Intellectual property basics for business owners

The Law Firm of Ekaterina Mouratova, PLLC

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Intellectual Property Basics for Business Owners

© 2012 The Law Firm of Ekaterina Mouratova, PLLC

“Intellectual growth should commence at birth and cease only at death.”

- Albert Einstein

IP Concerns for Businesses

• Protect Investment

- Naming and Branding

- Content

- Innovations• Avoid Liability

- Third Party IP infringement

- Clear agreements with partners


Types of Intellectual Property Protections

• Trademark

• Copyright

• Patent

• Trade Secret


Trademark

•Trademark is any word, letter, name, slogan, symbol, design, logo, shape, image, sound, color or combination thereof that is used or intended to be used in commerce

•In short, it is a brand name

•Trademark relates to goods and service mark relates to provided services


Why to use a trademark/service mark?

•to identify and distinguish your goods or services from those of other sellers or manufacturers

•to demonstrate to consumers and clients that all of your products or services come from one source (you or your company)

•to signify to consumers and clients that all of your products or services are of equal quality


Protecting Your Mark

•Infringement – use of mark in commerce that is likely to cause confusion (i.e. using someone else’s mark to sell your goods or services)•Counterfeiting – reproduction, copy, or imitation•Dilution –using famous mark in any way to gain benefits (e.g. using someone else’s mark to sell a different type of goods or services, using your own mark to sell someone else’s goods or services)•Unfair Competition – false advertising, trade disparagement (e.g. using a mark to misrepresent your own product as someone else’s or to represent someone else’s product as yours)


Federal registration of a trademark/service mark

•exclusive nationwide right to use the mark on or in connection with the goods/services set forth in the registration and grant licenses to others for its use at the owners’ discretion•constructive notice nationwide of the trademarks owners rights (mark shows up in trademark searches)•can be used as a basis for obtaining registration in foreign countries•may be filed with U.S. Customs Service to prevent exportation of infringing goods to foreign countries•can prevent others from taking advantage of trademark’s publicity by infringing the original mark, counterfeiting, operating under similar or confusing marks or committing other actions which may be detrimental to the trademarks owners•enables to sue for infringement and invoke jurisdiction of federal courts•affords legal presumption of the validity of the mark and its owner’s rights at courts•entitles the owner to statutory treble damages, disgorgement of profits and costs for willfulness•allows to use registered symbol ® to indicate the exclusive ownership rights•overall, is an incontestable evidence of the mark’s ownership


Copyright

•U.S. Copyright law protects the exclusive rights of the creators of the work, which is subject to copyright

•Purpose - to promote the progress of science and useful arts and to encourage creation of new works

•Copyright law protects the “original work of authorship fixed in tangible mediums of expression”

•So in order to be protected the work must be:

- 1) created by the author seeking to register it (created independently)- 2) original (not copied from somewhere in whole or in part)- 3) creative (not a plain compilation of information)- 4) fixed in a tangible mediums of expression (not merely an idea or plan

to create in the future); and - 5) non-utilitarian in nature (copyright protects only expression, not

function; functions are protected by Patent law)


Types of Works Protected

•Literary (includes computer programs)•Musical •Dramatic •Pantomimes and choreographic •Pictorial, graphic, architectural and sculptural •Motion pictures and other audiovisual works•Sound recordings•Vessel hulls


Who Can Claim Copyright

•Author or those deriving their rights through the author, unless

•Exception – Work for Hire - a work prepared by an employee within the scope of his/her employment or a work specially ordered for certain uses if the parties expressly agreed in writing that the work shall be considered a work made for hire

•Joint ownership – when there are two or more authors

•Collective work – ownership of the part of the work

•Ownership of the medium, such as a book or painting, does not give the possessor the copyright to the original work


Protected Rights

Copyright law protects only certain rights of the original author:

•Right to reproduce the work•Right to prepare derivative works•Right to distribute copies of the work to public (sell, rent)•Right to perform the work publicly•Right to display the right publicly•For sound recordings: right to perform the work by means of a digital audio transmission


Copyright Term

•Known author and his/her heirs - author’s lifetime plus 70 years after

•Corporate author, work for hire, anonymous - 95 years from the moment of its first display or 120 years from its creation, whichever is shorter

•Before the expiration of the original term of protection the heirs can renew and prolong their ownership rights

•If no renewal action is made, the copyrighted work becomes public domain and is available for public use


Federal Registration

•creates public record of owner’s copyrights

•prima facie evidence of copyright validity and facts stated in the registration certificate

•registration is required to bring a lawsuit to U.S. Federal court

•in case of infringement the owner qualifies for statutory damages and attorney’s fees

•copyright owner can have U.S. Customs prohibit importation of infringing copies of the work


Exceptions from Infringement The copyright owner cannot stop others from using his/her work all together. There are certain exceptions to the copyright infringement.

•“First Sale” doctrine – an owner of a particular copy of the work can sell or dispose that copy without the copyrights owner’s permission (e.g. a person who bought one book or disc, can later resell that same book or disc without being considered an infringer)

•“Fair Use” doctrine - the copyrighted work of others is not infringed if it is used for fair purpose

-Criticism -Commentary-News reporting-Teaching-Scholarship-Research -Religious performance-Nonprofit performance


“Fair Use” doctrine

Factors to consider when determining whether the work was used

under the “Fair Use” doctrine:

•Purpose and character of the use (commercial vs. not-for-profit,

e.g. a book was used for education)•Nature of copyrighted work (published vs. unpublished)•Amount and substantiality of the portion used in relation to

copyrighted work as a whole (was the main part of the work used

or just a short excerpt) •Impact of the use on the market value of the work (how much the

unauthorized use influences the ability of the owner to distribute

his/her work at the marker and its price)


Patents

•Patent – property right granted to the inventor of a new, useful and nonobvious process, machine, manufacture, composition of matter or improvement thereof

•Purpose of the law – to promote innovation by encouraging inventors to disclose their inventions to public

•The inventor gets exclusive right to make, use, sell, offer for sale and import the patented invention


Three Types of Patents

•Utility Patent – new and useful process, machine, article of manufacture or composition of matter, or any new and useful improvement thereof

•Design Patent – new, original and ornamental design for an article of manufacture

•Plant Patent – distinct and new variety of plant


Requirements for Obtaining a Patent

The invention must be:

•Useful

•A sufficiently developed idea (no requirement to have actually made an invention, but must provide an “enabling” disclosure)

•Novel

•Non-obvious


Federal Registration

•Patent rights attach when the patent is issued

•Patent are limited in geographical scope – granted on a country-by-country basis

•In the United States U.S. Patent and Trademark Office examines patent applications and grant patents

•Patent is granted for 20 years from the date of filing a patent application. Can be renewed thereafter

•As a general rule, patent applications should be filed before disclosing or offering the invention for sale


Trade Secrets•A trade secret – proprietary information that is under an obligation to be kept secret

•Almost any confidential, not-publicly known information used in the conduct of one’s business may be protected as a trade secret. For example, a trade secret may consist of formulas, manufacturing techniques and product specifications, customer lists and information, information related to merchandising, costs and pricing, internal company’s practices, and any new business-related ideas

•Purpose of the law – to encourage further creations and developments, promote innovation, and prevent unfair competition


Trade Secrets

A Trade Secret must:

•Derive economical value from not being generally known or readily ascertainable

•Be the subject of its owner’s reasonable efforts to keep it confidential


Non-Disclosure Agreements

•Confidential information – any information that the possessor wishes to keep secret and prevent others from disclosing it to his/her competitors or the public

•One-way non-disclosure agreements – contracts between one party having confidential information and another party desiring to receive this information

•Two-way non-disclosure agreements – both parties to the contract have confidential information that the other wishes to receive


Exclusions from Confidential Information

•Information already in the receiving party’s possession prior to disclosure

•Information that is or becomes generally available to the public other than as a result of the recipient's disclosure

•Information that becomes available to the recipient on a non-confidential basis from a source which is entitled to disclose it non-confidentially

•Information that was independently developed by the recipient, including by means of reverse engineering


When to Use Non-Disclosure Agreements

•Disclosing a new product to a potential investor

•Giving access to business information to employees and/or partners

•Contractual relationship with third-parties, which may have access to confidential information (e.g. independent contractors, suppliers, distributors, etc.)

•Anytime the information you are disclosing, if used by others, would lessen your competitive advantage


Employee and Independent Contractor Relationships

•Written Employee / Independent Contractor Agreements should be in place before any work is done

•Agreements should assign ownership in any intellectual property developed by the employee / independent contractor within the course of his/her employment to the employer

•Agreements should contain non-disclosure clauses (for individuals exposed to trade secrets)

•Agreements may have non-compete clause – obligating an employee not to compete with his/her employer during a certain period of time (e.g. 6 months) and in certain scope (e.g. geographical location, field of business)


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Intellectual property basics for business owners