SE-KB.3 -Protecting Intellectual Property: Overview

For US businesses in the entertainment or high-tech industries, the value of intellectual property (“IP”) is obvious. They realize that their entire business relies on the protection and exploitation of their IP assets. However, all businesses have IP – though many do not adequately identify or protect theirs.

What is IP?

Technically speaking, IP is a tangible manifestation of a creative work that is protected by law. IP protection does not generally extend to ideas and concepts unless and until those ideas and concepts are put into some tangible form, such as a book, advertisement, product prototype, drawing, etc. IP owners have the right to stop others from using their IP without express permission, and can pursue injunctions and civil damages against infringers.

IP can be as obvious as the name of a company’s product line or logo, or as subtle as its internal business methods, strategies, and client lists. Recognizing the different types of IP is key to identifying the IP assets created and owned by a company, and taking the correct measures to secure and protect its IP rights.

Brands & Logos – Trademark

A trademark is any name, symbol, figure, letter, word, or mark adopted and used by a business to designate its products and to distinguish them from those of others. Although trademarks technically refer to marks used in connection with goods. The words, “mark” and “trademark” are often used to describe all commercially-identifiable marks, including service marks, trade dress, collective marks, etc., and not just those which relate to products.

For most companies, their primary trademark is their business name or logo, but product lines and families, special programs, and even slogans can be trademarks.   In the US, the first company to use a mark in commerce will automatically own common law rights to the mark in connection with the goods or services related to the mark. Federal registration of trademarks with the United Stated Patent & Trademark Office (USPTO) grants exclusive rights to use the marks throughout the US. Trademark rights can last indefinitely, provided the mark is still in use and serves to identify a particular companies goods or services.

Situations that might give rise to trademark issues for a typical company include:

  • Formation of new company or spin-off
  • New products/marketing campaign
  • Enter new markets
  • Notice a similar mark used by other company
  • Merger/Acquisition or Financing

Artistic Works – Copyright

Copyrights refer to the rights which inure to the creator of artistic works such as books, paintings, and music, as well as computer software, fabrics, furniture and architectural plans. Although copyrights need not be registered to be protected, registration provides additional rights & benefits to IP owners. Copyrights created today can last 70 years after the death of the author, but cannot be renewed.

Situations that might give rise to copyright issues for a typical company include:

  • Creation of web site or advertisements
  • Hiring software company to develop contact management program
  • Creating training materials, newsletter or fact sheets to distribute, post on web, etc.
  • Merger/Acquisition or Financing

Inventions – Patent & Trade Secrets

Patents are meant to protect the rights of inventors of useful items and methods by allowing them to stop others from others making, using or selling their inventions. There are no “common law” rights to a patent. Patent rights can come only from the issuance of a patent by the USPTO.

To obtain a patent, inventors must file a patent application with the USPTO for an invention that is novel, unique and non-obvious. Patents rights generally cover the functionality of an item or method, rather than its appearance, although special “design” patents protect the ornamental elements of an invention. Patents expire 20 years after application is filed (14 years from the date of issuance for design patents), and cannot be renewed.

Like patents, trade secret laws protect the rights of inventors of useful items and methods by allowing them to stop others from others making, using or selling their inventions. However, there is no registration requirement to obtain trade secret protection. Generally, secrets that relate to how to manufacture, use, or sell something (i.e., give a competitive advantage) will be protected. Unlike patents, trade secret protection does not expire, but will last as long as the secret remains a secret and continues to be commercially useful. The Coca-Cola formula is an famous example of a trade secret.

Situations that might give rise to patent or trade secret legal issues for a typical company include:

  • Company invents a new product or business method
  • Learn of a competitor’s use of a patented product
  • Merger/Acquisition or Financing

How Do Businesses Protect IP?

Once a business has identified its IP assets, it needs to take action to protect them. There are two basic means of protecting IP: direct and indirect. Whenever possible, it is advisable to use both direct and indirect means to protect IP.

Protecting IP directly refers to using contracts and individual relationships to protect IP rights. For example, a way to protect trade secrets would be to require non-disclosure agreements be signed by anyone exposed to the secrets (including employees). This is a valuable tool because it allows businesses to define the scope of IP rights and more easily identify when an infringement occurs. The limitation of direct action is that businesses can typically enforce its IP rights only against those with whom it has a contract relationship.

Indirect IP protection involves taking advantage of government registration protections to secure IP rights against a much broader group of would-be infringers. A key limitation of indirect IP protection is that, due to the broad scope of protection, it is difficult to spot infringement, particularly when the infringing activity is isolated or remote.

Once businesses have secured their IP rights, they can maximize the value of the IP by using it licensing it to others in exchange for royalty payments. If someone uses the IP of another without permission, this is known as infringement. There is no “IP Police Force” watching out for possible infringement. Instead, businesses must be vigilant and take definitive action against infringement, which may include writing letters or initiating lawsuits. Failure to take action in the face of infringement could result in the loss of IP protection for IP owners.

In conclusion, all businesses have IP, although many do not adequately identify or protect theirs. Businesses who fail to identify and protect their IP assets risk losing them.