The AllBusiness.com Practical Guide to Patents, Copyrights, Trademarks & Trade Secrets

The AllBusiness.com Practical Guide to Patents, Copyrights, Trademarks & Trade Secrets

Overview

Many businesses need to protect their intellectual property. Intellectual property is a term that covers a variety of rights in inventions, trade secrets, and creative works. These rights may be protected by federal law (patents, for example) or by state law (such as trade secret laws).

Both the company's founders and its investors have a stake in ensuring that the company protects its intellectual property and avoids infringing the intellectual property of third parties. The company must take firm steps to achieve these goals. For example, a new company should ensure that the founders assign (or license) any existing intellectual property that is relevant to the new company's product. All of the company's employees and independent contractors should sign agreements that retain the company's intellectual property rights if an employee develops a new product for the company.

In this Guide, we discuss protecting your ideas, inventions, products, trademarks, and secrets.

Patents

The best protection you can get for a new product is a patent. A patent gives its inventor the right to prevent others from making, using, or selling the patented subject matter described in words in the patent's claims. A patent can be extremely valuable to an invention. For example, if you invent and get a patent on a new type of luggage that is unbreakable, you can prevent others from selling that kind of unbreakable luggage.

You can obtain two kinds of patent, in the words of the patent laws:

• Utility patent: "Any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof"
• Design patent: "Any new, original, and ornamental design for an article of manufacture"

Here are the key issues in determining whether you can get a patent:

• Only the concrete embodiment of an idea, formula, and so on—an invention—is patentable.
• The invention must be new or "novel"—that is, something different from what already exists.
• The invention must not have been patented or described in a printed publication anywhere in the world.
• The invention must have some useful purpose (this requirement is fairly loose, but alleged perpetual motion machines are cited as examples of nonuseful inventions).

For more information on whether or not you can patent something, check out Appendix A, which covers the conditions for obtaining a patent in greater detail and Appendix B, which contains General Information Concerning Patents from the U.S. Patent and Trademark Office.

You obtain a patent in the United States by applying to the United States Patent and Trademark Office. This process can be complicated, take several years, and cost thousands of dollars. The applications must generally be filed by patent lawyers (or patent agents) who are licensed to practice before the Patent and Trademark Office. Patent lawyers can assist greatly in drafting the patent application and in further refining the scope of the invention. Generally, the patent term begins when the patent is issued and ends 20 years from the date the patent application was filed in the United States.

Patents are granted on a national basis. Consequently, a United States patent gives a business no rights in Canada or other countries. Patent laws in other countries differ significantly from those in the United States, so companies should always employ an experienced patent attorney for these matters.

While patents can be very valuable to a company, don't expect them to lead to guaranteed riches. Few patents actually result in a financial windfall. Clever competitors can and do engineer around patent protection and bring similar products to market. Sometimes patents (which are public) provide competitors with the insight needed to make their own innovations. Remember, the first product to market isn't always the most successful. Products which combine innovation and strong marketing present companies with the greatest chance for success.

After you receive the patent, place a patent notice in the product, such as:

If a patent application has been filed and is still pending and if you are selling the invention, include the words Patent Pending on the invention. Legally, this move doesn't prevent anyone from making or selling the invention, but if a prospective competitor sees that the invention may soon have a patent, it may decide not to invest more money and resources on the product.

Legally, you can only use the words Patent Pending on a product if a patent application has actually been filed and is still pending.

Appendix C contains additional information and instructions from the United States Patent and Trademark Office.

Copyrights

Almost every company creates material that is entitled to protection under copyright laws. Copyrights are usually considered to be important for book publishers or motion picture companies, but they can also be valuable for many other types of businesses. A copyright gives the owner the exclusive right to make copies of the work and to prepare derivative works (such as revisions) based on the copyrighted work.

Copyrights cover (this is the definition from the copyright statute) the following:

That's a mouthful, but here are some concrete examples of things that are copyrightable:

• Advertising copy
• Art
• Articles
• Books
• Compilations of data
• Music
• Jewelry
• Movies
• Software

In the United States, the employer automatically owns the copyright for works that employees create "within the scope of their employment." Generally, this rule applies only to full-time employees. However, this rule does not exist in many foreign countries and the company should ensure that all employees (and appropriate independent contractors) sign confidentiality and invention assignment agreements immediately after being hired.

Affix a copyright notice to all copyrightable works, such as the following:

The moment you create a work that meets the requirements for copyright protection, you automatically get a variety of copyright protections under the federal copyright statute for that work. You also obtain additional rights if you file the appropriate copyright registration form with the Copyright Office.

If someone other than an employee creates a work for your company, make sure that the company owns the work's copyright. You can do so by having all parties sign a written document that spells out the agreement and includes an assignment of the copyright. A Consultant Confidentiality and Invention Assignment Agreement typically contains sample language such as:

The ownership of a copyrighted work, or any of a copyright holder's rights, can be transferred in whole or in part by contract. This transfer can be done by a Copyright Assignment (where all of the rights are transferred) or by a Copyright License (where only some rights are transferred).

Trademark

A trademark right protects the symbolic value of a word, name, symbol, or device (or a combination) that the trademark owner uses to identify or distinguish its goods from those of others. Service marks, which resemble trademarks, are used to identify services.

The trademark (or service mark) owner can prevent others from using a "confusingly similar" mark or tradename. Confusing similarity is based on a comparison of both the appearance of the two marks...