Eps 99 -  Protecting Your Expertise: Why Copyrights and Contracts Matter Transcript

Erin Austin: Imagine a clothing store with untagged garments stacked up in the back room. How would you know if you have a size in stock? How would you determine if there is an inventory loss? How would you know what to charge to make a profit? Every day that you don't take inventory of your assets is like that clothing store.

You might be in breach of client agreements with non compete provisions. Are subcontractors taking your IP with them? Once your confidential information is shared without an NDA in place, there's no going home again. Do you even own what you think you own? I posed these questions in the last episode where I covered the importance of auditing the assets in your business.

It is the first step in the three part framework to turn your expertise into recurring revenue. Audit, protect, and leverage. This week, we're talking about protecting your expertise. Thanks. Once you have a clear understanding of your assets, it's time to protect them. There are two key methods for safeguarding the most valuable intellectual property in your business.

Copyright registration and contracts. We're going to dive into the importance of copyright registration in preserving your valuable assets. How contracts can either protect or jeopardize your intellectual property and crafting client and contractor agreements to secure your rights and limit your risks.

First, copyright registration. So why am I talking about copyright registration? And you'll never hear me talking about trademark registration. Just as a quick reminder, what are copyrights? So copyright protects original works created by a human. that contain a minimal amount of creativity that's fixed in a tangible medium of expression.

When you are the owner of copyrights, you have the exclusive right to reproduce the work, to make derivative works based on that work, such as modifications or adaptations or new uses, the exclusive right to distribute copies of the work either publicly for sale or to license it. And the exclusive right to perform or display the work publicly.

So, when we think about protecting our work, and we're worried about competitors or former clients stealing our stuff, what are we talking about? Everyone talks about a trademark, do I need a trademark to protect my ideas, but contrary to popular belief, it's not trademarks that are going to protect your most valuable work.

If you want to protect those valuable assets, if you want to protect your moneymakers, copyright registration is what you need. Here's a little example. Let's say you have an HR consultancy and it is called diversity and that's C I T Y diversity. It's a little play on words there talent solutions and it has a trademark registration and diverse city talent solutions provides D E I training to corporate clients.

Trademark protects the business name diver city talent solutions. What does the copyright protect? It protects the training materials, the videos, your presentations, the workbooks, the guides. All those things are protected by copyright. Which one provides the most value to your clients? Well, which one provides any value to your clients?

In other words, which of those assets does your client pay you money for? Do they pay you money for your trademark or do they pay you money for those trading materials for those videos? It's the assets that are protected by copyright that they're paying you for. Your corporate clients care about the transformation you provide.

If you're going to turn their disgruntled employees to a well oiled machine, that's what they're paying you for. They don't get that from your trademark. They get that from your copyrighted materials. So that's what we want to focus on. Now that we've settled on copyrights over trademarks, Why register the copyrights?

As we know, copyright protection happens automatically at the time that it is put in that fixed, tangible form of expression. So, yes, it is automatic, but there are significant benefits to registering the work with the U. S. Copyright Office. And there are even greater benefits if it is registered before it is published.

It's considered published after you make it available, it's offered to the public in some way. So what extra protection do we get from registration that we don't get automatically under copyright law? One, it enables you to file a lawsuit to enforce the copyright in federal court. If you want to use the court system to get a remedy against an infringer, it must be registered.

Also, when you have it registered, it's evidence that you have a valid copyright. Let's say somebody infringes your work, they steal your work, and they claim that they have the valid copyright, not you. If it's been registered, well, that's a non issue. And, of course, it puts others on notice that the work is protected by copyright, that you are the copyright owner, and that you take your rights in those materials seriously.

We don't register everything. You probably wrote something today that you posted on LinkedIn or, or some, a blog post or something that you probably won't register. And we'll put our C in a circle. We'll use the copyright notice of a C in a circle on there, but we don't register everything. We want to register our moneymakers because we want to be able to enforce our rights against infringers.

So what is the big benefit that we get from registering our copyright? It is statutory damages. So what are statutory damages? They are a form of damages that a court can award in a lawsuit, but the damages are set forth in by law, like in the statute. It's why it's called statutory damages. And so instead of trying to figure out what the actual harm is, what profits were lost, what are my actual damages?

That's a whole separate process. But when you have access to statutory damages, it's basically like preset penalties. And so when someone infringes your work, you can just look at the statute and say, this is what they owe me. It makes it much simpler to get a remedy, much less expensive since using lawyers of course is expensive.

And it's much greater deterrent because it's kind of difficult sometimes to approve actual damages. But when you have statutory damages, you don't have to bring that proof. And that means that it is much easier for you to get a remedy and therefore a greater deterrent to potential infringers. So, to be clear, you can still protect your work against infringement.

You can still go after someone for damages if it's not registered before publication. So, if you have something out there that's already been published and it hasn't been registered, but it is something that you would hire a lawyer to protect your rights against an infringer in a court of law, then those are the things that you want to have registered But you would have to prove actual damages.

You'd have to say, I was selling 10 copies of this a week at 500 a pop, and they have been ever since they infringed it and started selling it on their own. I haven't had any sales. And therefore, this is what my damages are. It's a little harder to prove that than to be able to look to the statute and just say, they sold 50 copies of my work.

And therefore, these are what my damages are. So what are those statutory damages? Well, it depends on the gravity of the infringement as well as the infringer's intent. So, for innocent infringements, like, sometimes we steal things. We don't even realize it. That does happen. Unintentional infringement. Our subconscious remembers something we think it's original, but it is actually an infringement.

So if you can show that you weren't aware, you had no reason to believe that was an infringement, then the damages can be as low as 200 per infringing work, but it can go up. If you should have known, it can go up from 750 to 3, 000 per work infringed. And if it was willful infringement, you absolutely know.

Someone steals your entire website and they start selling it as their own. And when you tell them to stop doing it, they don't stop doing it. It's a willful infringement. The damages can be as up to 150, 000 per work infringed. So those are statutory damages. And these are some of the benefits that you get under intellectual property law when you register a work as copyright registration with the U.

S. Copyright Office. Contracts is the other way that we protect our copyrights. Registration that helps us and takes care of infringers, but you know what, mostly people don't just steal our stuff. The number 1 way that we lose rights in our intellectual property is by not using contracts or signing contracts that we do not understand.

All right, so intellectual property law takes care of infringers, but most people don't lose rights in their IP because of infringers. It's more likely that we will lose control over intellectual property because we are not using contracts or we're signing contracts that we do not understand. And that is just a self inflicted wound.

Unlike physical assets, ownership of intellectual property has nothing to do with possession or whose idea it was, or even who paid for it. If we want to make sure we are maximizing the value of our assets, we need to use our contracts in order to make sure that we control the use and get paid for its use.

So we cannot skip the contracts step. We need contracts with our clients to limit their ability to reuse or even distribute our proprietary materials, and we need contracts with our contractors to make sure that we have rights in everything that they deliver to you. So, when we think about our client contracts, if you're regularly signing contracts provided by your corporate clients, those agreements will absolutely have language about who owns the deliverables.

And you want to make sure that there is language in there so that you retain rights in your preexisting property. If they're coming to you, chances are you have preexisting property that they value. What is the distinguisher between you, like, take the HR consultant, the difference between you and another HR consultant will probably be your preexisting materials that you have developed workshops that you've developed trainings that you've developed guides that are more effective than the next guys.

And that's why they're coming to you. And we want to make sure that you are preserving the rights in those works. And if you're signing a standard client agreement, then you are endangering your rights in those works. Also with our contractor agreements, the agreements that we signed with people, when we are the client, we want to make sure that we have the rights, the ownership, and all the things that they do for us.

In the absence of a written agreement that is signed and not by email, but actually signed, it can be, you know, an e signature, but something that is an enforceable signature, if we don't have that in place, then the human who created it still owns it. So, if someone is creating something for you that you will be using with your client or you'll be using it in your business to build some assets on, you want to make sure you own those things.

You want to make sure you have contractor agreements in place that are signed. Signed agreements are the only way to overwrite the default provisions regarding ownership and licenses under intellectual property law. So, if you don't have signed agreements with your clients, then your clients may have an unlimited license to use your pre existing materials, if not own it.

So, those are the two dangers and no agreements with your contractors. They may own some very important piece of your methodology or framework. Now, in an AI world, we have even more risks associated with oral or unsigned agreements. And again, I'm including email in that. If we don't have signed agreements, we can't get assurances regarding the work that is delivered by our contractors.

We want to make sure that we have representations from our contractors regarding the originality of what they're delivering to us, and that it does not infringe any third parties rights. So, in our standard contractor agreement, you will want to have language that says that contractors work is original, unpublished, and solely their own work product.

And that as delivered to you and used by you, it will not violate any laws or violate any third party's intellectual property rights. When we have someone using AI, we don't get any of those assurances when you use AI. That is buyer beware, user beware with regarding anything that is generated by AI. So if you have a contractor where you care about the originality and that you have full ownership of those deliverables, you want to have the contractor agreement in place and you want to have language in there about whether or not they can use AI.

If you don't want your contractor to use AI, make sure the agreement says that. If you're okay with a contractor using some AI, so long as it's disclosed to you, then make sure that's in the agreement. And most importantly, always be mindful of how a deliverable from a contractor will be used. So that you can make sure that that agreement includes all of those rights that you have in there.

Let's say you have an agreement with a contractor and they have language that says, I'm gonna be using my pre-existing framework, and it will say, you as the client can use it, but you cannot sub-license it to any third party. But your intent was for this to be used with your own end client. You have to make sure that there's language in there about that.

So, the end result is in some, we really want to make sure that we don't end up on the receiving end of a cease and desist letter because we don't get all the rights from our contractors that we need, that we don't end up at the receiving end of a cease and desist letter because we have granted exclusive rights and materials.

To one client that we need to use with other clients and at best I wasted money. Maybe you need to refund money and at worst you could end up with an infringement claim and you could have some permanent damage to your reputation. Certainly if you turn in something to a client that turns out that it was created by AI, that could be a real mess for you.

So we want to make sure that that doesn't happen. IP is everywhere in particular. Your IP is everywhere. So we want to make sure that we use copyright protection and we're using contracts to make sure that you own it and that you control it. So that brings us to the third and final leg of building a scalable and salable expertise based business.

That is leverage. So leverage means increasing profitability, not just increasing revenue. What does that mean? We have leverage in our business. If we can increase our revenue without increasing the cost to get that revenue that increases profitability, or we can decrease cost without also decreasing the revenue or both in the best of both words.

That means we are applying leverage so that we have a more profitable business, meaning there's more distance between revenue and costs. And yes, you can have leveraged one on one services. So if you want to find out more, make sure you check out the next episode of the hourly exit podcast. Thank you ladies.

And remember IP is fuel.