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Modern General Counsel: Four types of intellectual property

Sterling Miller

Modern GC have a lot on their minds (and on their desks).  Contracts, litigation, and employee issues generally take up much of the day.  However, there is another equally important area that generally does not get the same level of attention and care:  intellectual property.  Although frequently ignored, intellectual property should be nurtured and protected, as critical company assets comprise it. Unfortunately, many in-house lawyers don’t understand the different types of intellectual property; therefore, they don’t know the right steps to take in either protecting it or encouraging its creation.  This lack of knowledge is remedied by Practical Law, a tool that provides numerous resources for in-house lawyers to easily get up to speed on four main types of intellectual property.

Patents

A patent is a government-granted monopoly to build, sell, and use your invention (and prevent others from doing so).  If you are issued a patent, it’s usually good for 20 years; however, there are some patents that are only good for 14 years.  After 20 years, your patent expires and anyone can copy, build,and sell your invention.  In exchange for the “monopoly,” you must disclose the details of your invention to the public so that someone “practiced in the arts” could recreate it.  To receive a patent your idea must meet four requirements:

  • The subject matter must be “patentable” (as defined by Congress and the courts).
  • Your idea must be “new.”
  • The idea must be “useful.”
  • Your idea must be “non-obvious.”

There are three types of patents you can file for:

  • Utility patent – Utility patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, composition of matter, or any new and useful improvement thereof (good for 20 years).
  • Design patent – Design patents may be granted to anyone who invents a new, original, and ornamental design (good for 14 years). 
  • Plant patent – Plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant (good for 20 years).

Patents can be expensive to obtain and maintain, as there are yearly or regular fees required to main them. And, like trademarks, patents are only good in the country where the patent was granted. So, in-house counsel must consider which countries and markets require patent protection. 

Trademarks

A trademark can be any word, phrase, symbol, design, or combination of these things that identifies your goods or services — it’s how customers recognize your company in the marketplace. We tend to use the term “trademark” generically as referring to both trademarks and service marks. A trademark is used for goods; a “service mark” is used for services.

A trademark has many benefits, including:

  • Identifying the source of your goods or services
  • Providing legal protection for your brand
  • Guarding against counterfeiting and fraud

A trademark does not mean you own a particular word or phrase. Rather, you own the rights to how that word or phrase is used with respect to specific goods or services. Key to obtaining trademark protection is the need to identify the specific categories of goods and services the mark will cover. And, the company must actually use or provide such goods and services in the chosen categories — or have a good faith and demonstrative intent to do so.

In-house counsel also need to avoid seeking trademarks that are merely descriptive of the goods or services. Unique words or phrases are far easier to protect and more likely to qualify for trademark protection. For example, “Nike” is a stronger, more unique mark than “Quality Tennis Shoes Company.”  

You own a trademark as soon as you start using it along with your goods or services. This is known as common law trademarks and it applies only to the geographic area where the company provides its goods or services. To obtain nationwide rights in the U.S., the company must apply to register your trademark with the United States Patent and Trademark Office (USPTO). Doing so provides broader rights and protections than an unregistered one, but the trademark is only valid in the U.S. — you must seek to register the trademark in every country where you seek protection. 

Every time you use your trademark, you can use a symbol with it: “™” for goods, “℠” for services, or “®” for registered trademark. The symbol lets consumers and competitors know you are claiming the mark as yours. You can use “™” for goods or “℠” for services even if you haven’t sought to register your trademark. 

Critically, in-house counsel must take steps to protect trademarks by actively going after infringers — other companies using the mark or a similar mark — and ensuring that the mark does not become generic in the minds of the public (for example, “Band-Aid”). Failing to do so can cause the company to lose the mark. 

Copyrights

Copyrights protect original works of authorship, such as paintings, photographs, musical compositions, sound recordings, computer programs, books, blog posts, movies, architectural works, and plays. There are some things that are not “creative,” like titles, names, short phrases, and slogans; familiar symbols or designs; lettering or coloring; and mere listings of ingredients or contents. Copyrights protect expression and never ideas, procedures, methods, systems, processes, concepts, principles, or discoveries. 

Companies can be copyright owners as the law allows ownership through “works made for hire” — works created by an employee within the scope of employment or certain independent contractors owned by the employer. Copyright law provides copyright owners with the following exclusive rights (among others):

  • Reproduce the work
  • Prepare derivative works
  • Distribute copies by sale, transfer of ownership, or license
  • Perform or display the work publicly

Works created on or after January 1, 1978, have a copyright term of life of the author plus seventy years after the author’s death. For works made for hire, copyright protection is 95 years from publication or 120 years from creation, whichever is shorter. Copyrights exist automatically but you can enhance the protection by registering the work. Copyright registration is not mandatory but allows copyright owners to seek certain types of monetary damages and attorney fees. 

Notable exceptions to the exclusive rights are “copyright fair use” or the use of copyrighted works that have fallen into the “public domain.” As to the latter, in-house counsel must ensure any company copyrights are kept current until they otherwise expire.  

Trade Secrets

While businesses have a lot of confidential information, not everything is a trade secret. A trade secret is typically something not generally known to the public, where reasonable efforts are made to keep it confidential, and confers some type of economic value to the holder by the information not being known by another party. 

What exactly constitutes a trade secret can vary by state — in the U.S. — or by country. A good shorthand for what constitutes a trade secret is: any information you would not want your competitors to have. Some examples of likely trade secrets include new business models; customer and supplier information, especially around price; marketing strategy; processes and formulae; and other confidential business information.

Even if you have plans, processes, or formulae that you don’t want your competitors to have, if the company doesn’t take appropriate steps to keep that information confidential it can lose the ability to claim such items are trade secrets. For example, if the company has handed out copies of its future marketing plans to customers without any type of non-disclosure agreement in place or failed to label the plans as “confidential,” the plans may not be treated as a trade secret. 

Courts will generally look at the following factors to determine if something is a trade secret: 

  • Extent to which the information is known outside of the company
  • Measures taken to guard the secrecy of the information
  • Value of the information to competitors
  • Extent to which the information is known throughout the company’s employee base and others involved in the business
  • Money or effort spent by the company to develop the information and how easy would it be for others to duplicate the information 

Understanding the different types of intellectual property is an important knowledge that all in-house counsel should master. Patents, trademarks, copyrights, and trade secrets are valuable assets of the company and understanding how they work and how they are created is critical to knowing how to protect them. With Practical Law, general counsel are only a few keystrokes away from a wide variety of information, forms, templates, and checklists that can help them master each type and know what to do to create and protect them.

Want expert legal guidance on intellectual property at your fingertips?

Then check out the Startups and Small Businesses Collection on Practical Law