It is not uncommon for companies to be founded on a single formula, product or software program. In my practice, I have found that many entrepreneurial companies have not taken the necessary steps to protect their IP (intellectual property) and thereby put their company at risk.
There are many IP protection options open to the entrepreneur.
It is important that we look at each of these options and discuss how they can assist in a program designed to protect you company’s intellectual property.
Trademarks
Registering you trademark or logo is very important. Companies like Harley Davidson, Major League Baseball, and the NFL vigorously protect their trademarks. Harley has been involved in numerous suits to protect their eagle logo and associated designs from individuals who want to trade on their name and reputation. The Green Bay Packers and the NFL have had several individuals try to enrich themselves as a result of the recent Super Bowl victory. At JH Collectibles, many times we sent letters to firms who tried to trade on our name, by using a different spelling of the word collectibles or even our logo. Trademarks can be registered at the state or federal level.
Copyrights
A copyright will protect your software, training materials, or other written works for a set period of time. Most software is copy written, yet some software companies elect to use a patent to protect their programs. Also, textbooks, photographs, training scenarios, manuscripts and other published materials can be easily protected with a copyright. You can obtain additional information on copyrights, the law and file a copyright electronically at www.copyright.gov.
Patents
Patents should be obtained for product formulations, production processes, machines, machine components, and other categories. Patents can protect your product, process or formulation for 20 years. In the United States the federal courts are very pro patent holder. Patents are issued based upon the first to invent, not the first to file as it is in Japan and other countries. Information regarding the filing of a patent is available at the United States patent office or on www.USPTO.gov.
Trade secret and non-disclosure agreements
A trade secret is universally defined by the courts to be, “any formula, pattern, device or compilation of information which is used in one’s business, and which gives (the owner) an opportunity to obtain an advantage over competitors who do not know or use it.” There are legitimate legal and business reasons to enter into such agreements: They can enhance the legal protections already provided by law and can address a number of practical problems. All states make it illegal for an officer or employee of a company to use or disclose the company’s trade secrets during or after the term of employment.
Confidentiality agreements
Confidentiality agreements perform several functions. First, they protect sensitive technical or commercial information from disclosure to others. One or more participants in the agreement may promise to not disclose technical information received from the other party. If the information is revealed to another individual or company, the injured party has cause to claim a breach of contract and can seek injunctive and monetary damages.
Second, the use of confidentiality agreements can prevent the forfeiture of valuable patent rights. Under U.S. law and in other countries as well, the public disclosure of an invention can be deemed as a forfeiture of patent rights in that invention. A properly drafted confidentiality agreement can avoid the undesired and often unintentional forfeiture of valuable patent rights.
Third, confidentiality agreements define exactly what information can and cannot be disclosed. This is usually accomplished by specifically classifying the non-disclosable information as confidential or proprietary. The definition of this term is, of course, subject to negotiation. As one would imagine, the company or individual disclosing the confidential information (the “discloser”) would like the definition to be as all-inclusive as possible. On the other hand, the company receiving the confidential information (the “recipient”) would like to see as narrowly focused a definition as possible.
The type of information that can be included under the umbrella of confidential information is virtually unlimited. Any information that flows between the parties can be considered confidential, data, know-how, prototypes, engineering drawings, computer software, test results, tools, systems, and specifications. This list is certainly not exhaustive but does illustrate the breadth of items that can be deemed confidential.
In order to protect the intellectual property that is the core of your business, you need to consult with an IP attorney and determine which of these options best suits your business model. Recent cases have demonstrated that the courts will vigorously assist you in defending your intellectual property against infringement and will compensate the owner of the patent, trademark or copyright for any losses incurred as a result of that breach.
