You are running a business and want to make sure you take action to protect your company. You read an article on the importance of businesses protecting their intellectual property. But what is intellectual property and what kind of intellectual property would your business have? Intellectual property is the ownership of a business’ original creation. These can exist in many forms including inventions, product designs, brand names and logos. In legal terms, these items would include trademarks, patents, copyright, designs, and trade secrets. These are the intangible assets that differentiate and bring value to your business. Let’s break down each of these types of intellectual property and how to protect them.
Trademarks
A trademark distinguishes between one company’s products or services from another company’s products or services and can be a word, logo, phrase, symbol or slogan or combination of these things—in other words, brands. For example, Nike has several trademarks: the name “Nike,” the logo of the swoosh, and the slogan “just do it”. Each of these trademarks individually identify products under the Nike brand. A trademark identifies your business as the source of the goods or services and protects your brand from infringement including counterfeiting and fraud.
A trademark does not mean that you own a particular word or image and can prevent any and all parties from using those words or images. Additionally, you cannot trademark just any word or image—there are specific rules about what can and cannot be trademarked. There is also a significant difference between owning a trademark (also called a common law trademark), having a state-registered trademark, or a federally registered trademark. Each of these has different levels of rights and protections. For example, you cannot trademark a name that is merely descriptive of the services or goods you provide. To illustrate, if you had a landscaping company, you would not be able to trademark the name “Best Landscaping” because that merely describes the services you are providing. You can learn more about these rights and protections in our article HERE.
Copyright
A copyright protects original works of authorship including books, movies, photographs, paintings, illustrations, sound recordings, and even computer programs. A copyright, however, does not protect ideas, discoveries, systems, titles, or familiar symbols or designs. A copyright is created once an original work is created and fixed. For example, the act of fixing a work can be as simple as writing the work such as a blog or taking a photograph.
The person who creates the original work is typically the copyright owner. A copyright owner can be other people besides the work’s creator if the work is made as a work for hire. A work for hire applies to employees and certain independent contractor relationships or certain types of commissioned works.
When a person creates an original work, copyright law provides the copyright owner with certain exclusive rights including performing or displaying the work, distribute the work, reproduce the work, or authorize others to exercise these rights. However, the copyright owner who registers the work can better their protections. Under U.S. law, registration is necessary to enforce exclusive rights through litigation as well as potentially types of monetary damages and attorney’s fees.
Patents
A patent gives an inventor the right to keep others from creating, using, or selling an invention. It does not give the patent owner a right to make the invention. There are different types of patents: utility patents, design patents, and plant patents. A utility patent may cover “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” A design patent may cover “any new, original, and ornamental design for an article of manufacture,” and a plant patent may cover a “distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber-propagated plant or a plant found in an uncultivated state.” For example, Volvo engineers patented the three-point safety belt and provided the patent for free in order to protect drivers and passengers around the world.
In order for a patent to be issued, your patent must meet four conditions:
- The invention must be a new and useful process, machine, manufacture, or composition of matter that Congress has defined as patentable.
- The invention must have potential utility meaning it can accomplish an intended purpose.
- The invention must be unique.
- The invention must not be obvious.
Trade Secrets
Trade secrets are intellectual property rights for confidential information of a company or business such as formulas, processes, recipes, designs, client lists, and advertising strategies. For example, the Coca-Cola recipe is a renown as a trade secret. In order to be a trade secret, the information must be:
- Commercially valuable due to its secrecy;
- Known only by a limited group of people; and
- Be subject to reasonable safeguards to keep the information confidential.
Trade secrets are protected against unfair competition and the protection of confidential information on both federal and state levels. Nonetheless, there are improper means of acquiring trade secrets. These include breach of duty, espionage, theft, and misrepresentation. However, trade secrets can be properly and lawfully acquired through independent discovery, reverse engineering, and licensing.
Who Owns Your Business’ Intellectual Property?
Many businesses make the mistake of thinking that the company itself own the business’ intellectual property. However, this may not be the case. It is critical that every business audits their records and ensures that the intellectual property is properly owned in order to be protected. For example, it is very common that when a company starts up, one of the founders applies for the trademark and lists themselves as the owner instead of listing the company as the owner. Another situation is when a company hires someone, whether a solo independent contractor or a design agency, who may retain the ownership rights to the intellectual property. Additionally, certain relationships such as joint ventures or partnerships may complicate ownership issues if these matters are not clearly addressed and recorded.
In most cases, it is preferable for the company to be the owner of the intellectual property. The company is the one who should derive value from the intellectual property and this reduces the risk of potential issues with owners of the company owning the intellectual property outright in their personal names which may lead to misappropriation, breaches of duty and other issues. It also allows the company to create lucrative revenue streams such through branding such as license agreements.
Furthermore, some businesses may want to create a separate intellectual property company whose sole task is to be the owner of the intellectual property; this is especially common in franchise models.
Each case needs to be reviewed individually in order to determine the best method for each business based on their own unique needs and priorities.
Conclusion
It is essential for your business that you safeguard your intellectual property and take the necessary actions to maximize your intellectual property rights. As you can see, there are many different types of intellectual property, and each has its own place and rules. Despite the value in intellectual property as an asset of the company, so many business owners fail to prioritize intellectual property and consequently, are unaware of the many pitfalls and complications that can arise. Intellectual property is an investment in yourself and your business—as such, proactiveness is key. We look forward to helping you understand your rights and assisting you in protecting your business.
