What first comes to mind when you think of the assets of a medical practice? Certainly the expertise of the physicians, other care givers, and staff. Practice leaders generally know, too, that this “human capital” can be protected with shareholder agreements and employment agreements. Patient and vendor relationships and the practice’s goodwill in the community readily come to mind as well. So does the office space and medical equipment used by your practice, which may be owned or leased.
When you think of present and potential liabilities, many physicians would name their office mortgage or lease, payroll and shareholder obligations, and the threat of patient lawsuits for alleged medical malpractice.
In your quick mental balance sheet, you may not immediately think of intellectual property. You should. Intellectual property can be a crucial asset or liability at any stage of your medical practice.
What is Intellectual Property?
Broadly speaking, intellectual property falls into four categories: trademarks, copyrights, patents, and trade secrets.
A trademark, sometimes also called a service mark, is an invented word, phrase or logo that is used in the marketplace to help customers (or patients) associate a particular service with a particular business (or practice). If you see that characteristic swish on the side of a running shoe, you know you are buying a pair of Nikes®. The swish is a trademark. Trademark owners have to “police” their marks: if a cut-rate manufacturer started selling poorly-made shoes marked like Nikes, the real Nike company would need to move fast to protect its reputation or it would start to lose its goodwill in the marketplace. Trademark rights can be strong or weak depending on the circumstances and are gained by being the first to use a trademark publicly. Trademarks can be strengthened by being registered with state governments or with the U.S. Patent and Trademark Office. If you see the symbol TM, SM, or ®, someone is claiming trademark rights.
A copyright protects an original work of authorship, which may be a writing, an artwork, or even a new or updated computer program. A copyright is gained when a new work is created (or sometimes when it is published). A copyright can be strengthened by registration with the Library of Congress. If you see the symbol ©, someone is claiming a copyright.
A patent is a limited monopoly given to an inventor after filing an application with the Patent and Trademark Office. They generally last 20 years and give the owner “the right to exclude others from making, using, offering for sale, or selling” or “importing” the invention in the United States. In exchange for her patent rights, the inventor makes the invention public by filing it with the government. If you see “U.S. Patent No. ______” or “Patent Pending,” someone is claiming patent rights.
A trade secret is any information that yields a significant competitive advantage in the marketplace, if the possessor of that information takes reasonable steps to keep it secret from his competitors. Trade secrets are governed by state law and no filing with a federal agency is involved. Trade secrets are protected by nondisclosure agreements and good security practices put in place with the advice of counsel. If you see a document marked “Confidential Trade Secret” and it is not yours, you should probably stop there!
Intellectual Property and Medical Practices
Intellectual property can be an important asset or liability at any stage of a medical practice. When a practice is first formed, after a merger, or at the outset of a new marketing campaign, you need to give some thought to your trademark rights in your name, logo, and other marketing materials. Trademark counsel can help you research other businesses and medical practices and evaluate those whose trademarks could be confusingly similar to the name or logo you have just chosen for yourself. Trademark “due diligence” at the outset is far less expensive and time consuming than dealing with a cease and desist letter or an infringement lawsuit later.
Your shareholder agreements, employment agreements, and vendor agreements should also be reviewed by intellectual property counsel before you sign. If a vendor you have hired comes up with an innovative new billing program tailored to your practice, you need to know who will own the copyright.
If you participate in medical research with a laboratory or university, it may lead to patentable new treatments. Patent counsel can assist you in protecting the fruits of your discoveries.
Finally, when you decide to retire or move and wish to sell your medical practice, it will be more valuable if all of these intellectual property rights have been legally documented and policed, and if you have avoided potential liability for infringing on the rights of others.
When you think of the assets and liabilities of your medical practice, keep intellectual property in mind and take steps to protect it.
