Protecting Your Ideas and Assets with Kyle Durand
All right, I'm gonna turn it back over to kyle now and we've talked about the business foundation, and now we're going to jump into intellectual property and how it is that we can actually create wonderful things and get the full value from them and make sure that they're protected. So kyle, right? So how many people here are, I'd be interested to know the statistics online as well are the children of entrepreneurs one, two um and you still did it. I myself am the child of two entrepreneurs my father and mother both ran all kinds of def business is when I was young from from the earliest age is that remember pouring concrete slabs, you know, at seven years old for my father's construction business or delivering bags of money from their store. Okay, there's a legitimate this is back when we didn't have all these electronic transactions but delivering bags of money to the bank on my bicycle, you know, at the end of the night or my mother, she had a parrot shop for a while and cleaning bi...
rd cages day and night. Um but, you know, we talked a little bit yesterday about those lessons that stick with you as a kid, right? And they're not necessary the lessons that you here, but they're the lessons that you see as a child and for me, the indelible lesson that stuck with me as a child of entrepreneurs was walking into the dining room and finding my mother. You face down on the dining room table in her arms, crying with a pile of papers around her, and that combined with the creditors banging on our door, the irs showing up at the business to seize assets, things like that. Taking intellectual property is one of those things that the irs will take as well. So that's why I feel I'm a kindred spirit with you and that's, why I feel so strongly about this stuff my parents eventually that for all the trouble and years and years of going through this, the painful way I figured out, you know, and making and losing lots of money finally figure out a few little pieces here and there make all the difference in the world, and we talked about several those pieces already now as creative people. Intellectual property is a huge piece for your business. It's again, I think that people are the biggest asset you have in your business. A second biggest asset is probably intellectual property as a creative and so intellectual property there the official definition. Let me it's it's so ridiculous I want to read it here creations of the mind for which exclusive rights are given like well, I just had a thought eyes that intellectual property so you know let's let's distill that doubt what what I'd love to hear from the internet to is we write this down write these down what are types of intellectual property when you hear intellectual property what do you think of it so let's that's a definitely it's a type of intellectual property so when the trademark and I'd like to drill down even further so like not just a class but what is like a photograph for an illustration room painting or well ah written piece of poem of a fiction story uh nonfiction not story um there's a thought about like coaching sacker exactly process um or method a brand that could be a recipe a symbol brand new mobile potentially uh recipe heard recipe names uh name original web site you know website code or something code for so code what about the company idea an idea for a product or something so that's one of the things about intellectual property is in many cases has to be reduced to some sort of tangible form. So when they say, you know thing creations of the mind have protections is not just like I sit there and think wow, that lights bright I'm gonna I'm going that's my intellectual property has to be reduced down and that also has to be have some sort of value to the business you know I was thought here's here's an issue I'd love to hear so let's say like in the harry potter books I have one of those wizards has a thought and they create something like tangible is that intellectual property I don't know but what I'm looking at the I know you start digging down I'm sorry I'm really hurt it out there but I started to think you know when I have nothing else to do I sit there and think about this stuff so um but really it has to be reduced down to some sort of tangible form to be protected and I love this this quote by albert einstein but this gets at the what's so why again why the big why why is it important why is intellectual property important for you and I guess that makes an assumption in first of all is intellectual property important for for all of you for all the people online for creatives is it only important for certain types of businesses first of all it is is it um is it important? Yeah okay. All right. Well let's go there yes is it important for uh only businesses like creative they're creating art or creating something from the mind no because because why uh I mean even like medical advances I know a lot of medical advances our trademark those and they make those princes I know uh one of my cousins uh wife she was on a fellowship for a university she kind of created this product for eye surgery and now she's kind of it's sort of the prize though the property of you know, the university so it's not just ideas but its idea encapsulated in that and it doesn't have to be a creative we're talking about any company it's the thing I'm getting at is intellectual property should be consideration for any company anytime there's any stage your business anywhere because brand really you know if your unless you're going out there and saying no, I'm kyle durant and I do accounting I mean that's there's no there's no problem with me doing that I'm not going in fridge my name can't infringe upon somebody somebody's business let's say now if I go call my business durant durant that's another issue altogether so steer clear of that, speaking of which you will see that I have no images in the in the examples that I'm talking about because I don't want to be sued and I'm pretty sure creative live once to stay away from the courts to so things like that just little nuances even getting down to hey I'm going to present I'm going to use this example from the x company can I include their logo? I mean it should it should be a consideration regardless of the type of business that you're in and it's always going to be an issue for every business and even from the first foundational stages when, you know, when you figured out that your second stages you figure out what type of entity you should be, name this a second that's intellectual property, you've got some considerations there. So these are the types, the category categories of intellectual property, and we'll talk about each one of these individually and different different things apply different. They apply two different pieces of intellectual property, they have different protections. It's, it's, a pretty involved and convoluted or can be convoluted area the law and it's rapidly developing as we move into this new world of work, right? I mean, pam khun camp, pam can speak to that. The stats that I heard last where it took one hundred years to get to the first million patents. And then it took I think, three years at the last three years there were a million patents, so I mean, the ramp up in intellectual property protection made the creation of intellectual property of becoming a lot of the value that's created in our society now is coming from intellectual property in one form or another, and the protections have been expanded to sew again, staying clear of being going afoul of intellectual properties that concern, but also protecting your intellectual property. I don't like to be you know I'm not fearmongering type from that close type but but really it's it's an important asset and if you're building these assets in your business you want to go do your great things your business you need to make sure you protect those effort assets and leveraging that protection as well. So copyrights uh can somebody tell me what what you think a copyright iss what's an example of a copyright or a work to which copyright attached movies tv uh let's go cost screenplay maybe so scream for a play photo manuscript thing I heard any more matter novels are all these up there boiled um what about many websites to see we'll cooperate symbol down at the bottom that what does that mean? What is that? So any content published on that is considered copyrighted right? So for instance this the same as if it was printed in a newspaper it's on the website it's always were copyrighted material belongs to that particular website right that's assuming that they oh they own all the images and all that stuff is well, right? Right. So an interesting point about copyright is you don't have to go do anything to create a copyright you don't have to register it like a patent, you have to go register it and they're very stringent our timelines and time frames you have to meet and filing deadlines, etcetera copyright once you have an idea, has reduced to attack tangible form. That's, your, uh, that's copyright protection covers that and that's. All you need to do actually sharing the world so let's say I create a novel and I type it and I printed out and I have it in my house because I have that document that's good enough. Do I have to show it somewhere else? If you do, have you? Have you do? After spread, spread, share once it's been made public. So the issue with the cup, right and whether I guess it goes back to a chicken or egg situation. So I say you create the novel, it sits in a box for seventy years or so, and nobody ever sees it. Then your house burns down. I mean, this really matter. I mean copyright protection it's a pragmatic approach, but let's say someone breaks in your house, steals manuscript, publishes it, you have a copyright, makes a million dollars, makes a movie right? Interesting. You should say that, so copyright, all you have to do is go snap a photo, put it on instagram, right? That's your intellectual property, and I'm sure you've heard off all kinds of stories. If you work in the online world or in photography or graphic design or web designer, anything about how these these laws were kind old and they're slow to keep up and so one case that's that's come up recently and maybe a landmark case is it's a case against buzzfeed which if anybody knows buzzfeed is they publish musings and they call him I mean it's a lot of it has like a comedic bent to it I think so they published a photo but a photographer had taken in one of their feeds and it is all of the lama making a weird face and he didn't go and register this you know, in the us in the library of congress for copyright, but he is now suing them for three point six million dollars because they used his weird lama picture and because they because of the dissemination of the photo you know, went those wide dissemination were used on all kinds of different sites he's saying that that was his intellectual property they use it without his permission he was there for harmed him out three point six million dollars for a lama photo it's interesting because busby too saying they're they're different there's a fair use doctrine and some of you or not you may have heard the fair use doctrine says if you take something that's that's maybe potentially covered by copyright so you take the president the president's picture and use it in the news article or using a commentary than potential then that may not copyright protections may not apply to that thing that use, but in this case, it's the argument is that they just boast we just stole this picture and used in this article and it wasn't news because apparently some the courts some people still think that online if it's not the newspaper it's not news, but again, the reason I bring this up is it just highlights there a lot. There are a lot of issues that come up in this area of law, and the law is very, very slow to catch up with the practical realities of doing business as you're doing that. So it's it's just always something to keep in mind thiss property that I'm creating or using fall into a certain category. There's one thing I want to say just cause it's so common and I'm curious for folks that air there on the internet, knowing we have a lot of photographers that aaron the creative live audience, that this could be a big issue and it's one that I find that many creative photographers are very passionate about, which could be attribution. And now we have the the thing which is getting beautiful photographs and putting inspirational quotes you're good enough, you're smart enough, doctor that people love you, you know stuart smalley and people will especially on facebook or you might see on instagram that people are often using these images or people use images within their blawg posts where you just do a google search on images and you know put the image in there with good reason might my dad's a photographer so I've always really respected the profession for example I make sure that whenever I use a picture in a block post I always get it from my stock photo where I purchased the picture for that one time use but what what are what is the actual law around that if if you're you find a beautiful image and you want to share it with your buddies with an inspirational quotes on facebook if you put the name of the photographer is that ok for attribution or potentially potentially it's not gonna cover your completely my golden rule for this is get the creator's permission golden rule like gold over contract everybody signed something golden rule for copyright is get the creator's permission and many times on the internet especially I've asked to use a sure fine I'll put your name down the bottom church fine love it well I think it's also a matter of respect I too like is a creative person I really respect you know people's you know images and sometimes I might have to use an image you know from flicker but I go into the creative commons archive because they're actually really you know fantastic images in their and and I always I have contacted the photographer's directly if I ever used something in a specific project not just to have a paper trail, but because even though the u know it allows meet, they allowed me to use it and it's, not for commercial purpose, it's it's still something that I feel like people also most the time are flatter pretty much on every occasion except maybe one, people are very flattered, and I feel like I'm using it in a pretty prominent way that they have a right to know and they're usually excited, and then I make sure I send them a copy of the printed piece or something, and we're in this age of, like, especially young people think everything is free and so and on my block, I try to use my own photos, but I'll use creative commons images and all credit the photographer and all linked back to that original, you know, page so eh? So that it goes directly back to the source and not to some random, you know, other place you're being very, very cognizant of the intellectual property is great. You're going, I would say above and beyond what was is required in many cases, but it's not gonna hurt to do that, really when you're talking about creative comments. On flicker and correct me if I'm wrong but they have different think so did chat room and has a great tip that google image search allows you to restrict by creative commons as this flicker and I did not know that but I think on the creative and if again correct me if I'm wrong but I think that they have different levels of creative they do like one might be like you can use it and modify it another might be use it don't modify it it's all the base level is attribution you have to give an attribution on dh then one of them is it can't be used for commercial commercial so like not putting it on your cover of a bottle of your shampoo and then selling the shampoo but here's here's a an issue that's come up in the courts as well what is commercial purposes if you publish a block post and it's on your business blawg there's really no argument for saying that that's not a commercial purpose if it's your, uh your home blawg like I came here is my family we're keeping up with it then yeah there's an argument if you publish something on your business blawg I would say that there's a very good argument that there's commercial purpose for that so the creative commons even though you find it the creative creative commons archive look at what level of creative commons they're talking about is well, um it's really important and it comes up a lot a lot of people inadvertently fall into these these traps and I want to but it's just keeping these things in mind as you're creating here intellectual property using so trademarks um when you think of trademarks what's what what? What comes to mind? Lo those okay names of prize loads of companies who goes will say names uh, logan's has come in from a tagline slogans taglines like I knew like pat riley trademark threepeat, right? Because that's a slogan the ashley right I'm not gonna write it down. Yeah, way. So yeah, I mean, trademark really apply purpose let's just back up and get away from what? Why trademark is to identify the source of a good or product that's that's what comes down to and the standard for is their trademark infringement is would there be confusion as to where that product came from? That source of heresy. So you think like that seems free pretty easy. I mean, I get it, just do it. We get that creative live get that right? What? But there's a case between, um, a company that sold used pipe and a video sharing, um, platform and there's a trademark infringement case in the world uh where the interactions their inner correlations how could any how could be there? How could there possibly be any confusion in the name of the pipe company with us the universal tube and roll form equipment corporation uh versus youtube uh so they had the domain since uh their domain you you teo since nineteen, ninety six and then this upstart comes along and starts there's some video sharing platform and the kid's crashing their servers and they're getting all these ranting comments, you know, filling up their mailboxes hey, why were the video you didn't post and is taking up? All of this company's resource is and so I mean it's ridiculous right to think is there a confusion in the marketplace? But one of the standards that you used and this is not a hard and fast standard that standards vary from court to court, but one of things that one of the standards that I kind of used to get to start eyeballing things in is wood fifteen percent of the market place be confused as to the source of the goods or product and if your servers air crashing and you know they're significant problems there and you probably got a fifteen percent problem car confusion I knew I heard recently where there was a food truck called truck norris and chuck norris actually sent a season this is so they had to change the name so they actually said yes to me and I from what I heard, I'm sure but I think they actually kind of lost a lot of money because of that because their name's not so you know memorable. Yeah, well, chuck norris and tio chuck are going through some other damn uh so yeah it's interesting because it's not the same word, right? I mean norris's but it's not the same word it's not as though we're saying uh I know chuck norris food truck company there's confusion in the marketplace potentially and you as a business owner and means a business owner wants stay well clear of those things because how do you how do you know if there is an issue that comes up what happens? You get season desist letter if you want to fight it, you got a court about right? Do you really want to invest in that or do you want to just nip it in the bud early and do some research on the product and what's out there? And the thing it makes trademark it makes it somewhat difficult also is there's an air relation between common law, which is are unwritten codes of laws and cases that have built up a law over there over the years over the generations and then there's the us patent trademark of filings on dh how did those inter relate just because a company doesn't have a trademark with the u s and patent trademark us patent and trademark office doesn't mean there's not trademarked you could gain rights, teo, you can gain rights too slogan, the name a this stuff just by putting it out in the world and using it in in a commercial context so you don't have to register it, but what the registration does for you is it gives you the default position. So if there's a argument between two companies is one, have the rights to another to it are not the the company that has the federal registration is going to be the one in the better position from from the default standard that that other company will have to overcome that presumption um, that they used it first. So when you're starting your business, a lot of people coming in to say I needed llc like, okay, why go through all that? I need a trademark. Why? Why? Why do you need the trademark? Like I need the registration, do you really need to invest? You know, anywhere from fifteen hundred two thousand dollars whatever it is in a trademark registration when you're still testing and trying in the marketplace, my take is get do your due diligence, do some searching out there on google go us pto dot gov and search that I should write that down uspto dot gov is important place to start when you're when you're doing your business foundation make sure that name's not taken and then you see see if you can get some traction in the marketplace if you get that traction the marketplace and becomes a valuable asset and it's maur its value exceeds the cost to protect it then it's time to get that trademark uh this isn't one of those things where you just go run out and throw a whole bunch of infrastructure together, but trademarks can cover a lot of other stuff like there's uh there's a category trademark is called trade dress and it's the way something looks like the coke bottle coke is very protect. Coke is very protective of the intellectual property and the number respects we'll get into that later but trade dress the shape of the bottle there they've sued companies that have tried to use that because there's going to be confusion in the marketplace as to where that came from. Um there's a a case in the last several years between these last ten years or so between adidas and payless shoes payless shoes was selling a shoe that had uh I guess the adidas has three three slashes on it and pay less was selling a shoe with like two or four slashes on it that looks similar and adidas sent them a cease and desist letter to send a cease and desist letter to pay less like alright, we'll stop doing that and then like it was a great shoes sold really well, I think they went from like two slashes or an added four slashes or something adds more slashes to it that'll do it and do just came back said, all right, now you really take this off and sued him and said we're not giving up wouldn't settle seven years of litigation and three hundred million dollars judgment because put some, they put an extra splash on a shoe and apparently, you know, they went through all this litigation there's a deep, deep analysis of two hundred seventy shoes to see if there's going to be confusion in the marketplace, and they did studies on each one of these shoes in focus groups and I mean, as a small business owner, we don't have time for that just stay away from it it's not worth it it's not worth to get like you're saying mike to get near the line not worth getting near the line on this stuff, especially when you're talking about chuck norris or pat riley or adidas or apparently the universal tubing company who interestingly enough, if you go to youtube dot com, they have put a little t m next to the domain, so youtube I could write down because it's trade part so if you go to youtube dot com there's a t m here and this is good is an interesting point. So do you know the difference between this mark and this markets? Is she okay mustard, right exactly yeah, this one has been registered, so if you go to youtube and search youtube dot com and search in the u s patent trademark office there's no trademark for that uh well registered trademark port, but since they have information out there they've published it has commercial value because they're now the siphoning off the traffic or the traffic that inadvertently goes to this domain. They have paid ads on it now, so they've monetized it. So this has commercial value, so they put that on there it's not they're probably giving it from google adsense probably. I mean, there probably make you two, I think, and some ridiculous number of minutes of video uploaded day like sixteen million minute it's a video a day were uploaded so the number of hits that they're getting a monetizing but they won the case against the video sharing site. Do you know I'm just curious for the both of you like, do you have your personal name trademarked or either of you or or or do you know people like in our space who are online entrepreneurs who do that and at what point you do it you your personal name you don't have to trademark most people don't trademark their personal name because it's not fanciful or distinctive on dh those air something categories fanciful pam it's fancy for that they may take just gonna become a symbol so prince becomes a symbol of my trademark that that simple but names generally people don't trademark they made trademark like mike's coaching for men that they're those those trademarks are all over the place but names alone so could you just clarify again for people including I'll win so you can have a trademark without registering it that difference again between p m it is I get it it's mind boggling but there's different types of law I don't want to go into all this because it's everybody's going so now fall over and challenge going teo but they're two different types of law there's a common law which is made up of like the the law that's built up over through court systems over the years and then there's codified law and the registered the uspto registration that's that's codified law where's the common law says that you don't have to go do that to get a trademark registration so there are many, many, many battles out there between the non registered trademark holders as to who was there first so who planted their flag with that name first and uh it's it's convoluted companies really simple things like I like it have a trademark which now that I realized that the two are similar but just one is not registered like I saw something that was a tagline like be simple something really basic like that and there was a trademark and I thought, how can you it wasn't even a clever one it was something you know there was no interesting play on words or anything like that and so I thought, wow that's that's kind of preventing you know somebody from using something also like that that really is just a sentence and it really literally was a sentence and I didn't know you could trademark sense yeah so let's say those shoes be simple for for instance, you're writing it block post like you know my my thoughts on this matter is just be simple about is a the is their confusion in the marketplace as to their source of good, right? So would have to be like a company with similar products or services that also use that or even something you know related enough that people could be confused. Yeah where let's say you're saying like the be simple x the be simple web design services that's your identifying those those goods and products and services if it if they're in the same space is you that's that's problematic the other thing I think kyle, when you start to think about in terms of investment for people that might have the kind of business where the business name or the slogan is one you may not be positive that it's gonna end up being a huge business but if it does do well if you just start to look at, we looked at those like staggering three hundred million dollars settlements which is bigger than most small business owners but just getting a little bit of a cat fight in a legal issue with somebody going back and forth about when you established this common law trademark and very quickly that number is going to surpass in legal fees what it would have cost you to register the trademark in the beginning so I'd say for people that are you know, I'm not a lawyer I know you're not giving legally by legal information, but just you know from a business planning perspective that sometimes if you have something that you feel like you're really gonna hang your hat on and you love it that if there's any sense like you said no having confusion and just want to protect yourself and you have a couple you know, extra thousand dollars laying around, you know it's not the worst decision that you could make and then you know the long run it could end up that you kind of overprotected yourself but at least if there is any kind of legal scuffle, you know, then did your protected that's kind of the way I think about it as a business owner, well, very well functioning profitable businesses have gone under in trademarked it just just because of trademark disputes. Um I, uh I won't name the company's, right? But as a small business, as you start to grow again, you pop up on the radar and if you pop up on that radar and, uh you get that cease and desist letter, you have to make that decision and it's much better to head it off early. Yeah, we have a similar question that from mahala in the chat room, he says that it seems like a waste of time to consider litigation for copyright infringement on her images if somebody's just starting out, but how can they protect him in a more affordable way? She feels like anything she posts on facebook pinterest or her sight could be lifted when you know when it's time to take that next step or is there anything you can do? I guess a little bit more on the cheap to protect yourself before you get into the litigation. You know, uh as a litigator as former litigator, I don't do fights anymore it any case like that comes down to is it worthwhile if you do a cost benefit analysis and you don't have to have a good standing to sue somebody necessarily I mean you know to initially filed the suit so the question being when you know it's it's worthwhile it's really up to that person is that image that valuable if you if I go and I snap a picture of my dog and then somebody uses it on their block post uh is it worthwhile for me do I have any commercial advantage to that? Is there going to be any confusion in the marketplace really even though that's a trademark aspect you look you look at the cost benefit analysis every time spent and intellectual property is one of those really nebulous moving areas of the law especially given how much intellectual property is being created now with all the photos being uploaded on all the news service is coming online that's all the intellectual property but it comes back to you as a business owner is it what's the value of that piece of property to you and does would that value be worth going through all the time and money and ext even companies that small businesses that seem to have had good standing you run up against bigger businesses and they could just outlast him so I'm all for dime definitely all for protecting the little guy? Absolutely but staying away from that line is probably the best course of action um uh I've seen this happen sometimes we're where someone already has the domain name purchased for either like a product or a service or a brand uh you know that I might want to create for a coaching program or someone might want to create for a book do you just launch anyway and then maybe filed for the trademark and then try and get that done domain name or what do people usually so that's a tactic that I've seen that same gun there's you know there are all kinds of laws related to cybersquatting where people just go in bulk you know grab a bunch of domains and they're cybersquatting statutes again complicated to get into but if someone if someone just is holding on this domain is not making any commercial use of it if you have a trademark registration you're using in the marketplace you planted that flag as you know it's a commercially viable name brand trademark for you first and so goes back to is it worthwhile getting in that fight a lot of registrars will force the person to pretend you full force the parties to get into a negotiation at least if one party comes to that they're registered with a trademark registration okay yeah again it moves all over the place so uh pat um patents are a little different because that it's a really very intense complicated area law that relates mostly relates to tangible goods for the most part right uh recently I think it was in the er early two thousand's patents were opened up the software and that's where the patent explosion just went went nuts before then you had it was related generally just tio tio two goods and they're the three times of patents there's utility patents mean which cover like a new invention and new designs are not new design but a new infection it does something useful and it's commercially valuable the design patent uh you know, obviously is decorative and then their plant patents for if you wanna go create a new doily or daisy or something but so her statistics I'm interested let's see who gets closest to it even online how many patents potential patents are? Does it the average smartphone are cover for thirty thousand thirty thousand higher like within one smart spots hard bone how many patents could possibly be bodies? Anybody I need the number it's two hundred fifty thousand we have one hundred thousand core of a million patents could possibly be embodied in the smartphone so this is I could just leave it that way I'm not turning that's a specialized area of law somebody comes to me with the patent issue I refer them to a specialist because this is something that you have to really, really, really, really know and so if you are thinking of inventing something um I definitely see a patent attorney about this uh to do a patent ability search that those generally aren't that expensive um a lot of inventors go off and start creating prototypes and and you start doing start doing the testing and trying process this is one of the areas where I'd be careful with that you at least do your own go to google patents google patents is an amazing resource used to used to take days and days and days now you know you just google it uh but a good patent attorney could also help you do that patent ability analysis which is going to save you a lot of time and money and hey, maybe if you tweet this made you do that um so I'll leave patents that unless there are any other questions about patton's probably not so much for this audience I think yeah yeah um so trade secrets uh what's an example of a trade secret thing is that like the coca cola recipe or like the colonel sanders of chicken breast? Yeah, yeah you ni you totally took the way blast you, mike coca cola was brilliant really that they did there their intellectual property strategy that they're like they're old school, I'll be back before the days it was like the apple who's really you know that now, but they're really they said we're not gonna patent our formula because patents expire after fifteen years, we're going to say our formal is a trade secret and never expires as long as we keep it confidential and we try to protect it. It's a brilliant strategy so the way I think of trade secrets is what's your secret sauce I mean and in colonel sanders case it's literally a big mac potentially, but so what? What is your secret sauce? What makes your what's the little nuances where that the formula formula or even customer lists khun b trade secrets and our trade secrets and is something to consider when you're dealing with like partners of affiliates of your company? If you're sharing data with venture partners, you're a customer list is a huge uh trade secret asset to protect you I think you have an obligation to protect your customers anyway, but even from an intellectual property standpoint, you have an obligation to make sure you take care of that and that comes up a lot with consultants with web developers databases those those could be covered by trade secrets as well. Um so with p this is a list of the what's, but the important things to remember are any time remember we have everybody signs something right is to keep that in mind when you're creating contract is there going to be intellectual property involved here when when you when you know my I'm talking here creative live there's intellectual property create right there there's intangible property so whether the nuances there where the nuances when you're working with customers and vendors and employees contractors again with the big point with regard to the contractors employees people working for you is remember if they're creating intellectual property if you don't have a contract that says it's yours it's theirs um so it's it's important point like non competes in like any is coming yeah that's it kind of fringes on intellectual property and contract law it's it's you know it's kind of a hybrid cross over there um we're gonna ask well as far as like a noncompete you know I had to sign a non compete for uh previous employer so is that like in california like are they I mean how how stringent are those and are they even sort of enforceable or like what kind of legal ramifications can that be, you know, going against that or yeah and it's a great question you bring up especially given the topic of escaping your cubicle when you're escaping your cubicle, take a look at what you've signed it so many people that take secretary of corporate job starting a side hustle, you know, help me get up and running like all right let's see your employment documents? I don't I don't have those well I say start there what can you say it? Can you elaborate on that? We're gonna do that later? I will mention that yesterday, but what exactly do you look for the non competition provisions on dh what those really relate teo and what their talk when you're talking about non competition, you're talking about essentially using the employer's confidential information or trade secrets intellectual property to for your own advantage in and the non competition agreements vary, but generally they say in the same market place, so if you're going after the same customer base or even if you're a one of the big things that comes up with people escaping their cubicle is uh targeting customers of their employer right? Like this costs I know this customer is not happy with the service, I give that customer much better service on my own that's a big no no even if you haven't, even if you haven't signed anything that that customer list is considered a trade secret of the employer and I would steer well clear that unless you clear it with the employer and the customer makes it abundantly clear that they're not a customer of the employer any longer. Yeah, and I think there's one specific thing that I often recommend to people because, uh I fondly called it in the book the mafia culture which hopefully over time is changing I think in the new world of work we're realizing that when you have a culture that says, when you're an employee of ours, you're in the family and as soon as you start to think about going elsewhere, you're outside of the family and sometimes you get I am thinking of chuck norris after that example was like, check norris is going to come after you, uh, for leaving and so sometimes there are companies that have a little bit more of that philosophy where as soon as you ask even to see a copy of the employment agreement, it might kind of raised the eyebrows of people it's not every company, but sometimes there could be uncertainty within the company. And if people even here that your poking around to try to, you know, figure things out, it might put you at risk. So that said, often, there's, somebody friendly that, you know you should always have a friend in human resource is I mean, everybody should know this if you work in a company, always have a friend in human resource is right, mike, remember, you're in hr before you always want to have somebody where you could just safely say, you know, I just would like tio, review my employee files, and within any large company, they do have copies of all the documents that you sign when you come in as a new employees it's one thing I think that we start to realize that kyle has, you know, scared the daylights out of me now because sometimes, you know, signing things that you don't realize that we just get a big stack of papers and start to sign it. Well, they're actually convincing big implications, and this is true even if you're signing papers for a spouse's business or if your asking your spouse to sign papers that relate to your business, so pay attention to what they are, you could go into that file and you could say, I just would like to review the whole thing because I'm just looking at my benefits or whatever, try to be inscrutable as you can, but you do want to specifically look out what is in that agreement, and there are some companies like kyle said, which are pretty cool, saying, as long as you're not going after our customers, you're not using our equipment or work hours to work on your business. It's okay, many times you have to actually give written notice that you are doing that just to kind of keep that on file with the company. But I know of many larger technology companies where I think, as I mentioned yesterday, even if you're a software developer and you're doing a vegan cookbook that in that their employer agreements are so strong that anything that you create during the time that you're employed with them is technically their property. So those kind of things you might wantto you might want to pay attention to you. Yeah. I mean, there was a the case between starwood, the hotel branch. They have the w line of hotels, which is a lifestyle brand. And hilton and employees left hilton and took a bunch of documents with and went over to starwood. Uh, I'm sorry. Left. Starwood went to hilton and lo and behold, several months later, hilton announces to hand this new lifestyle brand of hotels that come on and start with, like and and the ceo stands up there, and this guy is the brainchild behind it, and apparently, I don't know someone from starwood was watching, and that looks very similar. Us, uh, got in and litigation ensued. Uh, seventy four million dollars later hilton scrap the whole plan. So seven for four million dollars settlement plus scrapping all the plans that they did because, um, on the other side, hilton didn't vet what this guy was bringing to the table. Where did you get these ideas on? Apparently, through the discovery process there were there were some people within the organization that had inklings or it's seen cem's documents potentially starwood stamped on it, but that's another point from your perspective is business owner is making sure you're covered where's this know how coming from because uh you don't want to be on that end of it either so let's talk about a few pieces of intellectual property so I'm gonna name I'm gonna need so that I'd like to hear what you think what type of intellectual property is um so name coca cola he might just like killed that's not freaking like the name coca cola what kind of intellectual properties train train trademark right? What about the, uh, the colors in the cocoa you think you can trademark back the color in the yeah, they copier is a special blunt mick rednecks, isn't it? There's not a copyright and not a landmark it's a trademark of coca cola has trademarks the red that's in their logo there was the shoe designer did you know about the shoot? I forget somebody who's really into shoes might know who has the red underneath the soul, right? And then, like which one was your mother? You know well known designer actually wanted to right on the bottom of their shoes too, and they went to court over but it wasn't like a really big ugly battle I think that they just sort of they managed to convince the court that that was a very signature thing, not just the color but the process of putting red on the whole sole of the shoe or something I can never exactly how it worked out, but it's sort of about it seems outrages quirky little is that a color red? So when you're going, when you're photoshopping, you're creating something and you know what? I really like that red you do like a grab the color something potentially I just be careful with that you're going after truck norris a coke any of these litigious companies on people that is something to be aware of. We talked about the formula because mike killed me on that one and then the the coke bottle um, so I want to run through since we've talked about it and we've talked about the with notions of setting up your business foundation want to run through a hypothetical with you um and I use it, but I should use rosie's air quotes hypothetical because, uh, this might ring true for a lot of people, so I see a lot of times and this happens so often that I like to use it as as my hypothetical um, people goto workshop I think there was even online there's people online yesterday it wasn't nick and dave something who are two guys, you guys great dan, greg and dan, craig and dan yesterday, right? Greg dancing would be fantastic, right? They were they had like the jedi mind meld going there online through the chat forum on dso greg and dan decided to run off like this happens all the time right? We go to work shots we get like so jazz and like you've got this and I've got this and it's let's run off again you know the hand in hand we go off and take on the world with superpowers I get that because I'm an entrepreneur gets so jazzed about idea is going off and turning them into changing commercial products and services changing lives change in my own life you know bob about love that even me I have to take a step back think about all right let's go through these let's start going through these steps so the example here is we've got and here and he has been talking with our good friend pam about how miserable he is in his job and how it doesn't seem to be a good fit for him um and about the entrepreneurial journey and andy is has decide that it's getting it's a good fit for him to go out and start providing financial consulting advice the entrepreneurs because lord knows we all need it right so he's at a workshop and human meets susie susie sorry I'm gonna put a dress on her way just want to make sure we're clear on dh so he meets susie um anything I don't I've got like me I've got great I've got these ideas and I have no marketing sensibility, right? No no way no, I don't know how I'm gonna get out out in the world susie is a marketing consultants you're on your own firm and he has money stashed up from his his job he's been socking it away you know that six month cushion teo get ready to jump out and they think the great it's a great fit so we're going to start this were to start new business in this new idea and they come with a name like the money source code so they come up with and I don't know if this is trademarked so you come up with the money source code as an e book and so they sit down and andy he's not he's not working this is this is a sole focus right now he's trying to grab a foothold in the market place his first testing and trying step is let's see let's do this e book to see if there's any interesting and create the heat creates all the content for the book he that then suzy she goes and she has some design skills she designs the book makes you look really nice they start marketing it and he goes and sets up a host for it in online host susie helps our then he pays for a a graphic designer they come a web designer become create the website so at this point handy's get paid for the domain uh he's create the content and he's paid for the web designer at this point do they have a business partnership? They haven't offered anything to sell to the marketplace okay, I would say no a cz well because they haven't offered anything the marketplace there's still the ideation stage so they create this web page hand and he doesn't know anything about finances and stuff so he doesn't know anything about online financiers knows about like advising people on their finances and I guess he doesn't like the cobbler's kids you know that you have no shoes, so we decided that we'll hook it up to your paypal account and so they hook it up there and they start making some sense so at this point do they have a a partnership business partnership? No, we're said like seusshow hints and say no, yes, I don't care how interested but so at this point I would say yes they do because they have something mark in the marketplace offered the marketplace they're in business together it takes virtually nothing teo to start a partnership and I want it offering something I'm your line it reinforces because this is a tricky thing when I first heard it that actually legally even if you don't register of business partnership together and you've not signed one document at all. You are actually legally in a partnership at this stage. Is that correct statements group if you have my parade of something that I burst you, the fact that you created something together and you sold it you you which means that you are both liable for for andy running off and getting a mercedes, right? Or all the other things that you were talking about earlier, right? Yeah freaked me out the first time I heard it, I don't know about you, but I was like, what? I thought it had to be an official registration of a business partnership. Yeah, so the partnership myth we've gone through a bunch of golden rule commits the partners had met is you need an agreement? You don't you just need yu don't even you'll need a verbal agreement, you just need to go out and start doing business. You have this meeting of the minds, you know, and for, you know, a knee book springs forward from this meeting of the minds you start selling it. So what if it was like andy's? Like, I don't know anything about evil design? Uhm and when we barter and you'll design what you know, the book, and I'll give you like, a thirty minute session of our long session is that it wouldn't be a partnership like would it be almost like a zip he paid for the design or right yes yes barter bars is a way of paying for something so difference one of the signs of a partnership is you share profits and loss and liabilities um in that case you don't necessarily you're bartering even if let's say and he says I'll give you five percent of the the net and come off with this that's not a partnership either it's he's paying for those services it's not definitive payment it doesn't have to be a defender of payment but again how do we clear this up right is we use a contract everybody signs everybody signed something so att this point so they get they get on mashable and and techcrunch and because this is fantastic information and uh they start just all these sales start coming in all of sudden they've got fifty thousand dollars in this paypal account I wouldn't way wish it would all be so lucky so there's fifty k in this in this paypal account uh how so and at this point and he's all in he's he's doing he's managing it susie has contributed the design on the paypal account he's putting all the time he's managing the customer service isn't all that how did they split the fifty thousand who stole the market? What they good question hole in the booth so let's say they did all this marketing initially and then yeah then they got she helped get them onto techcrunch mashable on all of that so yeah, she contributed that how did they put the money? Who knows? Right, who knows because there's no meeting of the minds whatever expectations and he might say well I'm all in ninety percent of his mind what are you talking about? We wouldn't have a dime if it weren't for me this happens all the time all the time and again we alleviate all of these problems interns by signing something that says you know what are x rotation's are because in this example even if they said that you know hey, we're going to a fifty fifty split on a handshake that would still be nothing right? Because all the money's in susie's account you goto you know, if they don't have the actual contract so very good point you bring up a contract does not have me written down all it takes is again I'm not gonna bore you with all the legal part because again it's getting late I want you all over but you just need a meeting of the minds and some exchange of what's called consideration right? And so I would say handshake yeah, they have a contract but how do you enforce that contract? I saw this eight hun when I was a litigator but he said I do or he would do this I said you know involved and you just gonna he said she said and it just it gets expensive it destroys businesses and destroyed relationships so having a contract in place here would be would be ideal um and especially in a partnership context because there's so many issues involved right like who's going to do what in the partnership that's that's something it needs to be in the partnership agreement what's our revenue split here alright how much? Who was going to do the taxes for the partnership? Wei have fifty thousand dollars hey, I'm going on and they split up twenty five thousand piece let's say they get to that point um okay who's doing the taxes who's paying the taxes I don't know um again all this stuff should be in their expectations are all laid out. So with the partnership do you have to go through the same thing of like, checking the name and uh like registration in or like, do you have to do that with a partnership? Can you just leave it more informal and just have agreement? If you if you go ahead and you start doing business under an assumed name, that name should be registered somewhere with a business business license I would certainly do the trademark check on that anytime that's ragnar our business foundation that's the second step through that that stuff could destroy your business but yes o in the partnership agreement those are you do a lot of pieces there's a lot of the the agreement is not as important as the discussions leading up to the agreement it's really the process of creating the agreement that's the important part of it not and throughout the process you do that you investigate names you talk about what are your goals for this business and it's one of the things I mentioned to people who come to me talking about partnerships is what's your exit strategy sooner or later everybody leaves a partnership so whether you're you want out you get kicked out you get hit by a bus everybody leaves a business sooner or later and so one of the things you have to do at the beginning um is planned for that exit strategy so if we're if any and suzie actually did have a partnership agreement here um what if anyone susie out? How how does that happen? That should be it should be in the partnership agreement here's how we value our interests but they didn't do that and so uh at this point, uh they're still they decide alright fifty fifty we'll do fifty fifty that's that's what andy is saying all right, listen I am doing so much work in this partnership that uh if I'm going to get fifty percent I need more help me somebody help me so we need to hire somebody this is a lot taking up a lot of my time money is flowing in so that's that's a good problem to have generally right so they say all right let's hire or let's bring somebody in but we want him to be a valuable part of team we are going to be invested in this in this in this venture so we're gonna bring in jail and they say listen jake way will give you ten percent of the business uh we'll give you ten percent of business if you do all the customer service you do all that web stuff I don't know I mean and he's kind of hacked together himself or susie attack together um and he's like yeah I mean there's there's a lot of upside in this I see a ton of upside where is that come from like this is what happens a lot it seems ridiculous right you're all right it's fifty fifty plus ten um where does where's jakes ten percent come from that that's something is not thought out it seems really obvious right by uh uh obvious but this's not thought out and something else that's not about is that let's say the value of this business is fifty thousand they've got fifty thousand bank assume that give jake ten ten percent of it they for taxation purposes jake is taxed on five thousand dollars uh, so they just served up a big tax bill to jake and he has no money to pay for another thing it's not thought up a lot, so these are a lot of these issues that fit and again this's scenario that happens a lot it seems ridiculous, but it happens a lot so they're they're going along doing business money's coming in and just fine and he's getting kind of he's he's becoming disenfranchised with the business because he's doing all the work he's only got fifty percent are ish and he decides this opportunity comes along to give a talk and he says, well, I'll call it the money source code and he goes off and gives this he knows his paid five thousand dollars whose keynote and he takes the money and put it into his bank account then that somebody is sitting there's a publisher sitting in the audience that was really good information we'd like to give you a book deal on it so and he goes head signs a book deal he writes the book because on a book tour, I don't know what suzy is doing really she's just going to sit there checked out and he's raking in a lot of dough off the money source code and she it comes to light to suzy. Finds out hey, what do you do, dude? I saw it in a barnes and noble, and I saw you, your book's sitting on the shelf again. She I don't know. She was, like under a rock in france think I think so clearly, um, since she demands fifty percent of all of the all that of all the money that he's taken it, what what's your take on that? Would she be entitled to fifty percent of that? Of all the money he's taken it? I'm interested in that, too. I mean, you know, like, she could go after it, and he would have a great time. It would become a lawsuit, so why not map it up before that happens? But what if I mean, if he's, the author and he wrote it, and he copy right tio in his name? Then, isn't it hiss property? Because it's, his content sort of say, formed a partnership, but there's, there's all these intangible things that happen when your brain starts with people and that's like where you know something that she said could have spurred idea for him? He might even be better as a result of her on dh probably is, but clearly and if it's under the ifs if it's under the umbrella of the business then and he didn't explicitly say he was doing extra quickly racked activities than I would think that she'd be able to have something this this scenario actually sounds like something that happened between steve nash and shack uh steve nash when they were teammates and the feeling sons was telling him an idea for a tv show that he wanted to do when he retired shot came out with his show later on basically steve nash's idea but shock took it and he did it so if you look at the credit steve nash is like executive producer there's probably consent steve I can't accept the fact that they would have a bad they worked it out I believe so and I think he's a nothing story first you know I don't know but it was something like that where they were having a conversation and he was just talking about this idea for this show that he had when he turned around and he went in shock well steve nash said it's shock in the shack went and did it and then you know well there's always that risk with intellectual property if you're sharing your ideas that somebody's going to take that idea and turn it into a tangible form um and you could go around and have everybody sign india's non disclosure agreements and ma generally I've seen it when their business acquisitions going on or there's a partnership forming that's the appropriate time for confidentiality uh it's it's more problematic if I'm like hey pan, I got this thing I want to run by you but first let's do this end here you know, it depends on the on the person you're talking with you know and there are a million different factors that come into places too and whether a non disclosure agreement is appropriate in this case though uh they created assume from purposes hypothetical that this con most of book was this content here, does that change your opinion as to whether they should share the money but you used the same name he called you call it the money source code? Did they come up with the name together? Yes, the kid they came with the need together, he wrote the content. I would say that she would have a case for some of the because it's sort of branded there was it was the brand that they created together, but he ended up going further with it so rest for us but the content he did most so you can see we've got a bunch of different we've got trademark here, right? Trademark intellectual property issues way have the design maybe trademark here way have the content which maybe copyright the domain, maybe trade marker copyright this web designer but they didn't have him signing thing he's taking his design and make free copy cats all over the internet there are hypos too is used to illustrate there tons of p and contract issues that come slamming together in your day to day operations I mean day to day like this is just meeting somebody in the hallway so we close out the hypothetical here things start to go so itself obviously I really should start to fall apart a partnership agreement to break up the partnership suzy says I just want my fifty percent I'm gonna go on my way jake is like I want my ten percent I'm gonna go on the way then they start adding it up like way have one hundred ten percent here um but then um andy not so good with taxes and iris decides auto him and iris shows up on andy's doorstep and says where's, all this money coming from it's a partnership I'm in uh ok, well, we're gonna get that partnership too and so they started auditing the partnership. They find out nobody's paying taxes um and the big issue here is they say where's your partnership agreement uh and they're way said it was like fifty fifty ten way I really like irises okay, so thirty three percent thirty three percent thirty three percent and you made half a million dollars so jake you're gonna get a tax bill for, like one hundred sixty two and a half thousand dollars in income and jake, I got five thousand one hundred sixty two I got hosed in this deal, so the idea is move just I'll leave you with this is everybody signed something way susan where you meet? Yeah, they start with the best intentions they're very successful business, but the fact that they didn't deal with some of these issues at the outset causes a nightmare and poor old jake I don't know he's probably gonna have to, like, run off to most bee you're exactly and, you know, I think what's amazing about this too is that it happens more often than you think thankfully sometimes with not the exact consequences, but I know within my world of, you know, folks that love each other and like to partner let's do this joint venture it is so it's more common than not that that the agreements aren't, you know, set in place. So I think when you begin to realize some of the implications it's actually fairly straightforward and simple if you were just to go through an answer some of the basic questions about ownership, about roles and responsibilities about intellectual property and that means that you have clarity and you also have protection as you're going through it, I know we're almost at the end of the day. Are their comments? Are people running scared or people identifying with being andy or susie or poor jake out there? What what's the mantra? Wait.