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A Different Kind of 'Brain Drain'
Protecting your business' intellectual property can be a matter of life and death
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Business New Haven
11/10/2003
By: Lisa MiCali
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We live in an age where the fundamental unit of measurement of most products and services is information. Most notions in this knowledge-oriented commercial society rest upon the cornerstone of this information: machines, articles or products of manufacture, compositions of matter, processes, methods or improvements create jobs and contribute to the growth of a community and thus, an enterprise and its investors.
The core information created by an invention or concept has a unique and distinct value that derives directly from its usage, research, development, design, distribution and sale that must be protected to discourage unfair or illegal business practices. In fact, all of this information is protectable under law and if it isn't protected by a patent, or a trade secret, it (and possibly your business) could go the way of the dinosaur.
As an entrepreneur, your initial and ongoing investment of time, energy, brainpower and equity is of critical importance given that many products today can be replicated with ease and without large expense. How difficult or expensive is it to download a copy of a software program and copy the code once it is created? Or how about a competitor who takes your brochure, modifies it and mails it under their name? Or a company that duplicates a product's design and distributes it in another sales channel?
With worldwide access to electronic and physical distribution sources, the damage caused by piracy and other illegal infringements may destroy the value built into your product, service or company thus undermining your business and its strategy.
Yet entrepreneurs and small-business owners, who often are preoccupied conceiving or transforming a product, service or industry, frequently overlook marketing and protecting their intellectual property, or IP. Essentially, marketing your IP rights means establishing and securing a legal monopoly on that product, concept or service.
Legal protection of your novel widget, giant idea, innovative service or trade secret not only safeguards your business from raiders by placing a tangible value on your information, but defends your legal rights should your competitors, employees etc. breach your core intellectual assets.
IP issues can be unwieldy and complex, as the 50-plus participants who attended the Connecticut Small Business Development Center's and McCormick Paulding & Huber, LLP's workshop, entitled "Protecting & Marketing Your Intellectual Property," discovered.
Held October 27 at the North Haven campus of Gateway Community College, attendees from entrepreneurs to engineers to small-business owners hurled a barrage of questions at the presenters, who mainly were attorneys experienced in IP law.
Many expressed confusion regarding unfair competition, and copyright issues; others voiced concerns over trademark and patent issues to the five presenters.
The crux of intellectual property rights is to avoid unfair-business-practices litigation. In addition, the acquisition, protection, enforcement and exploitation of IP rights, as well as in most franchising and licensing agreements, require the laser-like precision of a legal eagle with the swiftness of a multi-lingual gazelle: that is, a good IP lawyer well-versed in national and international IP law.
These trained professionals act for a diverse array of manufacturers and suppliers offering a wide variety of goods and services, including industrial, household and pharmaceutical products, information technology and communications products and services, and offer a one-stop service for clients. They not only can help you advance your IP ideas but maintain and police them. Their strength lies in dealing with local and major national jurisdictions and international countries (an additional advantage most businesses overlook).
They can even guide you through a re-branding effort to ensure that all legal channels are covered. Plus, they can instruct you on regional and global anti-counterfeiting and enforcement programs - two critical components of any IP strategy today.
IP issues encompass passing off, unfair competition, copyright, and purchase, sale or licensing of IP rights, in addition to trademark, copyright and patent registration, maintenance, enforcement of IP rights, and anti-piracy initiatives.
Related areas of concern include Internet and domain name issues, media and advertising law, packaging, labeling, food and drug regulatory requirements, manufacturing and distribution agreements, franchising, trade-secret protection and data protection.
While most entrepreneurs or companies involve a lawyer early on, that doesn't mean some IP issues can't be tackled with the right guidance. But, like any endeavor, there is a tradeoff between cost factors (time and energy better spent elsewhere) and value factors (patentability versus marketability) - not to mention the constant changes in patent law to keep up with. But, the most important IP issues for any business revolve around patents, trademarks, trade secrets and copyrights. These often are fraught with confusion, and costly to maintain.
In any business, the investment of time and energy is critical when dollars are at stake. John Tomich, general counsel and secretary at Meriden-based Cuno Inc., a manufacturer of filtration products, suggests determining first if the information - i.e., the invention, idea or service - is worth protecting, and if it is, whether there is a market. After performing a market analysis, next comes what he calls a "patentability study." Ask yourself: Is it new, novel or unobvious? And, is it useful?
A t this point, he suggests searching patent records at the U.S. Patent Office to see if a patent has already been awarded. (Yes, someone already holds a patent for an outside pocket on fast food French fries containers in which the ketchup rests for easy dipping. McDonald's rejected it - it was too expensive.)
Finally, Tomich recommends "proof of principle" to see if it really does work under normal, stable conditions. Remember, your product, service, idea doesn't have to be better - it just has to be different.
At this juncture, if all signs are positive, it's almost certain, says Tomich, that your competitors will want to get a hold of the information and/or will also try to recreate it themselves. It's therefore critical to keep detailed records with date and witness signatures should you need to prove you invented it first.
Date of conception is very important. This is why Richard Michaud of the Hartford law firm McCormick, Paulding & Huber recommends starting an ongoing "idea disclosure program" to ensure all ideas are documented and laboratory notebooks dated and witnessed. (In the U.S., patents are granted to the first to invent, not the first to file, as is the practice in many foreign countries.)
The same goes for trade secrets - if they are not under lock and key protected by abundant, legally binding employee/client/partner nondisclosures, they could fall inadvertently into the general domain, causing irretrievable damage to your business. Trade secrets are only protectable, says Tomich, as long as they remain secret. That means it's your job to make sure everyone involved with an invention signs appropriate non-disclosures and non-compete agreements.
The legal definition of invention is composed of two parts, explains Michaud: conception and reduction of practice. Conception is the mental part: "the complete comprehension of the invention, including how to make it and use it." Reduction of practice requires you to either make the invention or file a patent application. "If possible," he adds, "file your patent application before disclosing the invention publicly or engaging in any commercial activity." This will satisfy the "practice" part of the invention should litigation transpire.
Trademarks (any name, symbol, sign or other device that is used to identify and distinguish goods or services from other businesses) are another prickly area. Under common law, regularly using the symbol "TM" permits you to "be in possession of" the phrase as you long as you to continue to use it. However, if you register it on a federal level, you can use the registered symbol (r), which will provide the most protection for your trademark.
But this doesn't mean you're covered in every state. In order to receive state protection you must register the mark in each state where the mark is used.
Selecting a trademark isn't easy, says Marina Cunningham, a partner with McCormick, Paulding & Huber, and shouldn't be taken lightly.
"Trademarks identify a business and reflect its good will," she says. Make sure it's protectable, unique, and not descriptive (unless the mark conveys an immediate idea of the ingredients, qualities, or characteristics of the goods - e.g., the "Coppertop Battery") and not confusingly similar to other marks.
"A great deal of effort goes into building this good will," she adds, "so a careful search should be conducted before adopting or using any name." That search, she says, should include trademark registrations and pending applications, as well as available databases relevant to the goods or services associated with the business.
Lastly, copyright protects your expression, whether in a brochure or sales catalogue, on a Web site, or in an e-mail. The Copyright Act of 1976 states that "the items of expression can include literary, dramatic and musical works; pantomimes and choreography; pictorial, graphic and sculptural works; audio-visual works; sound recordings; and architectural works." Any original expression is eligible for copyright protection as soon as it is fixed in a tangible form.
One of the largest threats to your business is the Internet, characterized by many lawyers as the biggest menace to copyright law since its inception. Awash in information, much of it with varying degrees of copyright protection, the Internet includes copyrighted material such as Web sites, catalogues, press releases, news stories, software, tools, novels, screenplays, graphics, pictures, instant messages and even e-mail.
In fact, the frightening reality is that almost everything on the Internet is protected by copyright law but that it's not easily policed for violations. That's your job. And it's a tall order to do that alone.
The bottom line is, Do your homework. And be wary of all those invention marketers you see advertising in the back of magazines. They usually charge a lot of money and for the most part, you can perform the research yourself.
If you can't spare the time and effort it takes to research all the government databases, file the detailed and often lengthy applications both here and abroad, it's best to hire an IP lawyer who can help. While it can be costly (anywhere from $5,000 to $25,000 for patent and trademark registrations), it will be worth your effort in the long run.
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