Protect Your Business with Patents


The old maxim that possession is nine-tenths of the law has no meaning when applied to intellectual property. Unlike personal property or real property, intellectual property has no physical form. Intellectual property rights are purely a creation of the law. While every business owns and uses various forms of intellectual property, many businesses are not aware that those assets can be easily misappropriated, relinquished, damaged or devalued if not properly managed. It is the savvy business owner who recognizes the significance of the business's intellectual property -- the patents, trademarks, copyrights and trade secrets -- and understands what steps are necessary to ensure that those rights provide value for the company.

  1. Patents
  2. Trademarks
  3. Copyrights
  4. Trade Secrets
  5. Developing an Intellectual Property Strategy

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What is a Patent?

In the United States, a patent is a grant by the federal government of the right to prevent others from making, using, selling, offering for sale, or importing into the United States the patented invention. There are two important types of legally enforceable patents in the United States: utility patents and design patents. A utility patent protects an invention which has practical utility and may cover virtually any apparatus, article of manufacture, or method of making or using something physical, whether mechanical, chemical, electrical, computer-oriented, biological or biotechnology-related. A design patent protects an ornamental design for an article of manufacture.

The Term of Patent Protection

The patent grant lasts for a limited period of time, often referred to as the "exclusionary period" or "monopoly period." The monopoly period for a newly issued utility patent is 20 years from the filing date of a patent application on the invention. The monopoly period for a "design" patent is 14 years from the date of issuance. After the monopoly period expires, anyone is free to copy the patented invention.

Requirements for Patentability

The main requirements for obtaining a patent are that the invention be novel and unobvious, and that the invention be fully disclosed in the patent application. In general, to be "novel," an invention must not have been publicly known of or used anywhere in the world prior to the date that the inventor made the invention. In general, to be "unobvious," the invention must not have been obvious to an "artisan." An "artisan" is a person of ordinary skill who works in the area of technology to which the invention pertains. The purpose of the patent law is to promote public disclosure of scientific principles and discoveries. Thus, in exchange for the limited monopoly period awarded to the patent owner, the patent owner must disclose to the public how to make and use the invention.

Requirements for Patentability

When Must a Patent Application be Filed? The inventor must file a patent application within one year from the earliest date in which the invention is offered for sale, publicly disclosed or publicly used. This one-year period is often referred to as a "grace period." Patent rights may be lost forever if no patent application is filed by the end of the one-year grace period. Many foreign countries do not even have the one-year grace period afforded by U.S. law. If foreign patent protection is desired, the patent application should be filed before the invention is offered for sale, publicly disclosed or publicly used. Each country has its own patent laws, and foreign protection is secured by filing on a country-by-country basis.

Patentability Searches

Before a patent application is prepared, it is sometimes advisable to conduct a patentability search to determine what, if any, aspects of the invention are potentially patentable. The cost of the search is a small fraction of the total cost of the patenting process and may identify potential obstacles to patentability, as well as additional inventions that may be of assistance to the inventor in further developing his or her invention. However, there is no requirement to conduct a search before or after filing a patent application.

Patents Searching as an Aid to Product Development

Perhaps the greatest use of patents for technologically oriented small businesses and entrepreneurs is to assist in product development, monitor activity of competitors, and identify potential infringement problems. A wealth of detailed knowledge is contained in patents. Inventions in expired patents may often be copied without risk of infringement. Furthermore, many ideas in unexpired patents may also be copied if they fall outside the scope of the patent claims which define the legal boundaries of the patent. Also, many recently issued patents are expired. Periodic maintenance fees must be paid throughout the monopoly period to continue the life of the patent. Many patent owners allow their patents to lapse if no pay back is foreseeable when the fees become due. Reviewing issued patents may thus avoid the costly process of reinventing the wheel.

Obtaining and Searching U.S. Patents

Titles and abstracts of U.S. patents from 1971 to the present may be searched for free through the U.S. Patent and Trademark Office (USPTO) Internet Site or through the IBM Intellectual Property Network site. Full images of the patents may also be viewed using the IBM site. Any U.S. patent may be ordered from either the government or private vendors for about $3 each.

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What is a Trademark?

A trademark can be a word, symbol, design or a combination of words, symbols and designs, that a business uses to identify its goods or services in the marketplace and to distinguish them from the goods or services of others.

Trademarks as a Symbol of Good Will and Quality

Trademarks can be among a business's most valuable assets. For example, the various trademarks owned and used by the McDonald's Corporation and its franchisees are of immense value. They are instantly recognizable and signify to the consumer that the goods and services meet certain standards of quality and consistency. A Big Mac® is a Big Mac® is a Big Mac®.

Common Law Trademark Rights

In the United States, trademark rights may arise by merely using a trademark in a business environment, without filing for registration. Using an unregistered trademark affords the trademark owner so-called "common law" trademark rights, often designated with a "TM" in superscript next to the mark. Common law trademark rights may be enforceable indefinitely, so long as the business continues to use its marks. The rights in a common law trademark are limited to the geographic territory in which the mark is being used.

State Trademark Registrations

State trademark registrations may offer limited protection beyond what is available for unregistered common law trademarks. The term of a state registration varies by state, but most state registrations have a term of 10 years.

Federal Trademark Registr ations

Registering a trademark in the USPTO is the most effective way to secure trademark rights. A federal trademark registration generally grants the trademark owner nationwide rights in the mark, and the right to prevent other parties from using the same mark or a similar mark anywhere in the country, if the other party's use is likely to cause confusion in the marketplace with respect to the registered mark.

Although a party must use a mark in commerce to obtain a federal registration, a federal trademark application may be filed based on the party's bona fide intent to use the mark in commerce. By filing an intent-to-use application, a company may preserve rights in a trademark before it begins using the mark. Once the company begins selling goods or services under the mark, the company may then file evidence of such use in the USPTO so that the registration may then issue in due course.

The term of a federal trademark registration is 10 years from the registration date. The registrations are renewable for subsequent 10-year terms, so long as the registrant is using the mark. During the first five years of registration, the registration may be challenged by third parties who believe that they will be harmed by the continued existence of the registration. After the fifth-anniversary date of a federal registration, the mark becomes eligible for incontestability status. If this status is obtained, the owner's rights to the registered mark generally cannot be challenged.

Foreign Trademark Rights

In most countries, trademark rights are secured by registering the mark in that country. Most foreign countries do not have common law trademark rights. If a business plans to sell its goods or services outside of the United States, the business should also investigate foreign trademark protection.

Trademark Searches

A trademark search should be performed before using a trademark, applying for registration, or committing resources to the promotion of a new mark. The purpose of the search is to determine if the mark is available for use by investigation whether another company or entity has rights in the same or confusingly similar mark for related goods or services. Trademark searches may be conducted through the Federal Trademark Register, the various state trademark registers, as well as through various databases and publications directed to common law trademarks. The extent of a trademark search depends upon the nature of the goods and services on which the mark is to be used and the search budget.

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What is a Copyright?

Copyright is a form of protection provided under U.S. law to the authors of original works that are fixed in some tangible form. Copyright protection extends to a variety of intellectual works, including books and other literary works, musical works, dramatic works, motion pictures and other audiovisual works, sound recordings, photographs, graphic arts, paintings and other visual works, sculpture, architectural works and computer programs. Copyright law grants the owner of the copyright certain exclusive rights, including the right to make copies of the work, to prepare derivative works based upon the work (for example, to create a screenplay or movie based on a book), to perform the work publicly, and to display the work publicly as well as the right to authorize others to do any of these actions.

How to Secure a Copyright

The copyright in a work is secured automatically from the moment that the work is created and fixed in some tangible form. There is no requirement for the copyright to be registered in the U.S. Copyright Office, although registration does have certain advantages, which are discussed below.

Filing for Copyright Registration

Registering a copyright is simple. Copyright application forms may be ordered 24 hours a day from the Copyright Office Forms Hotline (202) 707-9100, or they may be downloaded via the Copyright Office home page. The completed application form is filed together with a check for the $20 filing fee, and one copy of the work if it is unpublished, or two copies of the work if it has been published.

Benefits of a Registration

A registered copyright entitles the copyright owner to sue for alleged infringement. No lawsuit for infringement can be filed on an unregistered copyright. If the copyright is registered before an infringement occurs, the copyright owner may recover its attorney fees as well as money damages specified by the Copyright Act if it wins the lawsuit. If the copyright is registered only after the infringement occurs, then the attorney fees and statutory damages are usually not recoverable.

Copyright Notice

Prior to March 1, 1989, copyright owners were required to place a copyright notice on their published works, otherwise the works would fall into the public domain. The copyright notice is no longer required for works first published on or after March 1, 1989. A proper copyright notice has three elements: (1) the letter C in a circle - ©, the work "Copyright," or the abbreviation "Copr."; (2) the year of first publication of the work; and (3) the name of the copyright owner. No registration, or advance permission from the Copyright Office is required to use a copyright notice.

Benefits of Using the Copyright Notice

A copyright notice is not required to obtain copyright protection, since protection is now automatic. However, the notice should be affixed to the work to inform the public that the work is the subject of copyright protection. In an infringement suit, if a proper copyright notice appears on the published copy of the work, and if the defendant in the infringement suit had access to the work, then the defendant cannot avoid a damage award by arguing that the infringement was "innocent."

Works Made for Hire

The general rule is that a person who creates the work is the author of that work. However, there is an exception for a category of works called "works made for hire." If a work is a "work made for hire," then the employer, not the employee, is the author of the work. The employer may be a firm, an organization or an individual. The copyright statute narrowly defines "works made for hire." Works made by employees within the scope of their employment are works made for hire. Works created by independent contractors, however, are not "works made for hire" unless both of the following criteria are met:

  1. There is a written agreement between the parties, prior to the creation of the work, specifying that the work is to be a "work made for hire"; and
  2. The work has been specially ordered or commissioned for one of the following nine categories of works: a contribution to a collective work; part of a motion picture or other audiovisual work; a translation; a supplementary work; a compilation; an instructional text; a test; answer material for a test; or as an atlas.s

Business owners should be especially careful about ownership issues when copyrightable works are created by independent contractors. Unless there is an appropriate agreement in place, the independent contractor will generally own the copyright, despite the fact that he or she was paid by the business to create the work.

Duration of Copyright Protection

For works created since 1978, copyright protection for an individual author lasts for the life of the author plus 70 years. In the case of a "work made for hire," copyright protection lasts for 75 years from the date of first publication or 100 years from the date of creation, whichever is earlier.

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Trade Secrets


What is a Trade Secret?

A trade secret is a formula, pattern, device or compilation of information which is used in one's business and which gives the business an advantage over competitors who do not know or use it. Some examples of trade secrets are recipes (e.g., the formula for Coca-Cola®), proprietary pricing formulas, customer lists, manufacturing "know-how," and computer source code.

Requirements to Maintain Confidentiality

To maintain the proprietary nature of a trade secret, the owner of the trade secret must maintain its confidentiality and must take reasonable steps to prevent unauthorized disclosure, such as by using contracts, employee policies, physical security measures, and confidential disclosure agreements. Access to the trade secret should be restricted to persons on a need-to-know basis and any key materials related to the trade secret should be designated or stamped "CONFIDENTIAL."

If access to the trade secret is not strictly controlled, and a competitor gains access to it and uses it, the competitor may successfully argue that the formula, pattern, device or compilation of information is not entitled to trade secret protection, and that the information is thus in the public domain and free to be used by anyone.

Trade Secret vs. Patent

Most trade secrets do not involve technological devices or processes. However, if the trade secret is technology related, protecting the technology as a trade secret should be weighed against protecting the technology via patent protection. Trade secrets may potentially last forever, whereas patent protection expires at the end of the monopoly period. Trade secrets do not need to meet the novelty and unobviousness requirements for patentability. Thus, protecting the technology as a trade secret may be advantageous if patent protection is not likely to be available. Trade secrets do not protect against independent creation or reverse engineering. Thus, the degree of difficulty, time and expense of reverse engineering the technology should be evaluated before selecting the trade secret route over the patenting route.

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Developing an Intellectual Property Strategy


Intellectual property is the new wealth of the information age. Building and maximizing this wealth requires an understanding of the various types of intellectual property and how to acquire and protect them. It is equally important to avoid infringing the intellectual property of others, since even unintentional infringement is grounds for a lawsuit and award of damages. Every business owner and entrepreneur should identify potential areas of concern for their enterprise so that an effective intellectual property strategy can be developed and implemented.

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