Introduction to Intellectual Property:
Intellectual property is a commonly misunderstood term that continues to confuse entrepreneurs, businesses, and inventors alike. Intellectual property refers to a ‘product of the intellect’ that has a commercial value and is used to encompass a wide variety of creations, including songs, artworks, mechanical inventions, machines, software, formulas, designs, brand names, etc.
Intellectual property is an umbrella term for all the laws that together determine what the intellectual property is, who owns the intellectual property, and what rights are assigned to that ownership. Once ownership is established, intellectual property law provides the owner with a ‘negative right,’ meaning that it gives the owner the right to prevent others from copying the ‘product of the intellect.’ For example, an author of a poem could prevent someone else from reproducing the poem. Similarly, the inventor of an invention could prevent someone else from copying the invention.
Types of Intellectual Property:
Intellectual property generally consists of four distinct legal categories; Trade Secrets, Copyrights, Trademarks, and Patents. Although there may be some overlap, each is used to protect the rights for different creative endeavors. If cared for properly, intellectual property can be a valuable asset. However, the devil is in the details and without proper care, what would have otherwise been a valuable commodity, can be lost forever.
The Trade Secret:
A trade secret is any commercial information that has a value (i.e., benefits a business commercially) and is maintained in secrecy. Factors that have been used to determine if something qualifies as a trade secret include:
- (1) the extent to which the information is known outside the particular business entity;
- (2) the extent to which the information is known by employees and others involved in the business;
- (3) the measures taken by the business entity to guard the secrecy of the information;
- (4) the value of the information to the business; and
- (5) the ease or difficulty with which the information could be properly acquired by others.
Trade secrets are generally used by a company that wants to maintain proprietary information as confidential. This is to be contrasted with copyrights, patents, and trademarks, all of which require public disclosure. Thus, trade secrets require a level of discretion and secrecy that is put in place to prevent the dissemination of the information. In addition to other secrecy measures, using confidentiality and non-disclosure agreements is generally recommended for any information that a business may want to claim as a trade secret.
A copyright is a form of protection provided to the authors of ‘original works.’ This includes literary, musical, artistic, and certain other intellectual property. Copyrighted works include original soundtracks, web site design, photographs, poster art, computer programs, books, or even this article. The copyright gives the owner several exclusive rights to the work. For example, the copyright gives the owner the exclusive ‘right’ to ‘copy’ or reproduce the work.
In contrast to other intellectual property, a copyright exists from the moment the work is created. While not required, it is often beneficial to place a notice on the work to inform the public that the work is protected by a copyright. Furthermore, in the event that a work carrying a proper notice is infringed upon, courts will not consider an infringer’s argument that the infringement was innocent. An innocent infringement defense may result in a reduction of monetary awards that would otherwise be available to the copyright owner.
The owner of a copyright has not only the right, but also the responsibility to prevent others from copying or reproducing the protected intellectual property. If an infringer can show that the copyright owner knew of infringing activities and delayed in bringing a lawsuit to stop the infringement, the courts may allow the infringement. In other words, if a copyright owner knew someone was using the material for some time and did nothing to protect their rights, the copyright owner is prevented from enforcing the copyright against the current, and possibly other infringers.
A copyright notice should include the symbol ©, the date the work was first created, and the name of the work’s owner. For example, the copyright notice for this article would read, © 2009, Marcus R.
In addition to notice, a copyright owner should consider federally registering the copyright with the Library of Congress. Federal registration of a copyright is voluntary, though highly recommended. Registering the work places the copyright on public record and provides the originator with a certificate of registration. In the event that someone violates the copyright and uses the work without permission, the registered originator should be eligible for monetary awards by the courts. In successful litigation, the courts can award the owner any losses suffered by the infringement and any profits realized by the infringer. Furthermore, if the court finds that infringement was committed willfully, the court, in its discretion, may increase the award for appropriate treble damages.
As a result of the Copyright Term Extension Act of 1998, most works published after January 1, 1978 last for the life of the author plus 70 years. For example, the copyright for Michael Jackson’s Thriller album will now expire in the year 2079. A few exceptions are made for ‘work made for hire’ agreements and anonymous registrations, in which the copyright lasts between 95 and 120 years, depending on the date the work was published. After the expiration of the copyright, the ‘work’ goes into the public domain and is available for anyone’s use.
In order to federally copyright a work, the piece must be filed with the Library of Congress. Having a professional register your copyright will cost around $200 in attorney’s fees (not including a filing fee of $30). Or, you can do it yourself for only the filing fee. Go to www.copyright.gov for more information.
Another common form of intellectual property is a trademark or service mark, which operate as source identifiers.
A service mark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. The terms ‘trademark’ and ‘mark’ are commonly used to refer to both trademarks and service marks. In short, a trademark is a brand name. Created to distinguish different companies, products or services, a trademark or service mark provides protection from unauthorized use of a ™mark. A ‘mark’ is defined as a word, a phrase, a name, a symbol, a look or device that is used to indicate the source of a product or service. Typical things that are trademarked are company names, product names, logos, and slogans.
There are three levels of trademarks: (1) common law (2) state level and (3) federal level. A common law trademark is created when a distinctive ‘mark’ is used in commerce for a sufficient amount of time to create a ‘secondary meaning’ (when the trade or consumer has come to identify the specific mark with a company’s products or services). For example, if a shoe company sells shoes to local residents and those residents recognize that companies name as the shoe company in that geographic area, the name of that company will likely have a common law trademark. Common law trademarks provide only minimal protection limited to the geographic area in which the mark is used, such as stopping a competitor who enters your area with the same or confusingly similar mark. However, a common law trademark povides no protection against someone in another area (such as another city) using the same mark.
A state level trademark protects an owner from the unauthorized use of the protected mark in a specific state only.
Alternatively, federal level trademark registration usually supersedes state level registration, and provides far more legal protection than state level trademarks. To qualify for a federal trademark, the business must operate in interstate commerce or be planning to do so. ‘Interstate commerce’ involves sending the goods across state lines with the mark displayed on the goods (a web site used to sell the ‘marked’ goods to another state would qualify). With services, ‘interstate commerce’ involves offering or rendering a service to those in another state.
As with copyrights, federal registration of a trademark is not required. However, federal registration provides several advantages, including providing notice to the public that someone owns the mark, and the exclusive right to use the mark in all states.
Once federally registered, a trademark owner has not only the right, but also the responsibility to stop competitors and other infringers from using any mark that is identical (or confusingly similar) to their trademark. For example, a trademark owner who does not actively pursue each and every infringement on their registered trademark is in jeopardy of losing any rights associated with the intellectual property. In many cases, a trademark owner who fails to enforce their mark faces having the mark declared public domain. Alternatively, with proper ‘use’ and enforcement, the mark could last forever.
In certain circumstances, the courts have awarded the trademark owner all of the infringer’s profits that were made using the mark. And, in some seriously egregious situations, the courts have been known to award the trademark owner up to three times the infringer’s profits.
Before selecting a company, product name, or even a web site address, it is advised to verify whether or not someone else already owns the rights to that name. If the name is a registered trademark, the outcome could be terrifying. The infringing business may not only be forced to stop using the name after investing in signage and materials, but worse yet, the owner could drag the infringing business into court in another state, at the infringing business’ expense, and sue for losses and attorney’s fees.
To avoid such consequences, it is highly recommended that a professional trademark search be done prior to investing any time or resources into a particular name. A trademark search generally costs around $300, and having an attorney register the mark with the United States Patent and Trademark Office (USPTO) costs between $200 and $300 in attorney’s fees (not including a USPTO filing fee of $375). Additional information regarding trademarks can be found at www.uspto.gov.
In many cases, one of the most valuable assets a company can have is a patent or patent portfolio. A patent is the grant issued by the United States Patent and Trademark Office (USPTO), to the inventor of intellectual property rights for an idea or invention. The right conferred by the patent grant is, in the language of the statute and of the grant itself, – the right to exclude others from making, using, offering for sale, or selling – the protected invention in the United States, or ‘importing’ the invention into the United States. Note: a patent does not grant the right to make, use, sell, etc., the invention or idea, but the right to exclude others from making, using, selling, etc., the invention or idea.
The two types of patents that are most often applied for are the design patent and utility patent. A design patent is granted to anyone who invents a new, original, or ornamental design for an article of manufacture. In other words, a design patent protects the actual physical design of a product but NOT the functionality of the product. Instead, only the ornamentation of the product itself is protected.
In order to protect the functional operation of a product, or how it works, the inventor must apply for a utility patent through the USPTO. A utility patent is granted to anyone who invents or discovers any new and useful product, or any new and useful improvement of an existing product.
The scary truth, however, is while something may be patentable; certain actions of an unwary inventor can make it almost impossible to do so. Under current patent law, an inventor is given up to 1 year to file a patent application from the time they: (1) offer to sell the invention or product; (2) describe or disclose the invention in a printed publication; or (3) publicly use the invention. (Warning: most foreign countries do not even provide the inventor with the 1-year window).
In other words, if an inventor who has not filed a patent application offers to sell the invention in a commercial transaction, describes the invention in any publicly available publication or web site, or uses the invention in the public, the patent may be declined and the invention declared public domain. When in the public domain, the invention is useable by anyone without recourse.
Such was the case with Wil Schock of Creep Crafters. Wil had spent approximately 10 years developing a fog-chilling system using easily obtainable ice cubes. In addition to his time, Wil spent thousands of dollars in research and development of the product. With the excitement of having invented this new fog-chilling machine, Wil published an article on his web site and in a publication that described how to make the device. Because Wil did not file a patent application on the fog machine within the appropriate one-year window, he is now barred from being allowed to patent the invention, losing what could have been a valuable asset to his company.
Fortunately for Wil, he later developed several improvements to the original fog machine to perfect the product. This time, Wil learned from his past and filed a patent application on the improvements within the allotted time. Now, instead of giving his invention freely to the public, Wil has added a valuable asset to his company through a patent application.
When and if issued as a patent, Wil can prevent anyone, including competitors, from selling or even using a product based on his invention (in the country that issues the patent). In other words, should a competitor copy Wil’s product, Wil could use the patent in a court of law to force a competitor to stop selling the product. And upon finding for the patent owner, the court will award the patent owner a sufficient amount of money to adequately compensate for the infringement, with interest and costs as fixed by the court. Losses can be measured as a royalty fee, lost profits, or in some cases, the profits of the infringer. Furthermore, if the infringement was done knowingly, the court may increase the monetary award by up to three times the amount found or assessed. Having a patent can provide a significant amount of protection and value to a company.
Filing for patent protection is not cheap. A design patent typically costs between $1,000 and $2,000 in attorney’s fees (not including USPTO fees which start at $230). A utility patent is much more complex and costs significantly more. Based on the complexity of the invention and other factors, a utility patent often costs between $5,000 and $10,000 in attorney’s fees (not including USPTO fees which start at $545). For additional information related to patents, go to www.uspto.gov.
Your ideas are valuable, and as the originator, creator or inventor, you have every right to protect your assets as a form of intellectual property. If you have a great idea or invention, you should file a patent application prior to selling, disclosing, describing or displaying the product or invention (function or design). You should also ensure that the name you choose for a product or business is not already protected by someone else’s trademark. Otherwise, you may take the chance of being sued for all profits collected under the infringed name. Once you have done a search and made sure that your name can be trademarked, apply for federal registration of the mark as soon as possible to keep someone else from causing confusion in the market. Register your original music, attraction storyline, web site and other copyrightable creations with the Library of Congress for additional protection from infringers.
Author: Marcus R. Contact Legal Grind for more information.