Understanding Your Business’ Intellectual Property

By: Jaclyn Flint – Attorney at Law

A business’ intellectual property is among its most valuable assets. However, determining what intellectual property an entity owns and how to capitalize on the value of those assets can create confusion for business owners.

This article guides owners of intellectual property on the distinctions between various types of intellectual property assets, in particular, copyrights, patents, trademarks, trade dress, and trade secrets, and how their value is derived. The importance and value of intellectual property is recognized and established by the United States Constitution. Specifically, Article I, Section 8 of the United States Constitution provides that Congress shall have the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Pursuant to this enumerated power, Congress established laws first relating specifically to copyrights and patents.

Copyrights are intellectual property rights in creative works of authorship, including books or other writings, photographs, motion pictures, music, and works of art.

In order to qualify for copyright protection, a work must be original and fixed in a tangible medium, such as paper and digital text, image files, or audio recordings. A work is “original” if it has a minimal degree of creativity that gives the work its own creative spark. An owner of a copyright has the exclusive right to reproduce the copyrighted work, to prepare derivative works based on the copyrighted work, to distribute the copyrighted work (by sale or other means), and to display or perform the copyrighted work.

Ownership of a copyright attaches immediately upon creation to the person or entity that created the particular work of original authorship. However, to enforce one’s copyright through an infringement action, the owner of the copyright must register the copyright through the United States Copyright Office.

Additionally, a business may establish a work-for-hire contractual relationship with its employees or contractors that allows the business to take ownership of copyrights in the original works of authorship created by its employees or contractors. Ownership of a copyright lasts for either the life of the individual author plus 70 years or, in the case of anonymous works, pseudonymous works, or works made for hire, the earlier of 95 years from the year of first publication or 120 years from the date of creation.

In contrast to copyrights, rights in patents are granted to individuals or entities in connection with the invention or discovery of new and useful processes, machines, manufactures, or compositions of matter, or any new and useful improvements thereon.

To qualify for a utility or plant patent, a claimed invention or discovery must generally be novel (i.e., has not been known of or described in writing elsewhere previously), useful, and non-obvious. In addition to utility patents, one may obtain a design patent, which secures rights in how a particular work looks in its size, shape, and configuration and with any specific ornamentation or coloring. Ownership of a patent is established upon approval of a written patent application describing the claimed innovation by the United States Patent and Trademark Office (USPTO).

The owner of a patent has the exclusive right to make, use, offer for sale, or sell their innovation. An owner’s property interest in a design patent lasts for 15 years, while rights in a utility or plant patent last for 20 years, each so long as the patent owner continues to make required patent maintenance fees to the USPTO.

A trademark is the ownership interest in unique words, phrases, symbols, or designs to identify or distinguish the source of goods or services in commerce.

Trademarks protect a business’ distinctive brand or identity that it has built for its goods and/or services. A trademark can only be created for uncommon words, phrases, or images or unique combinations thereof. While a business may possess state common law rights in a particular trademark once the trademark is used in commerce, such rights would be limited only to the specific geographic markets in which the trademark is used unless the owner seeks federal registration of the trademark through the USPTO.

Federal registration of a trademark creates a presumption of ownership in the trademark and provides public notice of a trademark across the United States, rather than a limited geographic market. Once a trademark is established on the federal register, the owner’s rights in the trademark can last indefinitely, so long as the owner continues to maintain its registration and demonstrate continued use of the trademark at 5 to 10-year intervals. One may infringe on an existing trademark if he or she utilizes another, competing mark that is likely to create confusion among consumers of the goods or services being offered through the trademark.

Similar to trademarks, a trade dress is an intellectual property asset designed to protect a business’ brand or identity.

A trade dress is the property right in the commercial look and feel of a good that identifies and distinguishes the source of that good, including elements such as the design, shape, or color of product packaging.

A trade dress serves similar functions as a trademark and secures similar rights in the exclusivity of identifying packaging elements. Like trademarks, a trade dress owner can register a trade dress through the USPTO to create a presumption of ownership and serve as public notice of the trade dress.

Unlike copyrights, patents, and trademarks, a trade secret is an intellectual property right in a business’ confidential, commercially valuable information.

A trade secret is an intellectual property right in a business’ confidential, commercially valuable information.

To be considered a trade secret, information must generally be commercially valuable, known only to a limited group of individuals, and protected by the information holder with reasonable measures to maintain the information’s secrecy. Such measures may include non-disclosure agreements or corporate security measures.

Common examples of trade secrets include the secret recipe for Coca-Cola® or Google’s® search algorithm. Like these examples, a trade secret can serve as the most valuable asset of a business and can distinguish a business from its competitors if properly protected. The owner of a trade secret may enforce their rights through specific trade secret or unfair competition laws or through the enforcement of contractual provisions designed to protect trade secrets.

Understanding a business’ intellectual property and capitalizing on it can be the difference between a business thriving or failing. It is important to consult with an attorney experienced with intellectual property matters to best protect and utilize your business’ intellectual property assets.