Protecting Intellectual Property Rights – The Four Pillars and More

By Caroline Wei-Berk, Ph.D. Esq.

Intellectual property rights, also known simply as IPRs, have become one of the most talked about topics in business today, yet they remain the least understood.

Simply put, intellectual properties are products of human innovation and creativity and IPRs are the legal rights and protections related to intellectual properties. Unlike tangible properties, such as real estate, automobiles, cash, intellectual properties have no physical forms. They are intangible properties embodied on a piece of paper or in an electronic medium, similar to investment funds and bank deposits.

Like tangible properties, intellectual properties can be bought, sold or leased (actually, the correct terminology is “licensed”). Like tangible properties, intellectual properties can be lost or destroyed due to carelessness or neglect. But unlike other types of properties, one can create these valuable assets out of nothing. While other assets are limited by various resources, intellectual properties are only limited by human imagination and creativity.

It is essential for business owners and management to incorporate an IP strategy into their business plan.

A sound IP strategy should encompass at least four components: patent, trademark, copyright, and last but not least, contracts. While it may not be necessary to include all of the components, the owner and management should at least understand what the choices are and the rationales behind the decisions. The basic characteristics of these four components are introduced below, along with some of their limitations. There are many more rules and exceptions regarding IPRs. One should consult an IP professional in dealing with specific situations.

First, there is patent. In the U.S. there are three types of patents: utility patent, design patent and plant patent. A utility patent relates to new, useful and non-obvious innovations of article or device, composition of matter, method or process of doing or making something, new use of an existing device or material, or a product made by a particular new process. A design patent covers the ornamental (i.e., non-utilitarian) design of an article. A plant patent covers asexually produced plants. While it is conceptually easier for the inventors or business owners to understand the novelty and utility requirements, the legal concept of “non-obviousness” is best left to the judgment of the patent professionals.

A general misconception about patent protection is that having a granted patent allows one to make the product covered by the patent. Unfortunately, patent right is merely a right to exclude, that is, the patent owner may exclude others from making, using, selling, offering to sell or importing the invention. The patent owner’s own right to do so is dependent upon the rights of others as well as other applicable laws and regulations. For example, if the patented invention is an improvement over a prior patented invention, the patent owner may not be able to practice the improvement because it may constitute an infringement of the prior patented invention. This concept can be illustrated as follows: A owns a patent relating to a chair with arm rests and B owns a patent relating to a chair without arm rests; A can exclude B from making a chair with armrests and B can exclude A from making a chair without armrests, in this case, A cannot make his own patented chair without infringing B’s patent.

Second, a trademark serves to identify the source of products on which it appears. A service mark serves the same source-identifying function with respect to services. Examples of well known marks include Nike’s swoosh and Target’s red circles. When consumers see those marks, they are able to associate the marks with the particular sources providing those products or services.

The important thing to remember about trademark is that the mark owner must be vigilant – the mark may be lost or destroyed from carelessness or neglect. First, there is the use it or lose it requirement.

Trademark registration must be renewed with the Trademark Office periodically, and evidence of the mark being used in commerce must be submitted in order to get the renewal. Second, there is the enforcement requirement to protect the mark from confusion and/or dilution. If the mark owner neglects to police and take action against third parties’ uses of its mark or similar marks, the mark would fail its basic source-identifying function and may be cancelled. How important is this? Just look at how Victoria’s Secret fought Victor’s Little Secret all the way to the Supreme Court. Third, when a mark becomes too famous, it may run the risk of being genericized. It happens when the marks have been ubiquitously adopted as a verb or a noun, for example, “xerox” and “kleenex”. These mark owners have successfully campaigned to substitute other words, such as “copy” and “tissue”, and weaned their marks from the common vocabulary, thus, protected their marks. The next big one on the endangered list is “google”. Any suggestion for an alternative verb?

Third, a copyright is the right to prevent others from unauthorized reproduction, dissemination, or modification of a creative work. Copyright traditionally applies to literature, music, movie, work of art, and more recently, to computer software. Copyright differs from patent in that it protects the expression, not the idea itself. For example, Romeo and Juliet and Westside Story have the same idea but different expressions, therefore, both are copyrightable. Copyright protection emphasizes the expression and the authorship, therefore, facts, data, or compilation of facts or data are not copyrightable. However, the arrangement of them, their appearance on the page, etc., may satisfy the creative requirement, hence are copyrightable.

The exclusive rights afforded by a copyright are limited by the Fair Use Doctrine, which allows limited use of copyrighted material without requiring permission from the copyright holder. Examples of fair use include commentary, criticism, news reporting, research, teaching, library archiving and scholarship.

Additionally, facts, ideas, blank forms, and public domain materials are excluded from copyright protection. It is worth noting that “fair use” and “public domain” are legal terms that should not be confused with their everyday meanings.

Fourth, contracts should be included in the overall IP strategy. Contracts extract values from IPRs through licensing, franchising and outright sales of intellectual properties. Contracts fill in some voids between the legal limits of IPR protections and actual enforcement of IPRs. Some specific benefits provided by contracts are:

(a) Contract prevents others from infringing or stealing the patented products, especially useful with respect to outsourcing manufacturers; moreover, courts in many developing countries are quite effective in terms of enforcing contracts, even if the IP laws of those countries are not well developed or easily enforced.

(b) Contract can provide alternatives to litigation by incorporating the mediation or arbitration clause, which tends to be faster, cheaper and more effective route to enforce one’s IPRs.

(c) Contract provides clarity with respect to the ownership of improvements made upon existing products, especially useful with respect to joint development partners and outsourcing manufacturers.

(d) Contract protects confidential information, such as trade secrets, know-how’s, formulations, manuals, financial data, and business strategy, from being disclosed to competitors or third parties.

Finally, there are other forms of IP protections, such as trade secrets and know-how’s, registered mask works, and registered industrial designs.

It is essential for businesses to have a comprehensive IP strategy as part of their business strategy. An IP strategy carefully planned and successfully executed can make the difference between growth and demise of the enterprise.