The term “Intellectual Property” generally refers to the value created in human inventions and mental efforts, as opposed to value created through manual labor and following the instructions of others. Through its legal protections, intellectual property can be treated much like physical property, allowing individuals and companies to buy, sell and license their intellectual property to others.
The metes and bounds of intellectual property are defined by the legal frameworks established by national governments. Intellectual property laws define how individuals and organizations can assert legal rights to intellectual creations. Thus, intellectual property exists primarily as legal constructs that vary somewhat from country to country depending upon the details within each country’s intellectual property laws. In countries with laws that expansively protect inventions and intellectual creations, and whose court systems vigorously enforce such laws, intellectual property is highly valuable. In countries with narrow legal protections or limited legal enforcement mechanisms, intellectual property exhibits less value. Some countries also recognize the concept of “natural rights” and have enacted laws which extend extensive rights to individuals in their creative works of authorship, artwork and design. So one must look to the laws of each country to define the nature of intellectual property, the extent of the protections that are provided, and the inherent value in such intellectual property.
Traditionally there are five main types of intellectual property that will be of most concern to inventors and entrepreneurs: patents; trademarks; copyrights; trade secrets; and know-how. Additionally, most industrial countries also have laws that protect other forms of intellectual property which are similar to these five main categories, including rights in industrial designs (which are similar to design patents and copyrights), rights in registered semiconductor mask works, rights of publicity, and protections for Internet domains. Also, most countries have laws against industrial espionage and computer “hacking,” which provide protections for intellectual property. More recently there has been recognition of ownership rights in personal information; data on individual transactions, communications, and locations; social media files; medical records; and even tissues, cells and DNA. For this article, we will address just the five main types of intellectual property of concern to most entrepreneurs and business leaders.
Patents
Patents are essentially legal grants of limited monopolies to make, use, sell or import inventions for a limited period of time; generally 20 years from the date that the application was first filed. Patents are only granted for inventions that are new and involve an incentive step or are not obvious in view of what was known. The patent monopoly is granted in exchange for inventors publicly disclosing their invention in a patent application that the government soon publishes for all to see.
Patents have economic value because they provide legal rights to prevent others from using the claimed inventions, thereby enabling companies to exploit the invention without competition for the duration of the patent’s life. Note that patents are not a right to practice an invention, because patents held by others need to be respected as well.
Because monopolies have serious economic consequences, patents are only granted for inventions which are truly new and not merely obvious variations of what is known, only in exchange for a full public disclosure of the complete adventure, and only for the limited life of the patent so long as its maintenance fees are paid. Also, the monopoly is limited to what is recited in the allowed claims, and not to everything described in the patent.
There are three basic types of patents: utility patents; design patents; and plant variety patents.
Utility patents encompass things like machines and compositions of matter, as well as methods of doing things. When people talk about patents, they are usually referring to utility patents. Utility patents give owners the right to prevent others from making, using or selling things defined by words in a set of claims. Utility patents are generally valid for 20 years from the date of filing of the application, provided the maintenance fees are paid.
Design patents cover the ornamental design of articles of manufacture. Design patents claim the shapes of things as defined by a set of drawings. Design patent give owners the right to prevent others from making, using or selling things that look like the drawings in the patent. Design patents are valid for 15 years from the date the patent is granted.
Plant patents grant a monopoly in a distinct and new variety of a plant that is invented or discovered and asexually reproduced, excluding tuber-propagated plants and plants found in an uncultivated state. Asexually propagated means reproduced other than from seeds, such as by the rooting of cuttings, by layering, budding, grafting, inarching, etc. Plant patents are valid for 20 years from the date of filing of the application.
In short, patents can be very valuable property for companies with the resources to exploit them or enforce them in litigation.
We will dive more deeply into the requirements, costs and exploitation of patents in later articles.
Trademarks
Trademarks are symbols used by companies and organizations to identify themselves as the source of products and services they offer to the marketplace. Unlike patents and other forms of intellectual property that protect the owner, trademarks are premised on protecting consumers from being misled regarding the nature or source of products and services, as well as to protect the reputations of businesses. Trademarks inform the purchasing public of the source of particular goods or services, and a trademark is infringed if a consumer might be confused or misled by the same or similar mark. Thus, trademarks are linked to particular products and practices in commerce. As such, one cannot simply create an imaginative trademark and register it without selling or planning to sell goods or services that will be identified by the trademark. Unlike patents, trademarks do not expire so long as they are actively used in commerce on the registered goods or service.
Because trademarks are identifiers of organizations, goods or services, they can acquire real value when the reputation of those organizations, goods or services has value. For this reason, owners of trademarks often zealously guard the use of their marks to ensure they are not counterfeited, used by others or disparaged in the marketplace. For this reason, it is important to respect the trademarks of others, including identifying marks (e.g., with the “®” or “™” symbols) when the marks are used in publications and by avoiding associating the trademarks of others with negative connotations or another’s goods or services.
We will dive more deeply into the requirements, costs and exploitation of trademarks in later articles.
Copyrights
Copyrights give to the owner the legal right to stop others from making or selling copies, or collect royalties from those who do make copies, of a creative expression that is fixed or recorded in some tangible medium of expression or recording. Copyrights encompass a wide range of creative endeavors, including works of authorship, musical compositions, musical recordings, photographs, films, sculptures, software programs, drawings, and paintings, which is not an exhaustive list.
Unlike patents, copyrights do not protect ideas and cannot prevent others from making, selling or using an invention. Instead, copyrights protect the creative expression itself from being copied or reproduced by others without permission of the copyright holder. Thus, an author of a book or article describing how to make something can stop others from making unauthorized copies of the writing (e.g., article or book), but can do nothing to stop someone from making money on what they learned from the author. Similarly, the author cannot prevent others from reading the book or article and then writing their own book or article on the same subject, provided they do not copy substantial portions.
Since copyrights are limited to protections against copying and do create monopolies in the ideas described in the works, governments are liberal in granting copyrights. There is no requirement that copyrighted works be new or non-obvious; only that they are the creative works of the author and not a copy of someone else’s work. Copyright applications are not examined except to confirm that the material is eligible for copyright protection. In most countries, copyrights are acquired by the creator of a creative work as soon as the work is recorded in a tangible medium of expression. Thus, the very act of writing, recording, taking a photograph, drawing or shooting a video is sufficient to create copyrights in that document, recording, photograph, drawing or video. The registration of copyrights with government copyright offices is little more than a formality required to enforce the copyright, such as by filing a copyright infringement lawsuit against those making unauthorized copies.
We will dive more deeply into the requirements and exploitation of copyrights in later articles.
Trade secrets and industrial data
Another category of intellectual property that differs from patents and copyrights is knows as trade secrets, but is sometimes referred to as industrial data. Trade secrets and industrial data worthy of legal protections, by definition, are information that has economic value to the owner because it is not generally known to the public or industrial competitor. Thus, in order to be a trade secret, the information must be secret and it must have economic value because it is secret. “Secret” means that it is not known widely to the public, such as published in a document that is readily available, and not known to most competitors in the industry. To have economic value the information must provide some competitive advantage, such as enabling a unique product, providing a head start in development or a cost saving to the possessor that is not available to competitors.
Trade secrets encompass a broad range of information defined simply by whether it provides economic value as a result of being secret. Thus, private business information like customer lists, supplier lists, pricing structures, business plans and similar competitive information is eligible for legal protection as trade secrets. More important to many companies, trade secrets encompass technical information that is not known to competitors. For example, ingredients, formulations, methods of processing, inventions that have not yet been disclosed in a patent application, product designs not yet on sale to the public or disclosed in a patent application, research plans, unpublished scientific discoveries, research and development budgets that have not been disclosed (e.g., in a company securities filing), and future product plans are all typical types of trade secret information. In short, most technical and business activities of for-profit companies can be eligible for trade secret protection, at least until publicly disclosed, such as in a patent application, product offering, proposal, technical paper or other disclosure that may become known to competitors.
The legal protections afforded to trade secrets are limited to protecting against industrial espionage and unauthorized disclosure. Because of the very essence of trade secrets, once the information is publicly known the information is no longer secret, and thus public disclosure extinguishes trade secrets. As a result, the enforcement of trade secrets is often an exercise in trying to herd animals back into the barn after someone has left the barn door open. An owner of a trade secret may obtain legal enforcement in the form of payments or damage caused by misappropriating or disclosing a trade secret. In cases where the misappropriated trade secrets is still not generally known, the trade secret owner may be able to obtain a court order preventing the misappropriating individual or company from continuing to use the trade secret information. However, those competitors who innocently learn the information through public sources or develop the information independently are free to use that information without recourse.
Know-How
Know-how refers to the technical knowledge that is usually acquired by engineers, technicians and plant operators relating to efficient and effective processes for making certain products, operating certain machines or providing certain services. Often know-how exists in the experience of a company’s manufacturing team or laboratory staff, and is difficult to reduce to writing. While know-how is often not something that can be protected by patents or trade secrets, it nevertheless can be important intellectual property, particularly in the context of products, methods and services that are partially covered by patents and trade secrets. It is not uncommon for license or sales agreements for patents to also address the exchange or use of trade secrets and know-how. For example, an agreement to license a patented process to manufacture something may include license terms for disclosing related trade secrets and technical assistance to teach the know-how needed to practice the invention to the licensee’s employees.
Other types of intellectual property
Countries also provide protection for products of intellectual endeavors that do not fit neatly into the five categories of intellectual property discussed above.
Many countries provide intellectual property for registered integrated circuit mask works. Falling somewhere between copyright and patent, legal protections for the masks used to fabricate integrated circuits have value in the effort required to efficiently lay out the circuits and generate the corresponding photolithography masks. Registering a mask work gives the owner legal remedies against those who would copy the masks in order to make direct copies of the integrated circuits.
Many countries provide intellectual property for architectural designs, such as the designs of buildings and other large structures, such as bridges.
Some countries have intellectual property laws protecting works of engineering design that can be readily copied, such as by making a mold of the product. For example, some U.S. states have laws prohibiting the copying of boat hulls, which could be copied easily by using one boat to create a mold that can be used to create exact copies. Such laws are intended to protect the economic investment made by those who created the products by inhibiting competition from those who would pirate their intellectual products.
