doesn’t have to be scary or hard to understand. And she knows this to be true because she’s been practicing law since 2011. When Kiffanie is not creating art or running her business, you might find her concocting something in the kitchen, soaking up the sun, or plotting her next adventure.

WEBSITE | FACEBOOK | TWITTER | INSTAGRAM

This is part 3 of a 4 part series publishing every Thursday in January to help you dig a solid foundation for your business in 2015! Mark your calendars for a special Q & A#OMHG chat with Kiffanie on Twitter, January 29th from 1-2pm EST. 

Also in this series: {Part 1: Website}  | {Part 2: Contracts} 

{Part 2} Dig A Business Foundation: Contracts

{Part 1} Dig a Business Foundation: Contracts | Oh My! Handmade

Also in this series: {Part 1} 

I’ll admit it; I’m a total contract nerd. I’m the one that goes off in the corner and reads through every last word when I’m buying a new phone and they hand me a contract to sign.

So, I’m sad that contracts often get a bad rap. Since contracts really just define the boundaries of your relationship with the other party. They are there to say what you expect from each other, what the ideal outcome will be, and what happens if something gets off-track.

Having contracts that make sure you get paid, aren’t taken advantage of, and protect your creations are essential to the foundation of every creative business.

At minimum you should have two kinds of contracts in place for your business: client/customer contract and independent contractor agreement.

Client/Customer Contract

Getting paid by your clients and customers is how you keep the lights running, so it’s a no-brainer to have a solid contract with these people.

While I could give you a whole list of items that you could include in your contract, I think the following are the most critical.

What is being exchanged?

There’s a contract term called “mutual consideration”. This is a fancy way of saying that to have a valid contract both of you need to give something to the other party. This can take on many forms; it might be that one of you is providing services and the other giving cold hard cash. Or it could be that you allow someone to use your illustrations on their blog in exchange for publicity. The bottom line is we need to define what this exchange will be and clearly outline not only what’s included, but anything not included (in other words you should clearly outline the scope of the project).

What happens if the scope changes?

At some point the other party might ask you for a task outside the original scope. Because of this, it’s important to outline how this agreement can be changed. For example, if you sold 50 pieces of jewelry to a wholesale account and they’d like more do they have to order a minimum number of pieces? Can they do this via e-mail? If you provide graphic design and web design services and I hire you to create a graphic, but during the process we decide I need work done to my site, do we need a new contract? Or can we add an addendum to our current one?

What happens when we disagree?

If for some reason the two of you can’t agree on what the contract says, or if one of you is failing to live up to the promises you made in the contract, how will disputes be resolved? Do you have a mutual friend that you want to listen to your cases and then make a decision? Do you want an outside third-party, like a mediator, to be the one to make the decision?

How can we end this relationship?

While we hope that the contract will be a success, sometimes it’s just not a good fit and you need to get out. So you should outline how the contract can end. It might be that either of you can end the contract for any or no reason with 30-days notice. Or you could end it with 10-days notice if one of you fails to live up to your end the exchange.

Who owns the intellectual property?

If you are creating or exchanging something of a creative nature, you need to define who owns the intellectual property that will be created as a result of the contract. If you are collaborating, you might be co-owners. If you are the artist and they are giving you cash, you might retain the copyrights and only grant them a license to use your work.

Independent Contractor Agreement

At times, your business will be hiring independent contractors to help you. This might be a virtual assistant, a web designer, or a social media consultant. Some of these professionals will have their own contracts for you to sign, but many times you’ll be asked to provide a contract.

All of the items that we discussed for your client contract should be outlined here as well. In addition to these things you also should make sure that you are hiring them as an independent contractor and not as an employee. This assures that you are not responsible to pay their taxes or give them benefits.

When you are given a contract

Even though you have these contracts in your arsenal, it doesn’t mean that you’ll always get to use them. Sometimes the other side will want you to sign their contract.

This is where my biggest contract rule comes into play:

Never sign a contract you don’t understand

This is where most creative businesses get in trouble. They are given a contract, understand 90% of it, and sign it. Sometimes it works out, but occasionally, something goes wrong and they get upset about what the other side is doing. When I’m wearing my lawyer hat, my least favorite conversation to have with a creative is to tell them that I understand why they are mad, but there is really nothing we can do about it because the other side is a-ok according to the contract.

Having a process in place to evaluate and assess the contracts given to you is critical for securing your business foundation. Your process might involve Internet research to translate the legalese into English or you might have an expert on your team that you pass this task off to.

{Part 2} Dig a Business Foundation: Contracts | Oh My! Handmade

Click here or the image above to print out this worksheet and pull out your contracts. As you work through the worksheet assess if there are any gaps between where your current contract process is and where you’d like it to be. If you’ve got work to do, take out your calendar and block off time to tackle these issues.

Congrats! You’ve now reinforced the foundation of your business by getting your contracts squared away.

I’d love to know in the comments below which contracts you are going to tackle next. Or if you are all squared away, let us know so we can give you a high five.

Kiffanie Stahle | The artist’s JD

artistsjd_2001Kiffanie Stahle is a lawyer, photographer, and small business owner. In April 2014, she created the artist’s JD, a place where creative business owners can get the tools and resources they need to tackle the legal aspects of their businesses. Kiffanie believes that the law doesn’t have to be scary or hard to understand. And she knows this to be true because she’s been practicing law since 2011. When Kiffanie is not creating art or running her business, you might find her concocting something in the kitchen, soaking up the sun, or plotting her next adventure.

WEBSITE | FACEBOOK | TWITTER | INSTAGRAM

This is part 2 of a 4 part series publishing every Thursday in January to help you dig a solid foundation for your business in 2015! Mark your calendars for a special Q & A #OMHG chat with Kiffanie on Twitter, January 29th from 1-2pm EST. 

Also in this series: {Part 1}