When you own a business, understanding intellectual property and the laws that protect it are crucial. In essence, if someone steals your ideas—your intellectual property—you have recourse under the law. But you need to be proactive. Here is a basic primer to guide you.
Intellectual property refers to creations or ideas. Inventions, written and artistic works, and symbols and images used in business are all forms of intellectual property. Intellectual property rights stem from the basic principle that you are allowed to benefit from your own ideas and protect yourself from unfair competition. The thinking is that under these tenets, innovation will thrive and the economy will grow.
Intellectual property and the related protections fall into four basic categories: patents, trademarks, copyrights, and trade secret protection.
Most people are familiar with the concept of patents. Issued by governments—in the U.S. by the United States Patent and Trademark Office (USPTO)—patents grant property rights to the owner of an invention or new way of doing something. When something is patented, it cannot be used, sold, or made without the patent holder’s permission for the period of the patent (generally 20 years).
There are three main types of patents:
- Utility – This covers any new machine, process, or article of manufacture, or any new and useful improvement of one of these.
- Design – This covers any original, new and ornamental design for an article of manufacture.
- Plant – This covers someone who has invented or discovered and asexually reproduced a new variety of plant, such as a mutation or hybrid.
Not all businesses need patents, but they are crucial for entrepreneurs who are banking on a new invention to give them a competitive advantage.
A trademark is a symbol, design, phrase or word that distinguishes the source of a product or service. Having one means people can differentiate you and your business from similar goods and services offered by the competition. For example, the flowing Coca-Cola script that you see on cans of the popular soda is a registered trademark.
Trademarks are meant to avoid confusion between products and services from different companies, but do not prevent competitors from making the same thing.
If you’ve heard of a registered trademark, you may be wondering if you have to register. The answer is no. In the U.S., a person or business can assert “common law” rights based on simply using a specific trademark. However, there are legal advantages to registering a trademark with the USPTO. However, not all marks can be registered. In fact, the most common reason applications are rejected is that there’s a likelihood of confusion with another trademark.
Once you get a patent or register a trademark, it’s up to you, rather than the USPTO, to enforce them.
You probably think of written work when you think of copyrights, but copyright protection applies to any number of mediums, including literary work, dramatic work, and musical and artistic work. Copyright protection usually starts at the moment of creation and lasts for 70 years after the creator has died.
Just like with trademarks, you don’t have to do anything to assert a copyright in the U.S. But, there are legal advantages if you register your copyrighted works with the U.S. Copyright Office. (For instance, if you register within three months of publication, you’ll be eligible to recoup attorney’s fees in any future court actions, rather than just damages.)
A trade secret is information that gives your business a competitive edge over those who don’t possess it. It can be a formula, process, device, or program, among other things. Examples include computer algorithms, customer lists, survey results, and soda formulas.
In a way, trade secrets are the inverse of patents because they’re meant to be kept hidden, while patents announce to everyone that you have exclusive rights over your idea. While there’s no application or registration process, requiring non-disclosure or confidentiality agreements for your employees can help prevent trade secrets from being misused.
If you've got trade secrets that do get misused, there are now both federal and state laws to protect you. The Defend Trade Secrets Act of 2016 created a federal cause of action for trade secret disputes so people can choose whether to file suit in federal or state court.
Understanding the different types of intellectual property protection is the first step in being proactive to keep your competitive edge. As you grow your business, particularly if you are an inventor or entrepreneur, make sure you take out any appropriate patents and use the USPTO’s website as a resource. Registering trademarks or copyrights and planning ahead to avoid disclosure of trade secrets will also make things smoother should you need to hire a lawyer down the road.