As the information age progresses, intellectual property is becoming a core asset for more and more businesses. At the same time, information is becoming easier to access and distribute. Some companies are taking a free ride on the research and development efforts of others, leading to an unproductive incentive structure.
It is becoming more profitable to wait for someone else to develop intellectual property than to invest in R&D. It is more important than ever that your company understands how to protect intellectual property. It could mean the difference between success and bankruptcy.
What Is Intellectual Property?
What is intellectual property? Intellectual property, or IP, is any product of value that incorporates an original idea and enjoys legal protection. It could be an invention, a literary work, software source code, or a corporate logo. Your company’s IP portfolio might also include an innovative way of doing business, a recipe, or a manufacturing process.
Various state and federal laws protect IP, although some forms of IP enjoy more protection than others. A corporate and commercial business lawyer can help you establish a system to protect your intellectual property.
Types of Intellectual Property
Following is a brief description of the six main types of intellectual property. The most effective methods of IP protection differ among the various types of IP available. All of these forms of IP are creations of the human mind, and all of them are critical to every form of commerce.
Intellectual property law treats the various forms of IP as intangible property. As property, it can be stolen, and you can file a lawsuit to recover damages for infringement of your IP. You can also license (rent) your IP rights to other parties through an IP licensing agreement.
Patents are granted for inventions, typically of a technological nature. The patent holder enjoys the exclusive right to exploit the invention for 20 years. In exchange, the inventor must publish the details of their invention and allow anyone to exploit it after the patent period expires. The US Patent and Trademark Office (USPTO) administers patents.
Copyrights are granted to protect original works of authorship, traditionally of a literary or artistic nature. Copyrights protect music, poetry, novels, paintings, and movies, among other works. More recently, copyrights have been used to protect non-artistic works such as computer software. The US Copyright Office administers copyrights.
Trademarks are words or images that identify your company or product and distinguish them from those of your competitors. McDonald’s Golden Arches trademark is a famous example. Like other property, you can rent out trademarks. Typically this occurs through a franchise arrangement, where a private party licenses the use of your trademarks so that the company itself doesn’t own most of the sales outlets. The USPTO administers trademarks.
Trade secrets consist of commercially valuable information that enjoys limited protection under state law, not federal law. Two of the world’s most famous trade secrets — the recipes for Coca-Cola and KFC — are kept as trade secrets because of the short duration of patent protection. By contrast, there is no legal limit on how long you can keep a trade secret.
Industrial designs are two- or three-dimensional ornamental or aesthetic designs that appear in an article. Design patents protect the ornamental features (rather than functional features) of a product for 15 years. The USPTO administers industrial design patents.
A geographical indication is a sign placed on a product that indicates the geographical origin of that product. The products on which a geographic indicator is used must originate from that place, and they must have qualities associated with that particular geographic region. A well-known geographic indicator is “Napa Valley” for wine. The USPTO administers geographic indicators.
Intellectual Property Infringement
Intellectual property infringement occurs in many forms. If IP is a form of property, then IP infringement is a form of theft. In some cases, such as certain copyright or patent violations, “innocent infringement “ is possible, where the offender accidentally infringes someone else’s IP. The consequences of infringement can include both civil and criminal liability.
The first step that many IP owners (or licensees) take when they learn of infringement is to send a “cease and desist” letter to the offender. This letter will describe the infringement and demand that the offender stop their illegal actions. If they continue after the offender receives a “cease and desist” letter, they lose the option of attempting to reduce their liability by claiming “innocent infringement”.
If the offender continues infringing the IP after receiving a “cease and desist” letter, the IP owner will typically seek an injunction in the form of a court order to stop the infringing activity. Failure to comply with a court order can result in serious penalties including jail time. The IP owner can also seek money damages from the offender. In some cases, a court will award money damages in an amount sufficient to bankrupt the offender.
5 Tips for Protecting Intellectual Property
To protect intellectual property, you need a comprehensive strategy that covers every type of IP that your company generates or requires access to. Some of the important issues include:
- Inventorying all of your company’s IPs;
- Identifying parties who have access to your company’s trade secrets;
- Knowing the difference between patents and trade secrets;
- Identifying “prior art”;
- Understanding state law relating to IP; and
- Knowing when to register your IP;
If your company’s IP portfolio is large, you will likely need to train your employees in compliance with your company’s IP system.
1. Determine Which Type of Protection You Require
It is critical that you accurately determine which type of protection you require. If your determination is inaccurate, your protection might be legally invalid, or it might be legally valid but useless.
You need a lawyer to help you answer this question because sometimes the answer is counterintuitive. The fact that copyright, rather than patent, is the most useful way to protect software code is surprising to many people. You can use copyright, patent, or both to protect computer software.
2. Use an NDA or Confidentiality Agreement
Non-disclosure agreements (NDAs) provide contractual protections against the disclosure of a party’s proprietary information. If a party to an NDA discloses confidential information, civil liability will result. This usually means money damages, but it might also mean a court-ordered injunction to act or refrain from acting in certain ways.
Parties to a non-disclosure agreement might be an employer and an employee, or two companies negotiating a business deal.
3. Document Your Discoveries
Every time your company generates a new idea that might become eligible for IP protection (including trade secret protection), make sure to create a clear and accessible record that is easy to date. This task could make the difference between enforceable and unenforceable IP rights.
4. Use Digital Rights Management (DRM) Systems
If your company needs to put proprietary information online, take advantage of existing DRM systems to protect your rights. DRM systems place restrictions on what a reader can do with your work (copying, for example). It also allows the material to be identified as yours even if a user does copy it and claim it for their own.
5. Register Your Intellectual Property
The US government offers registration of certain types of IP. Since patents and industrial designs only exist in registered form, registration is not optional. Registration of trade secrets, by contrast, is not even possible. The registration of copyrights and trademarks is optional but highly advisable. Registration offers a host of important advantages, including easier enforceability and greater availability of damages.
Intellectual property protection is not a one-time act. It is a systematic endeavor, and it is a consistent way of doing business. If you need an intellectual property lawyer to help you protect your IP rights, contact Sequoia Legal today by calling (303) 476-2851 or by filling out our online contact form.
Although our main office is in the Denver metro area, we serve clients throughout the state of Colorado. We also offer free initial consultations. Our office is at 7355 E. Orchard Road, Suite 375 Greenwood Village, CO 80111 (by appointment only).