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Copyrights, Patents, & Trademarks 

Excerpted from “Small Business Advisor; Starting and Operating a Business” written by Michael D. Jenkins.  Full text available at www.roninsoft.com

Protecting Intellectual Property

Both U.S. and international laws give wide-ranging protection to certain intangible assets you may have developed, including trade names, trademarks, copyrights, patents, and trade secrets. Each of these is discussed below.

Protection of Trade Names or Trademarks

If you intend to use some type of distinctive trade name for your business or trademark for your product or in advertising your services, consider taking steps to protect the use of the name or mark by registering it under state or federal law, or both.

When considering your trade name or trademark, you may need to per¬form a search to determine whether someone else has already registered the same or a very similar name or symbol. Searches can be conducted at different levels of thoroughness. A small business development center (SBDC) or an inexpensive trademark search company (several can be found on the Internet) may be able to conduct a basic search for you. However, this level of search does not guarantee you have adequately investigated whether any other company may have established rights to a trademark. If you are launching a nationwide product or service, you will want a more detailed search, which will be more expensive. Since not every trade name can be registered, you will need to consult a trademark attorney if you are interested in protecting a particular name used by your business. You do not want to open yourself up to a lawsuit for infringement.

Federal registration of a trade name or trademark confers a number of significant benefits, including:

• Nationwide notice to others of your exclusive right to use the name or mark;
• An unquestionable right to use the name or mark, with certain exceptions;
• Recovery of profits and damages if you can prove in court that someone violated your rights under the Trademark Act of 1946;[7]
• The right to sue in federal court for trademark infringement, regardless of the amount at stake and whether or not there is diversity of citizenship — that is, regardless of whether you and the defendant operate in the same or different states; and
• The right to have customs officials halt importation of counterfeit goods illegally using your trademark. (such as fake “Levi” ® bluejeans).

Federal registration is permitted only if you will use the trade name or trademark in more than one state. If you have completed registration of a trademark, you should use the “®” symbol wherever the trademark appears.

(If registration is still pending, use TM instead.)

For more information on trademarks, consult Nolo Press’ book, Trademark — Legal Care for Your Business & Product Name, 6th Ed. (2003), by Stephen Elias

Copyright Protection

Under our legal system, protection is also afforded for intellectual property, such as copyrights, for literary material and similar creative works, including computer software.

While you cannot copyright an idea as such, you can use the copyright law to protect the original expression of an idea, such as a written document, or a computer software program. To do so, you have to be sure to place a proper copyright notice on the item you wish to protect when you publish it. The proper form of copyright notice (”the legend,” as copyright lawyers refer to it) should appear as follows:

Copyright 2007 John Doe
All Rights Reserved

or:

© 2007 John Doe
All Rights Reserved

Under U.S. law, you can use the “©” symbol OR the word “copyright” (or “Copr.”) and receive full copyright protection. However, you will have trouble enforcing the copyright in some foreign countries if you leave out the “c” in a circle. Also, note that many South American countries require that you add the statement “All Rights Reserved” in order to make the copyright legend valid. Thus, if you have a copyrightable work that has potential value outside of the U.S., be sure to add the “All Rights Reserved” phrase to protect your rights overseas.

In addition to using the legend correctly (being sure to include the year of publication–not the year of creation — and the name of the copyright holder), it is important to file a copyright registration form on Form TX, with:

Library of Congress
Copyright Office
101 Independence Avenue, S.E.
Washington, D.C. 20559-6000
(202) 707-3000

A $30 filing fee is generally required, which should accompany the filled-out registration form. If you are registering a book or other written publication, you must also enclose 2 copies of it with Form TX, which will become your small contribution to the vast Library of Congress collection.

If you are filing a copyright for a computer program you have written, the Copyright Office requires you to file a copy of either the object code (which you should do if your source code contains trade secrets you don’t want to divulge to the world) or of the source code. If you don’t want to disclose all of the source code for a large program, you need only file the first 25 pages and the last 25 pages of the source code (and, if you are a crafty and secretive sort, you can add a lot of meaningless and useless code to the beginning and end of your program, so that you still don’t give away any secrets). Note that if you choose to file your object code listing (which will look like gibberish to the folks at the Copyright Office) instead of source code, they will accept your registration subject to what is referred to as the “rule of doubt.” The meaning of this scary characterization is that they can’t really examine your code to determine if it is copyrightable, so you must also submit a written statement or cover letter with your application, stating that the material submitted is a work of copyrightable authorship. Also, in such a case, it is a good idea to arrange it so that on the first page of the object code listing you submit, your copyright notice prints out in a form such that the good people at the Copyright Office can read it.

A work that is created (fixed in tangible form for the first time) on or after January 1, 1978, is automatically protected from the moment of its creation and is ordinarily given a term enduring for the author’s life plus an additional 70 years after the author’s death. In the case of “a joint work prepared by two or more authors who did not work for hire,” the term lasts for 70 years after the last surviving author’s death. For works made for hire, and for anonymous and pseudonymous works (unless the author’s identity is revealed in Copyright Office records), the duration of copyright will be 95 years from publication or 120 years from creation, whichever is shorter.[8]

Note that you don’t need to have previously registered your copyright in material you create, to sue someone who infringes upon (steals or plagiarizes) your work. However, to sue them, you will have to do an after-the-fact registration, and you may have problems proving that you actually were the creator of the material at the earlier date. Also, if you have registered your work when it was first published, before the infringement occurs, you may be able to win statutory damages from the offender. Otherwise, you can only sue for actual, common law, damages, which may be nominal in many cases. In short, don’t “economize” by trying to save a $30 registration fee — it could cost you a great deal later if you fail to register your copyright promptly after publication. For helpful (unofficial) information on copyrights, visit “The Copyright Site” on the Internet, at:

The Copyright Website

Or, visit the official Copyright Office website for forms and information, at:

U.S. Copyright Office website www.copyright.gov

Patent Protection

Protecting patent rights is a bit more complicated. As is the case with copyrights, you cannot patent an idea, no matter how good or original it may be. In order to protect a patentable device, process, or design, you will need to actually invent and construct one widget or whatever the item is — conceptualizing an interstellar warp drive for spaceships, or putting drawings or descriptions of such an engine down on paper generally won’t do; you’ll have to actually build one. In short, patents are granted to doers, not dreamers.

The type of things you can patent vary widely, including gadgets, chemical processes, drugs, some computer programs (very rarely), or even genetically engineered bacteria, according to recent rulings.

There are three different types of patents issued by the U.S. Patent and Trademark Office:

•    Utility Patents. These may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement of any of the foregoing. Utility patents are granted for a term of 20 years beginning with the date of grant, subject to payment of filing fees and/or maintenance fees (which are set annually) at certain intervals, to maintain the patent.        
•    Design Patents. These patents are granted to a person who invents a new, original, and ornamental design for an article of manufacture, and are valid for 14 years from the date granted. No maintenance fees are required.        
•    Plant Patents. Patents can be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant. Plant patents are granted for a term of 20 years, beginning with the date of grant.      

Once you have invented something worth protecting with a patent, you will then need to hire a patent attorney, and have the attorney file an application for a patent at the U.S. Patent and Trademark Office. Since the Patent and Trademark Office takes a rather adversarial position to applications, forcing you to prove to them that you have a way of doing something that qualifies for the 14- or 20-year monopoly of patent protection, you can expect to wait a year or two and spend a lot of money on legal fees to get your better mousetrap or left-handed screwdriver patented; and that is if no one challenges your patent or claims that it infringes on theirs.

For more information on patents, including fees, which change frequently, see:

U.S. Patent and Trademark Office website

BOTTOM LINE:

With regard to a patent, unlike filing a copyright, you will need an attorney — a patent attorney.

Trade Secret Protection

Unlike patents, copyrights, and trademarks, the government does not provide any registration process for trade secrets. However, there is a well-developed body of state and federal law that enables businesses to seek legal damages from competitors or other persons who steal or otherwise misappropriate their trade secrets. Under federal law, the Economic Espionage Act imposes criminal penalties for theft of trade secrets. However, if your business has trade secrets, you are more likely to be concerned with enforcing your rights under the civil law than seeking criminal prosecution of anyone who may steal your trade secrets. There is a long tradition of protecting such secrets as a property right in the state and federal civil law courts, under the court-created common law.

By its nature, a “trade secret” is some form of secret information that is important to your business and that it is important for you to keep secret. Thus, you would not seek to protect a trade secret by patenting or copyrighting it, since it would then be public information, and might lose much or all of its value. The classic example of a trade secret is the formula for Coca-Cola,® which the Coca-Cola company developed over a century ago and has closely guarded ever since. The people at Coke were farsighted enough to realize that if they had patented the formula, someday the patent would have expired and competitors would have been free to use their formula from then on. Unlike patents or copyrights, there is no “expiration date” on trade secrets, so long as you are able to maintain their secrecy and so long as they continue to have economic value.

What is a trade secret? A trade secret can be any of many things, ranging from the Coca-Cola® formula to the recipe for Kentucky Fried Chicken, to software source code to customer lists, or strategic business plans, technical specifications, or even information about your profit margins on products, as a few examples.

A “trade secret” means information, including a formula, pattern, design, compilation, device, program, method, process, recipe, or technique, that has independent economic value (actual or potential) because it is not known to the public or to other persons who could derive economic value from its use or disclosure. To be considered a secret, the holder of the trade secret must make reasonable efforts, under the circumstances, to maintain its secrecy.

Accordingly, if you have trade secrets that you wish to protect from competitors or others, in order to enforce your rights to such trade secrets in a civil lawsuit, you must be able to establish the three following elements:

• That the trade secret is information that can be described in such a way as to distinguish it from matters of general knowledge in the trade or business;
• That the trade secret derives independent economic value from not being generally known; and
• That the efforts you have made to maintain its secrecy are reasonable under the circumstances.

In general, the main approaches used by most businesses to protect their trade secrets will include the following:

• Limiting access to the trade secrets, such as to a few high-level officers of a corporation;
• Marking or stamping documents that are to be protected as “confidential”; and
• Obtaining, from employees or others to whom you provide access to trade secret information, signed employment agreements, confidentiality agreements, or nondisclosure agreements regarding the secret information.

Some things that the courts have found to be reasonable steps to protect trade secrets include the following:

• Disclosing secrets solely to top-level employees;
• Limiting the information made available to contractors and subcontractors;
• Keeping logs identifying trade secrets;
• Marking documents as confidential or trade secret information or otherwise communicating to employees and others (in a well-documented fashion) that certain information is a trade secret and must not be revealed;
• Limiting the availability of trade secrets within a computer system;
• Obtaining signed nondisclosure agreements from anyone who is given access to trade secrets;
• Taking various security measures to protect secrets, such as locking documents in safes, requiring personnel to wear security badges in sensitive areas of a facility, and use of security personnel and systems, such as burglar alarms;

Things you should NOT do — actions or omissions which have persuaded courts that secrecy efforts were inadequate:

• Failure to obtain signed nondisclosure agreements;
• Displaying trade secret information at trade shows;
• Allowing trade secret documents to be placed in street curb dumpsters without first shredding the documents;
• Publishing trade secret information in various ways, such as in trade journals or on the Internet; and
• Failing to designate information as being trade secrets when filing documents with government agencies.

BOTTOM LINE:

While even the best efforts to avoid disclosure of your important trade secrets may fail, such as when a former employee violates a nondisclosure agreement with you that he or she has signed, it is still important to be able to show (in court) that you have taken all reasonable steps to protect such secrets, in order for you to recover legal damages against someone who has illegally obtained your trade secrets.