What Every Business Owner Must Know About Intellectual Property
By: Chris Arledge
Most business owners diligently protect their company's property. They invest hard-earned money on locks, safes, alarm systems, and other security devices to protect the company's inventory, cash and other tangible property. But it is often a company's intangible assets-business know-how, client contacts, and proprietary technology-that separate the wheat from the chaff in the marketplace. Yet most businesses do very little to protect their intangible, intellectual property. Your business should be different.
This article identifies the primary types of intellectual property-copyrights, trademarks, patents, and trade secrets-and offers a few tips that every business owner should know in each area.
A. Copyright
Copyright is the exclusive right to copy, distribute, display or broadcast an original work of authorship in a tangible medium. In plain English, anything with even a hint of originality that is made to exist for any lasting period of time-an e-mail or a drawing, for example, as opposed to the spoken word or skywriting-is entitled to copyright protection. If someone other than the author uses copyrighted material improperly, he or she can be found liable for copyright infringement.
There are three things every business owner must know about copyright. First, copyright protects a wide range of material, and thus copyright law can impact just about any type of business. While most people rightly think of books, movies, or music in relation to copyright, in reality just about everything tangible a business generates-manuals, memos, sometimes the product itself-is entitled to copyright protection.
Second, federal registration is important, and you should consider registering any material that is of value to your organization. Without federal registration, you cannot sue for infringement. And without timely registration, you cannot recover some of the most important remedies under the Copyright Act, including attorneys' fees and statutory damages.
Third, understand that "publicly accessible" is not the same as "publicly available." Many people fall into the trap of believing if they can access content on the internet, it must be available for public use. That logic is not sound. And because lack of intent is not a defense to copyright infringement, a business can expose itself to substantial damages if its employees are using material from the internet without the author's permission.
B. Trademarks
Trademarks are logos, slogans, or names that help identify the source of a product or service. McDonald's golden arches and Nike's swoosh are famous trademarks. The fundamental purpose of trademark law is to help consumers avoid confusion. If other fast-food restaurants could use McDonald's name and symbols, a consumer would never know when he or she is purchasing from the real McDonald's or a copycat competitor.
There are two things every business should know about trademarks. First, while it is possible to register trademarks with the federal government (and most states), trademark rights come from use, not registration. If your business has been using a particular name or symbol, it may have trademark rights even if it never registered the mark, and even if a competitor has registered the same mark. Even so, federal registration is valuable for a number of reasons, including because it helps the trademark user expand its mark into new geographical areas.
Second, some trademarks are stronger-and thus more valuable-than others. In part, the strength of a trademark depends on how descriptive it is; the more descriptive a mark, the less value it is under trademark law. "Chris' Sandwich Shop" is a descriptive mark, and it helpfully tells potential customers exactly what my business does. It is also a weak mark. Other shop owners are likely to use similar marks, and I may have little ability to complain. By contrast, the strongest trademarks are words and marks that tell us nothing about what the business actually does: Xerox, Starbucks, and Pepsi to name a few. When naming a business or product, balance the practical benefits of having a descriptive name with the potential consumer confusion that comes with using a weak mark.
C. Patents
Patents protect inventions-usually a product, sometimes a method of doing something. Patents are available if the invention is new, useful and nonobvious. Patent law gives the patent owner a limited monopoly on the use of a product or process for a certain period of time, often 17 years. This means that nobody else can make, use or sell the patented device (or method) without the patent owner's permission.
There are two things all business owners should know about patents. First, if you have a patentable invention, you must act quickly. Inventors are often tempted to test the market for the device before spending time and money on a patent. The danger is that in disclosing the invention or making it available for sale, the inventor can lose his or her rights to patent the device. On occasion it might make sense to publicly disclose a device before seeking a patent, but that decision should only be made after consulting a competent patent lawyer.
Second, the downside to patent protection is that you must make your invention public, including a thorough description of how the invention is made and works. Thus, a patent owner trades secrecy for a legal monopoly. In some cases, secrecy might be more valuable. Thus, an inventor should consult with legal counsel to determine when trade secret law might offer a better source of protection than patent law.
D. Trade Secrets
A trade secret is knowledge that has taken significant time or money to acquire and which has been kept secret. The Coca Cola formula is an example, and is arguably the most-famous trade secret in the world. But most businesses have some trade secret information: customer lists, formulas, business techniques, and pricing or other sensitive business information can all qualify for trade secret protection.
All business owners should know two things about trade secrets. First, keep your secrets, secret. As with any secret, the likelihood of disclosure increases as the number of people with the information increases. In addition, courts are much less likely to help the injured party if he or she was careless about protecting the alleged trade secrets. Thus, disclose trade secrets only to those employees who need to know them, and take reasonable precautions-computer network security, confidentiality and non-disclosure agreements-to keep secrets out of the wrong hands.
A second, related point concerns employees. Most businesses run into trouble with their trade secrets when employees leave and take the secrets elsewhere. Thus, consider non-competition agreements with those employees who must know the trade secrets. The enforceability of such agreements varies state-by-state and the law is sometimes muddled, so it is a good idea to consult good legal counsel on the issue.
About the Author:
Chris Arledge, a partner in the law firm Turner Green Afrasiabi & Arledge LLP, specializes in copyright, trademark and patent disputes. You can learn more about Chris at http://www.turnergreen.com
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Most business owners diligently protect their company's property. They invest hard-earned money on locks, safes, alarm systems, and other security devices to protect the company's inventory, cash and other tangible property. But it is often a company's intangible assets-business know-how, client contacts, and proprietary technology-that separate the wheat from the chaff in the marketplace. Yet most businesses do very little to protect their intangible, intellectual property. Your business should be different. 
