Intellectual Property Protection
As the name implies, intellectual property includes those things that can be viewed as creations of your mind that you believe to be valuable enough to protect. The major forms of intellectual property protection include: copyrights, patents, trademarks (for products) or service marks (for services), and trade secrets. Each will be discussed in this brief appendix.
All forms of intellectual property protection grant the holder a virtual monopoly with respect to the property, with some conditions and term limitations. Nonetheless, you should be aware that the intellectual property protection is of no use to you if you cannot afford to take the legal action to enforce your rights to the property.1 Certainly, for many, the mere fact that the copyright or patent or other seal is shown provides a deterrent to infringement. However, intellectual property infringement is all-too-common, so you need to be prepared to take action to protect your property, if needed.
Copyrights
Original works of authorship such as books, articles, poetry, software, and the like, are eligible for consideration for copyright protection. There are some who are of the opinion that it is not necessary to actually seek a formal copyright because the copyright law provides that material is copyrighted when you create it. However, why subject yourself to a potential challenge by someone who somehow obtained a copy of your work and decided to claim it as his or her own? Registering a copyright within five years of publication is regarded by courts as legally sufficient evidence of authorship.
The copyright process is far more user-friendly today than it was several years ago. Today, for example, you can provide a CD rather than the sheet music to register your work. However, copyright fees have increased markedly over the years—growing from $5, thirty years ago, to $35 for electronic filing of a basic copyright claim today. The fee structure for copyrights varies based upon the type of material that is being copyrighted. Your document and associated fees should be paid to the U.S. Copyright Office.2
Copyrights are granted to authors of original work for the life of the author plus 70 years. That is why the famous I Have a Dream speech of Dr. Martin Luther King will move into the public domain in the year 2038 (he died in 1968). Up until that time, the managers of his estate (presumably his family) will maintain legal control of the speech and determine by whom and how it is used, as well as at what price, if desired. That is how a copyright works.
There are some limitations associated with a copyright, however. One of the most important of these limitations is the fair use doctrine, which allows copyrighted work to be used for certain purposes, such as criticism, teaching, research or scholarship, and news reporting. Since it is not totally clear what the limits are for knowing when someone is properly using portions of a copyrighted work under the fair use doctrine and when someone is actually infringing on a copyright, court decisions over time have provided the current level of understanding of what the lines are. As government documents may not be copyrighted, following is a list of four criteria, taken directly from the website of the U.S. Copyright Office, that you should use to make an informed decision about whether an intended use of copyrighted work might result in violating the intent of the copyright:3
1. The purpose and character of the use, including whether such use is of 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
4. The effect of the use upon the potential market for, or value of, the copyrighted work
A Few Words About Innovations
Before addressing the types of patents, a brief discussion of forms of innovation should prove informative for you, as some of these can easily serve as the basis for seeking patent (or other intellectual property) protection.
There are four types of innovation: invention, extension, duplication, and synthesis.4 Following is a brief discussion of each.
Inventions
An invention is the creation of something new. If you are not an inventor, do not become concerned. Most entrepreneurs do not get started by using inventions. However, inventions can sometimes be very profitable if commercial potential is great and resources are available to move the product from prototype to the marketplace. Alexander Graham Bell invented the telephone and developed and controlled Bell Laboratories. Ma Bell, as it (and AT& T) came to be known in U.S. vernacular, held a monopoly over the telephone industry until it was broken up in 1984 by the U.S. District Court for the District of Columbia, led by Judge Harold H. Greene. This case illustrates the point that a patent on an invention (the premier form of innovation) does afford considerable protection that can allow an inventor to amass great power and wealth. Yet, when that owner’s control of the invention interferes, unacceptably, with competition, the monopolistic enterprise is likely to run risks similar to those experienced by AT&T.
Extensions
Extensions are innovations to an existing product or service that move that product or service along to a new level. For example, in the department store business, James Cash Penney produced an extension by establishing the first nationwide chain of department stores. The point is that department stores existed before Penney established the JC Penney chain. He simply moved the concept to a nationwide chain level. A similar example would be Ray Kroc, who established McDonald’s as the nation’s first fast-food restaurant chain. Kemmons Wilson is yet another example, as Wilson took the existing concept of a motel and used it to establish Holiday Inns as the first nationwide motel chain.
Duplication
A typical way of identifying duplication is to look for the owner’s name on the company or the owner’s presence in advertising. This signifies the owner’s high level of involvement in the business and willingness to stand behind the products and services provided by that business. Examples include the late Dave Thomas of Wendy’s (Dave was prominently featured in Wendy’s commercials, and instead of using his own name, he named the company after his daughter).
Synthesis
Synthesis is found when a number of separate products or services are combined into a single product or service offering. Examples include watches that also have calculating functions, take blood pressure readings, and the like. The individual products are not new; but, the combination of product functions can sometimes make for new and highly desirable products for consumers.
There are several other innovation models and typologies.5 You are encouraged to review these as sources that can be helpful to you by inspiring ideas for your business’s products and services.
Patents
A patent is a form of intellectual property protection that covers product or service inventions and innovations. There are three conventional types of patents: utility, design, and plant patents. An overview of each will be provided here (along with a brief description of a more recent patent type, the business method patent). All initial descriptions of patent types were drawn directly from the website of the U.S. Patent and Trademark Office (USPTO)6 and are shown in italics.
Utility Patents
Utility patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or compositions of matters, or any new useful improvement thereof. For example, for years, Kodak worked to find a method of producing instant photographs that could compete with but not infringe upon the patent of Polaroid. After some effort, the Kodak Instamatic camera was introduced to the market and began competing quite favorably with Polaroid. However, Polaroid sued, claiming patent infringement. While the case remained in the courts for several years, ultimately, Polaroid prevailed. The result was that Kodak was forced to recall all of its Instamatic cameras and remove the product from the market. The financial penalty that Kodak paid to Polaroid was just under $1 billion.
Duration: Up to 20 years from the date of filing of the patent application, subject to payment of maintenance fees. Utility patents represent about 90% of recent patents.7
Design Patents
Design patents may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture. For example, the incandescent light bulb developed by Edison—or the turbo direct injection engine developed by Volkswagen— would qualify for this type of patent (i.e., if Volkswagen was a U.S. company). Design patents also make it possible for clothing designers to protect unique (nontrademark) features that make their products distinctive, such as signature buttons on expensive jackets or custom wheels for luxury automobiles.
Duration: Design patents last for a period of 14 years from the date the patent is granted (soon subject to change). There is no requirement to pay maintenance fees.
Plant Patents
Plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant. Efforts to cross-breed plants have resulted in new plant varieties “(e.g., a longstanding myth is that the ancestors of Albert Broccoli, an Italian American born in Queens, crossed cauliflower and pea seeds and produced broccoli,8 which is now an American staple [and, just as an interesting aside, Albert Broccoli also produced the 16 James Bond movies, which probably has contributed to perpetuation of the myth]).However, a number of other plants have been produced by cross-breeding (e.g., tea roses, clementines, etc.) and such new plant varieties may be candidates for patent protection, given the ability to meet specific requirements imposed by the U.S. Patent and Trademark Office.
Duration: Up to 20 years from the date of filing of the patent application. There is no requirement to pay maintenance fees.
Business Method Patents
A fourth classification of patent is also listed on the USPTO website: the business method patent. However, this form of patent is not treated as a separate category up to this point but as a process patent to be handled under conventional patent forms. The growth in this type of patent application is associated with the rapid increase in e-commerce and use of the Internet.9 As an example, Amazon.com received a patent for its one-click process that allows customers to be able to place an order simply by clicking a button. Efforts to give a company like yours a competitive advantage in its marketplace might well meet with similar success. Information on this type of patent may be found on the USPTO website.10 You can also find the guidelines for filing a patent on the USPTO website,11 along with relevant forms and fee information.
Trademarks and Service Marks
A trademark is used to identify the products, or services in the case of a service mark of an organization, for purposes of commerce. The trademark is a word, slogan, symbol, or sound that is unique to the organization owning it and exists for the purpose of distinguishing its products from those of others. Most PC’s open with the colorful Windows symbol and familiar sound, for instance.
A trademark search is necessary to ensure that you are not planning to use a trademark that is already owned by another entity. The USPTO website makes this process rather easy—at least at the federal level. You should also check with the state in which you do business in order to find out about trademarks in that state.
While the process for applying for a trademark is not difficult, you must use your trademark in order to keep it. Once you have received authorization to begin using the trademark (a trademark “allowance”–not the actual registration), you must use it within six months or request an extension that will allow you an additional six months to begin use. Otherwise, your application will be considered as having been abandoned and you will have to take action to revive it. However, after you receive the actual trademark registration, you must still be vigilant in order to maintain it. Trademarks can be cancelled or invalidated for the following reasons:
• Failure to file required documents and pay fees in a timely manner
• Lack of use for three consecutive years (abandonment)
• Allowing the trademark to develop generic use (e.g., people commonly referring to a Jacuzzi rather than a jetted tub, or asking for a Kleenex rather than a facial tissue, or a Xerox copy rather than a photocopy)12
• Failure to challenge others’s use of the trademark
• Significant modification of the trademark such that the original trademark and the modified version may be viewed by consumers as distinguishable.13
The UJSPTO has a very user-friendly step-by-step explanation of the electronic filing process for trademark regisration.14 You are also encouraged to view the 42-minute video that gives you a very good understanding of trademarks and why these are important to you as a business owner.15
For more detailed information on intellectual property, you are encouraged to read a recent book on the subject by Scott Shane.16
Trade Secrets
Although there is no separate category for trade secrets among federal intellectual property protections (as is the case for patents, copyrights, and trademarks), you can protect your products by legally keeping some secrets. For example, if you make a product that requires divulging ingredients (e.g., a food item), you can still preserve the unique quality of your product by not disclosing how you combine and cook the ingredients. The same can be done for other products. In this way, you will be in compliance with regulations requiring you to show what ingredients were used while still ensuring that your competition cannot duplicate your product.