Businesses can protect intellectual property (IP), including products, designs, logos, product names, Weblogs and books, with a variety of legal tools, including patents, trade secrets, trademarks, copyrights and provisional patents.
A business owner should first conduct an IP audit to itemize the products or services that make the company unique. The next step is to determine which strategy can best be used to protect the company’s best ideas or products, according to IP attorneys.
Finally, business owners should weigh the importance of the IP to the business with the legal costs of protecting it.
Patents
Patents help companies such as Adaptive Micro Systems LLC, a Milwaukee high-tech manufacturing company, in multiple ways.
A patent lasts for 20 years, which gives a company the opportunity to license the patent to other manufacturers to make and sell.
“Our customers are protected by our patents because they can use them as a selling edge. If we have something unique in design, it helps our distributors,” said Bill Latz, president of Adaptive Micro Systems.
Adaptive Micro Systems works with about 300 distributors in the indoor and outdoor commercial display industry but also works with multiple original equipment manufacturers and offers private label services. Local commercial display distributors of Adaptive Micro Systems products include Greenfield-based Everbrite LLC and Milwaukee-based Poblocki Sign Co.
Adaptive Micro Systems also builds its patent portfolio to increase the asset value of the company. Another firm is seeking to purchase one of Adaptive Micro System’s older patents for about $1 million, Latz said.
“A patent is the best, strongest form of protection,” said Jill Welytock of Absolute Technology Law Group LLC in Milwaukee. “If a (person or a business) has something new, and it can be patented, then it should. If something can’t be patented, a second-tier strategy is to establish a very strong market identity for the product. Get a trademark so that everyone knows the source and the particular product.”
Patents are only granted to ideas and products that are new, useful and non-obvious, local lawyers say.
“Anything created by man, in theory, is subject to patent protection,” said Gary Plotecher, an attorney with Whyte Hirschboeck Dudek S.C. in Milwaukee.
Manufactured products, processes, improvements and business methods are just some of the ideas that are patentable by the U.S. Patent and Trademark Office. To determine if an idea is new, useful and non-obvious, the individuals with the ideas need to hire attorneys to do a patent search or perform their own due diligence to be sure the patent is not too similar to another patent that has already been issued.
“A patent is not a right for a person to do anything, but it prevents anyone else from making, using or selling what the person has patented,” said Leslie Miller, chairman of the IP department at Reinhart, Boerner Van Dueren S.C. in Milwaukee.
Racine-based Modine Manufacturing Co. recently celebrated the issuance of 35 patents in 2005 and has a total of 2,200 current patents, said Dean Zakos, vice president and general counsel for Modine.
Modine constantly innovates, applies for patents and improves upon patents that are close to expiration, to extend ownership of the product, Zakos said.
“When we manage patents, we try to manage them as we would other business assets where we maximize potential, avoid risk and always have a process that allows us to continually improve,” Zakos said. “If it is a good idea and is patented, most companies don’t stop at that point. If they are doing what they should be doing, there are always ways to follow up on a good idea with other good ideas.”
Modine received a patent on its Parallel Flow product, a condenser used in air conditioning systems in automobiles that has since become the world standard for the design of air conditioning condensers. The patent soon will reach the 20-year mark and expire, Zakos said.
Currently, automobile manufacturers license the patent from Modine, and the company receives the royalties from the licensing.
“It is important to see the big picture, not only to have a good idea now, but to always be thinking, working with customers, knowing trends in the marketplace and anticipating what the next big idea should be,” Zakos said. “This differentiates a lot of companies from companies that continually develop a series of good ideas over a long period of time.”
Patents can take two to five years after filing to be issued, because of the backlog in the U.S. Patent Office, local lawyers say.
“If the product is a fairly simple mechanical invention, the product will probably issue (a patent) within 12 months, but in other technology fields, I have seen some patents that have been pending for five years,” said Thomas Miller, an attorney with Michael Best & Friedrich LLP in Milwaukee.
“Make sure the idea you are thinking about patenting is important to your business,” Thomas Miller said. “Small businesses should consider the degree to which the idea fits into the business plan and the market potential based on the idea.”
Trade secrets
Because patents require full disclosure of the best way an individual knows how to make and use an innovation, some companies choose to protect their innovation through a trade secret instead, Plotecher said.
If a product cannot be reverse-engineered and a company believes it has an advantage in its market by keeping an ingredient, software application or process private, then trade secrets can be advantageous, Plotecher said.
“A trade secret is something that a business owner knows that one or more of his or her competitors don’t know, the fact that the business owner knows this gives him or her an advantage over the competitors and the business owner takes efforts to keep the knowledge a secret,” Leslie Miller said.
Companies keep a trade secret by having individuals who are privy to the information sign confidentiality agreements, keeping papers listing the trade secret under lock and key and only revealing the trade secret to a select few people.
For instance, the recipe for Coca-Cola has been kept a trade secret since it was introduced to the market in 1886.
“A trade secret can live on indefinitely,” Leslie Miller said. “For some reason, no one has been able to reverse-engineer or duplicate the taste. There are all different kinds of cola, but no one has ever successfully duplicated the Coca-Cola formula. (The Coca-Cola Co.) could have gotten a patent. The patent would have had to list the formula, and since it originally came out in the 1890s, the patent would have expired before any of us were born.”
However, once the secret is leaked, the company is at risk for losing its advantage in the marketplace without protection. If the company can prove that the person who leaked the secret obtained the information improperly, then the person can be sued. However, the secret is still blown, Welytok said.
Brookfield-based National Graphics Inc. uses a combination of patents and trade secrets to remain a leader and an innovator for the lenticular imaging industry, said Bill Benedict, sales and marketing manager for the company.
Lenticular imaging is the technique of placing a plastic lens over a scrambled picture to create three-dimensional images and the illusion that an image is moving. National Graphics holds more than 15 current patents.
“When you are first to market, having that patent behind you, the value to promote the product and new technology benefits the company,” Benedict said.
National Graphics learned the hard way in the early 1990s when it created the first commercially viable lens. At the time, National Graphics was incorrectly told that it could not patent the product. The company put the 75-line lens, which contained 75 lenses per inch, on the market and soon after, it became the industry standard, said Jane Boyd, director of sales. National Graphics received no royalties or recognition for its invention.
Trademarks & copyrights
National Graphics also uses trademarks on the names of its products. Trademarks are used to ensure that consumers and clients know where the product comes from and that there is an assumption of quality and goodwill, Plotecher said.
“If you have a paper-wrapped hamburger and it says McDonald’s, you pretty much know what it is going to taste like,” Leslie Miller said. “A trademark identifies the source of a good or service.”
Trademarks and copyrights can protect an expression from being copied identically, such as in the entertainment industry with music and movies, but cannot protect a company against infringement of an idea, Plotecher said.
“A copyright is much cheaper and faster, but the downside is in order to prove infringement, a person has to show copying, which is not always an easy thing to do,” said Tim Ziolkowski of Ziolkowski Patent Solutions Group S.C. in Mequon.
With a patent, a business owner can show the patent to prove that the idea was being used when the business owner had already claimed it, Ziolkowski said.
Provisional patents
Filing a provisional patent application can give a company a one-year grace period before having to file a regular non-provisional patent application. When filing a provisional patent, a business owner receives a filing date from the U.S. Patent Office to file the regular patent.
During the grace period, the business owner can use “patent pending” status, Welytok said. One advantage of a provisional patent is the fees. A provisional patent will cost a small business about $1,500 in attorney fees and $100 to file with the U.S. Patent Office compared with a regular patent application, which can cost about $5,000 in attorney fees and $500 to file, Welytok said.
The business owner will have to pay more fees once the regular patent filing date arrives, but in the meantime, the company can test the new concept in the marketplace before making that investment, Welytock said.
“The problem with provisional patent applications is that people tend to look at them as a shortcut to the patent process. However, there is a legal standard required to support a patent application, and this applies equally to provisional applications,” Thomas Miller said. “The inventor must describe the invention in sufficient detail to allow others to make and use the invention. Problems arise when people fail to fully describe the invention in the provisional application. Another pitfall occurs when applicants fail to consider improvements when formalizing the provisional application.”
There are many options for protecting ideas and expressions that can end up being the source of revenue or credibility for a company. Protecting intellectual property can prove imperative for a company that depends on the intangible.
Bad legal advice, shortcuts and the refusal to invest in intellectual property can be the death knell of a company.
“It may be that the most valuable asset of a company is the patent on the product that it started around,” Ziolkowski said. “A lot of people want to think they have a great idea and think people will pay for the idea without doing anything for it, but we all know that we have to invest in something in order to gain a return on it.”
Modine hires law firm to protect its patents
Modine Manufacturing Co., a Racine-based provider of thermal management technology and solutions, announced it has selected Michael Best & Friedrich LLP of Milwaukee as its new law firm to execute patents and provide intellectual property advice and services.
Modine has nearly 2,200 patents worldwide, going back to 1916, when founder Arthur B. Modine applied for his first of 120 patents.
“They are the best fit for our culture of applied innovation, our employees and our intellectual property management process,” said Dean Zakos, Modine’s vice president, general counsel and secretary. “Geography wasn’t the driver of this decision, but it’s a nice benefit that they are based in our own Wisconsin backyard.”
“Michael Best is excited to work with Modine in achieving Modine’s business goals, particularly in light of Modine’s strong reputation for innovation and intellectual property protection,” said Chris Austin, partner with Michael Best.
