Episode 53
E53: Taking Inventory of Your IP
I encourage my listeners to think about the intellectual property assets they are accumulating in their expertise-based services businesses so that they can scale their business to the next level. In this episode of Hourly to Exit, I encourage you to treat your assets like any other inventory through accumulation, tracking, and protection. While the legal definition of inventory envisions tangible objects, in an increasingly digital world, it’s important to expand your understanding of what IP you have created or licensed in your business. In this episode, I discuss:
- The typical stages of an expertise-based business, and the associated IP inventory
- How employees, contractors, and vendors are integral to identifying and developing your IP
- Best practices for taking care of your IP inventory at each stage of development
- BONUS – I review the reasons a non-compete is non-compatible with inventory accumulation
This solo episode is full of useful information and frames IP in a way that helps listeners to capitalize on their hard work. Whatever stage of your business, you have IP to nurture and preserve. If you aren’t sure where to start with this critical work, contact me to consult about developing and protecting your IP.
Resources Mentioned:
Connect with Erin to learn how to use intellectual property to increase your income and impact. hourlytoexit.com/podcast.
Erin's LinkedIn Page: https://www.linkedin.com/in/erinaustin/
Think Beyond IP YouTube Page: https://www.youtube.com/channel/UCVztXnDYnZ83oIb-EGX9IGA/videos
Music credit: Yes She Can by Tiny Music
A Team Dklutr production
Transcript
Hello, ladies.
Speaker:Welcome to this solo episode
Speaker:of the Hourly to Exit Podcast,
Speaker:where I ask and answer,
Speaker:does your expertise based
Speaker:business have inventory?
Speaker:Per Investopedia inventory
Speaker:refers to a company's
Speaker:goods or products that are
Speaker:ready to sell, along with
Speaker:the raw materials that
Speaker:are used to produce them.
Speaker:Inventory can be categorized
Speaker:in three different ways.
Speaker:Raw materials work in
Speaker:progress and finished goods.
Speaker:So now let's look at
Speaker:the typical stages
Speaker:of development for an
Speaker:expertise-based business.
Speaker:Most of us start by providing
Speaker:one-on-one services in
Speaker:our chosen field, which
Speaker:is usually the area of
Speaker:our prior employment.
Speaker:Many of us are ex-corporate,
Speaker:so maybe you're marketing
Speaker:or finance it or legal.
Speaker:during this initial stage, we
Speaker:develop our expertise through.
Speaker:Obviously our firsthand
Speaker:experience that we brought
Speaker:from us from employment.
Speaker:From that, we may have some
Speaker:original ideas about the way
Speaker:things could be done better.
Speaker:Maybe that was the impetus
Speaker:behind going out on our own.
Speaker:As we get clients, the type
Speaker:of work that they request from
Speaker:us will learn something new
Speaker:with every client engagement
Speaker:that will add their expertise.
Speaker:Many of us will get
Speaker:certifications or additional
Speaker:training, and depending on
Speaker:your field, you also may need
Speaker:to do continuing education.
Speaker:We may do research, either
Speaker:primary or secondary when we
Speaker:find holes in our knowledge
Speaker:or we need something to
Speaker:support, one of our theories.
Speaker:And occasionally we will
Speaker:need to use a subcontractor
Speaker:who has an area of expertise
Speaker:that we don't have.
Speaker:And so those subcontractor
Speaker:deliverables will
Speaker:also be something that
Speaker:feeds our expertise.
Speaker:Now, what I would call these,
Speaker:Elements during the initial
Speaker:stage of developing our
Speaker:expertise based business.
Speaker:I call them raw materials.
Speaker:They're all the pieces, the
Speaker:nuts and the bolts and the
Speaker:screws and the things that
Speaker:we bring together, that
Speaker:will form our expertise.
Speaker:Now as our expertise matures,
Speaker:we will develop internal
Speaker:resources so that we can
Speaker:predictably and efficiently
Speaker:deliver the results
Speaker:that our clients value.
Speaker:At this point, we've been
Speaker:servicing our clients
Speaker:we figured out what they
Speaker:want and how the best way
Speaker:to deliver it to them.
Speaker:And so at this point we start
Speaker:creating some infrastructure.
Speaker:To deliver those one-on-one
Speaker:services more predictively
Speaker:and efficiently, and therefore
Speaker:more profitably, of course.
Speaker:So those include systems
Speaker:and processes and SOPs,
Speaker:templates, frameworks,
Speaker:and methodologies.
Speaker:And I'm even gonna put
Speaker:employees and contractors in
Speaker:this category, even though
Speaker:it's a little bit kind of to
Speaker:the left, but basically, call
Speaker:these the work in progress
Speaker:stage where we have taken
Speaker:all the raw materials from
Speaker:that initial kind of building
Speaker:our expertise stage, we've
Speaker:figured out, the best way to
Speaker:serve our clients, and now
Speaker:we're starting to put the.
Speaker:Scaffolding in place
Speaker:for to serve them.
Speaker:and then I add the, employees
Speaker:and contractors in there
Speaker:because they are the extension
Speaker:of building these structures
Speaker:that helps you, serve your
Speaker:one-on-one clients, when you
Speaker:have these kinds of systems in
Speaker:place and frameworks in place
Speaker:and templates so that they can
Speaker:also serve your clients, and
Speaker:provide those same results.
Speaker:So that's the work
Speaker:in progress stage.
Speaker:Now, eventually we hit a
Speaker:revenue ceiling or an impact
Speaker:ceiling because there's
Speaker:only so many, clients we can
Speaker:serve on a one-on-one basis.
Speaker:so we start looking for ways
Speaker:to increase our revenue or
Speaker:increase our without just
Speaker:putting in more hours.
Speaker:So we know what that means.
Speaker:We need to, figure out a
Speaker:way to decouple our income
Speaker:or to decouple our in.
Speaker:Packed from ours.
Speaker:And so we start looking
Speaker:for resources that tell us
Speaker:how to scale, how to add
Speaker:leverage to our business.
Speaker:And probably we are
Speaker:either hiring a business
Speaker:coach or we are following
Speaker:a business coach.
Speaker:You know, we're listening
Speaker:to their podcast, we're
Speaker:reading their books.
Speaker:but in any case, however
Speaker:you engage the same.
Speaker:advice is that you need
Speaker:to turn your expertise
Speaker:into intellectual property
Speaker:so you can create new
Speaker:scalable revenue streams.
Speaker:So these are things like
Speaker:programs and courses and
Speaker:books, maybe even software.
Speaker:I do put productized
Speaker:services in this one.
Speaker:Templates that are now
Speaker:being sold as opposed
Speaker:to use internally.
Speaker:And, licensing when you
Speaker:have any of these things
Speaker:above that third parties
Speaker:wanna use as well.
Speaker:So these I call finished
Speaker:products cuz they are the
Speaker:things that you are literally
Speaker:selling that is not your
Speaker:time, but they are things
Speaker:that are separate from you
Speaker:that you'll be selling.
Speaker:So those are your
Speaker:finished products.
Speaker:we have raw materials.
Speaker:We have work in progress
Speaker:and we have finished goods,
Speaker:and these occur throughout
Speaker:the development of our
Speaker:expertise-based business.
Speaker:And what is each and
Speaker:every one of them?
Speaker:Intellectual property.
Speaker:So just because you don't
Speaker:have a stockroom filled
Speaker:with shelves of physical
Speaker:materials, that doesn't mean
Speaker:that you don't have inventory.
Speaker:You do have inventory.
Speaker:Now, of course, this
Speaker:is not the, accounting
Speaker:definition of inventory.
Speaker:this is not the
Speaker:cost of good solds.
Speaker:It's gonna go onto your
Speaker:financial statements.
Speaker:But the common sense,
Speaker:notion of inventory,
Speaker:where you have the.
Speaker:Inputs, the raw materials,
Speaker:the structures that you put
Speaker:in place to help, yourself to
Speaker:create those finished goods.
Speaker:And so you need to take
Speaker:the same care with your
Speaker:inventory that a car
Speaker:manufacturer does with its
Speaker:parts or that a retail store
Speaker:takes with its merchandise.
Speaker:So with your intellectual
Speaker:property inventory, you need
Speaker:to be thinking about the
Speaker:creation, the development.
Speaker:Protection and of
Speaker:course the monetization
Speaker:of your IP inventory.
Speaker:And so now we're gonna just
Speaker:go back over those stages
Speaker:of inventory and talk about
Speaker:the best way to manage it.
Speaker:In the context of intellectual
Speaker:property and these stages
Speaker:apply whether that IP is owned
Speaker:by you or licensed to you.
Speaker:So first, raw materials.
Speaker:at this stage of development,
Speaker:it is most mostly about making
Speaker:sure that you are using and
Speaker:understanding contracts cuz
Speaker:it's contracts that govern
Speaker:the creation ownership.
Speaker:Assignment and
Speaker:licensing of rights.
Speaker:With respect to copyrights.
Speaker:So at the raw material
Speaker:stage, it's all about the
Speaker:contracts, with the exception
Speaker:of your original ideas.
Speaker:So when you have original
Speaker:idea, first we're making
Speaker:sure that we are creating
Speaker:copyrightable materials by
Speaker:putting them in tangible form.
Speaker:Of course, they have to
Speaker:be original and have some
Speaker:element of creativity,
Speaker:although that's a.
Speaker:Fairly low bar.
Speaker:when you are putting your
Speaker:ideas, expressing them in
Speaker:tangible form, their original
Speaker:ideas, you are immediately
Speaker:creating, copyright
Speaker:ownership in that, element
Speaker:that you create in that
Speaker:material that you create.
Speaker:And it does not
Speaker:require registration.
Speaker:We'll talk about registration
Speaker:later, but at the raw
Speaker:material stage, it is just
Speaker:important to make sure that
Speaker:you are putting your original
Speaker:ideas into tangible form.
Speaker:Then the client work.
Speaker:So here, I'm sure your
Speaker:clients are gonna request
Speaker:agreements, so now it's
Speaker:important for you to make
Speaker:sure you understand those
Speaker:agreements that you're reading
Speaker:them and that you understand.
Speaker:Who owns the deliverables.
Speaker:Now, sometimes you're
Speaker:creating something completely
Speaker:original for a client.
Speaker:maybe you're doing something
Speaker:very creative, like,
Speaker:creating a new logo for them.
Speaker:But if you're doing something
Speaker:that is based on your original
Speaker:ideas, they're coming to
Speaker:you because you know how
Speaker:to, train, workplaces to
Speaker:have a better culture.
Speaker:So you have your own
Speaker:ideas around that.
Speaker:You wanna make sure that those
Speaker:client agreements reflect
Speaker:the fact that some of those
Speaker:deliverables are your original
Speaker:materials and that you will
Speaker:retain ownership in them.
Speaker:when we are going out and
Speaker:getting certifications
Speaker:or trainings or
Speaker:continuing, education.
Speaker:That is a circumstance of you
Speaker:borrowing or being licensed
Speaker:the right to use someone
Speaker:else's intellectual property.
Speaker:Here it's important.
Speaker:Again, it's a contract.
Speaker:A license is a contract.
Speaker:We need to understand
Speaker:the limits of your rights
Speaker:to use those materials.
Speaker:typically you will have the
Speaker:right to use, know, anything
Speaker:you get in a certification
Speaker:program or training
Speaker:program, you can use them
Speaker:And providing one-on-one
Speaker:services to your clients.
Speaker:But what you can't do
Speaker:typically is sublicense those
Speaker:materials to somebody else.
Speaker:You can't create a training
Speaker:program that you're selling
Speaker:to somebody else using
Speaker:the materials that you got
Speaker:from a training program or
Speaker:certification program, right?
Speaker:So we need to make sure
Speaker:that we understand the
Speaker:limits of our licenses,
Speaker:and that is about
Speaker:understanding the contract.
Speaker:When we're doing research,
Speaker:whether you're using AI or
Speaker:other sources, make sure that
Speaker:you are tracking the third
Speaker:party materials that you are
Speaker:incorporating into your work.
Speaker:Now here, if you are using
Speaker:AI or if you are using
Speaker:other sources, you need to
Speaker:make sure that, you are.
Speaker:not infringing
Speaker:anyone's rights.
Speaker:AI in particular.
Speaker:I mean, I'll
Speaker:confess that chat.
Speaker:G B T is the one that
Speaker:I'm familiar with.
Speaker:They don't provide attribution
Speaker:for what they provide to
Speaker:you, so you will need to use
Speaker:other sources like Grammarly
Speaker:to make sure that you aren't
Speaker:infringing anyone's rights
Speaker:if you are, using research,
Speaker:depending on how you're using
Speaker:it, if you're not transforming
Speaker:it anyway, if you're just,
Speaker:maybe you're taking someone's.
Speaker:pie charts or someone's,
Speaker:you survey results and
Speaker:you're incorporating
Speaker:them into your work.
Speaker:if this is something
Speaker:that are going to be,
Speaker:selling, you should have
Speaker:permission to do that.
Speaker:so that's important
Speaker:to know there.
Speaker:then your subcontractor.
Speaker:Deliverables always,
Speaker:always did I say, always
Speaker:use a written agreement
Speaker:with subcontractors.
Speaker:That is the only way to ensure
Speaker:that you own the deliverables.
Speaker:In the absence of a written
Speaker:contract, the subcontractor,
Speaker:the human being who created
Speaker:the deliverables, owns
Speaker:the copyrights in it.
Speaker:So you need to have that
Speaker:written agreement so that
Speaker:you own those deliverables.
Speaker:And the other thing that
Speaker:you get with your written
Speaker:agreement is that you
Speaker:can make sure you put in
Speaker:there a requirement or
Speaker:a warranty, that those
Speaker:deliverables are original.
Speaker:You don't want
Speaker:your subcontractor
Speaker:delivering, some ai.
Speaker:Crapola, right?
Speaker:So you wanna make sure
Speaker:that you have clarification
Speaker:about the nature of
Speaker:those deliverables so
Speaker:you can depend upon them.
Speaker:And if your subcontractor is
Speaker:using their own preexisting
Speaker:materials, again, like
Speaker:they have some area of
Speaker:expertise that you don't
Speaker:have, and so they're using,
Speaker:their own foundational
Speaker:materials to help you then.
Speaker:They, of course, are going to
Speaker:want to reserve rights in that
Speaker:preexisting material, but you
Speaker:need to make sure that the
Speaker:rights that you do get the
Speaker:license that you get to use
Speaker:your preexisting material is
Speaker:sufficient for your purposes.
Speaker:Let's say you do need
Speaker:to use it with your
Speaker:clients, then you will
Speaker:need a right to sublicense
Speaker:it, to your clients.
Speaker:Or maybe you need to
Speaker:use it more than once,
Speaker:whatever it may be.
Speaker:You need to make sure that you
Speaker:have the rights that you need.
Speaker:In the deliverables from your
Speaker:subcontractors if you're not
Speaker:going to own them outright.
Speaker:All right, so that was
Speaker:the, raw material stage.
Speaker:Now, the work in progress
Speaker:stage that is really pretty
Speaker:much about positioning.
Speaker:So it's less about,
Speaker:contracts, but more about
Speaker:how you are becoming the
Speaker:go-to person in your space.
Speaker:So you've.
Speaker:Figured out the way that
Speaker:your clients like to be
Speaker:served, what the best
Speaker:results are, the best way
Speaker:to create those results.
Speaker:And you're building that
Speaker:infrastructure, the systems,
Speaker:the SOPs, the templates, the
Speaker:frameworks, methodologies.
Speaker:And so at this point you
Speaker:are focusing on getting
Speaker:those nailed, right?
Speaker:So.
Speaker:there are some
Speaker:circumstances where you
Speaker:can copyright a system,
Speaker:a process, or a method.
Speaker:Generally you cannot,
Speaker:because the system itself
Speaker:is kind of an idea.
Speaker:remember, it's the expression
Speaker:in tangible form that, can
Speaker:be, protected with copyright.
Speaker:but, My opinion is not
Speaker:the most important thing
Speaker:that's happening here.
Speaker:The most important thing
Speaker:that's happening here
Speaker:is making sure that
Speaker:you are known as the
Speaker:authority, in the space.
Speaker:So I like to use the analogy
Speaker:of the cook and the chef,
Speaker:the work in progress Stage
Speaker:when you're working on
Speaker:your positioning, think
Speaker:of your systems or your
Speaker:SOPs or your templates
Speaker:and things as the recipe.
Speaker:And we're not worried
Speaker:about being the cook.
Speaker:I can't, couldn't do
Speaker:a thing with any of
Speaker:anyone's recipes, frankly.
Speaker:But you need to worry about
Speaker:being the chef and given them
Speaker:Michelin star service and
Speaker:that is that work in progress.
Speaker:state is.
Speaker:Building those systems.
Speaker:even if they can't be
Speaker:copyright, they're very
Speaker:valuable In enhancing your
Speaker:brand and your positioning,
Speaker:you become the authority
Speaker:with respect to the outcome
Speaker:that your framework provides,
Speaker:and there is potential to,
Speaker:protect it with trademarks.
Speaker:if you heard me talk about
Speaker:copyright versus trademarks
Speaker:before, you know my.
Speaker:gross bias is toward
Speaker:copyrights that when you
Speaker:have corporate clients,
Speaker:your corporate clients,
Speaker:don't care what your
Speaker:trademark is, frankly.
Speaker:so as long as they get the
Speaker:outcome that they receive, you
Speaker:can call it anything you want.
Speaker:if you fall in love with the
Speaker:name, then you fall in love
Speaker:with the name and, trademark
Speaker:lawyers will certainly tell
Speaker:you if you have a name that
Speaker:it would kill you to lose
Speaker:then, go for your trademarks.
Speaker:But when we're talking about
Speaker:like where to put our focus,
Speaker:it is in making sure we become
Speaker:the authority in, the outcome
Speaker:that your framework provides.
Speaker:So that is the work in
Speaker:progress stage where we're,
Speaker:it's all about positioning.
Speaker:Finally the finished
Speaker:product stage.
Speaker:Here we are squarely
Speaker:in copyright
Speaker:registration territory.
Speaker:when you have an asset that
Speaker:is going to be a direct
Speaker:revenue driver, meaning
Speaker:something that you are selling
Speaker:directly to the end user,
Speaker:it makes sense to register
Speaker:it in the copyright office.
Speaker:So just a reminder that
Speaker:your copyrights attached.
Speaker:As soon as you created them,
Speaker:you put them in tangible form.
Speaker:But registration is required
Speaker:if you want to enforce
Speaker:your copyrights against
Speaker:an infringer in court.
Speaker:So to use courts, for
Speaker:compensation and to,
Speaker:enforce your rights
Speaker:against infringers.
Speaker:it does need to be registered.
Speaker:And if it is registered in
Speaker:a timely basis, then there
Speaker:are also statutory damages
Speaker:that are available to you.
Speaker:So there are, a number of
Speaker:business reasons in order.
Speaker:to encourage registration
Speaker:for those things that
Speaker:are revenue drivers.
Speaker:So again, the finished
Speaker:products, you know, your
Speaker:group trainings and programs,
Speaker:courses, books, et cetera,
Speaker:and productized services,
Speaker:probably cannot be registered.
Speaker:but maybe some of the
Speaker:underlying materials
Speaker:can, templates and then
Speaker:licensing, you You've put
Speaker:together a whole program,
Speaker:around your framework that
Speaker:includes, workshop materials,
Speaker:scripts and worksheets
Speaker:and things like that, and
Speaker:those things that are being
Speaker:licensed to your licensees.
Speaker:You would certainly want
Speaker:to have those registered.
Speaker:So in some you have
Speaker:inventory and the form that
Speaker:it takes is intellectual
Speaker:property, and you have that.
Speaker:At every stage of your
Speaker:expertise-based business, it's
Speaker:not all about registration,
Speaker:as I just mentioned.
Speaker:It starts at the beginning
Speaker:when you're starting to
Speaker:develop your expertise that
Speaker:you're, making sure that
Speaker:you're putting your original
Speaker:ideas, intangible thought.
Speaker:Form so the
Speaker:copyright attaches.
Speaker:At that time, you are
Speaker:making sure that you
Speaker:are using contracts with
Speaker:your subcontractors.
Speaker:Always you are reading any
Speaker:agreement that the client
Speaker:puts in front of you to
Speaker:make sure that there are no
Speaker:restrictions yeah, you're not
Speaker:giving them your expertise.
Speaker:and I forgot, you know,
Speaker:I'm just gonna throw this
Speaker:in, uh, and you've heard
Speaker:me talk about it before,
Speaker:is making sure that there's
Speaker:not non-compete provisions
Speaker:in there or anything that
Speaker:restricts your ability
Speaker:to develop your expertise
Speaker:by working with other
Speaker:clients on similar matters.
Speaker:You, really wanna make
Speaker:sure that you are reading
Speaker:those cuz those are niche
Speaker:killers and frankly,
Speaker:they're expertise killers.
Speaker:and then, the same as
Speaker:with any company that
Speaker:has inventory retailers
Speaker:or car manufacturers.
Speaker:You need to make sure you're
Speaker:tracking it and then you
Speaker:know what you own and what
Speaker:you control, whether it is
Speaker:something that is original
Speaker:to you, something that is.
Speaker:Created by a subcontractor
Speaker:and assigned to you through
Speaker:contract or something that
Speaker:you are licensing from a third
Speaker:party through a certification
Speaker:program or, through research
Speaker:and that you are tracking your
Speaker:rights in your intellectual
Speaker:property inventory, cuz
Speaker:that is the only way
Speaker:that you can protect it.
Speaker:So I have created a visual
Speaker:summary of today's episode.
Speaker:you can find a link to
Speaker:that in the show notes just
Speaker:to help you kind of wrap
Speaker:your head around it, I've
Speaker:talked about a lot here.
Speaker:So of course, as always, you
Speaker:can find me@thinkbeyondip.com
Speaker:if you have any questions.
