What is intellectual property and why does it matter?
All intellectual property rights are legal rights to exclude competitors
- Patents prevent others from using your inventions and the ideas behind inventions (methods, machines, compositions of matter, manufactured articles)
- Trade secret law protects information used in your business, such as customer lists, business processes, manufacturing methods, and similar information that is kept secret
- Copyright law protects, works of authorship such as software, written materials, and pictorial words
- Trademark law protects marks that designate source of goods or services—trade names, logos, tag lines, and the like.
Most forms of intellectual property allow a business to use these assets in a public way, while retaining competitive control. The decision among the various forms of intellectual property legal protection depends on the nature of the innovation, long- and short-term strategies of the business, and the circumstances of the given situation.
| Patent | Trade Secret | Copyright | Trademark |
| Inventions: machines, processes, articles of manufacture, compositions of matter, and improvements thereof
Protects the “idea,” no matter how embodied, even against independent re-discovery “Design patent” is a fusion of patent, copyright, and TM—not elaborated here |
Any information that is valuable and can be kept secret: business and manufacturing methods, customer lists, “know how”
Protects against wrongful use or misappropriation—industrial espionage, faithless employee, etc. |
“Original works of authorship:” written works, software, artistic works, architectural drawings, maps, etc.
Selection and organization, if there is minimal originality Protects against direct copying, not independent recreation |
Any mark, sound, device or trade dress that designates the origin of goods or services
Lets consumers know source of goods, and when similar goods come from similar sources and will be of similar quality. Protects consumers against confusion—counterfeiting, passing-off, innocent look-alike |
| Patent | Trade Secret | Copyright | Trademark |
| Things that are old, including naturally-occurring products
Ideas “in the abstract” Thus, a method of computing a time limit for an industrial process is not patentable, but controlling a machine based on that computation is. “Gut feel” expertise that can’t be put on paper |
Ideas that are disclosed by the product itself (e.g., most mechanical devices)—use patent instead
Ideas that are common knowledge in the field, or the general expertise that an individual had previously. Specific knowledge developed for the company is protectable. Software techniques readily accessible by decompilation; contract terms |
“Factual compilations involving no creativity—e.g., telephone directory
Facts, ideas, and processes. The written expression of a fact or idea is copyrightable (a specific map, the World Almanac, Romeo & Juliet), but not the underlying idea (other expressions of the same fact, plot, or process) Scenes a faire—“background” material that is essential to the field Functional instructions |
Generic or highly descriptive names—others have the right to sell competing goods and refer to them by names consumers will recognize
Functional designs: even for a distinctive design, protection is limited to the non-functional aspects and features Surnames Geographic terms—highly specialized rules |
| Patent | Trade Secret | Copyright | Trademark |
| Inventions: pharmaceuticals, software, manufacturing processes
Drug patents (hard to design around any particular one), Polaroid’s instant photography patents (because there were so many, it was hard for Kodak to design around them all) |
GE’s process for synthetic diamonds
Coca Cola’s secret formula Manufacturing processes Financial models, arbitrage or trading strategies Customer lists |
Software, movies, music, literary, artistic and sculptural works—works where initial creation is hard, expensive, or “hit-and-miss,” but copying is easy
Software, marketing materials, company manuals, possibly the precise wording of a contract |
Kinds of mark: a word mark like “Coca-Cola,” the red and white “wave,” the curvy glass bottle; a distinctive color
Especially valuable in markets with many participants, but a few “stand out” brands that command a price premium—Schwinn bicycles, I.B.M., many consumer products |
| Patent | Trade Secret | Copyright | Trademark |
Use trade secret instead when:
|
Where the cost of erecting a secrecy barrier is higher than the marginal value of the secret
Information that has to be widely shared to be used at all: e.g., contracts, an agricultural process that has to be practiced in the open |
Legal instruments: issues include ownership as between client and the lawyer, reluctance to sue a client or counterparty, ease of redrafting to get away from original language | Kinds of mark: a word mark like “Coca-Cola,” the red and white “wave,” the curvy glass bottle; a distinctive color
Especially valuable in markets with many participants, but a few “stand out” brands that command a price premium—Schwinn bicycles, I.B.M., many consumer products |
| Patent | Trade Secret | Copyright | Trademark |
| “Non-obvious” to one of ordinary skill at the time the invention was made.
As a practical rule of thumb, if the idea is new, and the difference is valuable (especially valuable enough to warrant the legal fees), it very likely meets the legal threshold for “non-obvious” |
The secret has to have value for those who use it, relative to those who do not; scope must be articulable; must be a compartmentalized body of knowledge that can identified (to frame a legal case) and cordoned off for secrecy | The product must be at least minimally “original” to the author—the level is not high, but does exist (e.g., an engraver’s copy of an old art work). Unauthorized copying of another’s work does not create a copyrightable work. However, two authors of identical works can each hold a copyright, if the two worked independently | “Distinctive”—either inherently (e.g., a fanciful word such as “Exxon”), or through acquired “secondary meaning,” that is, an ordinary purchaser would associate the mark with the owner’s products or services—American Airlines
Protects a distinctive mark—unrelated to any innovation in the underlying product |
| Patent | Trade Secret | Copyright | Trademark |
| A patent is the right to exclude others from making, using, selling, offering for sale, or importing the invention
Independent recreation is not a defense |
Legal right to prevent others, who learn or use the secret by improper means (e.g., fraud, bribery, industrial espionage, or breach of a confidentiality agreement), from using or disclosing the secret | The right to exclude others from making or distributing copies, displaying or publicly performing, or preparing derivative works
A copyright holder must prove copying—e.g., by showing access to the copyrighted original and substantial similarity between the original and the copy, or striking similarity (access is then presumed) |
Counterfeit goods or services—e.g., $5 Rolex watches
A mark that is confusingly similar—e.g. “Stanley & Morgan” for a new investment bank Dilution—Coca Cola can stop others from selling unlicensed Coke sportswear, even if Coke is not in that market |
| Patent | Trade Secret | Copyright | Trademark |
| Designing around the patent
If the accused infringer can show that the patentee was not the first to invent the invention, then the patent is invalidated Patentee has to prove infringement—if use is entirely hidden, patentee may never learn Prior user defense—if the infringer used an invention in secret before the patentee files, the patent remains valid, but the prior user can continue |
Independent rediscovery
Reverse engineering The tradeoff is that trade secret protection comes into existence very easily, but is just as easily pierced so long as not misappropriated |
Independent recreation
“Fair use” for research, teaching, news reporting, scholarship—transformative use, subject to balancing of “unfair” factors Fair use permits reverse engineering of software to produce compatible products—“clean room” techniques may be used to produce a functionally-identical product First sale—once an article is sold, the copyright owner cannot control further transfers of the article |
Fair use—where the mark describes the goods or services (as opposed to only designating source), others may use the mark to describe their own goods or services
“Nominative fair use”—using another’s mark to refer to user’s products or services. E.g., a former Playboy playmate can use the Playboy mark to market herself |
| Patent | Trade Secret | Copyright | Trademark |
| File a patent application—a complete description of the invention that teaches how to make and use the invention, then overcome Patent Office rejections—typically $10K– 40K over 3-5 years | Use the secret
Take substantial steps, reasonable under the circumstances, to preserve its secrecy |
Fix an original work of authorship in a “tangible medium of expression”
If you wrote it down, you own the copyright. Emails and telephone doodles are copyrighted from the moment of creation |
State law protects trademarks automatically, in states where there is actual commercial use
Federal rights vest with use of the mark in commerce (Constitutional sense) and registration—typically a few $K |
| Patent | Trade Secret | Copyright | Trademark |
| Government maintenance fees ($3-9,000 over 12 years)
Damages statute of limitations is six years No requirement for “working” a patent—if there are only four good ways to accomplish something, four well-drafted patents will exclude all competitors, even if you only use one |
Continue to use the secret
Maintain reasonable secrecy precautions |
To sue, a U.S. work must be registered—a pure formality, no examination (though with legal technicalities to be carefully observed). Registration within 5 years of publication creates prima facie presumption of validity
Foreign works need not be registered Copyright notice © no longer mandatory, but negates innocent infringement limitation on damages |
Continue use of the mark on goods of like type and quality
Evolve the mark with care Police use (like Xerox)—protection is lost if the mark becomes generic: e.g., trampoline, aspirin, motel, ping-pong, kerosene, dry ice, heroin, lanolin, linoleum, Thermos, videotape, app, touch-tone Declaration of continued use during 5th year, renewal every ten years |
| Patent | Trade Secret | Copyright | Trademark |
| A patent expires 20 years after filing (with some extensions, especially for FDA approval for pharmaceuticals) | Potentially indefinite, until the secret becomes known, either by disclosure or rediscovery | Life of the author plus 70 years, or 95 years from publication or 120 years from creation for works created by employees | Potentially perpetual, as long as the mark is used, registration is renewed, and other users are policed |
Managing your business’ intellectual property is a fundamental part of valuing and protecting your business. Contact Cambridge Tech Law for sound advice on how to handle your intellectual property.