Intellectual property has long referred to patents, trademarks, copyrights, and trade secrets, but the term is used more expansively today to include industrial designs, product packaging, integrated circuit mask works, “know-how,” domain names, rights of publicity, biological materials, databases, moral rights — and the list keeps growing.
Every business owns some intellectual property. A company’s name and any logos, slogans and brand names it uses to identify its products or services are its trademarks; the company’s print publications, advertising materials, computer software, graphics designs and website are its copyrightable IP. The new machines, processes, formulations and business methods, as well as the improvements or novel combinations of existing technologies it develops may be patentable, or may constitute trade secrets.
The following are basic IP concepts:
Trademarks indicate the source of origin of a company’s goods and services, and gain strength through use. Trademarks generally have no value initially, but can dramatically appreciate over time. Unlike copyrights and patents that eventually “expire,” trademark rights can last forever — as long as the trademark remains in use. Because a trademark is an appreciating asset with a potentially perpetual life, it is important to choose trademarks carefully and to protect them through appropriate registration and controlled licensing. Federal registration provides important protections, including nationwide rights, even in geographic areas where the trademark has not been used.
Copyright protects original works of authorship in six broad general categories. For example, computer programs are protected in the literary works category, because computer program code consists of characters and symbols. Timely copyright registration is required to secure access to federal courts, and to obtain attorneys’ fees and statutory damages from infringers.
Patents can provide significant competitive advantages. Once a new product, process or business method is developed, timing is critical, because patent rights are forfeited if a patent application is not timely filed. In the United States, an inventor must file a patent application within one year of the first publication, sale or offer for sale, or public use of the invention. The one-year “use or on sale” bar is strictly construed. For a process or business method utilized openly in the inventor’s business, once a year has passed, the inventor is barred from obtaining a U.S. patent. Even in the process of disclosing the invention to a potential licensee, the one year “use or on sale” bar may be triggered — the clock is ticking! Most foreign countries do not permit even a one year grace period, so if international patent rights are important, patent counsel should be consulted early, before any use, sale or publication of a potentially patentable invention.
Businesses should require their inventor-employees to maintain journals describing inventions, signed, dated and witnessed, as evidence of inventor-ship, to establish priority in any dispute.
Information that has value because it is not readily ascertainable by competitors, and which is the subject of reasonable efforts to maintain confidentiality, is legally protect-able as a trade secret. Production processes, compilations of data, customer lists, business plans, product specifications — in fact, almost any type of information that would provide a competitive advantage if not known to competitors — can be legally protected as a trade secret. It is important to examine internal information handling practices to ensure that trade secret legal status is not inadvertently lost. Information discovered by competitors through lawful means, such as reverse engineering or through careless disclosures by a business that fails to maintain the confidentiality of sensitive business information, is not protect-able under trade secret law.
Overlapping Legal Protection
Sometimes it is possible to secure different types of IP protection for the same product. For example, a computer program, if it meets the legal tests for patentability would be patentable, while the source code of the same program is separately copyrightable. A patent is infringed if someone other than the patent owner makes, uses or sells the patented invention without permission of the patent owner. For a computer program’s copyright to be infringed, the source or object code must be copied. The advantage to the IP rights holder, in holding both patent and copyright on a software product, would arise if the functionality of a competitor’s product is identical but the source code of the copyrighted work was not copied. In that case, the second work would not infringe the work’s copyright, but it would infringe its patent. Of course, if the source code, too, was copied, a separate claim for copyright infringement would be available.
Copyright can protect the separable artistic aspects of a utilitarian object, while design patent can often provide another source of protection. In some cases, trademark rights can be claimed in a product shape (like the COCA COLA® bottle), creating the possibility for a triumvirate of overlapping intellectual property protection in a single object (copyright, design, patent, trademark).
Each category of intellectual property has specific legal requirements for effective transfer and maintenance of rights. Trademarks must be acquired in conjunction with “goodwill,” and third party use of trademarks must be controlled in specific ways by the licensor or trademark rights are forfeited. When copyrightable works are created by independent contractors, copyright ownership must be conveyed in writing or the contractor generally retains copyright, while copyrights in works created by employees within their scope of their employment are automatically owned by the employer.
Unlike copyright law, which provides that the employer is the “author” (and therefore the owner) of works created by its employees within the scope of employment, U.S. patent law provides that an invention belongs initially to the inventor. Unless the inventor-employee has a duty to assign the invention to the employer, either in an employment contract or implied in law under the circumstances, the employer may claim only a “shop right” in the invention, which is a limited right to use the invention without the right to sublicense the invention to others. In such cases, the employer may not prevent the inventor-employee from commercializing the invention herself.
The rules are different for co-inventors than for co-authors of copyrightable works. In the absence of a written agreement to the contrary, joint authors of a copyrightable work may each use or license the work on a non-exclusive basis, subject to a duty to account to the other co-author(s) pro rata for profits, while co-inventors owe no such profit-sharing duty to co-inventors. Whether inventions are created by employees, independent contractors or through collaboration, it is good practice to have written agreements addressing ownership. On top of all this, states may have additional laws relating to ownership of patents developed by employees.