1. Chapter 10 Intellectual Property

2. Objectives Different forms of intellectual property Value of trademarks, copyrights, and patents. How to obtain a copyright. Creating an idea, to patent approval. Selecting professional assistance – legal services in pursuing intellectual property rights. Reverse engineering and trade secrets.

3. Introduction Most common intellectual property (IP) protection are for trademarks, copyrights, and patents. Trade secrets are sometimes a more effective way for securing property rights (Coca Cola formula). Professional legal advice and assistance may be necessary for many entrepreneurs.

4. Value of Trademarks Trademarks protect words, names, symbols, motto, jingles or distinctive forms of identification associated a product or service. The slogan “Quality is Job #1” is one of Ford Motor Company’s trademarks. A service mark applies to services rather than products. To achieve a favorable trademark awareness a business entity will have to invest money, effort, and time in its development. A trademark can be an effective tool for promoting use among consumers.

5. Registering Trademarks In order to safeguard one’s trademark rights, it is recommended that it be registered with the U.S. Patent and Trademark Office (USPTO) in Washington, DC (fig 10-2, page 267). Only the owner can apply, although an attorney may initiate the application on behalf of the owner. The owner must submit an application with supporting documentation. Fees are about $325 online and $375 by mail. It takes approximately one year until receiving approval for the trademark. If a trademark is similar and is likely to cause confusion, this is sufficient ground for infringement.

6. Copyrights Copyrights are legal protection given to authors of original works of writing, art, musical composition, photography, and architectural design. A payment of $35 online or $45 by mail must be sent to the U.S. Copyright Office along with a simple application form and nonreturnable copies of the work. It takes 8 months to a year to get a copyright. Unlike trademarks, copyrights must be renewed to remain in force. Upon expiration of the copyright, the work becomes part of the public domain.

7. Patents A patent grants the inventor (heirs or assignees) specific rights for twenty years from the date the patent application is filed. U.S. patents are issued by the U. S. Patent and Trademark Office (USPTO). For securing rights outside the United States additional foreign patent applications are needed. A patent is good for protecting a business model from new competition, extracting rents (royalties) from others who want to use the invention, or sale, collateral for borrowing, and increasing the value of the enterprise. Filing a patent means that you will be telling your competitors exactly what to do. This is usually a case to use trade secrets for protection. To be patentable an invention must have utility and novelty and must be non obvious. There is no guarantee that an issued patent will be able to withstand a legal challenge.

8. How to Protect Intellectual Property A simple non disclosure agreement (NDA) or confidentiality agreement (CA) should be drawn up and signed by any person with whom the ideas are discussed before any substantive conversation takes place. A patent attorney or patent agent may charge anywhere from $6,500 to $12,000 to file an utility patent application. The U.S. government gives rights to the first person who conceives an idea. Therefore it is important to keep good dated notes whenever possible. The USPTO’s web site www.uspto.gov is a good site to search for prior patents.www.uspto.gov A patent pending mark carries no legal weight but may prove a deterrent to potential competitors. A licensee will usually pay some kind of upfront fee, ongoing royalty, or both to the owner of the patent.

9. Progress from idea to patent to enterprise 1. Conceive an idea and perform a preliminary analysis of the market and patent potential. Take steps to protect your idea. 2. Document your idea. 3. Select an intellectual property law firm. The initial consultation is usually free of charge. Compare services and costs. 4. Conduct a preliminary search to see if the idea is already patented. 5. If not patented, perform a detailed search to identify related patents. 6. Prepare a patent application using diagrams and flow charts – see examples of previous patents on site www.uspto.gov. File a patent application.www.uspto.gov 7. It takes 9 to 12 months to get a response from the patent office. 8. Respond to any objections from the USPTO. 9. Wait some more. 10. Look for a notice that the patent is accepted and a patent number has been issued. 11. Embark on your new enterprise. 12. Maintain vigilance for patent infringement and prosecuting appropriately.

10. Value of Trade Secrets The trade secret’s greatest advantage over other forms of intellectual property may be in the potentially limitless duration of its value and service to its owner. Coca-Cola is the best example of a company that has kept its secret for over a hundred years and continues to enjoy its economic benefit. Even if the formula can be duplicated through chemical analysis, Coca-Cola has built such a powerful brand that they will not be hurt by the competition. The smaller the number of persons exposed to a trade secret, the lower is the likelihood that it will fall into the hands of the competition – use confidentiality and non disclosure agreements with these individuals.

11. Reverse Engineering Reverse engineering is a process whereby an existing system is analyzed with the purpose of reproducing and improving. Provided that patents are not violated this method can be an effective tool in building improved products.

12. Summary Trademarks protect words, names, symbols, motto, jingles or distinctive forms of identification associated a product or service. Copyrights are legal protection given to authors of original works of writing, art, musical composition, photography, and architectural design. A patent grants the inventor (heirs or assignees) specific rights for twenty years from the date the patent application is filed. The trade secret’s greatest advantage over other forms of intellectual property may be in the potentially limitless duration of its value and service to its owner. Reverse engineering is a process whereby an existing system is analyzed with the purpose of reproducing and improving.

13. Home Work 1. What is a trademark? 2. What are copyrights? 3. What is a patent? 4. What is the advantage of trade secrets? 5. What is reverse engineering?