Published in the NH High Tech Council's newsletter (June 13, 2016)
Anyone from individuals to companies of all sizes may have a range of intellectual property (“IP”) considerations. Even where you do not specifically intend to create intellectual property, you and/or your company may have protectable rights or interests to consider. You should also be wary of the possibility that you may be using and even unintentionally infringing the intellectual property of others. From trademarks to copyrights to patents to trade secrets, it is important to understand each distinct category of intellectual property as well as the respective protections and limitations that surround them.
Therefore, the goal here is to provide a general baseline of understanding of the different types of intellectual property and help you to begin to identify and understand your property as well as the relevant rights, protections, and risks. Subsequently, you will likely find it worthwhile to further explore certain categories in detail.
Trademarks can most simply be described as being a source identifier for goods and services. Trademarks/service marks, collectively referred to as trademarks for convenience, typically protect brand names, logos, and sometimes slogans on goods and services. Although a trademark may be a number of identifying or distinguishing features, it is most commonly a word, phrase, and/or image associated with a product or service. The manner in which a trademark is used is key in determining trademark rights.
When developing a brand, a trademark should be chosen carefully. Descriptive names, surnames, and geographic names should be avoided. The strongest and most protectable marks are typically arbitrary or fanciful, including made-up words or words that have no relevance whatsoever to the goods or services provided. Although performing a trademark search is not required by law in the United States, it is critical to clear/search a potential mark prior to adopting the mark. This can save you a great deal of time, money, and headaches down the road.
There are three levels of trademark protection:
- Common Law: simply applying a mark to a product or using a mark to provide a product/service creates common law trademark rights. However, the rights are limited to the geographic area.
- State Registration: every state permits registration of a trademark at the state level. However, the rights are limited to particular states where the mark is registered.
- Federal Registration (U.S. Patent and Trademark Office): while you can file a federal application based on intent-to-use (or actual use), in order to complete the registration process you must satisfy interstate/foreign commerce requirement, meaning that you are providing the branded goods/services in two or more states OR between the U.S. and a foreign country. A federal registration is perpetual if properly used/maintained.
A copyright is a form of federal protection that exists for published and unpublished “original works of authorship” when they become fixed in a tangible medium of expression. Copyright is created as soon as the work is fixed in a tangible medium; registration is not required.
Although the author of the work is generally the owner of the work, there is an exception for work-made-for-hire. Works-made-for-hire include work created by an employee within the scope of employment or work created by an independent contractor if certain conditions are met.
Unlike trademarks, copyrights do not exist in perpetuity. The term of protection for works created after January 1, 1978, is broken down as follows:
- Individual authors: life of author plus 70 years
- Joint authorship: 70 years after life of last surviving author
- Work-made-for-hire: 95 years from publication or 120 years from creation, whichever is shorter
A patent is an exclusive right to an invention. The patent system essentially aims to motivate inventors to disclose their technology in exchange for a limited-time monopoly on that technology. In the United States, the term of a new patent is usually 20 years from the date on which the application was filed in the United States.
There are three types of patents: Utility, which protect implementation of technological inventions; Design, which protect aesthetic or ornamental appearance of an object; and Plant, which protect new plant varieties. Patent rights are created only by filing an application with the U.S. Patent and Trademark Office and obtaining approval and issuance of the patent from the USPTO.
Benefits of patent protection include the right to exclude competitors, monopoly pricing on the technology, the opportunity to license the technology, access to additional technology through cross licensing, business assets (such as in funding and valuation), and use as a marketing tool (the ability to use the labels “patented” or “patent pending”).
Disadvantages of the patent process include the costs from start to finish, which can become very high, and the relatively short life of a patent at about 20 years. Furthermore, the applicant of a patent must make a full, enabling disclosure of the invention, which means complete loss of trade secret protection.
Trade secrets are any information that have value, are not readily ascertainable, and have been maintained as secret (as defined under the New Hampshire version of Uniform Trade Secret Act). Famous trade secrets include the formula for Coca-Cola, WD-40, and Lena Blackburn Rubbing Mud.
Unlike patents, trade secret rights are acquired upon creation and protection may last indefinitely. Such rights are subject to loss if the information is or becomes publicly known. Therefore, it is absolutely paramount that steps be taken to protect the information, such as with non-disclosure agreements, restricted access (”need-to-know”), labeling the information as confidential, non-compete/non-solicit agreements, and other high tech and low tech strategies (lock and key, document shredding, passwords, monitoring activity, etc.).
Bear in mind that the biggest threats to trade secrets are actually employees and former employees. Therefore, ideally, protection should be made a part of the company culture, starting from the interview process all the way to the exit interview and beyond.
Beyond recognizing and taking steps to protect your IP through registration and/or other channels, you should monitor your IP as well as the relevant marketplace/industry for instances of infringement.
Although there are a number of factors to consider and options to take in addressing infringement, below is a quick and broad breakdown of what constitutes “infringement” of trademarks, patents, and copyrights, as well as some of the possible remedies respectively.
- Trademarks: use of the mark or similar mark in connection with sale, offering for sale or advertising of goods or services, which cause likelihood of confusion.
—Remedies: injunctions; monetary remedies; treble damages and attorneys’ fees for willful infringement and exceptional cases
- Patents: if any one claim of a patent is infringed, then the patent is infringed.
—Remedies: injunctions; monetary remedies (the products must be marked, or there must be actual knowledge of infringement); attorney’s fees in exceptional cases
- Copyrights: there must be an owner of a valid copyright and actual copying of constituent elements of the work that are “original.” The question is whether the accused work is “substantially similar” to the copyrighted work. Note that registration is required before commencing litigation
—Remedies: injunctions; statutory damages or actual damages; court may award attorneys’ fees to prevailing party.
Catherine Yao is an attorney in the Corporate Department at McLane Middleton, Professional Association. She can be reached at [email protected].