Intellectual Property
An Introduction
| Almost all businesses, large and small, own some form of
intellectual property. And many companies have been built almost entirely
on intellectual property assets. Because intellectual property assets can
be as valuable (if not more valuable) to a company as its desks, computers,
inventory or even the building in which it conducts business, protecting
those assets should be an indispensable and routine practice.
The term "intellectual property" traditionally includes the four legal subjects of trademarks, copyrights, patents and trade secrets. While these four subjects have in common an abstract concept of "property," they are each directed to quite distinct protections. Of course, it would be impossible to cover all aspects of these four subjects in a basic overview. Nevertheless, this document seeks to present a brief description of each type of intellectual property and provide a few pointers for protecting and maintaining these assets.
What Is a Trademark? A trademark is a word, slogan, logo or package design used by a manufacturer or merchant to identify its goods and services and distinguish them from the goods and services of others. The trademark laws of the United States recognize several different types of commercial marks, including: (1) trademarks (or brand names), which distinguish and identify the origin of a particular manufacturer's products, e.g., Kellogg's® breakfast cereal; (2) service marks, which perform the same function for services, e.g., Burger King® for restaurant services; (3) collective marks, which identify members of a collective organization, e.g., Professional Golfers Association; and (4) certification marks, which identify goods or services meeting specified criteria, e.g., Underwriter's Laboratories®. U.S. trademark laws also protect product design or packaging which indicates or has come to identify the origin of a particular product. For example, the U.S. Supreme Court has recognized as protectable trade dress the interior and exterior design of a Mexican restaurant. How Do I Get Rights in a Trademark? In the U.S., rights in a mark stem from actual use of the mark, not from registration of the mark with the U.S. Patent and Trademark Office. Generally, a trademark owner begins accruing rights in a mark (known as common law trademark rights) from the first day of using the mark. The "use" necessary to acquire rights in a trademark may include offering for sale products with labels displaying the mark or using the mark in the advertising of services. Actual sales of the products or services are not necessary to meet this use requirement. But public use of the mark is; merely thinking up the trademark does not create rights in the mark. How Protectable Is My Trademark? The strength of a mark varies with its distinctiveness. A mark that is unique is likely to be more valuable than a mark taken from common language because it will distinctively identify the owner as the source of the goods or services. Trademarks can be classified, in increasing order of distinctiveness, as generic, descriptive, suggestive, arbitrary or fanciful. A generic mark (for example, "Apple" for apples) is a common description of a product and can never achieve status as a trademark. A descriptive mark (e.g., "Pencils" for retail stationery and office supplies services) describes a characteristic or attribute of goods or services. A descriptive mark does not inherently identify the source of the product or service. However, if over time, a descriptive mark comes to denote particular goods or services, such as through frequent advertising, it is said to have acquired "secondary meaning." Secondary meaning is required for a descriptive mark to be protectable. Suggestive, arbitrary and fanciful marks are considered "inherently distinctive" and are protectable without a showing of secondary meaning. A suggestive mark (e.g., WORDPERFECT® for word processing software) is one that hints at a quality of a product and requires some imagination to link the mark with the product. An arbitrary mark is a known word used out of context. For example, while "Apple" is generic for apples, it is arbitrary when used for computers. Fanciful marks are marks with no dictionary meaning and are considered the strongest and most easily protectable of marks. KODAK®, POLAROID® and EXXON® are well-known examples of fanciful marks. Should I Register My Mark? Federal registration is not required to obtain rights in a trademark. However, it does provide a number of procedural and substantive legal advantages over reliance on common law rights. A few of those are:
Applications for federal registration of a trademark can be filed with the U.S. Patent and Trademark Office based either on the actual use of the mark or on a bona fide intent to use the mark. However, for a federal registration to issue, the owner of the mark must show that the mark has been used in interstate commerce, i.e., in more than one state. Trademarks also can be registered under state law. A trademark owner who will be making only intrastate use of the mark should consider state registration. What Is An Appropriate Trademark Notice? A trademark should be followed by an appropriate trademark notice. Marks registered with the U.S. Patent and Trademark Office should be accompanied by one of the following notices: "®," "Registered U.S. Patent and Trademark Office," or the abbreviation "Reg. U.S. Pat. & Tm. Off." Note that it is inappropriate to use any of these notices before a mark has been federally registered. Marks that are not federally registered should be followed by the "TM" symbol. While not bestowing or denoting any trademark rights, the "TM" symbol can be used with any mark to notify the consuming public, and the competition, that the mark is being used as a trademark. How Long Will Trademark Protection Last? Like any other asset, a trademark must be continually maintained to retain or increase its value. Trademark rights continue indefinitely as long as the owner neither abandons the mark nor permits it to become generic. A mark is abandoned when its use has been discontinued with the intent not to resume such use. A mark also may be considered abandoned if the owner licenses the mark without retaining appropriate quality control of the goods or services sold under the mark. And a mark that has become generic is no longer protectable. For example, "aspirin" was at one time a protectable trademark but has since become the generic name for a type of pain reliever.
What Is Protectable Under Copyright Law? Copyrights seek to promote literary and artistic creativity by protecting works of authors and artists. To be protectable, such a work must be "original." The level of originality required is not stringent; however, there must at least be a minimal level of originality to constitute a protectable work. Examples of types of works protected under the federal copyright laws include:
Copyright does not extend to specific historical facts, formulas, or algorithms, or "to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated or embodied." Similarly, there is no protection for works consisting entirely of data or other information that is common property and that contains no originality, e.g., telephone directories of residences listed in alphabetical order, height and weight charts, etc. In addition, copyright does not cover titles, slogans, short phrases, names, blank forms, lettering or other minimal works. What Rights Do I Have? Under the federal copyright laws, the copyright owner is granted certain exclusive rights:
Who Owns the Copyright? It is important to note that the creator of a work is not necessarily the "owner" of the copyright of the work. Therefore, the determination of the owner of the copyright is very important because it determines who has the important exclusive rights to exploit a work. The copyright statutes grant copyrights initially to "authors" of a work. For works created by a single author, the author initially owns all rights. In the case of joint work, the authors are co-owners of the copyright; each author may exploit the work without having to account to the other for the profits. In contrast, copyright ownership of a "work made for hire" vests in the employer or other person for whom the work is prepared, not the creator of the work, unless there is a written agreement to the contrary. Works made for hire arise in two types of situations. The first situation is when the work is prepared by an employee within the scope of his or her employment. The second situation is when the work, specially ordered or commissioned, falls within one of nine categories and the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. These nine categories include (1) a contribution to a collective work; (2) a part of a motion picture or audiovisual work; (3) a translation; (4) a supplementary work; (5) a compilation; (6) an instructional text; (7) a test; (8) answer material for a test; and (9) an atlas. How Long Does Copyright Last? The duration of copyright depends on the nature of the work. Generally, copyright duration for works by a single author last the life of the author plus 50 years. For joint works, copyright endures for the life of the last surviving author plus 50 years. In contrast, the duration of copyright for a work for hire or an anonymous or pseudonymous work is 75 years from the date of publication or 100 years from the date of creation, whichever expires first. Should I Use a Copyright Notice? For copies or phonorecords created after March 1, 1989, copyright notice is permissible but not required. However, copyright notice is encouraged. If a proper notice appears on the published copy or phonorecord to which a defendant in a copyright infringement suit had access, no weight will be given to a defense of innocent infringement in mitigation of actual or statutory damages. A proper copyright notice should be in such manner and location as to give reasonable notice of the claim of copyright and must have three elements: (1) "©," "Copyright," or "Copr."; (2) the year of first publication, and (3) the name of the copyright owner. Do I Have to Register My Work? Registration of copyright is not required under the copyright laws. Rather, an author acquires rights automatically upon fixing the work in a tangible medium of expression. However, registration is encouraged because it provides certain advantages:
What Is a Patent? U.S. patent laws recognize three basic types of patents: utility, plant, and design. Utility patents, which account for the vast majority of those patents issued in the United States, are available for the type of inventions most people envision when they think of patent law, such as the cotton gin or the microprocessor. Plant patents are available for new varieties of asexually reproducing plants, and design patents protect new and ornamental designs for articles of manufacture. A patent gives the owner exclusive rights that can provide a tremendous market advantage. A patent owner can use the patent to exclude the competition from making, using or selling the patented invention or, alternatively, can license her patent rights and use the patent as an indirect source of revenue. Should I Patent? The United States patent system was created to encourage the advancement of science and technology for the public benefit. To achieve this purpose, the patent laws were designed to provide an economic incentive for the investment of time, energy and money toward the development of new technology. The "incentive" is a grant of exclusive rights in any resulting invention for a period beginning on the date the patent issues and lasting for twenty years from the date the patent is applied for. To obtain the benefits of the "patent bargain," the inventor must teach the public how to make and use the invention. The inventor accomplishes this by providing the public with a description that would enable anyone skilled in the art to make and use the invention. In addition, the inventor must disclose what she considers to be the best mode for carrying out the invention. This information becomes available to the public immediately upon grant of the patent, and can be used to further advance technology. The decision to seek patent protection for a new invention should not be made lightly. The patenting process can be expensive and may not always provide meaningful protection (as in the case with fast moving technologies where the invention may become obsolete before any patent issues). And the invention becomes public property upon termination of the patent. As a preliminary matter, therefore, each inventor must consider whether the exclusive rights provided by a patent are worth the price of complete public disclosure of the invention. In certain circumstances, the inventor may decide to forego patent protection and attempt to protect the invention as a trade secret. What Rights Will a Patent Give Me? A patent gives the inventor the right to exclude all others from making, using or selling the invention in the United States for a period of twenty years from the filing date of the patent application. It is important to note that this is not an exclusive right to make, use or sell, but only a right to exclude others from doing so. While the distinction may appear subtle, it is quite significant. For example, the inventor of the stool, in theory, could have obtained a patent granting him the right to exclude all others from making, using or selling "a device for sitting comprising a surface supported by a plurality of legs." A later inventor may discover that the first inventor's "stool" can be improved by attaching a back, and thus making a "chair." This second inventor, thus, may obtain a patent granting him the right to exclude all others from making, using or selling "a device for sitting comprising a surface with a back attached thereto supported by a plurality of legs." The second inventor, therefore, could exclude all others from making, using or selling the "chair." However, because the second inventor's "chair" includes "a surface supported by a plurality of legs," he cannot make, use or sell it without infringing the first inventor's patent on the stool. Is My Invention Patentable? Not all inventions, regardless of how profitable they may be, are patentable. To be patentable, an invention must be what is termed "patentable subject matter." If it is, it must meet three additional basic requirements: utility, novelty and non-obviousness. Each of these four requirements will be summarized below. Patentable Subject Matter Utility patents may be obtained on any new and useful process, machine, article of manufacture, or composition of matter. While these categories appear to be quite broad, courts over the years have limited the scope of patentable subject matter to exclude printed matter, methods of doing business, products of nature, and laws of nature or other abstract scientific principles (i.e., Einstein could not have patented his formula E=MC2). Historically, the category "abstract scientific principles" had been interpreted by the courts and the Patent Office as extending to mathematical formulas or algorithms. Consequently, until only recently, it was very difficult to obtain patent protection for computer programs or software because they were usually considered nothing more than mathematical formulas or algorithms. Software developers, therefore, often decided not to seek patent protection for their innovative programs but instead relied on copyright protection. However, the courts and the Patent Office have begun to recognize broader patentability of computer programs and software developers should now carefully consider seeking patent protection for any newly developed code. Utility As a practical matter, an invention must meet a relatively low standard of usefulness, or "utility," to be patentable. While it may be difficult to define with particularity, most people recognize when something is not "useful" for patent purposes. For example, it has been held that a bar of soap with an image embossed on its side is not "useful," and therefore not patentable. While the soap is useful, the soap is not new and merely adding an embossed image does not provide any added "usefulness." Novelty A fundamental precept for the issuance of a patent is that the invention be new or "novel." An invention is not novel if it was described by others in a printed publication (including other patents) anywhere in the world, or publicly known or used by others in this country prior to the applicant's invention. The novelty requirement ensures that the person seeking the patent is the actual first inventor of the invention. In addition, the United States' patent laws provide "statutory" bars that will defeat patentability even if they occur after the applicant's invention. Specifically, a patent will be denied if the invention was patented or was in public use or on sale in this country more than one year before the inventor filed his patent application. For example, many researchers publish their work or have products embodying their invention on sale prior to seeking patent protection. If the patent application is filed more than one year after these activities, the exclusive rights to the invention have been lost. Non-obviousness Finally, although a specific invention may be novel, it is still not patentable if it would be "obvious" to one of ordinary skill in the art. Inventors should be extremely cautious before deciding that their recent discovery is "obvious." First, due to experience or training, they may have significantly more knowledge than a person of "ordinary skill in the art." Moreover, while many inventions appear to be obvious once they have been discovered, courts require that obviousness be determined at the time of invention, without the benefit of hindsight. Finally, the invention may lie in the identification of the problem (which may not be obvious) from which an obvious solution follows. How Do I Get a Patent? In the United States, an inventor is permitted to prepare and file her own patent application in the Patent Office. However, most inventors choose to hire a professional patent attorney or agent to guide them through the process and insure that any resulting patent provides the broadest possible protection. The entire process, from filing of the patent application to issuance of the patent, generally takes about two years. One key to the patenting process is distinguishing the new invention from preexisting technology or "prior art." Therefore, before writing the patent application it is wise to search the prior art of related patents and other publications for similar technology. The patent application can then be drafted to emphasize the differences between the new invention and the prior art, and hopefully, yield a shorter process through the Patent Office.
What Are Trade Secrets? Many businesses protect substantial portions of their intellectual property as trade secrets. Even companies with aggressive patent programs find this an effective strategy, particularly for inventions that have not yet been patented or for technology that may not be patentable but is still valuable. Trade secrets are not limited to "technology" but include any information that is "secret" and provides the business with a competitive advantage. Thus, for example, customer lists, expansion plans, or marketing and pricing information may all constitute trade secrets. The law protects information as a trade secret only to the extent that the information is maintained as a "secret." If secrecy is properly maintained, trade secret protection may extend indefinitely. This is in contrast to patent protection, which lasts only twenty years from filing of the patent application. The secret formula for Coca-Cola® is one of the best known examples of a trade secret that has been maintained for decades. Had Coca-Cola® chosen patent protection for its beverages, its recipes would now be in the public domain. If the information becomes generally known, it is no longer a trade secret and any protection is lost. As a practical matter, this is true regardless of how the information becomes generally known. For example, if a former employee improperly publishes a company's trade secrets, those trade secrets are lost to the public domain. That the business may have a cause of action against the former employee (and possibly against the publisher) for damages in many cases will provide small consolation. Moreover, because of the "secrecy" requirement, some technology or information cannot reasonably be protected as a trade secret. If the information is embodied in a commercial product and that information can be obtained by simply observing, using or even reverse engineering the product, that information is not truly "secret" and therefor not protectable as a trade secret. If possible, such technology should almost always be patented. Finally, no matter how carefully a company protects its trade secrets, it has no rights against an independent discoverer. Thus, a soft drink company that successfully maintained its formula as a trade secret for decades would have no rights against a competitor that independently invented the same formula. How Do I Protect My Trade Secrets? In today's world of high employee mobility, the greatest threat to a company's trade secrets often comes from former employees who leave to work for a competitor or possibly to start their own business in competition with their former employer. An effective trade secret protection program must, therefore, focus on its employees, requiring the employees to agree not to compete with their employer, either during or after employment, and to agree to keep the trade secrets confidential. Unfortunately, because the law concerning such agreements is somewhat unsettled and varies from state to state, the agreements require careful drafting. To obtain the benefits of a trade secret protection strategy, businesses must ensure that their information is kept as "trade secrets." Therefore, to the extent possible, businesses should implement the following procedures: (i) inform employees when information is confidential; (ii) limit access to confidential information only to those employees that need to know the information to do their job; (iii) label appropriate documents "confidential" and limit their distribution to appropriate personnel (perhaps even prohibiting copying of such documents); and (iv) limit access to restricted areas and implement and maintain security measures within the company's facilities. This last procedure is often overlooked when giving tours to customers and other persons with whom a company may be considering a business relationship. It is difficult for the company to claim that its processes or other technology are trade secrets if it has invited people outside the company to view the processes or technology on such tours. Accordingly, the business should consider having confidentiality agreements signed by anyone who will receive a tour of its facilities. Likewise, anyone receiving sensitive information during business negotiations should also be required to sign a confidentiality agreement.
While the value of intellectual property assets cannot be understated, the ongoing management of an intellectual property portfolio will determine the ultimate value of such assets. An effective intellectual property strategy considers not only procuring intellectual property rights, but also provides for ongoing maintenance and protection. Management practices grounded in an accurate understanding of intellectual property laws, along with careful planning, will ensure that investments in intellectual property seek solid rewards. While this memorandum sets forth brief guidelines regarding Intellectual Property, it cannot begin to address all day-to-day issues that may arise. If any additional direction or assistance is needed, please contact Alan H. Blankenheimer or C. Mark Kittredge at Brown & Bain, (602)3518000.
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See also the following articles on the Brown & Bain website:
Guidelines for Choosing and Protecting Trademarks
at http://www.brownbain.com/new/tmguide.html
