Legal

Small Business Guide to Intellectual Property Law

Regardless of the type of business you operate, it’s likely that intellectual property is an important element of value creation for your business. In fact, intellectual property may be one of your business’ most valuable assets.

If you currently run a small business, or are planning to launch a new business venture in the future, it’s critical you understand your Intellectual Property (IP) rights and how to protect them.

There are different types of intellectual property. Below we’ll explore each type and how they relate to your business. The three essential categories of intellectual property protection include:

  • Patent rights
  • Trademark rights
  • Copyright rights

Patents

One of the most common types of intellectual property is a patent. Patents safeguard the rights of inventors. If you invest your time, money and resources inventing a product or service, you can protect you investment by securing a patent. Pursuant to laws passed and radified by Congress under the protection of the U.S. Constitution, a patent conveys exclusive rights to an invention. These rights are granted to inventors who file an application for protection with the United States Patent and Trademark Office (USPTO).

The U.S. Federal government issues three types of patents:

  • Utility patent
  • Design patent
  • Plant patent

Utility patents provide protection for invention relating to the functional aspects of products and processes. Design patents are awarded to protect the rights of inventors of the ornamental design of useful objects. Plant patents provide legal protection for the development of any new variety of living plant. Every patent confers “the right to exclude others from making, using, offering for sale, or sell” the protected invention within the United States or federal jurisdiction of the U.S. Federal government.

The most commonly filed patent, is the Utility patent. When someone refers to a patent generically, more often than not they are referring to a Utility patent. Utility patents are granted for specific types of inventions, including:

  • A process or method, such as computer software codes or medical procedure
  • A machine, such as a treadmill or lawnmower
  • An article of manufacture, such as a paper towel dispenser or shampoo
  • A composition of matter, such as a fitness supplement or anti-wrinkle cream
  • A betterment of a creation or invention that fits within one of the first four categories

When discussing any other type of patent, the terms “design” or “plant” are almost always included as qualifying terms in the discussion.

Patents do not protect ideas. Patents can only protect something that meets the criteria for being patent eligible as defined by the United States Patent and Trademark Office. Historically, in the United States what has been considered eligible for patent protection is quite broad. You can’t protect a business idea. You can however secure a patent to protect the process of doing business, as long as it meets a specific set of requirements. Machines, compounds and other definable processes are also eligible.

For an invention to qualify for patent protection it must be new and non-recognizable to a person of a general level or skillset within the field or industry. The first step to obtaining a patent is to file an application with the U.S. Patent and Trademark Office. After the application is completed, and if a patent is granted, the owner typically is provided patent protection for 20 years. Once granted, the patent holder can preclude others from making, using, or selling the invention throughout the U.S. or importing the invention into the United States from a foreign country.

How to file a patent

When compared with trademarks and copyrights, patents are considered to be the most complicated and challenging to obtain. It may take more than two years from initial filing for a patent to be awarded.

The basic steps to file a patent are as follows:

  1. Search the USPTO website for competing patents. If you’re idea has already been patented there is no sense in trying to patent it. You can search the USPTO patent database at http://patft.uspto.gov/.
  2. Make sure your idea is something you can patent. Not all ideas meet the criteria for patent protect. You can learn if your idea qualifies for patent protection by visiting https://www.uspto.gov/help/patent-help#patents.
  3. Hire a patent attorney. Filing a patent is not something for the traditional “do it yourselfer”. If you’re serious about protecting your idea, using an experienced patent attorney will help you avoid mistakes that could cost you dearly down the road.
  4. Figure out what type of patent you need. There various types of patents. Do you need a Utility, Design, or Plant patent? Make sure you apply for the correct patent type. The USPTO guide outlines the process you can use for determining the type of patent you need.
  5. File a provisional patent application. U.S. patent law is based on a first-to-file-system, not first-to-invent. If you want to protect you unique idea using a patent, you have to move first. A provisional patent application ensures you’ll have the earliest filing date possible.
  6. Signup as a Registered eFiler. You can file a patent application by fax or U.S. mail, but it’s much easier and faster to do it online via the USPTO website. To become a registered eFiler visit EFS-Web Guidance and Resources.
  7. Gather required information for a formal patent application. You you need to prepare a specification, which includes an abstract, background, summary, detailed description and conclusion, include both scope and ramifications. You’ll also need to define the legal scope of your patent. This is where it can get a little bit tricky if you’re not using an attorney. Don’t go at it on your own if you don’t have the required skills and knowledge.
  8. Review your formal application for completeness. It takes a long time (1-3 years) to process a patent application. You don’t want your application rejected because you made an error. Get it right the first time.
  9. Participate in the patent process. Once received and entered into the USPTO system, a patent examiner will be assigned to your case. If contacted, you need to respond to your case examiner with any information he or she requests as soon as possible. If you’re using an attorney, the USPTO examiner will communicate directly with your attorney. If you need to meet with your case examiner you can arrange a meeting by video conference.

If your patent application is rejected twice, you have the right to file an appeal with the Patent Trial and Appeal Board.

Trademarks

You’ve likely seen a logo or marketing slogan with a ™ or ® next to it. These stand for trademark or registered. To build value in your business and brand you can choose to trademark a word, sign, symbol, or graphic that you associate with your company.

There are two types of trademarks: unregistered and registered.

Unregistered Trademarks

When you associate a unique logo, slogan or design with your business, it becomes an unregistered trademark. An unregistered trademark is intellectual property that is protected by law, and cannot be copied by others. There is nothing special you have to do in order to be awarded an unregistered trademark. You receive automatic trademark rights in your brand by virtue of using it.

The letters “TM” are used in association with trademarks used for products (i.e. goods) to show they belong to you. The letters “SM” stand for service mark, and are used in association with services. Both TM and SM can be used prior to official registration with the U.S. Federal trademark office (USPTO).

While you are not required to register your trademark, doing so provides you additional protections. Using a trademark that is the same as another business is infringement. If your trademark is unregistered and another company registers a similar trademark with the federal trademark office, the registered trademark trumps yours. Your unregistered trademark would infringe on the registered trademark, even if you used the trademark first.

Unregistered trademarks offer limited legal protection.

Registered Trademarks

Registered trademarks offer greater legal protection than unregistered trademarks. In addition to slogans and logos, registered trademark may include the shape and color of specific logos that are part of your overall brand identity. For example, Coca-Cola Company owns a trademark registration for the distinctive shape of their fluted cola bottles, Nike owns the shade of orange it uses for its packaging, and even the NBC has a trademark for the chime noise played in association with its broadcasts. Once your trademark is registered, you can use the letter “R” along side your trademark to show that it is registered.

A trademark registration offers protection domestically in the United States. This means that no one in the U.S. can use your trademark. However, a USPTO registration does not protect your trademark outside of the United Sites. You must register a separate trademark for every country where you plan to do business and will require trademark protection.

Does a small business require a trademark?

I recommend that every small business obtain a registered trademark for their company name. This is different than registering a business name with the state. The purpose of obtaining a trademark is to prevent another party from stealing any of your business’ trademarked names, logos, slogans or designs that identify your company.

One of the benefits of trademarking your name is the legal protection it provides your identity, and company, when doing business in other states. Registering your trademark with the federal trademark office prevents infringment problems associated with doing business in states where there may be companies that operate under a name or trademark similar to your own.

If your small business sells goods or services over the internet, you may want to register your trademark. A registered trademark will protect your company’s name and identity when conducting business online in other states.

Other benefits to small businesses of registering a trademark:

  • Trademarks are instrumental in communicating your company’s brand. By using unique works and symbols, that no other competitor can use, you’re able to create messages that are unique to your business and marketing.
  • Trademarks are intangible assets that grow in value with your business. The more successful your business is, the more valuable your trademark becomes. If you ever decide to sell, your trademark could increase the overall value of your company.
  • Once registered, your trademark will be listed online in the U.S. Patent and Trademark Office’s database. Inclusion in the USPTO online database, will deter other companies from using your trademark, brand and indentity in any competitive or unlawful manner.

How to register a trademark

You might be wondering how you can obtain trademark protection. There are two ways to do so. The first is to use the ™ symbol to establish unregistered or common law trademark. This is the simplest way to take advantage of trademark protection, but it doesn’t offer full protection. The second is to register your mark with the U.S. Patent and Trademark Office. This will offer you the best protection, and makes it easier for you to take legal action against someone who infringes on your trademark.

Copyrights

Copyright is a form of legal protection provided to the authors of original works, such as literature, photographs, drawings, paintings, speeches, and musical recordings. The copyright gives the author exclusive right to reproduce, distribute, display or perform the copyrighted work publicly. Under copyright protection the author has the power to regulate how the work should be used or duplicated in any fashion.

While we typically think of copyright protection as it relates to books, music, movies and other tangible works, it also has a broader application. In the context of business, copyright protection can extend to letters, legal documents, emails, computer programs, authored articles, spreadsheets, architects plans, drawings, photographs, and graphic designs.

Copyright law applies to published and unpublished works alike. It’s important to understand this element of copyright law as companies invest substantial resources, including both time and money, in developing and producing marketing colateral and training materials they need to prevent from being reproduced by competitors. Copyright provides the means for a company to protect their investment in an original work from infringement by competing businesses.

Benefits of copyright registration

While registration is not required for copyright protection, it offer several additional benefits. Most importantly, registering your copyright enables you to sue someone in court if they infringe on your copyright. Don’t wait until you have a copyright infringement to register your copyright.

Registering your copyright provides notice to would-be infringers and competitors that you own the copyright, and it makes it more difficult for infringers to plead ignorance. Having a registered copyright can make a tremendous difference in the amount of court awarded damages you receive if you sue an infringer.

Per U.S. copyright law, the copyright holder is entitled to “actual damages” and “profits of the infringer that are attributable to the infringement”. Actual damages due to infringement may be hard to prove without an official registration. In lieu of actual damages, a copyright registrant may elect statutory damages which range from $750 to $30,000 per work and may reach as high as $150,000. As a copyright registrant, you may also be awarded attorney’s fees and court costs if you’re require to defend your copyright.

Copyright registration process

While anyone can submit a copyright application without the assistance of an attorney using forms provided by the U.S. Copyright Office, given the complexities of the process, copyright registration is usually handled by an intellectual property attorney.

The cost of copyright registration varies based on how soon the copyright is needed. For several hundred dollars, applicants can request their copyright be expedited. Given both the complexities of copyright law, and the ability of a defense attorney to invalidate a registration in copyright actions for even the slightest registration errors, it is wise to seek the experience of an experienced intellectual property attorney to assist in the registration process.

Steve Perry
Steve assists small businesses to Fortune 50 companies with a range of intellectual property rights and services in areas related to patents, trademarks, copyrights and licensing. His previous experience as a computer more...
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