​Intellectual Property


Protect Your Property: Variety of Tools Available to Companies

Creativity and innovation are key ingredients in the recipe for the success of any middle market business. But whether your company’s Next Big Thing is a product, service, or even a novel way of doing business, it must be protected.

Companies can use copyrights, patents, trademarks, and trade secrets to safeguard the hard-fought ingenuity and inspiration – the intellectual property – on which their enterprises are built.

A copyright protects works of authorship such as writings, music, motion pictures, works of art, and computer software. The concepts that underlie both copyrights and patents are rooted in the U.S. Constitution, which states “The Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” A copyright generally lasts for the life of the author plus 70 years.

“Under current law, whenever someone creates one of those types of works and finalizes it in a tangible form, it’s copyrighted immediately,” says John A. Rothchild, associate professor at the Wayne State University Law School. “The copyright prevents others from copying the work, performing it, displaying it, or making a new work based on that work without permission.” For added protection in case a copyright has to be enforced, Rothchild recommends adding the “©” symbol or the word “copyright,” the year created, and the owner’s name to the work and registering it with the U.S. Copyright Office.

“These steps will help you establish ownership and get damages for infringement if it ever comes to a lawsuit,” he says.

Patent Protects Rights

A patent grants property rights to an invention (a process, machine, manufactured item, or composition of matter) for 20 years from the application’s filing date and is granted by the U.S. Patent and Trademark Office (USPTO) in exchange for public disclosure of that invention. “You must submit a patent application to the patent office and prove that your invention qualifies by being novel, non-obvious, and useful,” Rothchild says.

As technology evolves, patent laws are tested. The U.S. Supreme Court decided in 2013 that products of nature like human genes couldn’t be patented. Amazon’s patent of its “1-Click” e-commerce ordering system has spurred debate over to what extent “business methods” are patentable. In a move that favors those who can process paperwork in a timely manner, the America Invents Act of 2013 changed the U.S. patent application process from “first to invent” to “first to file.”

Acquiring Trademark Rights

A trademark is defined by the USPTO as “…a word, phrase, symbol or design, or a combination thereof that identifies or distinguishes the source of the goods of one party from those of others.” Trademarks include brand names that identify goods (Coca-Cola) and “trade dress” that consists of the graphics, color, or shape of packaging (the Coca-Cola bottle).

“You needn’t register a trademark to have protectable exclusive rights in it,” says William M. Borchard of the Cowan, Liebowitz & Latman law firm in New York. “Simply by using a mark on or in connection with goods, or by displaying the mark in the sale or advertising of services, you can automatically acquire trademark rights in the geographic area of use.”

However, registering a trademark gives evidence of the registrant’s exclusive ownership rights and provides greater defense against counterfeit products and illegal importers. The “TM” symbol can be used at any time to claim ownership, but the “®” symbol may be used only after the USPTO has registered the mark. Unlike a copyright, a trademark can last indefinitely as long as it continues to be used in connection with the product or service.

Federal and state laws protect rights to trade secrets (think KFC’s 11 herbs and spices), but the burden remains on companies to keep a lid on proprietary information.

“Trade secret protection is a narrowly applied but extremely important strategy for certain types of businesses,” Rothchild says. “If a secret gets out, you lose, but if you manage to keep it secret, you have the rights to keep it potentially indefinitely. Companies must determine what sort of intellectual property is most important for their business, then assign the appropriate resources to protect it. As with any business decision, you must know the risks and have a strategy to mitigate them.”

Comerica Bank. Member FDIC. Equal Opportunity Lender.

This material has been distributed for general educational/informational purposes only, and should not be considered as accounting, tax or legal advice or recommendations by Comerica Bank, its affiliates or subsidiaries.

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