Tax exempt organizations often overlook their ownership and use of intellectual property, particularly their trademarks and copyrightable materials. Intellectual property (IP) use should concern a tax exempt organization because the organization must both (a) protect its IP; and (b) ensure that it is not infringing on someone else’s IP rights. Protecting the tax exempt organization’s IP requires identifying the IP and preferably registering it to secure rights in it. Protecting the organization against claims that it is infringing on another person’s IP involves identifying the activities that could raise concerns among other IP rights holders and identifying potential claimants of prior existing rights to the IP.
Create a protectable brand.
Trademarks that are generic or too descriptive of the services provided will be ineligible for trademark protection, and, therefore, fair game for use by another organization. For example, Feed the Homeless is probably generic or too descriptive a name for a single tax exempt organization to successfully obtain exclusive rights in that phrase. As such, any efforts to create a brand under that name could be undermined by another organization using the same, or a very similar, name. On the other hand, a distinct name that has no independent meaning will generally result in broad exclusive rights and efforts made under that brand could be protected.
Actually register your trademarks and copyrighted material.
A federal trademark registration is not that expensive, and well worth the expense to protect a tax exempt organization’s valued asset. If the organization does not register its trademark, its rights only cover the particular regions in which it provides services. This means another organization could freely use a similar name in another region (e.g., in another state), making future expansion difficult, and potentially confusing donors. Trademark registration extends the tax exempt organization’s rights to include the entire nation. Moreover, copyright registration is very inexpensive and not only protects the assets, but can give the organization that filed the copyright registration the right to statutory damages ranging from $750 to $30,000 per act of infringement (potentially up to $150,000 if the act is willful) plus attorney’s fees. This is significant since proving actual damages of a copyright infringement is often difficult and because the attorneys’ fees in a copyright infringement action are often greater than the financial damages that might be available. Because of that, having the right to recover fees can make an otherwise impractical infringement action feasible. Registration is also required prior to filing suit for copyright infringement. As a result, an organization that registers its copyrights will often be able to act more quickly should an issue arise.
Ensure contracts with your workers and third parties address IP issues.
The tax exempt organization should ensure that all of its contracts that involve the production or use of IP, e.g., written materials, software (including websites), the organization’s name, project names, etc., contain provisions that indicate that any IP produced for the organization belongs to the organization (so-called “work for hire”) and that the other parties to these agreements will protect and not disclose or use the IP without the organization’s express written consent. It is important to understand that, even if the organization pays a contractor such as a website developer to create IP, the organization may not own the work product if there is not a clear written agreement in place. The tax exempt organization should also be sure that all of its workers and contractors sign agreements that protect the organization’s confidential information, such as donor rolls, development plans, and the like.
Keep good records.
Often resolving IP disputes is a matter of proving which organization was the first to begin using the IP. It is therefore a good idea for tax exempt organizations to keep good records including copies of brochures, flyers, and websites even after they are no longer in use, together with business records, such as printing receipts, as those records can be strong evidence should a dispute arise. Operations manuals and employee manuals can also help prove how the organization operated in the past, which could be helpful in the event a patent or trade secret dispute arises.
Collect, define, assign.
If a tax exempt organization has IP that it has not previously taken steps to protect, it should (1) collect the different types of IP and identify who produced it, (2) define the IP clearly, and (3) have all appropriate individuals assign the IP to the organization to ensure ownership by the organization and agree to protect its confidential information.
Invest in an ounce of prevention.
If a tax exempt organization is thinking about using a tradename or embarking on a significant project using that tradename, before investing in the name and developing associated goodwill, it should check to see if the name (or something similar) is being used by another organization. Assessing the potential risk upfront is almost always less expensive and less frustrating than getting involved in an IP dispute, which can be extremely expensive and time-consuming.
 17 USC § 504.