What is Intellectual Property?
Most small business owners and entrepreneurs have heard of the phrase “intellectual property,” but very few actually understand how effectively using intellectual property can help increase their business’s value and fend off unfair competition.
It’s important to understand that in the United States, there are four (4) forms of intellectual property (all serving different areas) and there are six (6) ways to protect your intellectual property.
First, what is intellectual property? The World Intellectual Property Organization (or WIPO) defines intellectual property (or IP) as “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.”
Intellectual Property is not the same as Real Property. Real property usually refers to real estate or fixed property (such as land and buildings). And, IP should be contrasted with “property” in general, which applies to anything that belongs to, in the possession of, or in the control of someone.
Four Types of IP in the United States
The four (4) types of IP in the United States are:
- Patents. Patents convey an exclusive right to an inventor to manufacture, use, or sell an invention for a certain number of years. A “provisional patent” lasts for a year, and creates a filing date for an invention. “Utility,” “design” and “plant” patents offer protection for 20 years from the filing date for different types of inventions. Not just any idea can be patented. In order to obtain a patent, the invention must represent patentable subject matter, must be novel (i.e. some aspect must be new), must non-obvious (to someone knowledgeable about such matters), and must be useful (i.e. provides some identifiable benefit and is capable of use).
- Trademarks. Trademarks protect a “source identifying” mark from a “likelihood of confusion” in the marketplace within the borders of the United States. Almost all states provide “common law protection” for trademarks without registration, although registration at the State (and definitely Federal) levels provide additional benefits. Trademarks must not be generic (i.e. Auto for auto, and elevator for elevator cannot be trademarked, but auto for elevator and elevator for auto can), nor can they be descriptive (i.e. “Albuquerque Hamburgers” for a hamburger stand and “Chicago Optical” for an eyeglasses stand cannot be trademarked). The best trademarks are “suggestive” or “arbitrary.” Trademarks are intended to protect the public from misidentified sources of goods and services, therefore they can last forever provided the trademark owner submits proper and timely “affidavits of use” (every 5 years). Read more about trademarks in our previous article.
- Copyrights. Copyrights protect original works of authorship, which can include literary, musical, artistic, architectural and audiovisual works, as well as sound recordings. These categories are broad enough to capture unique user interfaces (at least the non-functional elements of UI), computer software and code, manuals, training materials, presentations, icons, logos and more. You must register a copyright to properly protect it: You cannot sue someone for infringing your copyright, unless it’s registered. Registration also permits statutory damages. Learn more about copyrights in our prior blog article.
- Trade Secret. Trade secrets protect the secrets of your business, that you treat as secrets. Think of the “Coke Formula.” They are not “registered” like the other forms of IP. They are defined by you. You need to mark secrets as secret. You need to limit who has access to your secrets, and you shouldn’t leave your secrets out and about for just anyone to see, take or learn about. You should have policies and procedures to control and maintain the secrecy of your secrets. You should put anyone with access to your trade secrets under contract to adhere to your policies and procedures regarding your trade secrets. If you work hard to maintain your trade secrets, most states will permit you to enforce your trade secrets as against anyone who violates your trade secrets. Trade secrets can include customer lists, contact information, recipes, methods, processes, procedures and more. If you are careless with your trade secret, you lose it. Learn more about trade secrets here.
Contracts Represent Another Way to Protect Your IP
Don’t forget the power of contracts. Whether you have a specific item or thing properly registered or protected doesn’t necessarily matter if you have the right parties under contract. A contract can define how parties are to treat your important assets, regardless of their actual or proper status or registration, and you can hold people accountable if they fail to abide by their contracted duties. For example it’s common to have employees, independent contractors and some vendors sign contracts that include “non-solicitation” clauses, that prohibit them contacting or soliciting or doing business with your employees, customers or partners.
As a business owner, you need to understand IP
You are strongly encouraged to talk with an intellectual property attorney for two reasons: First, what do you need to do, to protect your IP and prevent unfair competition from competitors stealing such important assets. Only a properly licensed attorney specializing in IP can help assess your IP and provide recommendations on how to protect your IP.
Second, you need to take prudent steps to prevent from running afoul of others’ IP. We’ll address this in our next blog article.
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