Protecting Your Ideas: An Introduction to Intellectual Property Rights. By Sasha G. Rao and Andrew J. Koning

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1 Protecting Your Ideas: An Introduction to Intellectual Property Rights By Sasha G. Rao and Andrew J. Koning You have an idea. Something that s going to revolutionize the industry. You re excited, but before you blog about it on the web or post it on Facebook for your friends to marvel, you realize that you need to protect it. But how? This article presents an overview of some key intellectual property rights and what steps you ll need to take to avail yourself of these rights. This article is by no means comprehensive and is not intended as legal advice. If you truly think your idea has potential, then make an appointment with an experienced intellectual property attorney to ensure that others don t profit on your genius. 1. Intellectual Property Rights Intellectual property is the legal term for different types of ideas that can be protected by law. These ideas can range from poetry and music to windmills and flying cars. Intellectual property rights are divided into several categories depending on the nature of the idea. The categories of rights are copyright, trademark, trade dress, patent and trade secret. Each category arises from different legal sources and therefore can vary depending on your particular circumstance. Each type of intellectual property right protects a distinct type of human ingenuity and certain inventive processes can be protected by multiple rights. To help illustrate how each right may be used, this article not only explains how these rights might work but also presents a fictitious technology company Acme Hardware and demonstrates how its products may be protected under all five categories Copyright Copyright is the set of exclusive legal rights a creator of an original work has over their work, including the right to copy, distribute and adapt the work. Afforded by the United States Constitution and codified by Congress, copyright protection subsists from the time the work is created in fixed form. What this means is that the moment you write an original work, such as a song or software code, that work is protected from unauthorized copying. The copyright in the work immediately becomes the property of the person who created the work. It is only the author or those deriving their rights through the author who can rightfully claim ownership. Copyright protection does not require extra steps such as registration or examination by a federal agency. But federal registration is available and does provide added benefits such as the ability to file a claim for copyright infringement in federal court. The framework of copyright protection can be porous, and there are circumstances that permit the use of a copyrighted work without permission or legal repercussion. The fair use doctrine permits limited copying and distribution of an original work without the permission of the copyright holder. This doctrine covers uses such as educational uses or parodies (e.g. on television shows like Saturday Night Live). 42

2 CASE STUDY: Acme Hardware is a growing hardware company that designs and manufactures 3D gaming consoles. Acme has recently written over five million lines of code to be used by its latest console controller. Luckily for Acme, the code is automatically protected from unauthorized copying; but Acme can still face risk if its code is not kept secret. This is because software engineers can rewrite code, changing the visual form while maintaining the underlying function. If an engineer acquires access to code, she could in theory rewrite an implementation using different code to carry out the same instructions, thereby avoiding a copyright infringement claim. Thus copyright might not provide the best protection for software. This limitation means that copyright s strongest use is with artistic expression, such as a song or painting, where the value is derived from the form itself and not the function. For Acme, its advertisements would be a good candidate for copyright protection Trademark Trademarks protect identifiable signs or symbols on a product that connects the product to the trader or producer of that product. A trademark may be a symbol, words, or something else that associates consumers with a company or its product. Like copyright, a trademark does not require registration. In other words, certain marks or logos associated with a particular company may be protected even though not federally registered with the United States Patent and Trademark Office. But unlike copyright, a trademark cannot be appropriated by itself rather, a trademark only exists in relation to some form of commercial activity. A trademark is meant to aid the consumer in identifying the source of a particular good. Therefore, the legal protection serves both to protect the public from confusion as well as to protect the trademark owner from losing his or her market. Even though a trademark does not require registration, there is a federal registry that provides some advantages. First, registration provides an official priority date that may be used to overcome any later claims that someone else used the mark first. Second, registration provides a constructive nationwide notice of use. Third, a registrant has access to the federal court system. And lastly, federal registration for a period of five years provides additional protections not afforded by common law. In order to serve as a trademark, a mark must be distinctive. In determining whether a mark is distinctive, trademark law groups marks into four categories, based on the relationship between the mark and the underlying product or service: (1) arbitrary or fanciful, (2) suggestive, (3) descriptive, or (4) generic. Because marks in each of these categories vary in distinctiveness, the requirements for, and degree of, legal protection depend upon which category the mark falls within. An arbitrary or fanciful mark is given the greatest protection because the likelihood of confusion is the smallest. Examples of arbitrary marks are Nike and Amazon. A suggestive mark implies a characteristic of a product, but is still deemed inherently distinctive and thus is automatically entitled to protection. Examples of suggestive marks are Blu-Ray and Coppertone. A descriptive mark conveys an immediate idea of the ingredients, qualities or 43

3 characteristics of the goods. Because descriptive marks are not inherently distinctive, they can only be protected if they have acquired secondary meaning. According to the United States Supreme Court, secondary meaning is acquired when in the minds of the public, the primary significance of a product feature... is to identify the source of the product rather than the product itself. An example of a descriptive mark that was granted protection after the manufacturer showed secondary meaning is Frosted Mini Wheats. Lastly, a generic term such as rubber tires is provided no protection because the term refers, or has come to be understood as referring, to the particular product. Interestingly, a mark can become generic and fall into the public domain if the public consistently refers to the term for a class of products. A historical example of that happening is with the Kleenex brand of tissues. A subset of trademark law is trade dress which protects the visual design of objects that are not purely functional. Trade dress protection is intended to protect consumers from products that are packaged to imitate the appearance of other products and thus to prevent a consumer from buying one product under the belief that it is another. Trade dress also requires that the dress be either inherently distinctive or acquire distinctiveness through secondary meaning. CASE STUDY: Acme Hardware will likely be unsuccessful in registering Acme Hardware as the name is descriptive at best. But Acme will likely be able to acquire protection for its console name: Kazamo. Because Kazamo is an arbitrary term, Acme will not have to show secondary meaning. Nevertheless, Acme will still have to ensure that the mark is not already used by another. If it is, Acme runs the risk of being sued by the original holder. Courts will allow multiple users of a mark but only if the risk of confusion is limited. This occurs if the mark holders are geographical diverse and/or sell completely different types of products Patents Patent rights were established over 200 years ago in the United States Constitution: To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. A patent grants an inventor the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States for a limited time in exchange for public disclosure of the invention when the patent is granted. It is important to note that a patent grants its owner the right to exclude others from practicing the patented invention. It does not automatically give the patentee the right to continue producing an article/product or practicing a process that is the subject of its patent. Unlike copyright and trademarks, a patent must be applied for. Patent applications are examined by a federal agency called the United States Patent and Trademark Office (USPTO). This office will only grant a patent if the application meets certain requirements. First, the subject matter of the claimed invention must fall within four categories of inventions or discoveries: processes, machines, manufactures, and compositions of matter. This broad range is said to ensure that ingenuity receives liberal encouragement. Second, the claimed invention must be new. This test looks at prior inventions and human knowledge to see whether the claimed invention is actually new. The office will also reject an application if it believes that an ordinary person in a given field (i.e. a software engineer for a software patent application) would find the claimed invention 44

4 obvious. Third, the application itself must be described in such a way that allows the ordinary person to recognize and practice what has been invented. Lastly, the applicant must describe the best mode subjectively known to the inventor for carrying out his or her invention. While a patent provides the right to exclude others from practicing your invention, it does not necessarily provide the patent holder with the right to practice the patented invention him or herself. For example, if a patent is granted for a type of hammer, there could still be another patent for the process of manufacturing that hammer. CASE STUDY: Acme s gaming console has hundreds of components which by themselves could qualify for patent protection. Acme could patent not only the console itself, but also the firmware used by the console s hardware components. The Kazamo console would fall under the machine category of patentable subject matter while the firmware would be a process. Both however would have to novel and not obvious in light of prior inventions and Acme would need to ensure that its console does not infringe someone else s patent and risk being taken to court Trade Secret Lastly, there is trade secret law to protect an idea that is not generally ascertainable by the public and is protected by reasonable means (i.e. kept a secret). The owner of that idea can enforce its confidential status against those who obtain improperly the idea. Broadly speaking, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret. Trade secrets encompass manufacturing or industrial secrets and commercial secrets. The unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret. Unlike trademarks and patents which are protected under federal statutes, trade secrets are protected by state law. One of the more significant features of trade secrets when compared to patents and trademarks is that a trade secret is only protected when the secret is not disclosed. Trade secrets offer several advantages over patents. First, a trade secret has no fixed term of protection whereas a patent has a fixed 20 year term. Second, because the idea is kept confidential, there is often less cost and possible litigation associated with it. But unlike patent protection, once a trade secret is known either by reverse engineering or independent discovery, there is no recourse. CASE STUDY: Acme can also maintain its inventions as trade secrets. As discussed below, there are many questions to consider when deciding whether to patent an invention or maintain it as a trade secret. Acme s manufacturing process for the Kazamo Acme s console would be a good candidate for trade secret protection because it is highly efficient and would be a valued prize to a competitor. It is also a good candidate because the process cannot be deduced from analysis of the end product, the Kazamo. If Acme can keep it sufficiently secret, any unauthorized access and misappropriation will allow Acme to seek redress in court. 45

5 2. Key Considerations So, what method of protection should you choose? We outline some of the considerations below but caution readers to seek legal advice from a qualified intellectual property attorney in your jurisdiction. There are several questions you ll need to consider. First, how vulnerable is your idea to reverse engineering or independent discovery? Second, what is the commercially valuable life of your idea? Third, will the costs of applying for a patent outweigh the costs of protecting your trade secret? Fourth, is the subject matter of your idea patentable? Fifth, is your idea adequately new to warrant a patent? Sixth, do you want to practice or license your idea? And lastly, would you be able to afford the costs associated with enforcing your patent? Each one of these questions is addressed below. If your idea is vulnerable to independent discovery or reverse engineering, you might want consider applying for a patent. Patents provide protection for the first to invent, so later independent discovery of the same invention will not affect your rights granted by a patent. Alternatively, if your idea has a high degree of complexity and is not easily reverse engineered then trade secret protection might be a viable option. Trade secret protection, however, does not stop a competitor from reverse engineering your idea, so you ll want to consider patent protection if reverse engineering is easily accomplished. Second, if the commercially valuable life of your idea is longer than 20 years, you might want to hold off on getting a patent and opt for trade secret protection which is theoretically never ending. Similarly, if the commercially valuable life of your idea is only a year or two, then spending several years obtaining a patent might not be the most efficient method of protection. There are circumstances where obtaining a patent nevertheless makes the most sense. Third, the cost of applying for a patent can be high. Even if you re a lone inventor or a small company and can get certain price reductions, you ll still need a patent agent or attorney to draft the claims and handle communication with the patent office. You could avoid those costs by applying yourself, but patent law is complex and the advice of an expert is prudent. Depending on your industry however, these costs could be less than the cost of maintaining a trade secret. Security in both limiting physical access to your trade secrets and also ensuring the people who do have access sign confidentiality agreements can be pricey. Fourth, as discussed above, your idea must fall within one of the patentable subject matter categories. The Supreme Court recently reiterated that these categories are broad. An inventive idea, however, can still fall outside these defined categories meaning you can either modify your idea to fall inside one of the subject matter categories or rely on trade secret protection. Either way, consultation with an attorney is a necessity. Fifth, just because your idea is something new and valuable does not mean that a grant of a patent is automatic. As discussed above, your idea must meet the USPTO s definition of novel. If that threshold is unattainable, then trade secret protection might be your best option. 46

6 Sixth, if you neither have the means nor the desire to practice your invention, you may be interested in a licensing deal. Yet, deciding whether you want to license your invention as a trade secret or a patent needs consideration. Licensing could pose additional issues with keeping your invention confidential and reasonably secure to maintain its trade secret status. If security is an issue, licensing your idea as a patent might be a more attractive option. Lastly, if you do obtain a patent, you are by no means free and clear of legal obstacles. If someone infringes your patent, you will likely need to take affirmative steps to stop them. This could even mean having to take them to court. Once in court, the alleged infringer can both dispute your claim that they infringe your patent and can also attack the validity or enforceability of your patent. Patent litigation, furthermore, can be expensive. All these questions and others must be considered. Intellectual property rights provide a broad spectrum of protection for human ingenuity, however because the issues are complex, careful analysis of what protection is best for you in consultation with a qualified attorney is necessary to ensure that you can capitalize on your creativity. 47

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