Artwork for podcast Hourly to Exit
E53: Taking Inventory of Your IP
Episode 5325th July 2023 • Hourly to Exit • Erin Austin
00:00:00 00:19:43

Share Episode

Shownotes

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

Transcripts

Speaker:

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.

Video

More from YouTube