Intellectual Property and Business
By Kimberly Lekman, Esq. | Legally reviewed by J.P. Finet, J.D. | Last reviewed August 12, 2021
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Intellectual property (IP) is a general term that covers many types of creative and intellectual works. Your business might have intellectual property without you even realizing it. For example, if you have a secret recipe, a company logo, or a unique manufacturing process, your business has intellectual property.
As a business owner, you need to avoid infringing on anyone else's intellectual property. You should also protect your own intellectual property. Below, we will discuss the four types of IP rights and how you can protect them.
If your business has created a useful and new invention, a patent can protect that invention.
A patent gives an inventor the right to exclude others from making, using, or selling their invention. In exchange for this exclusive right, the inventor must share the details of the invention with the U.S. Patent and Trademark Office (USPTO). The details then become public.
The three types of patents are utility, design, and plant patents.
- Utility Patents: When you think of patents, you probably think of utility patents. The USPTO gives utility patents for inventions that are both new and useful.
- Design Patents: Design patents cover new and original designs for manufactured products. A design patent protects the way the product looks, rather than the way it works.
- Plant Patents: Plant patents are less common than utility and design patents. The USPTO offers plant patents to people who discover or create a new type of plant.
How to Protect Your Patents
To secure protection for your business's inventions, you need to apply for a patent with the USPTO. You should file for a provisional (temporary) patent right away. Once you have filed for a provisional patent, you can put the words “Patent Pending" on your invention. You can apply to convert a provisional patent into a non-provisional patent within 12 months of filing for the provisional patent.
The patent application process is more complex and expensive than copyrighting or trademarking. You must be able to prove that your invention or innovation is non-obvious, novel, and useful. If your business is seeking patent protection, it's a good idea to talk to a patent lawyer.
If you get patent protection, you cannot keep your invention a trade secret. In your patent application you will reveal the details of your invention and make it public. Although you lose the ability to keep it secret, you will be able to prevent others from profiting from your invention. This exclusivity gives the patent holder a major competitive advantage. There is a 20-year term for utility and plant patents. Design patents receive a 14-year term.
Copyrights are a type of IP protection available for people who create original works. The types of works covered by copyright protection include:
Your work will enjoy copyright protection as soon as it is created. But the work cannot merely be spoken, performed, or imagined. It must be recorded or “fixed in a tangible medium" to be copyrighted.
Who Owns a Copyright?
In general, the author or creator of a work is the copyright owner. However, there is an important exception to this in the business world. If you hire someone to create something it will be considered a "work made for hire" and you are the owner of the copyright.
How to Protect Your Copyrights
A copyright exists as soon as you create a work. But it is still a good idea to register your business's works for copyrights. To sue for copyright infringement on a work, you must have registered it.
If your business hires or employs people to create copyrighted works, you should create a contract for those employees to sign. The contract should make it clear your business owns the copyrights on the works that the employees create in the course of their employment.
A trademark is a word, logo, symbol, name, design, or combination of those things. Businesses use trademarks to differentiate their products or services from those of competitors. A good trademark increases your visibility in crowded markets.
How to Create a Strong Trademark
When you are creating a trademark for your business, you should make sure it is a strong trademark. The types of acceptable/strong trademarks, in order from strongest to weakest, are:
- Fanciful: Fanciful trademarks are made-up words like Pepsi, Starbucks, or Ikea.
- Arbitrary: Arbitrary trademarks are real words that have no relation to the product they identify. Apple computers is a good example of an arbitrary trademark.
- Suggestive: These are trademarks that hint at a product's features or qualities. Think of KitchenAid, for example.
Unacceptable/weak trademarks are:
- Descriptive: A descriptive trademark describes a feature of your product and is not distinctive. For example, the word “Bright" would be descriptive and weak for a lightbulb trademark.
- Generic: A generic trademark is simply the actual word for the product. For example, “Barber Shop" for a barber shop. This is the weakest type of trademark and can't be registered.
As an illustration of the differences between strong and weak trademarks, think of Razor scooters. When the word "Razor" is applied to scooters it is a strong trademark because it is arbitrary, or may be suggestive of speed. The trademark Razor for razor blades, however, would be generic and unacceptable for federal trademark protection.
Other examples of strong trademarks include fanciful (made-up) words like Google and Rolex.
The USPTO provides a helpful visual representation of strong and weak trademarks.
How to Protect Your Trademark
The stronger your trademark is, the easier it will be to protect it.
If you are using your trademark on your goods or with your services, you already own your trademark. But you can increase your trademark protection by applying for a registered trademark. Until your trademark registration is approved, you can use the letters "TM" near your trademark. After it is registered, you can use the ® symbol to show that it is federally registered.
There is a lot of misinformation out there when it comes to trade secrets. A trade secret is not a form of nationwide protection for intellectual property. So, it's important to understand that trade secrets are just that – secrets. The best protection for your trade secret is to guard its secrecy.
Sometimes, a company's trade secret gives it a huge competitive advantage. This is especially true in the food and beverage industry with recipes. A couple of examples are the secret recipes for Kentucky Fried Chicken and Coca-Cola.
Coca-Cola has gone to great lengths to prevent anyone from stealing its secret recipe. It has claimed it keeps the recipe locked away in secret vaults. The company has also stated that only a few high-level executives know the recipe. By publicizing these stringent security measures, Coca-Cola has added to its name recognition.
How to Protect Your Trade Secrets
It might seem obvious, but the most important thing you can do to protect your trade secrets is to keep them under wraps. The following steps can help your business tomaintain secrecy:
- You should have nondisclosure agreements in place with business partners and employees. Nondisclosure, or confidentiality agreements, prevent employees and partners from using or revealing your trade secrets. Take, for example, a bakery that comes up with a popular new gluten-free cookie recipe. A nondisclosure agreement prevents the bakery's employees from going to another bakery and giving away the secret recipe.
- Train your employees regularly on the importance of keeping the company's secrets.
- Password-protect your company's computers. If someone steals an employee's laptop, this will help to prevent access to your trade secrets.
- Limit outside access to your business. Tours or non-employee visits should be infrequent.
You may be able to sue if someone steals your trade secret. But you will most likely need to prove they accessed the trade secret illegally.
Some states have enacted laws to protect trade secrets. To benefit from this type of protection, you must be able to show that your business takes precautions to secure your trade secrets. The bottom line with trade secrets is to do everything you can to maintain their secrecy.
How an Attorney Can Help
Intellectual property is a complex and evolving area of the law. If you have questions about your business's IP rights, an intellectual property attorney can help.
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Contact a qualified business attorney to help you identify how to best protect your business' intellectual property.