Confusion over how to protect ideas and innovations is widespread among businessmen, many of whom lack an understanding of the basic legal protections available to them.
A small Ohio company, for example, made around $300,000 by selling its patented speed control device for electric drills to several Fortune 500 companies. But soon another company copied the invention and began selling it in the same market. A lawsuit followed in which the Ohio company claimed patent infringement.
Hidden in the company's past, however, was one innocent but very damaging act: The company had failed to file its patent application until 13 months after it had shipped 1,400 devices to partially fill its first order.?this delay of more than one year violated the strict law requiring patents to be filed within 12 months after the first sale of the product. As a result of the company's oversight, the court not only invalidated the patent, but also ordered the Ohio company to pay its opponent's attorney's fees.
A Minnesota snack food company was the first to adopt a trademark, "Old Dutch," which it used only in the upper Midwest. Promptly obtaining a federal trademark registration would have given the company exclusive rights to use this mark nationwide. But the filing was delayed and in the interim an East Coast snack food company adopted the same mark in six eastern states. As a result, the East Coast company established exclusive rights to the trademark in its six-state territory.
These examples illustrate how a small business often sees its valuable ideas taken away by its competition -- legally. It won't happen if the businessman understands the basic requirements for preserving his rights before he markets a new product or embarks on a venture.
The five essential legal tools for protecting ideas are patents, trademarks, copyrights, trade dress unfair competition laws, and trade secrets. Some of these legal tools can also be used creatively as marketing aids, and often more than one form of protection is available for a single design or innovation.
A patent is a right granted by the United States government to prevent other parties from making, selling, or using your invention, whether that invention is a product, a method, an apparatus, a composition of matter (including man-made microorganisms), or a computer program.
To qualify for the right, a person must file an application describing the invention in the U.S. Patent and Trademark Office.After the office determines that the invention is in fact new, it will issue a patent, a process that takes about two years. Exclusive rights, i.e., the right to sue to stop others from using your invention and to collect damages for unauthorized use, do not begin until the patent is issued.
Patents cover not only major advances, but also less important or unobvious improvements. So it may be to your advantage to apply for a patent on such an improvement just to put the phrase "patent" or "patent pending" of your product or in your promotional material. "Patent" or "patent pending" on packaging, flyers, or advertisements conveys to the public your exclusivity in the product. Television commercials for certain products, such as Mr. Coffee electric coffee maker and Yes detergent, assert that the product is unique because it is patented.
Basic requirements to preserve your patent rights. Before seeing a patent attorney, you should not release any information about the product or innovation publicly, since public disclosure triggers various laws by which rights can be irrevocably lost. You should also have written documentation, signed by a witness, of every step that went into making your invention, to prove that you are the actual inventor. If any of your employees are likely to be inventors, you should have them sign agreements, in advance, that inventions developed in the course of their work for you belong to the company.
A trademark is a word, phrase, or symbol (two- or three-dimensional) that identifies your product or service in the marketplace. Trademarks, like patents, can be used creatively in your market program.
Aspects of a product that may qualify for trademark protection include:
Shape, such as the Jeep front grille and the Coca-Cola bottle, or even building designs, such as McDonald's golden arches.
Ornamental color or design, such as the decoration on Nike tennis shoes, the black and gold color combination of a Duracell battery, or Levi's small tag on the left side of the rear pocket of its blue jeans.
Catchy phrases, such as McDonald's registered phrase "Two-all-beef-patties- special-sauce-lettuce-cheese-pickles- onions-on-a-sesame-seed-bun," or Tammy Wynette's registered trademark "First Lady f Country Music."
To establish ownership of a trademark, you must first use it in a commercial sale of the goods or services. Then you should promptly file an application for registration of the mark in the U.S. Patent and Trademark Office. After the office determines that the mark is not confusingly similar to any previously registered mark, it will issue the official registration. This notice of your rights to the mark enables you to legally prevent others from using the mark anywhere in the United States, even if they don't know you've used it before.
Basic requirements to preserve trademark rights: Have a search conducted to see if the mark is still available; get legal advice to verify that the mark can be registered; and learn how to use it properly to complete your ownership.
A trademark attorney can check the U.S. Patent and Trademark Office, which covers only existing U.S. marks, or can contact a private computer search company that covers federal and state registrations and various directories. The cost for both searches will usually range from $300 on up.
A copyright prevents copying of any writing, work of art (two- or three-dimensional), or computer program. Ownership in a work exists automatically the moment the work is reduced to tangible form. That ownership can be forfeited, however, if the work is made public without proper "notice," which includes the symbol (c), the year first made public, and the name of the owner of the work. Before or after publication, a copyright can be federally registered by filing an application with the Copyright Office of the United States Library of Congress.
In addition to covering conventional texts such as books, pamphlets, and the like, the copyright laws protect virtually all written and artwork material used in promotion and advertising. This would include package design, all advertisements, operating and sales manuals, and operating instructions. Artwork protected by copyrights can also include such products as fabric designs, lamp bases, and belt buckles.
Basic requirements to preserve copyright rights: Unlike trademarks, exclusive rights exist in copyrights upon creation. To preserve that right, be sure that the proper notice appears on every work whenever it is shown publicly. Federal registration should be obtained on any important work, since you'll need it if you bring an infringement suit. Failure to file for registration promptly can prevent recovery of statutory damages and attorney's fees. On the other hand, companies that create many copyrighted works can save money by forgoing federal registrations on copyrights until it becomes apparent that a given work will have some importance.
If you hire a freelancer to prepare any text or artwork for you, you must have him agree in advance, in writing, that the work is your property. Otherwise it belongs to the author or artist, who can dispose of it as he wishes.
TRADE DRESS UNFAIR COMPETITION LAWS
In addition to protections granted by federal law -- i.e., patents, trademarks, and copyrights -- there are two important state common law protections available. One is trade dress unfair competition laws. The term "trade dress" refers to the distinctive way the products is "dressed up" with, for example, labels, packaging design, or color schemes.
These laws protect against unauthorized copying of ornamental and distinctive package or product designs (but not functional features) that, through use, have come to be recognized by the public as coming from a certain source. These rights exist automatically, without any application being filed, as soon as such public recognition has come into existence.
While these rights are similar to trademarks, and do in fact overlap with trademark rights, unfair competition encompasses a greater range of design possibilities. Some designs that have been protected by courts but which did not qualify for trademark protection include a mattress-cover design, a distinctive bicycle color scheme (a pink body frame, powder blue handlebars, and yellow wheels), and a color coding system used in milling machinery.
Basic requirements for preserving trade dress unfair competiton rights: Since no applications are filed to effect these rights, the best advice is to develop distinctive product and package designs promptly, and then publicize them as much as your budget allows by, for example, including them in your advertisements.
The other common law protection, trade secrets, may be defined as all those documents and pieces of information within a company that the company takes steps to conceal from outsiders and that are not necessarily disclosed upon the sale of the company's product or services. Examples include customer lists, blueprints, and recipes. The company's ownership in these secrets exists upon their creation. No application need be filed anywhere.
However, maintaining secrecy is essential; a company cannot prevent an outsider from using the secret if the company voluntarily or carelessly revealed it to him without a signed agreement prohibiting use of these materials. The company also cannot prevent outsiders from using its trade secret if the outsider arrived at it independently. (A patent, remember, does allow a company to stop such use.)
While trade secrets are essentially for protecting internal matters, they can often be used in advertising to convey to the public your company's exclusivity in a certain product or service. Cosmetic ads often sell products made by "secret formulas" and many kinds of foods are allegedly made by "secret recipes."
Basic requirements to preserve trade secret rights: Trade secrets can be protected indefinitely (as, for example, the Coca-Cola formula has been for nearly 100 years) by following two basic rules:
1. Before anyone is given access to any trade secret, that person should sign an agreement that he will keep it secret. Employees and hired outside consultants have a duty not to reveal trade secrets. The laws governing such duties are not always clear, especially as they apply to employees after they leave the company. So to preserve rights to trade secrets, employees and hired outside consultants should be asked to sign a secrecy agreement at the beginning of their employment. Such agreements will be especially helpful to stop other companies from using your secrets if they become aware of them without authorization.
2. Have a sensible in-house control procedure that, for example, keeps secret documents in a secure place, prohibits outside visitors from access to places where trade secrets are visible, and educates empoloyees on the importance of maintaining secrecy.
For additional information on: Patent and Trademarks: Write to the Supt. of Documents, United States Government Printing Office,
Washington, DC 20402, for: General Information Concerning Patents ($2.25)
General Information Concerning Trademarks ($1.70)
Copyrights: Write to the Copyright Office, Library of Congress,
Washington, DC 20559 for: "Circular RI -- Copyright Basics" (no charge)
Unfair Competition and Trade Secrets: See these extensive works available at most law libraries: Roger M. Milgrim, Trade Secrets, Matthew Bender, 1980.
J. Thomas McCarthy, Trademarks and Unfair Competition, The Lawyers Cooperative Publishing Co., 1973.