Protecting Your Ideas – An Overview of Intellectual Property Law
Most entrepreneurs start their business with some idea of bringing to new product or service to the market or providing an existing product or service to customers in a new or exciting way. Because this idea is the foundation of your business venture, you’ll want to make sure that you are taking proper steps to protect it. Creations or ideas of the human mind that are given legal property rights are known as “intellectual property”. Intellectual property can be protected in four main ways: Patent law, copyright law, trademark law and trade secret law.
A patent is a grant by the federal government of the right of an inventor to exclude others from making, using or selling an invention. Patents do not protect “ideas” – only the technological methods and processes of the idea as incorporated into an invention. In order to receive a patent, an invention must meet two key tests of being both “novel” and “nonobvious”. An invention is “novel” if it is not identical to prior or existing inventions. An invention is “nonobvious” if it is not an obvious improvement on prior or existing inventions. In other words, there needs to be an inventive step between existing technology and the new invention such that a person of ordinary skill would not come up with that new invention.
The term for a patent in the U.S. is 20 years from the application filing date. Once the patent expires, the invention goes into the public domain and is free for anyone to use. An inventor may be barred from receiving a patent if the invention is publicly available, either by being described in a printed publication or offered for sale, for more than one year before the patent application is filed.
For this reason, inventors must be careful in disclosing their invention to others before a patent application is submitted to the U.S. Patent & Trademark Office (USPTO).
A copyright is a federal right owned by every author of a creative work to exclude others from doing any of the following five activities:
3 Distribution to the public
4 Performance in public
5 Display in public
A copyright exists from the moment that a work is created and fixed in any tangible medium of expression. For example, an author who writes a book on her laptop has copyright right protection in the work that she produces immediately upon saving her work to that laptop’s hard drive. If she uses a notebook and pen to write her manuscript, copyright protection exists as soon as the words are written onto the paper.
Copyright does not protect an idea; it only protects specific expressions of an idea. For example, two artists might be inspired to paint a picture of the New York City skyline at dawn. You would expect that the paintings produced might contain similar elements, such as buildings, bridges and perhaps people, but you might also expect to see differences in choices of color, shading and abstraction. Each artist has copyright protection in the creative work as created by him. The idea (in this case, painting the New York City skyline at dawn) is not subject to protection under copyright law and other artists are free to come along and create their own works based upon that idea.
In order for a copyright to be valid, the work must contain a minimal degree of creativity. This means that the work cannot be an exact copy or replication of someone else’s work. For example, taking an old movie filmed on 35-mm film and converting it onto a DVD, while requiring some technical skill, does not give the person making the DVD a copyright in the original movie. Likewise, taking basic information and ordering it in an obvious way, such as an alphabetical listing of phone numbers in a telephone book, is also not subject to copyright protection.
The term of a copyright differs depending on when the work was created. Generally speaking, for works created after 1978, the term of the copyright will be for the life of the author plus an additional 70 years. Once the copyright term expires, the work goes into the public domain and can be used without restriction.
A trademark is a word, slogan, picture, sound, color or any other symbol used by a business to identify and distinguish its goods from others in the marketplace. A trademark performs four functions:
- A trademark identifies the maker’s products or services and distinguishes them from products or services sold by others.
- A trademark signifies that all products bearing the same trademark come from, or are controlled by, a single source.
- A trademark indicates that all products bearing the same trademark are of an equal level of quality (whether high or low).
- A trademark is a means of advertising, promoting and assisting in selling products by providing a single name or symbol that a customer can rely on to associate with the maker of the product.
For example, when purchasing a beverage sold under the name COKE®, a consumer knows immediately who the maker of the beverage is and generally what the characteristics and quality of the product (e.g. color, flavor, appearance, etc.) will be, whether that beverage is purchased in Boston or Los Angeles.
Unlike patents and copyrights, which are federal rights only, trademarks can be protected under both state and federal law. The term for a federal trademark registration is 10 years and registration can be renewed every 10 years thereafter for an indefinite period.
All trademarks are initially categorized for their validity based upon their level of distinctiveness. Names that are used on products or with services that are generic or descriptive are not given protection under trademark law. Words that are suggestive, arbitrary or fanciful are capable of protection. For example, “YUMMY” could not be used as a trademark for a product such as cookies as the word merely describes a characteristic of the cookie. However, OREOâ has no relation at all to the qualities or characteristics of its cookies and, as a consequence, receives full protection under the law.
Ownership of a trademark is determined by who was the first to use the mark, not who was the first to file a trademark application. However, if two trademark applications are submitted for the same or similar trademarks, priority is given to the first application filed. Under current federal trademark law, it is possible to file for trademark protection on an intent-to-use basis which allows the maker of a product to have a constructive first use date of its trademark as the filing date of the trademark application. In order for an intent-to-use based application to mature to registration, the maker must demonstrate actual use of the trademark in commerce during the application process.
Trademarks that are federally registered with the USPTO are accompanied by the ® symbol. Unregistered trademarks may use the ™ symbol. Since it can take up to one year from the date of filing a federal trademark application for a trademark to register, it is good practice to use the ™ symbol when a trademark is first used in commerce until registered.
A trade secret is business information that is kept confidential and has value because it is not generally known to others. The element of secrecy is a key requirement to maintaining a valid trade secret property right in business information. This means that the owner of the business information must take reasonable steps to preserve the confidentiality of the material. For instance, the information should be marked as “Confidential and Proprietary” when possible and access to the information should be limited to only those within the organization who have need to know it and to outsiders who agree to be bound by a confidentiality agreement.
An example of a trade secret is the storied COCA-COLA® syrup formula. It is said that employees involved in the manufacture of the syrup do not make the syrup from start to finish but that only certain steps are completed by one set of employees before the concoction is brought to a different set of employees who complete other steps in the process. Whether or not this is true, the story is a good example of how a business might want to consider going about maintaining the secrecy of valuable business information by limiting access and segregating processes within an organization.
Trade secrets are protected under state law and last for as long as a company maintains the information’s secrecy. However, trade secret law only protects against use of the information obtained by illegal or improper methods, such as through theft, bribery, trickery or breach of a duty of confidentiality. Trade secret law does not forbid the discovery of a trade secret by fair and honest means, such a through reverse engineering or independent creation of the same information. If, for example, someone is able to reverse engineer the COCA-COLA® syrup formula through a process of trial and error, that person may sell their version of the syrup without fear of violating applicable trade secret laws.
Most trade secret cases involve claims by an employer that a former employee has stolen information prior to his or her departure. If proven, the former employee and his new employer (if that information has been transferred to the new employer) can be subject to damages, disgorgement of profits, injunctions and punitive damages. For this reason, if you are leaving a current position to start a new business or are hiring a new employee, steps should be taken to make sure that trade secret or confidential information from a previous employer is not brought into the new business.