There are times in business where you can successfully fly by the seat of your pants. There are business situations where you can crash through like a bull in a china shop, clean up the pieces later and still get a decent outcome. Intellectual property is not one of these. Failure to act proactively to protect intellectual property most often leads to lost time, money and business opportunities and may result in litigation or even total business failure.
Intellectual property generally consists of patents, trademarks, copyrights and trade secrets. Below is an overview of some of the common issues confronted by businesses dealing with intellectual property, issues that require prior planning and execution to address effectively.
The law does not automatically protect “your” intellectual property. If an employee creates copyrightable material in the course of their employment, the company generally owns the copyrights under the “work for hire” rules. In contrast, if an employee creates a patentable invention in the course of work, the company generally will not own the patent rights unless there is an employment contract stating that the employee has agreed to assign their patent rights to the company.
A little planning can go a long way. Even where the law does provide some “automatic” protection, you can often get a lot more bang for your buck with a little prior planning and effort. For example, in the United States, you are not required to register a trademark in order to have trademark rights, but your rights and remedies are significantly stronger if you do register with the U.S. Patent and Trademark Office.
A whole lot of laws to worry about. Different types of intellectual property are subject to different laws, and if your company operates in multiple states or countries, you may have to worry about the applicable laws of several different jurisdictions. For example, patents and copyrights are governed by federal law in the United States, while trademarks are subject to both federal and state law and trade secrets are primarily governed by state law. Foreign countries have their own intellectual property laws, some of which are quite different from U.S. law and may provide no protection for your intellectual property outside of the United States unless you have registered the intellectual property or taken other appropriate actions in that country.
Is it worth it? Not all intellectual property that can be protected is worth protecting. For example, patent litigation is often extremely expensive. Even smaller cases can cost hundreds of thousands of dollars, and the litigation costs for larger cases are millions of dollars. A small company considering whether to patent an invention needs to consider not only the cost to obtain the patent, but whether the company can afford to defend the patent if it is challenged. If the company cannot not afford patent litigation, it may not be worth the time and effort to get a patent in the first place, particularly if the company can instead protect the invention as a trade secret.
Although litigation is generally less costly than with patents, trademarks and trade secrets require active measures to protect and retain your rights. A company generally must engage in “reasonable efforts under the circumstances” to protect the confidentiality of trade secrets or it will lose its trade secret rights. Similarly, a company must take active measures to identify and prevent unauthorized use of its trademark or it may lose its trademark rights.
