What a Business Person Should Know
About Intellectual Property Law and Why it Matters!
By J. Nevin Shaffer, Jr.
In the Beginning
Twenty-four years ago, we just called ourselves patent attorneys.
Because patent laws provide leverage to individuals and their
businesses by providing a limited monopoly, patent attorneys also
involved themselves with other areas where the law provides leverage
to businesses. Some smart lawyer had the idea that “patent attorney”
just didn’t have enough snap and so now we are more commonly
referred to as “intellectual property” lawyers. I personally prefer
this term because I am not too intellectual but it helps get the
clients in the door! Nonetheless, no matter how intellectual the
lawyer may or may not be, the term does help explain to the client
that the lawyer can help with more than just patents. In fact any
lawyer can call herself an Intellectual Property (IP) lawyer even if
she does not have the technical degree and federal license to
practice patent law. In addition to patent law, the field of
intellectual property law includes trademark, copyright
and trade secret law, none of which require an additional
license. Having previously discussed the basics of patent law in
earlier articles, this article will focus on the basics of these
three other areas of potential leverage for your business.
If You Are in Business, You Have Intellectual Property
The truth is that not every business has a patentable idea or
patented product. However, if the bad news is that you can not
patent your idea, the good news is that you now have an extra
$10,000 (more or less) to spend on advertising. In order to make a
rational decision about the benefit of investing in protecting a
businesses’ intellectual property, you need to know that a full
blown IP protection strategy is likely to cost much less than a
single advertising campaign. In fact, absent patent expenses, the
cost for fully protecting a company’s trademarks, copyrights and
trade secrets could easily be less than $2500. Certainly, costs can
and do vary according to circumstances. The point is, however, that
relative to other costs incurred by businesses, IP costs are
generally not very high but the benefits are!
A Trademark is a Word, Symbol, or Slogan a Business Uses
to Identify and Distinguish Its Product or Service From Its
Competitor’s Product or Service
The main benefit of a federally registered trademark is that it
lasts forever. The world will have to end for COCA COLA to lose the
rights to those two words. Because every other form of IP has a much
shorter term than forever, trademarks are the most valuable asset a
business has to protect. This is even more apparent when it is
understood that a company’s trademark is the short cut people use to
give the company their money. I can think of no more important asset
a business can have than a short cut to other people’s money!
If you are going to offer goods or services in more than one state,
your business qualifies for a federal trademark. For the record, a
trademark applies to trade goods while a service mark applies to
services and the federal symbol “ ®” applies to both.
One of the first areas of confusion with trademarks is that simply
obtaining a DBA or incorporating DOES NOT give the business any
trademark protection. Another area of confusion is that while a
business can choose any word, symbol or slogan it wishes, not all of
them are automatically registerable at the Trademark Office. The
Basic Rule is that if the word, symbol or slogan is just descriptive
of the thing being sold, it is NOT registerable. APPLE for the
fruit= NO; APPLE for computers= YES.
There are other unknown rules that perplex business owners about
trademarks. Perhaps the most confusing is that a business must use
the trademark as an adjective not a noun or a verb. The problem, of
course, is that everybody uses trademarks descriptively and that
leads businesses to conclude that a good trademark describes the
product. WRONG! (See Basic Rule above). The business owner must use
the mark as an adjective followed by a descriptive term e.g. NIKE
Once a trademark has been selected and before it is used, a
trademark search can help avoid obvious problems. If the same or
confusingly similar mark is already applied for or registered for a
similar product, forget about it and pick another. Another trademark
rule is :First come, first served. The first person to use or apply
for a mark is the winner. Informal searches (both patent and
trademark) can be conducted at the United States Patent and
Trademark Office web site: www.uspto.gov.
For a mark that is going to register, the registration process
normally takes about a year to complete. In the meantime, it is
advisable to identify the mark with the letters TM or SM, for
trademark or service mark , and to set the mark off by italics, bold
letters or the like so that is stands out wherever it is used.
Almost All You Need to Know About Copyrights, You Already Know
The thing many people don’t know about copyrights is the part about
copyright law that made Bill Gates the richest man in the planet.
That thing is this: An independent contractor owns the copyrights
for works of art or authorship ( read “software”) that it is paid to
develop! IBM got exactly what they bargained for, a world wide,
royalty free, perpetual license to use Bill’s software and he owns
the copyrights to it.
So, now, when it comes to copyrights and independent contractors, a
careful reading of the contract on behalf of your business which is
hiring the independent contractor should reveal at least two things.
1. A guaranty that the work will be original i.e. not simply copied
off the internet and 2. That you own the copyrights in the work you
are paying to have created.
Maximum protection for a work of art or authorship is obtained by
registering the work at the United States Copyright office. Forms
and information may be obtained at:
Copyrights last for the life of the author plus 70 years.
Every Secret Thing You Know About Your Business That Your Competitor
Would Like To Know is a Trade Secret
Trade secrets do not have to be rocket science. They are often the
mundane things that every business knows about its business and that
it would like to know about others. A customer list, for example,
that every employee knows, if kept secret, i.e. not published, is a
very valuable business asset.
While every form of IP protection is designed to provide a business
leverage against its competitors, trade secret protection is most
valuable when it protects a business against the competitor tomorrow
who is its most valuable employee today. Sadly, it is not an
uncommon story. Happily, an employment agreement that also
incorporates a trade secret agreement can end the unhappy situation
quickly. Essentially, a trade secret agreement requires an employee
to agree to keep secret the secrets she learns while employed and to
not take them with her and use them against the employer when she
leaves. Then, when she leaves in the dead of night and opens a
competing business the next day by sending 10% off letters to all
her former employer’s customers, it is a much simpler thing for a
court to rule in your favor. A trade secret, however, lasts only as
long as the business keeps it secret
A Proper IP Strategy is Like Dressing for Cold Weather: The More
Layers of Protection You Have, the Longer You Can Stay Outside
A single idea of yours may result in a patent on the functional
parts of it, a trademark on the brand name for it, copyrights on the
advertisements about it and the generation of trade secrets in the
nature of new customers. A business that is advised of the costs and
benefits of these various forms of protection can more accurately
judge when and where to invest its money. As indicated above, the
cost of maximizing protection under the laws of intellectual
property is minimal so that even beginning businesses can and should
avail themselves of multiple forms of protection.
Copyright 2004 JNSJrPA. The material in this article is provided for
general informational purposes only and should not be considered a
legal opinion nor relied upon in lieu of specific legal advice.
Accordingly, readers who require legal services in connection with
their specific circumstances should consult an attorney competent in
the field of intellectual property.