Blog | Entrepreneurship, Personal development

The Value of Protecting Your Ideas and Assets

“In life, you get what you pay for.” As a business owner, if you go cheap on legal, it can cost you a lot more down the road.

If you’re like me, you love a good movie. And there’s no better time for movies than the sizzling summer movie season.

This year got off to a sonic boom with the relaunch of the Top Gun franchise. To date, Top Gun: Maverick has made over $552M, with a 97% Rotten Tomatoes score. Seems like Paramount has a new franchise hit on their hands…or do they?

The cost of failing asset and idea protection

According to Screenrant, we may never see another Top Gun movie again. Why? Because Paramount failed to re-secure the copyright for the original story the franchise is based on.

As author Jordan Williams writes:

However, the celebrations for Top Gun 2’s unexpected success didn’t last long, as the heirs to the author whose story inspired 1986’s Top Gun are now suing Paramount in a game-changing IP lawsuit. In 1983, author Ehud Yonay wrote an article for California Magazine titled “Top Guns,” with the documented stories being licensed by Paramount Pictures quickly thereafter. Now, after nearly four decades, the story’s cult status, and an incredible sequel performance, Paramount could lose big on one of the studio’s greatest assets.

The case is far from resolved, but the long and short of it is that there was a 35 year window for the copyright to revert back to Yonay family. Meaning the family got the copyright back in 2019. Paramount says the movie was done before that time but delayed in release because of COVID. But it’s also murky whether other work was done in editing post 2019. Either way, the Yonay family now owns the copyright, and unless Paramount buys it back, they won’t be making any more hit Top Gun movies…plus, they’ll most likely settle for millions on the existing lawsuit.

That’s a big price to pay for not shoring up their idea protection.

Asset and idea protection is a small price to pay

I’m reminded of a story about my first business selling nylon-and-Velcro wallets. It was the 1980’s and we got the rights to make the wallets with the screen-printing of the names of popular bands of the time. It was very successful, and I thought I was a real business genius.

When I was planning the business, I spoke with an attorney about a patent for my idea. When I found out that it was going to cost $10,000 in fees to file for my patent, I decided it was too expensive and not important.

Another company quickly came along and copied my idea, and there was nothing I could do about it. Eventually, my business failed and I lost millions of dollars. Suddenly, that $10,000 didn’t seem like so much money, and I didn’t feel like such a business genius either.

The world is filled with business people and smart entrepreneurs with great ideas who began selling their products or ideas before protecting them. In the world of intellectual property, once your idea is exposed, it is almost impossible to protect.

My hope is that you won’t become one of these people. If you have a great idea or product, an essential component to success is securing that idea by having solid legal protection in place. This is especially true in the Information Age, when anyone can steal your ideas with a search engine and a few clicks.

How to protect your assets and ideas

In a recent episode of The Rich Dad Radio show, we talked about asset and idea protection with my advisor, Garret Sutton, whose latest book, “Veil Not Fail,” talks about how to use legal entities—in the right way—to protect your assets and ideas.

I encourage you to watch the show. If you don’t have the time, at least read the recap. I’ll also unpack some of the ideas here. With the economy getting worse every day, I guarantee you that litigation will go up. If you’re not prepared, you can lose big.

Hire an attorney you trust to protect your ideas and assets

Rich dad always said, “Business is a team sport.” And in business, your intellectual property attorney and your contract attorney are some of the most important people on your team because they help you protect your most important assets—your ideas and products. If you find good attorneys, they’ll keep the intellectual bandits away.

Your attorneys will help create the necessary documents and do the proper filing to secure your intellectual property in the form of patents, trademarks, and copyrights. These are some of the most valuable assets you can own, and they are called intangible assets.

The legal documents your attorney creates will grant you specific protection and ownership of your intellectual property. Without this type of protection, you risk losing everything.

Make sure you operate legitimately

A lot of people think that if you form an LLC or a corporation you’ll be protected. But that’s only half the battle. You must also operate that entity legitimately or else it will easily fall apart in a court of law.

This means that when the corporation is formed and on an annual basis you need the articles, the operating agreement, the meeting minutes, the issuance of certificates, and more. All of that is important on an annual basis. You need to have meeting minutes, showing that you had a meeting.

As Garret is quick to point out, a lot of promoters say that with an LLC you don't need to have a meeting. But when you get into court, the judge and jury goes, "Wait a minute. How do you run a business, an LLC, or a corporation for 10 years without a meeting? It's just not realistic." The result is that your entity can be pierced, and you could lose everything.

As Garret says, follow the formalities.

Make your ideas work for you

Once you have protected your rights, not only can you keep others from using your property, but you can also sell or license those rights and receive royalty income when doing so. And that’s a perfect example of making your assets work for you.

At the end of the day, legal work can be expensive; so many people skimp on it—to their disadvantage. As they say, “In life, you get what you pay for.” As a business owner, if you go cheap on legal, it can cost you a lot more down the road.