Properly protected intellectual property rights can preserve a company’s market position for decades.
According to Tony McShane of Neal, Gerber & Eisenberg LLP, however, many businesses do not act to get their intellectual properly houses in order until a competitor has copied something unique or when pursuing financing or an IPO. By then, it is usually too late. Here are some things to know when auditing an intellectual property portfolio.
Adds McShane “Intellectual property laws do not protect ideas in and of themselves; rather, they protect ideas that have been reduced to practice in some tangible way, through trademarks, patents, copyrights and trade secrets.”
Here is a brief checklist of what are important intellectual properties and some actions small businesses need to do to protect their assets.
- Trademarks. A trademark is the word, name, symbol, or device (or combination thereof) by which a business’ products and services are known. A trademark assures customers of the quality and character of the goods and services with which they appear.
While trademarks are protected by common law as a result of their use in commerce, registration confers a myriad of valuable benefits. A qualified trademark attorney should “clear” a mark before it is adopted to guard against infringing another business’s mark. To ensure that it gets the benefits of registration, once cleared, a trademark should be registered.
- Patents. A patent secures for its owner the right to make, sell or use new and useful inventions. Patentable inventions include machines, articles of manufacture, compositions of material; they include computer programs and business methods. A patentable invention can be a new and useful improvement of an earlier invention.
Under many circumstances, patents are owned by the individual inventors, and not their employers. Businesses should therefore be sure that they are assigned the rights in the inventions of their employees.
Importantly, an invention is not patentable if it has been patented or described in a printed publication in the U.S. or a foreign country, or if it has been in public use or on sale in the U.S. for more than one year prior to the date of the application for patent in the United States. Identifying and acting before this one-year bar date is therefore critical to obtaining patent protection.
- Copyrights. Copyrights protect the expression of an idea as soon as it is reduced to a fixed, readable format. Protectable works include written words (such as manuals, advertising and product information), graphic arts (such as product packaging and website pages) and computer programs.
Although copyrights arise from the act of authorship, enforcing a copyright requires a copyright registration, and registration prior to an act of infringement affords a copyright holder the opportunity to recover statutory damages and attorney’s fees.
- Trade Secrets. Trade secrets (i) derive independent economic value from not being generally known to or ascertainable through proper means by those who can obtain economic value from its disclosure or use, and (ii) are the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Examples include business plans, financial statements and projections, detailed customer and supplier information, blueprints and engineering drawings.
Often trade secrets cannot be enforced in court because they are not the subject of “reasonable efforts” to maintain their secrecy. These days, trade secrets can be unwittingly or intentionally disclosed over social media. It is therefore critical for all businesses to ensure that they have an effective Trade Secret Protection Protocol and Social Media Use Policy.
- Annual Audit. As the pace of business and change continues to increase, every business should work with qualified counsel to conduct an annual intellectual property audit to ensure that integral assets are identified and protected.
Tony McShane is a partner and co-chair of the Intellectual Property & Technology Transactions Practice at Neal, Gerber & Eisenberg LLP (Chicago). He represents businesses of all sizes in matters related to intellectual property counseling and litigation, including the protection and enforcement of trademarks, trade dress, copyrights, trade secrets and patents. He may be reached at (312) 269-8486 or firstname.lastname@example.org.