Most entrepreneurs or small business owners are familiar with the general concept of intellectual property (IP) and understand that IP is an important business asset. When searching for a specific definition of IP, a lot of fancy terminology pops up, but what does it all mean? In order to obtain valuable IP for a business, it is important to recognize the types of IP and the differences between the types. Thus, that fancy IP terminology cannot be avoided and entrepreneurs should make it a priority to become comfortable with it. Consider the following.
The types or categories of IP may be broken down differently, but generally, the IP types to understand include patents, trademarks, copyrights, trade secrets, and trade dress. Understand that not all IP is created equal and each IP type pertains to a different creation or aspect of the creation. Whether a type of IP protection is good, better, or the best will be dependent on the creation itself and the nature of the business for which the IP is being protected.
Starting with patents, patents are commonly considered to be one of the strongest types of IP protection, assuming that the patent is well-written and the invention has commercial value. Patents pertain to ideas that are new, useful, and non-obvious, and give the patent owner the right to exclude others from making, using, selling, and importing the invention for about twenty years. This is a lot of terminology, but basically, the exclusivity of the rights is what makes a patent strong. The key to recognizing whether an idea is patentable subject matter is considering the functional and utility aspects of the idea. A new and improved method or process may also be patentable, but patents directed to the new and useful product itself are usually considered to be stronger. For example, it is much easier to prove that a competitor is making the patented product as compared with proving that the competitor is using the patented method.
So, if patents are so great, then why not go out and try to get as many patents as possible? Given the power of patents, it should be no surprise that the process to obtain a patent is typically more costly and lengthier than obtaining one of the other types of IP. Even a relatively simple invention may cost over $10,000 to obtain, and that is before maintenance fees. In thinking about whether to pursue patent protection, the technology should also be considered. If the technology has a relatively short lifespan, as is often the case with software and computer-related technologies, protecting the idea with another type of IP may be preferable. Alternatively, if the technology pertains to a method, a patent may also not be preferable since obtaining a patent requires publicly disclosing the invention in the patent document. Thus, when the patent expires after about twenty years, the public disclosure essentially provides a blueprint for competitors.
A subset of patents is design patents which protect a new and ornamental design of a product. Design patents may provide value for certain products. Think Apple versus Samsung, which was a costly lawsuit over the shape of the phone. Design patents may not be as strong as the above-described utility patents since design patents are typically easy to design around. Advantages of design patents are that that they are typically less costly, easier to obtain, and enable the patent holder to slap a “patented” sticker on the product that could deter competitors. A lot of products are suitable for both utility patent and design patent protection, but it is important to understand that the utility patent protects the function of the product, whereas the design patent protects the way the product looks.
Similar to patents, trademarks can also provide strong protection. Trademarks pertain to any word, name, symbol, design, or expression that identifies and distinguishes a product or service of a specific source from those of others. Trademarks do not expire as long as the trademark is being used in commerce. Unlike patents, a trademark does not have to be registered with the government, although a registered trademark offers stronger protection. In choosing a trademark, the strongest marks are those that are arbitrary or fanciful, rather than generic, descriptive, or suggestive. Again, this is a lot of terminology, but it basically means pick a mark that is weird or not naturally associated with the product or service. A tip for obtaining trademark protection is, before even starting to use a mark, make sure that the mark is not owned by somebody else. Check the US Patent and Trademark Office trademark database and the state’s secretary of state business name search before choosing and developing a business or product name.
Like patents and trademarks, copyrights are another registrable IP type. Like trademarks, copyrights do not need to be registered with the government, but registered copyrights offer stronger protection. Filing a copyright is an inexpensive and straight-forward process so there is really no big downside to filing a copyright. A copyright is the exclusive right to reproduce, publish or display, or sell original works of authorship and derivative works, and copyrights generally last for the life of the author plus seventy years. Copyrights should not be confused with trademarks which are typically short phrases, or patents which cover the function of an article. But, note the potential use of a copyright instead of a patent. Given that software typically does not have a long life of commercial value, it may be more beneficial to copyright the code as opposed to trying to obtain a patent.
Trade secret is different from the other types of IP in that it is not registrable and the protection is in the secret itself. A trade secret pertains to information used by a business that is secret to the general public, such as source codes, ingredients, formulas, product designs, customer lists, and data. In contrast to a patent, the innovative business secret is not publicly disclosed, meaning that the duration of the trade secret protection lasts as long as the secret lasts. In a scenario in which an innovative business method would be difficult for competitors to reverse engineer, i.e. “figure out,” trade secret protection may be preferable to patent protection. Trade secret protection is particularly beneficial for going after employees who leak secret information or competitors who steal technology. The key to establishing a trade secret is having internal company policies such as using non-disclosure agreements, marking documents as confidential, controlling access to the business, and using passwords. The biggest downside to trade secret protection is that it does not protect against independent conception by competitors.
Trade dress is sometimes forgotten about as being a protectable type of IP, but trade dress may be thought of as a subset of trademarks. Like trademarks, trade dress is also a source identifier, but trade dress pertains to the visual appearance of a product, such as packaging or a design. Since trade dress pertains to the product look, trade dress is narrower than a trademark and possibly not as strong. Trade dress is also comparable to design patents, and a product may be suitable for both trade dress and design patent protection. However, it is important to recognize that design patents are used to provide a period of exclusivity for using a specific design, whereas trade dress is used to identify a product source and prevent consumer confusion. An advantage of trade dress is that the duration of protection is infinite so long as the design is being used in commerce.
So, what type of IP is good, better, and the best for a business? Like most answers in IP, it depends. However, becoming familiar with fancy IP terminology enables a business to evaluate the different types of IP and decide which type, or multiple types would be the most beneficial. Even though IP terminology seems fancy, it is just terminology and the underlying notion is that IP laws exist to protect good ideas. Just remember, if a good idea exists, there is most likely a way to protect it.
If you would like further information on any of the above, please contact Bonnie Smith at email@example.com.
Renner, Otto, Boisselle & Sklar, LLP