General Practice, Solo & Small Firm DivisionMagazine

 
Volume 17, Number 3
April/May 2000

BASICS OF INTELLECTUAL PROPERTY

BY CHRIS A. CASEIRO

The term "intellectual property" covers property generated by the thought processes, creativity, and organizational capabilities of individuals and legal entities. Intellectual property can be divided into the four primary types: functional inventions (protectable by patent); nonfunctional works of originality (protectable by copyright); trademarks and service marks; and trade secrets. Each type has its own distinctive characteristics and forms of protection.

Lawyers need to understand the protection available for each type of intellectual property, and the relationships between these forms of intellectual property and electronic commerce activities and employment responsibilities.

Patents

A patent provides its owner with the right to exclude others from making, using, or selling the invention described and claimed in the patent. In the United States, only the federal government can grant that right (U.S. Constitution, art. 1, § 8, cl. 8; 35 U.S.C. § 1 et seq.). It has no basis in state law. Inventions protectable by utility patents include "any new and useful process, machine, manufacture, or composition of matter, or any improvement thereof" (35 U.S.C. § 101). Patents also may be obtained for plant varieties and for designs of utilitarian devices.

The federal government grants a patent to an invention owner for a limited period of time in exchange for the public disclosure of the invention. That is, the patent grant is an incentive that provides the invention owner with control of the exploitation of the invention in exchange for expanding the common knowledge of the public in relation to that invention. The term of exclusivity for utility and plant patents is limited to a maximum of 20 years from the date an application describing the invention is filed with the U.S. Patent and Trademark Office (PTO). The term is 14 years from issuance for a design patent. To retain patent rights for the patent's full term, maintenance fees must be paid periodically. Each country grants its own patent rights. There are no international patents.

To obtain patent rights, an invention owner must file a patent application that completely describes the invention. The owner must disclose the "best mode" of the invention. All details required to duplicate or practice the best design of the invention must be described in the patent application. The invention owner cannot hide key aspects of the invention in an attempt to thwart others from copying the invention. The patent application is generally a fairly complex document that is a mix of technical and legal characteristics. Apart from direct filings by original inventors, only individuals registered to practice before the PTO (patent attorneys and patent agents) are entitled to represent inventors and invention owners in the prosecution of patent applications pending before the PTO.

A U.S. application must be filed in the name of the inventor(s); it cannot be filed in the name of a legal or business entity. However, complete rights in the invention and the application may be assigned to any type of entity.

There is a one-year deadline for the filing of a patent application in the United States. The start of that one-year period is triggered by the public disclosure of the invention. Public disclosure consists of:

  • A public use or display of the invention;
  • A publicly available document describing the invention;
  • the sale, or offering for sale, of the invention; or
  • an oral description of the invention presented in a public forum.

Failure to file a patent application within one year of public disclosure bars any chance of obtaining patent rights for the invention. In most countries, no public disclosure of the invention can be made prior to the filing of a patent application. Under certain patent conventions of which the United States is a member, it is possible to rely on a U.S. application filing date as the filing date in many other countries.

Once the patent application has been filed with the PTO, the invention has "patent pending" status. That status will remain in effect for as long as the application is active in the PTO system, or until a patent issues. Patent pending status does not give the invention owner the right to exclude others from making, using, or selling the invention.

An examiner at the PTO reviews the application and relevant "prior art" that may describe the same or a similar invention. In most instances, the examiner initially "rejects" the application based on the alleged teachings of prior-art references deemed relevant by the examiner. The applicant is permitted to respond to the rejection by modifying the claimed scope of the invention, presenting arguments in response to the cited prior art, or more commonly, using a combination of the two. If the examiner agrees with the claim modification(s) and/or the arguments presented in response to a rejection, the application will be allowed for issuance. The patent application process typically takes one to two years to complete.

An invention owner cannot initiate litigation to bar others from making, using, or selling the invention without first obtaining the government-granted patent. All or a portion of the rights defined in a patent may be assigned or licensed.

Copyrights

Original works of authorship that are fixed in a tangible medium of expression are protectable under federal copyright law (U.S. Constitution, art. 1, § 8, cl. 8; 17 U.S.C. § 100 et seq.) upon their creation. The tangible medium of expression may be paper, film, phonograph, or mass storage medium such as CD-ROM, DVD, or computer hard drive and diskette. A few states, including California and New York, offer limited supplemental protection for certain authors in regard to preservation of the appearance or display location of a particular work. For the most part, however, federal law controls. There is no international copyright registry. Registration must be sought directly in countries of interest.

Copyright is available for nonfunctional original works including, but not limited to, literary works, two- and three-dimensional works of art, video and audio recordings, computer programs, and architectural blueprints. Copyright protection is also available for articles of manufacture, but only to the extent that the design for which protection is sought incorporates "pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article" (17 U.S.C. §§ 101, 102(a)). Copyright protection permits the owner of the work to bar others from (1) making copies of a created work; (2) creating derivatives of the work; and (3) performing or displaying the work in a public manner. Independent creation of a substantially similar work is permissible under federal copyright law.

In the United States, copyright protection remains in effect for the life of the last surviving author plus 70 years. For anonymous and pseudonymous works, and works deemed to be created by legal entities (such as an author's employer), the copyright term is 120 years from creation or 95 years from publication, whichever is shorter. The copyright in a work remains in the name of the original author or authors of the work unless the work is deemed to be a "work for hire." Pursuant to 17 U.S.C. § 101, a work for hire is (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, part of a motion picture or other audiovisual work, sound recording, translation, supplementary work, compilation, instructional text, test, answer material for a test, or atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. In all other instances, transfer of ownership in the work must be in writing. The courts do not recognize a transfer based solely on an oral agreement.

While copyright vests in a work upon its creation and fixation in a tangible medium of expression, registration of the copyright in the work affords its owner certain added benefits. First, it provides a public record of the creation of the work. Second, it is required in order to bring suit for infringement. Third, it is prima facie evidence of the validity of the copyright, provided registration occurs within five years of first publication of the work. Fourth, it enables the owner of the work to block importation of infringing copies. Registration must be effected within three months of publication of the work, or prior to infringement of the work, for the work's owner to claim statutory damages and attorney fees in the course of litigation. Otherwise, only actual damages are available.

Fairly stringent requirements are associated with obtaining a patent, but copyright registration is a simple matter. A two-page application form suitable for the specific type of work must be completed and submitted to the U.S. Copyright Office, along with the registration fee and one (unpublished) or two (published) copies of the work. An examiner reviews the application and the work and makes a threshold determination as to whether the work appears to be original. If so, the registration is effected and delivered to the copyright claimant.

Prior to enactment of the Copyright Act of 1976, the work had to be published before copyright attached. In addition, copyright notice had to be applied to the work. Generally, that notice took a form similar to "© [work owner's name] [year work was created]." Under existing law, publication is no longer required to establish copyright. Further, in 1989 the United States became a signatory to the Berne Convention, and the copyright notice requirement was eliminated. Nevertheless, it is recommended that copyright notices continue to be used to advise potential copiers of the rights existing in the work.

Trademarks

A trademark or service mark is any word, name, slogan, symbol, device, design, shape, color, scent, or combination of such elements (collectively, the "mark") used or intended to be used to identify and distinguish the source of origin of particular goods and/or services from those provided or manufactured and sold by others. Trademark rights are established through federal law (Lanham Act, 15 U.S.C. § 1000 et seq.) and individual state law. Trademark laws were established primarily to protect consumers. That is, the trademark is deemed to provide to consumers an indicator of the source of particular goods and/or services of some minimum expected quality.

To qualify for trademark protection, the mark must either be inherently distinctive or have acquired distinctiveness through secondary meaning. It must not be identical or confusingly similar to another mark used on similar types of goods or services, it must not be merely descriptive, and it must not be functional. The extent to which each of these criteria is defined may vary from state to state. Individual state laws must be consulted when assessing the scope of trademark rights available to a client that offers its goods/services intrastate only. The common- law identifier that may be applied to a trademark is ™ and to a service mark is SM.

To qualify for federal trademark protection, in addition to the basic criteria noted above, goods/services offered to consumers must be used or intended to be used in the relatively near future, in commerce (i.e., commerce regulated by Congress). Further, the mark must be used in such a manner that the consumer can easily view it in association with the goods/services offered (for example, by affixing the mark to the goods). State or federal mark registration is not required to initiate litigation to block others from using the same or a similar mark in connection with the sale of the same or similar goods/services. Nevertheless, federal registration of the mark affords some important benefits, including constructive notice to all second comers of the existence of the registered mark and the opportunity to collect enhanced damages from tortious infringers.

Unlike a patent application, a federal trademark registration application is fairly simple. An important feature of the application is the description of the goods and/or services that are or may be offered under the mark. The description must be drafted as broadly as is accurate, because the PTO will not permit subsequent amendments that broaden the description, which sets the boundaries of the scope of federal registration protection with respect to each mark. The mark is assigned to one or more review classifications depending on the goods and/or services offered under the mark as described in the application.

After an application is filed for federal registration, a PTO examiner searches publicly accessible files to determine whether the application should be denied, for example, because the mark is likely to cause confusion with either (1) a mark previously federally registered or (2) a mark previously used in the United States by another person. Even if the examiner is satisfied that no such conflict exists, the application is subject to opposition by anyone who believes there is a conflict. This opposition period is initiated by a public disclosure of the pendency of the mark for registration and ends 30 days from that publication. There is a mechanism for a registered mark to be cancelled pursuant to petition by a party claiming damage by the registration.

If there is an interest in protecting the mark in countries outside the United States where it is not registered, the mark owner can rely on a U.S. filing date provided the filing is made in the other country within six months after the U.S. filing. Most countries grant an application the same filing date as long as the filing in that country occurs within six months after the U.S. filing.

Federal registration entitles an owner to use the mark identifier ® in association with the mark. Federal registration of the mark remains in effect for as long as the mark is in use. In addition, the Trademark Office requires several filings over the course of the registration term. The first is an affidavit of "continuous use" due between the fifth and sixth anniversaries of registration. In addition, an affidavit of mark incontestability may be filed at that time.

Federal registrations have renewable terms of ten years. Such registrations may be renewed for successive ten-year periods by filing an application within six months prior to expiration of the term. Trademark rights may be assigned or licensed, provided the good will of the business associated with the mark accompanies the transfer.

Trade Secrets

A trade secret is "information, including a formula, pattern, compilation, program, device, method, technique, or process [(collectively, "information")], that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use and (ii) is subject of efforts that are reasonable under the circumstances to maintain its secrecy" (Uniform Trade Secrets Act § 1).

A trade secret, in other words, is confidential information that is valuable to its owner because it provides the owner with an advantage in the marketplace over those who do not know the secret. To maintain information as a trade secret, the owner of the information must take affirmative steps to keep the information secret. This may include maintaining visitor logs, requiring employees to mark and secure information deemed to be of value to its owner, and conducting periodic audits of security measures.

The mere intent to maintain information as a trade secret is not sufficient. Information that is observable in a public forum is generally not considered to be a trade secret. For example, the existence of a certain type of beverage, such as a soft drink, is deemed not to be confidential when made available for purchase by consumers. However, the formula used to create that soft drink may not be determined upon analysis and is therefore protectable as a trade secret.

Trade secret is primarily the subject of state statutory and common law. Federal law is limited to criminal prosecution under the Economic Espionage Act of 1996. It is generally seen as a contractual obligation, and therefore confidentiality or nondisclosure agreements often form the foundation for the establishment of the obligation to maintain the information in secrecy. It is important to define the scope of information that is considered to be a trade secret. Trade secrets remain a valuable form of intellectual property for as long as the information is kept secret and may be of interest to other parties. This indefinite term of protection is generally seen as an advantage over the finite life of a patent. Trade secrets may be sold or otherwise licensed in a manner similar to the transfer of the other three forms of intellectual property.

Electronic Commerce

The rapid expansion of the array of business transactions carried out by electronic transmission-primarily through the Internet-affects most businesses. Issues concerning copyrights, patents, trademarks, and trade secrets should be considered by companies that obtain and/or supply products/services via the Internet.

The novelty of this avenue of commerce as well as the added need of transaction security in most instances make a review of a company's Internet/website/electronic transmission policies and procedures increasingly important. Today's practitioners should bear in mind, when dealing with clients conducting business by way of the Internet, that copyright, patent, trademark, and trade secret issues may arise.

Employee and Contractor Policies

Employee relationships-including preemployment disclosures, orientation of new employees, employment manuals, periodic reminders, seminars, and exit interviews for terminating employees-form part of the foundation for defining the employer's and the employees' rights and responsibilities with respect to one another. In regard to intellectual property, these rights and responsibilities include a clear understanding between the parties as to ownership of such property; obligations to maintain confidential trade secrets during and after the term of employment; and any obligations in regard to competition, or working for the competition, postemployment.

Similarly, agreements with nonemployee consultants should be in writing and should define the ownership of intellectual property created before, during, and after the term of the relationship, as well as confidentiality and noncompetition obligations. Finally, it is important for a company to establish security procedures in regard to its facilities. This includes access to such facilities, the handling of confidential information, and the company's right to review all public disclosures of its products, processes, and marketing methods.

Conclusion

The four main types of intellectual property protection often overlap. Computer programs (software) may be copyright protected as one author's expression of an idea. In addition, they may be patent protected as a functional means of performing an operation. They also may be kept as trade secrets if reverse engineering is not possible. Manufacturing processes and business methods may be maintained as trade secrets as long as they are not readily ascertainable from the resultant product. They also may be protected through patent laws.

Company logos may be artistic in nature as well as a source identifier and therefore may be worthy of copyright and trademark protection. Product containers may be the subject of design patent, copyright, and trademark protection. Lawyers should consider all of these forms of protection when discussing with their clients any new products, services, or business methods that clients are contemplating creating and bringing to market.

Chris A. Caseiro practices in the corporate department and intellectual property & technology group of Pierce Atwood in Portland, Maine. He is registered to practice before the U.S. Patent and Trademark Office.

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