What About IP?

Clients often ask me about issues related to Intellecual Property, so I thought I would write a post that can act as a primer - answering some of the most common questions. Let's get to it...

What is Intellectual Property?

The phrase "Intellectual Property" gets tossed around often now. You might see it referred to as its commonly known abbreviation, IP. Most people know what IP is even if they don't know what it is.

IP simply refers to intangible (e.g. not physical) creations that are allowed ownership protection under the law. This includes patents, copyrights, and trademarks. Most people know, or use these words and don't know those are what people refer to with the term Intellectual Property. The idea is that, unlike a building or car, or some other physical object you can lay hold to and say, "this is mine!", Intellectual Property is generally conceived in the mind - the intellect. An idea for an invention begins in a person's thoughts. The characters and plot for a novel originates in the brain. A special business name, slogan, or logo is imagined by a person before it gets set to paper or computer. Over time, laws have evolved to provide ownership in these different ideas so that people can feel safe investing time and money in producing products or exposing the public to their business logo, without fear that someone will just make copycats and steal their thunder. There's even a case headed to the Supreme Court over whether or not computer code can be copyrighted.

IP Types defined

Here's a very quick explanation of the three types of IP

 

Patent

A patent is an ownership right in an inventive and/or novel creation of something that has a use. Patents can be granted in many different types of 'inventions' - ranging from newly created vaccines to the proverbial better mousetrap. There are a few different types of patents and stages to the patent process (that I won't get into here - maybe the subject of a later post), but the ultimate idea is that when you create a brand new invention or way of completing a task that isn't obvious, you may be able to get granted a patent (legal ownership of that creation) by the government.

There is a general 'first to use' way of deciding who has the protection when two or more invent the same idea around the same time. However, the cleaner way courts like to look at patents are a 'first to file' situation, where they only have to decide who was the first to the office with the idea. Unless their fraud or theft involved, generally the first to file gets the right of ownership.

 

Trademark

This is possibly the most recognized, but most unknown of the three. Our world is filled with trademarks. Ever seen the Nike 'swoosh'? How about the golden arches of McDonald's? Those symbols are trademarks. Literally, the mark of the business that people come to recognize and associate with that business. The logo or icon. Trademark status can also be granted in slogans that become associated with the business, such as "Just do it!" associated with Nike.

Trademarks are big business and fiercely protected. Because human beings are such visual creatures, we come to associate the logos and marks of businesses with the business itself. At one time, Xerox put out full page ads in newspapers cautioning people to refer to making copies of documents as 'photocopying' and not making a 'xerox'. Because it had become a common term for office workers to say, for example, "Can you xerox this report for me? I need three copies of it." that Xerox, the company, had to tell people to stop! Once a trademarked term becomes a part of the public's common use, it stops being protected. Kleenex did something similar to keep their name "Kleenex" protected by making people refer to Kleenex as the brand and tissue as the product.

 

Most people have become familiar with the term copyright, and even some of its principles, due to the music sharing conflicts in the 2000's. Copyright is generally recognized as the legal ownership right of someone in a work of art that they create. Music gets copyrighted. Novels, poems, stories get copyrighted. Artwork and other designs get copyrighted. There are a couple other, more specific areas that fall under copyright protection, but those are the general ways people gain this type of right.

Copyright in a work created by a person grants them (and sometimes their descendants) with the right to prevent anyone else from copying the work, in whole or in part, for commercial gain or in a way that diminishes the gain of the creator. For example, while the file sharers on the original Napster were not selling or profiting from the sharing, those peers in the peer to peer network were still liable for copyright violation because when you give away someone's creations to the masses for free you've deprived the creator of the economic benefit they earned. Likewise, if someone scans a book and puts it online for free or when someone shares a movie with a large group of people, they are violating copyright laws.

A hazy area that comes into play with copyright is fair use. It's a similar doctrine to the public domain issue with trademarks. Once a copyright expires, it goes into the public domain and can be used by anyone for virtually any reason. But even before copyrights are extinguished, there are times when people can use a copyrighted work without getting in trouble. There is fair use doctrine that allows individuals to use copyrighted material for their own personal use in almost any way they want. This is why you can duplicate a CD you own (or make mp3's from your cd collection) in order to back up your music. This is why you can make a photocopy of a book just for yourself. This is why teachers can show films to their classes or copy sections of an article. Either the audience is so limited or the use is so completely non-commercial, that the person is allowed some flexibility in how they're using the materials over which they possess control.

 

Why Protect Your IP?

Ultimately, what's the reason to jump through all the hoops necessary to get protection of ideas? Considering every major business and many individuals are falling all over themselves to get to the US Patent and Trademark Office to pay all the fees and complete all the forms, there must be something to all of this stuff.

There are a few reasons you'll want to seek and buy this kind of protection. Primarily you want to keep people from using and profiting from your ideas. Inventions take a long time to create. Logos and other marks take a lot of thought to create and make unique. You've been writing the great American novel for three years now and there's no way you're letting someone put their name on your hard work.

Additionally, when you seek to sell your company at some point, that IP becomes very valuable. In some cases it's the most valuable asset your company owns. Perhaps it's the only asset your company owns and is the reason for its founding. Then, of course, there are those cases where a part of something you developed can be used by others in their products without diminishing your space in the marketplace. In those cases you may want to license that technology or mark to someone else. They pay you for the right to use it without breaking the law. Think of a franchise for McDonald's that needs to use the arches and menu. Or consider an algorithm that compresses data lossless near instantly which you use for your video app, but a streaming music company wants to use it for their service also.

The possession of legal ownership of these different things allows the ability to make someone pay you for the right to use themselves. It allows another business to justify (and allows you to demand) a higher price for the purchase of or investment in your company. You now own some item that is actually worth something and that makes you and your business more valuable.

 
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