By Lauri Donahue, Esq.
Copyright 1998

IP in General
Patents
Copyrights
Trade Secrets
Licensing
NDAs
Misuse of IP
Links to Other IP Sites

"Intellectual property" is an omnibus term encompassing patents, trademarks, copyrights, and trade secrets. Intellectual property is any product of the human mind which the law protects against unauthorized use by others.

Note that the law in this area is constantly changing and the following information may not be current at the time it is read. Please consult an attorney whenever intellectual property issues arise.

A patent grants the holder of the patent the absolute right for a certain term to determine who, if anyone, can make, use or sell the invention. There are three types of patents:

• utility patents
• design patents
• plant patents (for living plants)
  

The following discussion will pertain to utility patents, unless otherwise stated.

In order to obtain a patent, the invention must be of a patentable subject matter, have utility, and be novel and nonobvious. These requirements are established through the patent application process.

Patentable subject matter for a utility patent includes products, machines, compositions of matter and processes. Design patents protect only the design surface features of a product.

Utility is established if there is some qualitative benefit from the invention. The utility of the invention must be disclosed in the patent application.

Novelty requires that the invention be new when compared to the existing technological knowledge (called "prior art"). A "statutory bar" to the patent will result if certain events occur more than one year prior to the filing of the patent application. These events are:

• publishing an article describing the invention,
• public use, sale or an offer to sell the invention, or
• a prior patent by anyone.
  

If any of these events occur, the inventor must file a patent application within one year; otherwise no patent will be granted. Essentially, the inventor has a one-year window after disclosing the patent within which to file the application.

"Nonobviousness" requires that an invention be a significant advancement over the prior art, such that the advancement is not an obvious one to a person skilled in the relevant field of technology. This determination is difficult, and this issue is most likely to be the subject of a rejection by the Patent and Trademark Office (PTO). Also, this issue is most often litigated in a patent infringement suit.

Joint Inventors: A patent can have two or more inventors, called joint inventors. A joint inventor can grant or assign a license in a patent to a third party without the consent of the other joint inventors. This can be a problem when an independent engineer, consultant or machine shop is hired to work out the details or solve a problem regarding the invention.

International Protection: If an inventor wishes to seek international protection for a patent there are three main routes available:

• the inventor can directly file an application in the foreign country, or
• the Patent Cooperation Treaty (PCT) can be used, or
• the European Patent Office can be used.
  

The PCT establishes a system for centralized filing and searching of one international application which is then sent to designated member countries. The PCT can be used in conjunction with filing in the US. The procedures are extremely complex, but once mastered the system is more efficient and less costly than filing in each of several countries.

There are two important differences to note regarding the PCT and US system:

If an inventor discloses the invention before there is a US application on file, many countries will not grant a patent. This is different from the US laws which allow the one year window discussed above.  At 18 months into the PCT procedure, the international office will publish the patent application. In the US the application is published only after the patent is granted and the application remains secret if the patent is never granted, so that the inventor may be able fall back upon trade secret law to maintain confidentiality of the intellectual property.

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The Copyright Act sets forth the rules governing copyrights:

• Copyright protects the literary, dramatic, musical, artistic or computer works of the copyright owner.

• Copyright allows the owner to prevent others from displaying, reproducing, adapting, performing or publishing the owner's work.

• Protection extends for fifty years after the death of the author. When copyrightable work is created by an employee, the Company owns the copyright, and the protection extends for 75 years from the date of the publication of the work.

The essence of copyright is originality. An original work of authorship is required to obtain a copyright. The work must be the product of some creative intellectual or aesthetic labor.

Notice: Notice of the copyright should be attached to the work, for example:

The date in the notice is the date of first publication. For computer programs, the copyright notice should appear on the first screen that is displayed when the program is executed.

Infringement: To infringe a copyright, the infringer must have taken work from the copyrighted source, not from some independent source. Two persons can create the same work and not infringe upon each other, if the works were created independently. Infringement is established by proof of access and substantial similarity between the works.

Defenses: Fair Use: A defense to infringement is the Fair Use doctrine. The doctrine allows the use of copyrighted work for certain publicly-important activities such as education, literary criticism and the exercise of First Amendment rights. The exact definition of what is fair use is unclear. However, the key inquiry is whether the copyrighted work was used for profit by the alleged infringer. If a reasonable copyright owner would not have consented to the use without compensation, then the fair use doctrine is most likely not a defense.

Registration: Copyright registration is not required for protection. However, registration is required prior to bringing an infringement suit. Also, registering the copyright within three months of publication of the work affords certain statutory damages that are otherwise not available. The registration form is relatively simple and there is a small fee. But there is a requirement that the work be deposited with the Copyright Office (CO). This can present a problem for computer programs that contain trade secrets. The CO prefers that source code be deposited; most companies prefer to deposit object code. If trade secrets are involved, the CO has varying deposit requirements for portions of the object and source code depending on the length of the program.

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Trademarks

• A trademark is any letter, word, symbol or combination thereof, affixed to goods which identifies the origin of the goods.

• The Lanham Act provides for federal registration which protects marks in the US without geographical limitation.

Distinctiveness: Marks can be registered only if they are "distinctive." Distinctiveness means that the mark distinguishes the goods or services of the owner from that of others. The registration process will vary depending upon the distinctiveness of the mark. The most distinctive marks are arbitrary or fanciful. A "generic" mark actually describes the product or service and cannot be registered.

Registration: To federally register a mark with the PTO, the applicant must first show that the mark has been adopted, affixed to the goods, and used (or there is intent to use the mark within six months). After affixing the mark but prior to registration, use the designation "TM"; after registration, use the designation "R."

Abandonment: A mark can be considered to be abandoned if the owner ceases to use the mark with some evidence of intent to relinquish it.

Infringement: To successfully bring an infringement action, the owner of the mark must prove that the alleged infringing mark creates a likelihood of confusion, or may deceive or cause mistake among consumers regarding the origin of the product or service.

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Trade secrets are protected under state law. For information to qualify as a trade secret, the information must:

• confer upon the owner a competitive advantage, and
• have been the subject of reasonable security by the owner.
  

The owner of a trade secret must guard its secrecy using reasonable efforts to prevent disclosure. Otherwise, trade secret protection is lost.

Under the Uniform Trade Secrets Act (UTSA) a trade secret will lose its protection if it is disclosed or is ascertained by proper means. "Proper means" include:

• discovery by independent invention;
• discovery by reverse engineering when acquisition of the product to be reverse engineered is obtained by fair and honest means;
• discovery under a license from the owner of the trade secret; or
• observation of the item in public use or on public display.

When dealing with outside vendors, entering into licensing contracts or in teaming agreements, non-disclosure agreements (NDAs) can help protect trade secrets. Physical security procedures will also limit access to trade secrets.

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All of the intellectual property discussed above can be licensed.

The heart of an IP license is in the "grant of rights" clause, for example:

For a detailed discussion of the spectrum of possibilities for a grant of rights clause, please consult the article on Intellectual Property Licensing: A Cribsheet for Dealmakers.

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Non-Disclosure Agreements (NDAs) are used when parties wish to exchange confidential information. NDAs are legally-binding contracts not to disclose the information except under specified circumstances.

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Misuse occurs when the owner of an intellectual property right attempts to improperly expand upon the rights inherent in that intellectual property. Examples:

• A patent owner refuses to license a patented process unless the licensee agrees to purchase other non-patented staple commodities.

• A copyright holder attempts by contract to extract royalties after the copyright has expired.

Such acts may be illegal. For more information, contact us to order our publication on Intellectual Property Misuse.

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