NEVADA INTELLECTUAL PROPERTY Lionel Sawyer & Collins (Nevada)

Transcription

1 Last Updated: March 2013 Federal Update: September 2012 NEVADA INTELLECTUAL PROPERTY Lionel Sawyer & Collins (Nevada) Foley Hoag LLP (Federal) Julia Huston, Joshua S. Jarvis, Jenevieve J. Maerker, and Philip C. Swain Table of Contents 1. Overview 2. Copyrights 3. Trademarks & Service Marks 4. Trade Names 5. Trade Secrets 6. Patents 7. Other State Specific Considerations 8. IP Resources 1. Overview There is often a tradeoff between the widespread dissemination of solutions to intractable social problems and the legal protection of intellectual property. On the one hand, if a social sector organization uses the intellectual property laws to protect a process, technology, invention or creative work essential to its social mission, others will be inhibited from replicating the same or similar methods of accomplishing positive social change. On the other hand, the protection of intellectual property can sometimes help social sector organizations achieve scale and thus accomplish greater social good by, among other things, generating revenues, minimizing confusion and maintaining quality control. Every social sector organization should carefully assess and consider the importance of its intellectual property to the success of its mission in order to select the appropriate level and method of legal protection for these assets. To assist in this assessment, the following provides an overview of federal and Nevada laws protecting copyrights, trademarks, trade names, trade secrets and patents. 1

2 Copyright Trademark Patent Trade Secret What it commonly protects Literary and artistic works; computer software Words, phrases, symbols, logos, and images associated with a product or service New and useful inventions and processes Information that is not generally known When might this protection be useful for a social sector organization? Basic Requirements Is federal protection available? 1. Ability to license literary and artistic works with others while retaining ownership 2. Potential source of revenue 1. Work must be original and creative 2. Work must be shown in a tangible medium of expression 1. Prevent others from using your product/service name and causing confusion 2. Increase awareness by consistently using same brand names and slogans 3. Help create a brand 1. Must act as an identifier of source 2. Must be distinctive 3. Must not infringe any existing trademark rights 1. Potential source of revenue 2. Ability to license inventions and technology with others while retaining ownership 1. Novelty invention cannot be "anticipated" or be identical to a previous invention 2. Non-Obviousness - invention must be different enough from previous inventions so it is not obvious to a person skilled in the art 3. Utility - invention must have a useful purpose. 1. Protect donor lists and strategic plans for fundraising 2. Protect formulas and business information or knowhow 1. Owner of the information must take reasonable measures to maintain secrecy 2. The information must have some value to the organization Yes Yes Yes Limited Is state protection available? No Often, but not in every state. No Yes Necessary to file with the government to receive protection? Symbols to indicate claim of right Not necessarily, but it is advisable. A work is protected as soon as it is created, but one must register before suing for infringement Once a work is created or published, owner can use to indicate copyright claim. Not necessary to file before using this symbol. Not necessarily, but it is advisable. Federal registration is presumptive evidence of ownership and validity of mark. If trademark is unregistered or in the process of registration: TM If trademark is federally registered: Yes After filing you can use: patent pending to warn others that you claim the right. Patented or pat. along with the patent number should be marked on the product after the patent issues. No There is no symbol to indicate ownership of a trade secret. 2

3 2. Copyrights Copyrights are governed exclusively by federal law (17 U.S.C. 101, et seq.). Copyright refers to the rights an author obtains by creating original works of authorship such as literary, musical, dramatic, and artistic works, and computer programs. A copyright enables an author to protect his or her works of authorship from unauthorized use (copying, distribution, performance, and display of the work and creation of translations and other derivative works). Anyone who without authority exercises a right reserved exclusively to the copyright owner is considered to infringe the copyright and may be liable for actual damages (plaintiff's actual losses plus any profits of the infringer that were not taken into account in calculating the plaintiff s losses) or statutory damages (damage amounts provided by the copyright statute) and may be subject to an injunction. Copyright law distinguishes between an idea and an expression of an idea. Only the expression is protected. Thus, copyright law does not protect ideas, procedures, processes, systems, methods of operation, concepts, principles or discoveries revealed by copyrighted works. To be eligible for copyright protection, all works must meet two basic requirements. First, the work must be fixed in a copy or some other tangible form, e.g., book, audio CD, photograph. Second, the work must be the result of original, creative, and independent authorship. Under limited circumstances, a copyright-protected work may be used without permission if the use is considered fair use. Four factors, laid out in 17 U.S.C. 107, are considered in determining whether a particular use is a fair use: 1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; 2) the nature of the copyrighted work; 3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4) the effect of the use upon the potential market for or value of the copyrighted work. The difference between fair use and infringement is often difficult to determine. Generally, using only a small portion of a work, for purposes of news reporting, parody, education, scholarship, criticism, or commentary in a way that will not affect the value of the copyrighted work may be considered fair use. a. Copyright Registration No publication, or registration in the Copyright Office, is required to secure copyright protection. Copyright is secured automatically when the work is created, and a work is created when it is fixed in a tangible medium for the first time. It is nevertheless 3

4 advisable to register a copyright with the Copyright Office. Registration provides evidence of the owner s title to the work and is a prerequisite to bringing a lawsuit for copyright infringement. In addition, early registration (that is, registration that pre-dates the alleged act of infringement) entitles the owner to seek statutory damages and attorney s fees. Because actual damages may be difficult to prove, the threat of statutory damages adds strength to a claim for copyright infringement and may result in quick and inexpensive resolution of the case. Registration can also provide actual notice of copyright ownership and can therefore assist responsible content users in avoiding inadvertent infringement. The owner of copyright in a U.S. work must register or pre-register the copyright prior to initiating a lawsuit for infringement. Federal copyright registration requires that a copyright application be filed with the U.S. Copyright Office. There are three ways an application may be submitted to the U.S. Copyright Office: (1) registration online; (2) registration with a printable, fill-in form appropriate to the type of work (e.g., literary, visual art, sound recording, etc.; these forms are processed more quickly than paper forms); and (3) registration with paper forms. More information about these forms is available at: The fee for filing a copyright application is $35 if it is submitted online. The fee for the two other methods discussed above is $65. In addition to the application and fee, an applicant for copyright registration must submit a complete, non-returnable copy of the work being registered (or acceptable identifying information for certain types of works, such as unpublished fine art). For most published textual works, the deposit requirement is two copies of the best edition. Because the deposit is public information, registration of copyright in a work is generally inconsistent with maintaining the work or its content as a trade secret. Note, however, that there are special rules for depositing computer software, which may enable the copyright owner to register copyright while continuing trade secret protection. Registration may be made at any time within the life of the copyright. A copyright registration is effective on the date the U.S. Copyright Office receives all required application items notwithstanding how long it takes to process the application. b. Copyright Notice It is advisable but not required for copyright owners to affix a copyright notice to each copy of their work. The copyright notice consists of three elements: the word copyright, copr. or the copyright symbol ; the year of first publication; and the copyright owner s name. Notice can prevent inadvertent infringement and prevent an infringer from mitigating damages by claiming innocent infringement. c. Work Made For Hire 4

5 In most cases, the person who creates a work is presumed to be the owner of the work and to hold copyright in the work; however, there is an exception when a work is made for hire. A work made for hire arises in two situations. The first is in an employeremployee relationship. A work created by an employee within the scope of his or her employment is considered a work made for hire and ownership of the work vests in the employer. The employer may be a firm, an organization, or an individual. The second situation in which a work for hire may be created is when all three of the following conditions are met: 1) a work is specially ordered or commissioned, 2) the work falls into one of the nine categories listed in the statute, 17 U.S.C. 101 (e.g. a contribution to a collective work, part of a motion picture or other audiovisual work, a translation, etc.), and 3) the parties have a signed written agreement stating that the work will be considered a work made for hire. Note that independent contractors hired to create a copyrightable work are not employees for purposes of copyright law. Therefore, it is absolutely imperative that a company engaging an independent contractor enter into a contract stating precisely who will own the rights to the work. If the company is intended to be the owner, the parties must set forth the assignment in writing. It is worth noting that the definition of employee is not as clear cut as it might seem. So, regardless of whether the author is an employee or an independent contractor, a written agreement is usually advisable to clarify expectations between the parties and, where applicable, to vest ownership in the company. For more information, please see Works Made for Hire under the 1976 Copyright Act, published by the United States Copyright Office. d. Duration of Copyright Protection Copyright protection remains vested in the author for the duration of the copyright unless transferred by written assignment. The duration of copyright protection depends upon the identity of the author or authors, when the work was created and when the federal copyright protection was first obtained. Generally, for works created on or after January 1, 1978, the following terms apply: A work of an individual author is protected for the life of the author plus 70 years. Joint works prepared by two or more authors are protected for the life of the last surviving author plus 70 years. Anonymous works, pseudonymous works and works made for hire are protected for 95 years from the date of publication or 120 years from the date of creation, whichever is shorter. Additional information about copyrights and the registration process can be found at 5

6 3. Trademarks and Service Marks A trademark may be any word, name, symbol, design or device or any combination thereof used by a party to identify its goods or services and to distinguish them from those of other providers. Trademarks and service marks are essentially identical, except that trademarks are used to identify the source of goods sold, and service marks are used to identify the source of services offered. Ownership of a mark begins when it is used in commerce in connection with goods and services so that consumers begin to associate or identify it with a particular source. Trademarks need not be registered with the United States Patent and Trademark Office in order to be protected. A trademark may be protected under the common law or state law. The benefits of registration will be discussed below. a. Selection of a Trademark The selection of a trademark should be carefully considered. The level of protection against infringement of a trademark varies with the strength and uniqueness of the mark. Arbitrary or fanciful marks are the strongest type of marks because they bear no logical relationship to the underlying product. Often they consist of a coined name that has no dictionary definition. For example, Texaco for gas stations, Apple for computers, and Kodak for film and cameras are arbitrary or fanciful marks. Suggestive marks are weaker than arbitrary or fanciful marks because they convey information about the ingredients, qualities or characteristic of the goods or services provided. Examples of marks held to be suggestive are Citibank for banking services, Chicken of the Sea for tuna, and 7-Eleven for convenience stores. Descriptive marks are weaker and less defensible than suggestive marks. A descriptive trademark is a name that describes some characteristic, function, or quality of the goods. For example, Holiday Inn for hotels, All Bran for bran cereal and Chap Stick for lip balm are all examples of descriptive marks. Descriptive marks are not entitled to trademark protection without showing that the public associates the term with a particular provider of services, rather than just the services in general. Generic trademarks are not trademarks at all and are not enforceable. Generic marks actually denote the product itself. ( Visiting Nurses for a visiting nurse service.) An otherwise valid trademark can become generic if the consuming public continuously misuses a trademark to identify a generic class of products. For example, the terms aspirin, cellophane, and Murphy bed are all former trademarks that have become generic through public use as generic terms. Genericism is a valid defense to a trademark infringement claim. 6

7 Selection of a mark should be accompanied by a trademark search to determine whether someone else has already adopted or used a mark that is the same or similar to the one desired. Publications, both hardcopy and on-line, provide lists of existing trademarks, registered and unregistered, and there are businesses that specialize in trademark searches. These search resources are identified in the Resources section below. Actual and potential trademark conflicts should be avoided, in order to avoid the possibility of an expensive infringement lawsuit. Of even greater concern is the potential loss of the right to use a mark after considerable expenditures in marketing and advertising using the mark. b. Advantages of Trademark Registration The principal method of establishing rights in a trademark is actual use of the mark. In the U.S. (but not in most other countries), both federal and state law provides for the protection of unregistered common law trademarks. An individual or entity claiming common law trademark rights in a term may wish to use the symbol. Use of this symbol effectively alerts others to the user s claim of trademark rights in the term. Despite protection of common law trademark rights in the United States, registration of a trademark under federal and/or state law can be extremely useful. Federal registration of a mark is presumptive evidence of the ownership of the trademark and of the registrant s exclusive right to use the mark in interstate commerce, thus strengthening the registrant s ability to prevail in any infringement action. It also provides public notice of the registrant s claim of ownership as well as listing in the U.S. Patent and Trademark Office database, which could deter the adoption and/or registration of potentially infringing marks. Federal registrations may also be recorded with the U.S. Customs and Border Protection Service, which can aid registrants in preventing the importation into the U.S. of foreign goods that bear an infringing trademark. There are also less tangible advantages of registration, such as the goodwill arising out of the implied government approval of the trademark. While the advantages of state registration are not as extensive as federal registration, there may be some cases where it is advisable. For example, in situations where sales or services will occur only within a particular state, it would make sense to register at the state level. c. Federal Registration Process 7

8 Federal trademark registration requires that a trademark application be filed with the U.S. Patent and Trademark Office. For a step-by-step description of the trademark selection and registration process, see A federal application may be based on actual use of the mark, or on the applicant s intent to use the mark in the future. In general, the application must identify the mark and the goods/services with which the mark is used or is proposed to be used, the date of the first use, and the manner in which it is used. The application must be accompanied by payment of the requisite fee, a drawing page depicting the mark, and, for a use-based application, a specimen of the mark as it is actually used. The fee for filing depends on a variety of factors but begins at $275 per class. A current list of trademark fees is available at After the application is filed, it is reviewed by an examiner who evaluates among other matters, the substantive ability of the mark to serve as a valid source identifier and the possibility of confusion with existing marks. The examiner may ask questions to clarify various aspects of the application. The applicant must timely respond to any questions. Additionally, the examiner may reject the application and the applicant may respond with reasons why the examiner should reconsider. If the examiner makes a final rejection of the application, the examiner s decision can be appealed to the Trademark Trial and Appeals Board. An adverse decision by that body can be appealed to federal court. If the application is approved, the mark is published in an official publication of the Patent and Trademark Office ( Opponents of the registration have thirty days after publication, or such additional time as may be granted, to challenge the registration. If no opposition is raised, or if the opponent s claims are rejected, an applicant whose mark is already in use receives a certificate of registration. An applicant whose trademark is proposed for registration before actual use receives, upon approval of the application, a notice of allowance. An applicant who receives a notice of allowance must within six months of receipt of the notice furnish evidence of the actual use of the trademark or file an extension, which will give the applicant another six months to claim actual use. Up to five extensions may be filed. Once the applicant has provided evidence of actual use, the applicant is then entitled to a certificate of registration. Failure to furnish evidence of the actual use of the mark within the time allowed results in rejection of the application. An applicant using an unregistered mark should consider adding a trademark notice to its mark consisting of. This notice will alert others that the user is asserting trademark rights in the mark. Once the mark has achieved federal registration, the symbol 8

9 should be used. (The symbol cannot be used with common law or state-registered marks.) d. Post-Certificate Federal Procedure A certificate of trademark registration, issued by the Patent and Trademark Office, remains in effect for ten years. However, by the end of the sixth year after the date of registration, the owner must file an affidavit of use, attesting to the fact that the mark is still in use, and pay an additional fee to keep the registration alive. The owner must make the same filing by the end of the tenth year after registration to renew the mark for an additional ten-year term. The window during which both of these filings must be made for the trademark to avoid cancellation is one year prior to the filing due date or during a 6-month grace period immediately after the filing due date. For example, if a trademark was registered on January 1, 2009, the owner could file the 6-year filing between January 1, 2014 and June 30, 2015 and the 10-year filing between January 1, 2018 and June 30, After at least five years of continuous use of a trademark following receipt of a certificate of registration, a registrant can seek to have the status of the mark declared incontestable. This elevates the registration from presumptive evidence of the registrant s exclusive right to use of the mark to virtually conclusive evidence of exclusive right. To do so, the registrant must furnish the Patent and Trademark Office with a declaration attesting to continuous use of the mark for at least five years. Additionally, there must not be any outstanding lawsuit or claim that challenges the registrant s right to use the mark. e. State Law & State Registration Process State trademark registration is typically less expensive and faster than federal registration. It is also typically easier. At the federal level, each application is scrutinized by an examining attorney for deficiencies and conflicts with other marks. Most states do not have the resources to provide such a rigorous examination process. While the state registration process offers advantages, the protections provided are limited. State registration generally only protects a mark in the geographic area in which it is in use. Despite this limitation, if an organization is operating solely within one state, state trademark registration may be good alternative to federal registration and can be helpful as a way to put others on notice that the mark is in use. Protection of registered trademarks in Nevada is through NRS Chapter 600. To register a mark, the applicant must submit a trademark application that may be found on the Secretary of State s website along with a fee to the Secretary of State. The fees start at $100 for a new registration. The application may be found on the Secretary of State s 9

10 website at: Applicants may not register marks that are likely to cause confusion, mistake, deception or disparagement. When a mark has been accepted, the Secretary of State s Office will provide the applicant with a certificate as evidence of registration. Registrations are effective for a period of five years, and may be renewed in successive five year terms by submission of a form provided by the Secretary of State within 6 months of the expiration of the term of registration. f. Enforcement Once a trademark is registered, some form of enforcement against infringers usually is necessary because protection can be lost through acquiescence or longstanding inattention. One protection strategy is to appoint a person or persons to monitor the trademark registers (federal and state) and the Internet and to attend industry trade shows to discover any infringing marks. In addition, periodic searches of similar marks can be made, much like the search conducted when seeking to register or use a new name or mark. The same search companies have watch services that they will perform for trademark owners. (See Resources section below.) If the owner of a mark identifies a potential infringer, the owner should carefully research the nature and scope of the potential infringement. Not only could the potential infringer s use pre-date the owner s own use (and possibly create rights superior to the owner s rights), but the use also may be distinct enough in terms of trade, market area, or geography to preclude infringement. The ultimate test, made up of several factors, is whether there is a likelihood of confusion between the two marks at issue. If litigation does become necessary, the owner of the mark may have the following remedies available to it: (1) an injunction against threatened or actual infringement; (2) damages for lost profits and lost reputation or goodwill; (3) enhanced damages if the infringer s conduct was willful and malicious; and (4) costs and reasonable attorneys fees under exceptional circumstances. It is also possible to challenge federal applications in the U.S. Patent & Trademark Office apart from an infringement action, the sole remedy of which is the refusal of such applications. Additional information about trademarks and the registration process can be found at 4. Trade Names A trade name is distinguishable from a trademark in that a trade name may identify not only goods and services, but also the business of and/or goodwill of an organization as a whole. 10

11 To the extent a trade name is also used as a trademark, it can be registered and protected as a trademark at the federal and state levels. Trade names are otherwise governed by state law and not covered by federal statutes. Under state law, trade names are sometimes referred to as DBAs (doing business as) or fictitious business names. Persons conducting business under a fictitious business name typically must make one or more filings with the state and/or city in which they are doing business. a. Nevada Filing Requirements & Fees In Nevada, trade names and trademarks are governed under the same body of law. The law does not distinguish between the two in registration, filing requirements, or actions for infringement. In Nevada, trade name means a word, symbol, device, or any combination of them, used by a person to identify his business, vocation or occupation and distinguish it from the business, vocation or occupation of others. The right to use a trade name belongs to the party that first uses it in connection with their business. There is a central registry of trade names that can be checked prior to filing at: b. Actions for infringement under Nevada Law Under Nevada law, a plaintiff in a trade name or trademark infringement case must establish that 1) it has a protectable right, and 2) that right has been infringed. If a mark is registered, it has the presumption of being protectable. If the mark is not registered, the level of protection depends on the mark s distinctiveness and strength. To prove the plaintiff s right has been infringed, the plaintiff must show the infringer s use of the mark is likely to confuse customers. The court considers seven factors in determining whether the infringer s use is likely to confuse customers: The degree of similarity between the trade names, including appearance, pronunciation, and suggestion of the trade names; The similarity of services offered by the users; The marketing channels used by the junior and senior users; The evidence of actual confusion; The strength of the senior user s name; The intent of the junior user in adopting the trade name; and The degree of care likely to be exercised by purchasers. 11

12 In Nevada, a court may grant injunctive relief to restrain the use, sale, manufacture, or display as necessary to prevent further infringement. 5. Trade Secrets In disputes between private parties, the protection of trade secrets is largely a distinctly statecontrolled area. Trade secret protection can be of potentially infinite duration; it exists for as long as the secrecy of the trade secret is maintained. State law varies as to whether a trade secret owner is required to make continuous use of a trade secret in order to receive protection. As detailed below, federal law provides criminal and civil penalties for misappropriation of trade secrets in appropriate circumstances. a. Definition of a Trade Secret Many states have adopted some variation of the Uniform Trade Secrets Act, which protects information that (1) derives economic value from not being known to the public and (2) is the subject of reasonable efforts to maintain its secrecy. A trade secret can include a business formula, compilation, pattern, program, device, method, technique, or process which, though neither copyrighted nor patented, is used in the conduct of the owner s business, is not disclosed to the public, and provides the owner with some competitive advantage. The following factors will likely be considered in determining whether a trade secret exists: The extent to which the information is known outside the owner s organization; The extent to which it is known by employees and others involved in the organization; The extent of measures taken by the owner to guard the secrecy of the information (e.g., labeling the information Trade Secret or Confidential, advising employees of the existence of a trade secret, limiting access to the information within the company on a need-to-know basis, and controlling access to company premises); The economic value of the information to the owner and the owner s competitors; The amount of effort or money expended by the owner in developing the information; and The ease or difficulty with which the information could be independently acquired or duplicated by others. No one factor is dispositive. Some information does not qualify for trade secret protection, including publicly available information, general industry skills and knowledge, and abstract goals or ideas. 12

13 b. Misappropriation of Trade Secrets Misappropriation of a trade secret occurs when a person acquires the trade secret of another by means which the person knows or has reason to know constitute improper means, or when a person discloses or uses the trade secret without the express or implied consent of the trade secret owner. The Uniform Trade Secrets Act provides for injunctive relief if a trade secret is misappropriated or there is a threat that a trade secret will be misappropriated. The Uniform Trade Secrets Act also provides for awards of monetary damages, covering both actual loss and unjust enrichment caused by the misappropriation. Absent proof of actual loss or unjust enrichment, a reasonable royalty may be awarded. If the misappropriation is willful and malicious, the court may award punitive damages of up to twice the above-mentioned damages and attorneys fees. If a misappropriation claim is made in bad faith, a court may award attorneys fees to the accused misappropriator. Pursuant to the Uniform Trade Secrets Act, misappropriation is not limited to the initial act of improperly acquiring trade secrets. The use and continuing use of the trade secrets is also misappropriation. It is also noteworthy that the Uniform Trade Secrets Act does not require that the defendant gain any advantage from disclosure of a trade secret in order for misappropriation to occur. It is sufficient to show disclosure of the trade secret with actual or constructive knowledge that the secret was learned under circumstances giving rise to a duty to maintain its secrecy. It is important for organizations to take significant steps to keep sensitive information secret; an organization may not claim misappropriation of a trade secret if there was no effort taken to treat the information as secret. Some practical means by which a company can help avoid misappropriation of its secrets include reminding employees about confidential communications, asking employees to sign confidentiality agreements, and marking sensitive communications with the word secret or confidential. A trade secret owner can defeat its own rights by disclosing the trade secret without a confidentiality obligation, losing knowledgeable employees without a confidentiality obligation or non-compete agreement, lax security, or applying for a patent and allowing the application to publish but not receiving the patent. In some states and under the federal laws described below, one may also be criminally liable for the intentional misappropriation of a trade secret. Under the Uniform Trade Secrets Act, an action for misappropriation must be brought within three years after the misappropriation is, or reasonably should have been, discovered. The statute of limitations may vary by state. 13

14 A trade secret is not protected against discovery by fair and honest means, such as independent invention or reverse engineering. As a general principle, the more difficult the information is to obtain and the more time and resources expended by the employer in gathering it, the more likely it is that a court will find such information to be a trade secret under the Uniform Trade Secrets Act. c. Protect Yourself Against Accusations of Misappropriation Savvy companies take steps to proactively protect themselves from claims of trade secret misappropriation. Such steps can include: Screening incoming employees for confidentiality obligations; Responding (internally and externally) to cautionary letters from the former employer of a new employee; Researching state law concerning enforceability of non-compete agreements before hiring; Keeping documentation of the company s scientific knowledge and independent development; and Limiting the amount of third-party information that the company agrees to keep confidential. Companies should think ahead about how they acquire information, who owns the information, and what duties they have to the information s owners. d. Federal Trade Secrets Law Two federal laws may help protect against misappropriation of trade secrets: the Economic Espionage Act, 18 U.S.C , and the Computer Fraud and Abuse Act, 18 U.S.C The Economic Espionage Act (EEA) makes it a federal crime to misappropriate trade secrets and provides protection against both domestic and foreign conduct. The EEA criminalizes misappropriation of trade secrets in two main areas based upon who benefits from the conduct. Section 1831 criminalizes conduct that will benefit a foreign government, foreign entity, or agent of either. Section 1832 criminalizes trade secret misappropriation for the economic benefit of anyone other than the owner, provided the misappropriation is related to a product placed in interstate or international commerce. The Computer Fraud and Abuse Act (CFAA) provides another federal means for protecting trade secret rights by criminalizing certain activity where a computer is used. As it can be applied to trade secret information, the CFAA makes it a crime to intentionally access a computer without authorization or exceed authorized access and 14

15 obtain information from any protected computer (a computer used in interstate or foreign commerce or communication). The CFAA also makes it a crime to intentionally access a protected computer without authorization and cause damage or loss. Since computers are used everywhere in business today, with a substantial number connected to the Internet, the CFAA covers most computers. Notably, the CFAA places no restriction on what constitutes information. Therefore, the sometimes difficult issue of proving the existence of a trade secret does not arise. Damage includes any impairment to the integrity of information, and this has been interpreted to include conduct that compromises the secret nature of information. e. Nevada Trade Secrets Law Nevada adopted the Uniform Trade Secrets Act in 1987 (NRS Chapter 600A). As provided by the Act, the common law of trade secrets continues to exist with regard to contractual law and civil liability not premised on misappropriation. In trade secret law, customer lists are a frequent area of dispute. The Nevada courts have held that whether a customer list is protected as a trade secret depends on: (1) the extent to which the information is known outside of the business and the ease or difficulty with which the acquired information could be properly acquired by others; (2) whether the information was confidential or secret; (3) the extent and manner in which the employer guarded the secrecy of the information; and (4) the former employee's knowledge of customer's buying habits and other customer data and whether this information is known by the employer's competitors. An employer that knowingly benefits from trade secrets its employee stole while working for a former employer may also be liable under Nevada s Uniform Trade Secrets Act. The Nevada Supreme Court has previously held a company liable for the actions of its managerial employee who stole trade secrets from a former employer. Additionally, Nevada is one of the few states that recognizes the theft of trade secrets as a crime. There are no reported court opinions of criminal trade secret theft in Nevada. 6. Patent Protection A patent is an intellectual property right granted by the United States government to an inventor. In exchange for public disclosure of the invention, the U.S. government conveys to the inventor certain property rights concerning the invention for a limited time period. The property rights include the right to exclude others from making, using, selling, or importing the invention. Patent rights are not affirmative rights to make, use, sell, and import their inventions, but rather the right to exclude all others from doing so. A valid patent forecloses 15

16 use of the patented invention by any other party, even if another party independently conceives of the identical invention. a. United States Patents Patents are governed exclusively by Federal law (Title 35, U.S.C.), although any agreement to license a particular patented invention is a contract and will be governed by state law. The United States Patent and Trademark Office (USPTO) is the federal agency that promulgates rules, grants patents and through which filing and prosecution of patent applications occurs. Patent rights conveyed by the USPTO are only enforceable within the borders of the United States; therefore, a patent owner may consider filing foreign patent applications if patent protection outside the United States is desired. Other countries have similar processes and an inventor can obtain similar rights in other countries. b. Foreign Patents Patents are generally applied for on a country by country basis. Under the Paris Convention, which has been signed by almost every industrialized country, a foreign patent application corresponding to a United States patent application will be treated as if it were filed on the same day as the United States application, so long as the foreign counterpart is filed within one year. There are several options for filing a foreign patent application, including filing the foreign application directly with the patent office of the country in which protection is desired, or filing through a regional patent office (such as the European Patent Office, which can issue a bundle of patents that can be enforced in any member country that is designated in the filing). Another option is filing through the the Patent Cooperation Treaty (PCT), which came into force in The PCT is the international treaty allowing an inventor to file a single international application. This application may be used subsequently to obtain a national patent in one or more countries as long as they are members to the treaty. As of 2012, 146 countries adhere to the treaty, including the United States. To find out more consult World Intellectual Property Organization (WIPO) website: c. Types of Patents There are three types of patents issued by the United States Patent Office: utility, design, and plant. Although the procedures for each are similar, each type has specific requirements. For example, both plant and design patents are limited to one claim, whereas, utility patents may have an unlimited number of claims. 16

17 i. Utility patents include patents granted for inventions relating to any useful and new process, article of manufacture, machine, or composition of matter, or any useful and new improvement thereof. It generally governs the functional aspects of a machine, manufacturing process, article made, method of use, or composition of matter. The term of protection for a utility patent is 20 years from the date the patent application is filed. ii. iii. Design patents cover ornamental features of a manufactured item and may be granted to any person who creates a new, non-obvious, original, and ornamental design for an article of manufacture. This is separate and distinct from the functioning parts and features of a manufactured item, which would instead be covered by a utility patent. Design patents contain only one claim, which itself describes the ornamental design or appearance of an article. The term of protection for a design patent is 14 years from the grant date. The numbers of all design patents begin with D to designate them as design patents. Plant patents encompass asexually reproducing plants and may be conveyed to any person who invents or discovers and reproduces asexually a new and distinct type of plant. (Sexually reproduced varieties are also entitled to certain legal protection upon certification, pursuant to the Plant Variety Protection Act of 1970.) Plant patents have only one claim and their term is 20 years from the date of filing. d. Who can file for a patent Any natural person who invents a machine, composition of matter, a process, an article of manufacture or an improvement thereof can file a patent application. The person filing must be the inventor, with certain specific exceptions. Corporations are not natural persons; therefore, they cannot file for an invention, even if it was created by an employee. e. Patent Professionals To obtain a patent an inventor may file and prosecute his own application, pro se, or be represented by a registered patent professional. Registered patent professionals who are attorneys are referred to as patent attorneys, while registered patent professionals who are not attorneys are referred to as patent agents. The United States Patent Office maintains a listing of registered patent professionals ( No person other than a registered patent professional may represent an inventor before the USPTO. To become a registered patent professional one must have a requisite amount of scientific or engineering education and pass a USPTO-administered examination. The reasoning is that to effectively establish and protect an inventor s property rights the professional must 17

18 have a sound knowledge of science or engineering (and have a minimum level of skill in patent law). Importantly, a patent professional who is not a lawyer cannot represent an inventor in other legal matters even regarding the patented invention. For example, a patent agent (a patent professional who is not an attorney) may not represent an inventor during licensing negotiations, license drafting and/or any litigation even if it involves the same patented invention. f. Ownership of the Patent (and/or Patent Application) In general, an inventor owns all rights to a patent application on which they are listed as an inventor as well as to any resulting patents which issue from the patent application. Patent rights are freely alienable and therefore patent rights may be sold, purchased, or licensed as if they were any other property right. An assignment (sale) of a patent transfers all rights, title and interest in the patent for the full life of the patent to the assignee (new owner). This means that the assignee has the right to exclude all others from making, using, importing, or offering to sell the patented invention. Patent applications may also be assigned. With respect to inventions made by an employee, the employer may claim ownership in the invention, depending on the circumstances of its conception and development, the employment agreement and whether the invention was within the scope of the employee s employment. To avoid any uncertainty, however, employees should be required to sign an employment agreement that includes a covenant to assign all inventions to the employer and/or a prospective assignment of any and all inventions which are made within the scope of employment. Usually, this covenant and/or prospective assignment will result in the employer being the sole owner of the patent. g. Patentability i. Subject Matter Patentable subject matter is specified in 35 USC 101. According to the statute, patents may be granted to anyone who invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof. The United States Supreme Court has stated further that Congress intended patentable subject matter to include anything under the sun that is made by man. Diamond v. Chakrabarty, 447 U.S. 303 (1980). However, certain things are not patentable such as laws of nature (laws of relativity or gravity), things that occur naturally, and ideas or suggestions. Patent law has been developed to reward the invention of new machines, processes, and compositions of matter, not just the idea or suggestion of one. 18

19 Patentable subject matter includes new and useful machines, compositions of matter and processes. Machines include, for example, a flat screen TV or a copy machine. Compositions of matter may be a new drug or a new type of plastic. Processes include both the method of making something (e.g., a drug, a plastic, or a baseball bat) and the method of using something (e.g., a drug for the treatment of asthma or a plastic to make a sturdier window). An improvement falling within any of these classes may also be patentable. Taken together these categories of subject matter include practically all things that can be made by man and the methods for making the products. One may seek to obtain patent protection on computer software as a machine, computer program product, or process. Similarly, one may obtain patent protection on new and non-obvious business methods, particularly if implemented as a computer-related invention. It should be noted, however, that the question of what is or is not patentable, particularly with respect to computer software, business methods, and computer-related inventions in general, is a difficult one and the standard for what is patentable subject matter has been the subject of several recent cases in the United States Supreme Court. ii. Novelty, Non-obviousness, and Usefulness The patent law specifies that an invention must be new and useful. Therefore, even if an invention fits into one of the appropriate subject matter categories, it must meet the novelty, non-obviousness, and usefulness requirements. The new prong of the analysis is met if the invention is novel and not obvious. In practice, determining novelty and non-obviousness can be very challenging and is best done by patent counsel. The useful prong of the analysis is met if the invention has utility, actually works, and is not frivolous or immoral. That is, the claimed invention as a whole must accomplish a practical application; it must have a concrete and tangible purpose. h. Determining Patentability In order to determine novelty and non-obviousness, and hence, patentability of an invention, it is often useful to search the records of the United States Patent Office, WIPO and Google Patents. On these websites, one may examine all U.S. patents, published applications, many foreign patents, and a large number of technical publications often referred to as references. A patent search is customarily performed by a patent professional. A patent attorney or patent agent may be asked to render an opinion regarding the patentability of a particular invention. In this way, an inventor can then make an informed decision as to whether to proceed with the cost of an actual patent 19

20 application. Note that any reference determined to materially affect patentability must be disclosed to the USPTO. i. Patent Application Process The patenting process can be broken down into two parts: 1) filing the application; and 2) prosecuting the application. i. Filing of the application Patent applications must be filed with the United States Patent Office and may be filed either as a provisional application or a non-provisional application. Filing a provisional application is a quick, simple, and cost effective method to officially file an application with the Patent Office and thereby obtain a filing date (discussed below). Provisional applications are not examined; instead they act simply as a place holder for one year. Provisional patent application requirements are less stringent than those for a regular patent application. The oath or declaration of the inventor and claims are not required and the application is held for the 12-month period without examination. At the end of one year, the provisional application expires, and if a nonprovisional application has not been filed prior to the expiration of the provisional application, then the filing date of the provisional application is lost. In order not to lose the filing date of a provisional application, when filing a subsequent non-provisional application an applicant claims priority back to the filing date of the original provisional application. (Note that in order to file a design patent which claims priority to a non-provisional application, the design patent must be filed within six months of the filing of the non-provisional application.) Non-provisional applications are subject to examination by the USPTO. To file a complete non-provisional patent application one must file a specification, including at least one claim, an oath or declaration and appropriate fees. The specification is a description of what the invention is and what it does. The specification can be filed in a foreign language provided that an English translation, verified by a certified translator, is filed within a prescribed period. The oath or declaration can be filed with the specification or within a prescribed period thereafter. The oath or declaration certifies that the inventor believes himself or herself to be the first and original inventor. If the inventor does not understand English, the oath or declaration must be in a language that the inventor understands. The application must include drawings if drawings are essential to understanding of the invention. Lastly, the appropriate fees must be included or paid within a prescribed period. The fees for filing a standard utility application range from approximately $500 to $1,000 depending upon whether the filing 20