intellectual property rights

What Every Business Needs to Know About Intellectual Property Rights

Latest posts by William Honaker (see all)

Intellectual property (IP) – intangible creations such as inventions, ideas and processes – covers some of the most valuable aspects of a business, yet many treat it as an afterthought. While IP law can be complex, confusing and overwhelming, it’s important to have an understanding of your rights, and luckily, the basics are fairly simple.

Let’s take a look at the four types of intellectual property – trademarks, copyrights, trade secrets and patents – and what you need to know about each of them.

Trademarks

Trademarks identify goods or services coming from a single source and can include business or product names, logos or slogans. Some examples of trademarks are the name Nike, the Coca-Cola bottle shape and the sound of the light saber from “Star Wars.”

In the United States, common law trademark protection is limited to the geographic area in which the trademark is used. For example, if you sell a product in Michigan only, the trademark rights to that product name exist only in Michigan. If you want to use that trademark in interstate commerce, you’ll want to register it federally as well.

While registering federally is not required, it gives you, the trademark owner, additional rights not available under common law. After registration, your rights extend throughout the U.S. and the trademark can become incontestable, which provides valuable presumptions in litigation. You also can use the “®” symbol, which shows the item is registered with the United States Patent and Trademark Office (USPTO).

Before you choose a trademark, you should search the USPTO database, also called the Trademark Electric Search System (TESS), to be sure that it is available in the U.S. After that, a more comprehensive search should be done to be sure there are no common law trademark uses. This can be difficult to do since no registration is required to establish common law rights to a trademark. Experienced trademark counsel can conduct these investigations to give you the confidence you need to invest in your trademark. If you are going to use your trademark internationally, a search should be done in those countries, too.

You must be careful when choosing a trademark as you don’t want to be sued for infringement.  Don’t invest resources in marketing only to have to change the name and pay damages for infringement.



Copyrights

Copyright is a type of IP that gives owners the exclusive right to make copies of a creative work. Protection of copyrights attaches as soon as an idea is expressed in a form that can be reproduced under the Copyright Act. Copyrightable materials include literary or musical work, artwork and computer programs.

Since copyright protection attaches immediately, it’s not necessary to register a copyright. However, it’s a good idea to do so because copyright registration is a prerequisite for filing a lawsuit for infringement.

There are also important benefits to registration, especially if you must enforce your copyright – statutory damages and legal presumptions. If you register your copyright within three months of publication, or before infringement, you can elect statutory damages of $750 to $30,000, and up to $150,000 for willful infringement, at the discretion of the court. By electing statutory damages, you don’t have to prove actual damages – which often can be difficult to do. Courts have also held that registration before or within five years of publication of your work establishes prima facie evidence of the facts stated in the registration certificate. Consequently, in cases of infringement, the court presumes you own the copyright and that the registration is valid. The burden of proof then shifts to the defendant to disprove any facts in the registration, such as ownership.

Copyright infringement is always a risk. If you receive a letter for copyright infringement, it typically describes the statutory damages available, threatens litigation and demands payment. There are strategies to defend against charges or to reduce damages, but the better approach is to not infringe in the first place. Therefore, it is extremely important to be aware of the consequences of clipping copyrighted materials such as images, videos, music or articles.

Trade secrets

Every business has trade secrets – confidential information that may be sold or licensed, such as a device, formula, program or technique. To qualify as a trade secret, information must be commercially valuable, known only to a limited group of people and be subject to reasonable steps taken to keep it secret. For example, Google’s search algorithm, KFC’s secret blend of herbs and spices, and a company’s client list all qualify as trade secrets.

Trade secrets are not registered with a government agency, although they can be the most valuable IP a business has. They’re not unprotected, however – the Uniform Trade Secrets Act (UTSA) is a piece of legislation published in 1979 and enacted by most states. One of the UTSA’s goals is to make the state laws governing trade secrets uniform. In states where the USTA is not enacted, infringement remains a common law tort. Trade secrets are also protected federally under the Defend Trade Secrets Act (DTSA), which allows the owner of a trade secret to sue in federal court when their trade secrets have been infringed upon.

It’s important for business owners to understand the trade secrets they have and the requirements to protect them. To make a trade secret infringement claim, you need to prove that 1) the subject matter at issue is in fact a trade secret, 2) you made reasonable efforts to keep it protected and 3) somebody wrongfully took the information.



Patents

Inventions are protected by patents, which give the owner(s) the legal right to exclude others from making, using or selling the invention. A few famous patent inventions are the light bulb, telephone and computer.

There are three types of patents – a utility patent, a design patent and a plant patent. Utility patents protect inventions, products or processes, while a design patent protects the appearance of manufactured products, and a plant patent protects asexually reproduced plants.

A patent application should be filed as soon as possible because protection goes to the first to do so. In the U.S., there is a one-year grace period to file a patent application. The timer starts when the invention is made available for public use, for sale or described in a printed publication. Most other countries do not give you a grace period, and if you choose to disclose the invention before you file, you lose your right to get patent protection in that country.

The takeaway

Intellectual property is one of your most valuable assets, so take steps early to invest in and protect it. If you don’t, there can be significant consequences.


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