Understanding Intellectual Property
This post is Part 3 of a series. Read Part 1 here and Part 2 here.
When most of us hear the term “intellectual property” or “IP” we know, at least vaguely, that it is important and has something to do with protecting ideas. Then our brains tend to freeze as we scramble to figure out which legal bucket our ideas fit into. Do I copyright my company name? Do I trademark my invention? Do I patent my video? When we don’t know, we tend to make mistakes, the worst possible being, “I don’t want to deal with this so I’m going to blow it off, hoping it’ll all work itself out.” That is a fatal IP mistake you don’t want to make.
Here are the four basic buckets of intellectual property law laid out with an easy-to-remember example to which we can all relate. Have you enjoyed a Coca-Cola lately? You know, in the classic greenish-tint glass bottle pulled from an iced cooler, wet and cold enough to beat back a sweltering Georgia summer day. Maybe you have one around and can look at it while we chat. If not, your memory of that bottle and its contents is probably clear enough.
Here’s how the company navigates the complexities of intellectual property.
A patent is a time-limited monopoly issued by a government in exchange for inventing and sharing something that is “new, novel and nonobvious.” The policy idea here is that society wants innovation, and innovators need both incentives and protections in exchange for inventing and sharing. The patent was born as society’s way of both protecting and rewarding an inventor with a marketplace head start for their invention.
Know that a patent doesn’t protect just an idea, but it protects the tangible manifestation of an idea. For example, Einstein tried but wasn’t allowed to patent E=mc2. Similarly, it’s fantastic if you invent the invisibility cloak, but you are not going to get a patent for it unless it works and you show others how it works (which you may not want to do). Last thing, for now, there are three types of patents (utility, design and plant). A utility patent is for protecting how something is made or functions, a design patent is for protecting ornamental features of something, and a plant patent is for protecting … you guessed it.
So about that Coca-Cola bottle in your hand or on your mind. A utility patent could have protected how the bottle was made, while another utility patent could have protected the drink’s formula. A design patent could have protected the shape of the bottle. But, and not much of a spoiler alert here, Coca-Cola didn’t take those approaches. Instead, they went in other directions.
Think of a trade secret as the exact opposite of a patent. You don’t get a government issued monopoly because you are not telling others how to make your invention. Instead, you are keeping private information that has commercial value. The upside of a trade secret is that it isn’t time limited. It can last at long as you’re able to keep it a secret. And that’s the downside, you have to keep it a secret. The secret doesn’t have to be absolute as a limited number of people in your organization can know it, but they have to keep it secret.
Processes, equipment that can be hidden in a manufacturing line, recipes and chemical compositions are the sorts of things that lend themselves to being trade secrets. Things that can be purchased and reverse engineered, a motor for example, are not the sort of inventions to try to protect with a trade secret.
Back to that bottle in your hand or on your mind. Hypothetically, a utility patent could have protected the Coca-cola formula for 17 years, starting with the patent’s date of issue. And once that patent expired, anyone would be allowed to make the same formula and sell the drink. Instead, what’s possibly the most famous trade secret in the world? Exactly. And for how long? Since 1886 — 8 times 17 years — and counting.
A trademark is an identifier that can be anything a consumer associates with a product or service—words, graphics, sounds, color. The examples are endless, and the average American sees thousands per day. Is there anyone in the United States over the age of three that cannot identify the Golden Arches at 70 m.p.h.? Yeah, I do not think so either. Trademarks are important in that they are supposed to eliminate confusion for consumers. You know those Golden Arches mean just one particular source and none other. There are two basics to understand about selecting a trademark.
First, a trademark can not be generic or descriptive of a product or service, rather, at best they are arbitrary or fanciful. For example, getting trademark rights to VANS for a camper van conversion service is not likely because the word ‘vans’ is too descriptive of the actual service. But you can get trademark rights for VANS to label and sell shoes because the association between the word and produce is arbitrary; no one naturally associated the word ‘vans’ with shoes until some company started doing it. Also, a made up word, like XEROX, is fanciful and protectable as a trademark.
Second, a trademark can not be confusingly similar to another existing trademark in the same or similar market. What does that look like in real life? It is unlikely that anyone is going to get trademark rights to WANS for a new line of shoes because someone else has VANS for the same thing. Meanwhile, DELTA Airlines and DELTA Faucets can co-exist because no one is reasonably going to confuse which company provided its airline ticket and which its bathroom faucets.
Let’s look or think about our Coca-Cola bottle. What trademarks do you see and what could act as a trademark? The script Coca-Cola with the ® symbol. The block lettered Coke with the ® symbol. The red bottle cap could be under certain conditions. How about the actual shape of the bottle? Yes, since it wasn’t first protected by a design patent, which opens an interesting subset of trademark law called trade dress.
Remember patents are a time-limited monopoly in exchange for inventing and sharing something new? Copyrights work in a similar way, but a copyright is a monopoly that protects an artistic expression in a fixed medium. A story idea about ‘boy meets girl’ in and of itself isn’t protectable, that’s just an idea. But a book titled Romeo and Juliet, or a play titled West Side Story, or a movie titled Titanic, or a song titled Love Story—are just some examples of copyright protectable artistic expressions. Yes, a computer program can be copyrighted. As long as the idea is made a unique artistic expression in a fixed medium, it should be able to receive copyright protection.
The writing typically found on a Coca-Cola bottle is unlikely to receive copyright protection. That’s because most of that writing has to do with required labeling, ingredients, directions to recycle and other common phrases for which we do not want to give someone a monopoly. But how about all those Coca-Cola signs, magazine ads, television commercials, songs, Santa calendars, pajama patterns, Christmas tree ornaments … the list seems endless. Those are all copyright protectable.
So now you are set with a clear understanding of the four basic buckets of intellectual property law. No more brain freeze for you, unless you drink a Coca-Cola slushie too quickly. That gives me a brain freeze every time.
Hiring the right people, understanding intellectual property and documenting your new company correctly will lay the foundation for success at your new venture. If you have additional questions or want to take action to plan for and protect your business, please schedule a consultation with us for timely and sound business advice.