|
INTRODUCTION
Patents, copyrights and trademarks, as well as know- how or trade secrets,
are often collectively referred to as intellectual property. Many firms have
such property without even being aware of it or of the need to take measures
to protect it.
Many people's notions of intellectual property are unrealistic. Some
believe, for example, that having a patent on a product will enable one to
succeed in the marketplace. Consequently, they may spend thousands of
dollars to obtain the exclusive rights to market something that no one wants
or can afford to buy. Others may conclude that intellectual property
protection is not worth the expense and bother.
People who may not be interested in protecting their own rights still must
take precautions to avoid infringing on the rights of others. This calls for
more than the avoidance of copying. Copying is unavoidable; it is a way of
life and one way in which we learn. But, one can easily infringe on the
rights of others without deliberately imitating specific features of goods
or services.
This publication addresses the steps newcomers to a market should take to
avoid infringement and when they should take them.
PATENTS
Most people have heard variations on a remark attributed to Ralph Waldo
Emerson: If a man can make a better mousetrap than his neighbor, though he
builds his house in the woods the world will beat a path to his door. To
keep the discussion concrete, let's imagine a present day inventor of a new
mousetrap who not only invents a better mousetrap but is also successful in
marketing it.
The higher the inventor's profit margin, the more others will want to copy
his invention. Let's assume that the inventor selects Figaro as the brand
name and actively promotes the product. However, he does not legally protect
his invention, but relies on the consumers' loyalty, goodwill and brand
identification to ensure future sales.
Taking measures to develop loyalty and goodwill may be sufficient until a
larger and better known competitor turns up. For example, what if economies
of scale and lack of development costs mean that the competitor can sell the
same mousetrap for 20 percent less? Goodwill may not be enough to ensure
customer loyalty at a higher price.
A patent would be much more helpful, because it would prevent the competitor
from selling the new trap until well after the original firm had a chance to
get on its feet. This situation illustrates that it is the smaller firm that
often has the most to gain from protecting intellectual property.
As bad as the situation is without patent protection, it could be worse.
Let's assume that customers are so taken by the Figaro promotion that they
are willing to pay the 25 percent premium the firm charges in order to stay
in business. Imagine what would happen if the company had to stop using that
name or had to face an expensive lawsuit.
Imagine what would happen if it turns out that someone else actually has a
current patent on one or more features of the better mousetrap. By failing
to consider the intellectual property of others, the new firm would not only
be forced to stop selling under the name Figaro, but might be forced to stop
selling the mousetrap altogether.
AVOIDING PATENT INFRINGEMENT
Utility patents - what people usually mean when they use the term patents -
provide 17 years of exclusive rights for inventions that deal with the way
things work. Design patents afford 14 years of protection for significant
improvement in the appearance of useful items, such as car bodies or
furniture.
Both of these patents do more than prevent copying; they forbid the making,
using or selling of an invention similar to or the same as the protected
invention, even though the second invention was independently created.
(Plant patents, which will not be covered in this discussion, may not give
the same protection.)
Copying may actually be a way to avoid infringement. The inventor of the
mousetrap might have avoided potential problems by using technology that was
described in a printed publication, publicly used or on sale. Products that
are on sale and give no notice of patent coverage are relatively free from
the risk of infringement.
Any person trying to market fairly new technology that doesn't appear to be
patented should keep in mind that an inventor has one year from public sale
or disclosure within which to file a patent application. In addition,
because patents often take two or more years to obtain, there is still a
chance that a patent could be issued at a later time. Although there is no
liability for infringement prior to issuance of a patent, a competitor would
have to cease making, using or selling the technology once the patent was
issued, thus risking the loss of both start-up costs and inventory.
Of course, if our inventor was determined to make a better mousetrap, there
would be no interest in copying something else in the market. Still, before
spending too much time and money on research, the inventor should ensure
that others do not have exclusive rights in the area being explored. The
inventor certainly should not assume that, because a product is not on the
market, it is unpatented. As many independent inventors have learned to
their chagrin, it is usually easier to patent something than to market it
profitably.
A PATENT SEARCH
The inventor should hire a patent attorney or agent to conduct an
infringement search. A patent agent is a technically trained person who has
passed a special examination given by the U.S. Patent and Trademark Office;
a patent lawyer is one permitted to draft contracts and provide other
general legal services. Patent searches can be expensive if one must consult
foreign records; it is much less costly to determine whether technology is
currently patented in the United States. Yet, as we will see, there is value
in going somewhat beyond that point.
A search might reveal that (1) someone else had a patent that has since
expired, i.e., the information patented is now in the public domain; (2) no
current or expired patents cover the area of proposed research or (3)
someone else has a current patent covering all or part of the proposed
design. Let's consider these potential results in order.
THE INVENTION IS IN THE PUBLIC DOMAIN
If the mousetrap (or an obvious variation) was disclosed in an expired
patent, the inventor is free to manufacture and market it without concern
for the patent laws. Also, even if the inventor didn't find exactly what he
or she originally had in mind, a host of good and freely used ideas that are
even better might have been discovered. These alone could be worth several
times the price of the search in saving research and development time.
ONE OR MORE ELEMENTS OF THE PROPOSED MOUSETRAP APPEAR TO BE NEW
If, after a thorough search, our inventor's proposed improvements to the
mousetrap seem not only to be novel but also to offer significant advantages
over the prior design, the inventor may seek a patent and/or begin selling
the mousetrap without further ado. If, however, the inventor begins selling
without first filing a patent application, he immediately forfeits possible
protection in many other countries and also forfeits any possibility of
patent rights in the United States after one year.
ASPECTS OF THE PROPOSED DESIGN ARE COVERED BY A CURRENT PATENT
If an unexpired patent is found to cover any part of the proposed mousetrap
design, the inventor knows that he is not free to use it without a license.
Infringing on a current patent exposes one to a suit for damages as well as
an injunction against future use. Even an injunction might mean substantial
costs, including the loss of current inventory, and a patent covering even a
small feature of the new mousetrap might give rise to the need to retool.
Although deliberate infringement is more serious,ignorance of others'
patents is no defense.
TRADEMARKS
Trademarks (or brand names) indicate commercial source. Trademarks may be
words, logos or other symbols indicating that goods come from a particular
company. They may even be sounds, three-dimensional symbols (such as the
well-known McDonald's golden arches) or colors. There are also service
marks, which indicate the source of services, and other kinds of marks that
will not be considered here.
As with patents, one can infringe on another's marks without copying them or
even being in direct competition with their owner. All that is necessary is
to use the same or a similar mark under circumstances in which consumers may
be confused as to the source or sponsorship of the goods or services.
A TRADEMARK SEARCH
A trademark search is the only way to find out whether Figaro or something
confusingly similar is being used by others as a mark for a mousetrap (or
perhaps such things as rodenticides) in the proposed market area. It is also
necessary to determine whether the mark has been registered in the U.S.
Patent and Trademark Office, which could give the registrant rights well
beyond the market areas currently occupied.
There are two reasons why a search may not be sufficient. First, in the
United States, it is unnecessary for a firm to do more than use a good mark
to have trademark rights in its market area. Consequently, a search may not
locate all such prior users. Second, people may be able to prevent the use
of a potential mark without having used it as a mark themselves; for
example, when a trademark can be associated with others in such a way that
consumers might presume that some kind of relationship might exist. This is
where the mark Figaro would run into trouble.
As you may recall, Figaro is the name of the cat in the Disney film
Pinocchio. Although the Walt Disney Company does not have a monopoly on the
use of the name, it might nevertheless be able to prevent it from being used
on a mousetrap. If that seems too farfetched, consider the company's concern
if "Mickey" had somehow been part of the mousetrap name!
COPYRIGHTS
A copyright provides an owner with the exclusive rights to reproduce a
certain work for a specified period, subject to some basic limits. The term
of a copyright is the lifetime of the author plus 50 years in the case of
identifiable, living authors. Copyrights arise automatically and are
inexpensive to register.
Searching for a prior copyright is probably unnecessary. Copyright
infringement can be avoided by establishing that a work was independently
created. Therefore, records showing independent creation are helpful to
avoid liability. Even with such records, establishing independent creation
may be difficult if the original work was widely disseminated or otherwise
available to the alleged infringer. In one such case, the court held
that, although copying may have been unconscious, the original was
nevertheless infringed.
One of the limits to copyright protection is that ideas (compared to
expressions) and technology (computer software aside) are generally not
protected. This means that our inventor is free, at least as far as
copyright laws are concerned, to use any information that can be found in
books on mousetrap designs and to make and sell working copies of anything
shown or described. Copyright gives the owner only the right to prevent
reproduction of the text or drawings themselves.
What if the inventor wants to use some of that text, for example, in an
advertisement? There is a remote possibility that such use might be
protected under the "fair use" defense, but it would be very unwise to
proceed without getting permission from the copyright holder or seeking
expert advice.
TRADE SECRETS
Trade secrets overlap the subject matter of copyrights and patents. As long
as efforts have been made to preserve secrecy, a suit may be brought to
redress the misappropriation (or wrongful taking) of almost any kind of
information of competitive value. Misappropriation includes industrial
espionage and breaches of confidential relationships (for example, by former
employees), but it does not include reverse engineering.
Thus, a trade secret suit will not succeed if an aspect of a product's
design or construction was obtained by examining an item purchased in the
marketplace. Nor will a suit be useful against those who independently
discover a secret process or recompile commercially valuable information.
The risk of being accused of misappropriating a trade secret is never very
high, particularly if one seeks competent legal advice before using
unlicensed information that has not been obtained through reverse
engineering.
THE NEED FOR EXPERIENCED COUNSEL
Any attorney admitted to practice in any state in the country is technically
qualified to register trademarks with the U.S. Patent and Trademark Office
or copyrights with the U.S. Copyright Office in Washington D.C. Unlike the
situation with patents, no special examination is given to determine whether
the attorney is familiar with the copyright or trademark law or registration
procedures, for example. Clients are advised to seek an attorney who
specializes in such matters.
SUMMARY
Whether or not our mousetrap inventor takes measures to preserve the
intellectual property, he or she certainly should avoid infringing on the
rights of others. Although this is not difficult in the case of copyrights
and trade secrets, patents and trademarks are another matter altogether.
Unquestionably, it costs precious start-up capital to have patent and
trademark searches performed; however, proceeding in a new venture without
doing so is equivalent to erecting a building or signing a long-term lease
without checking the real estate title. Searches will not make the product
appeal to the public, but they will ensure enjoyment of any hard-won market
success.
A patent search is comparatively cheap insurance against the possible need
to retool or to absorb inventory losses. Moreover, a close look before
adopting a trademark is cheaper in the long run than the cost of advertising
and new promotions designed to advise customers to seek the mousetrap under
a new name.
APPENDIX A: FURTHER INFORMATION ON INTELLECTUAL PROPERTY
Patent and Trademark Office, Washington, DC 20231, or the United States
Trademark Association, 6 E. 45th Street, New York, NY 10017. Both publish
free or inexpensive booklets.
A booklet for independent inventors, "So You Have An Idea", is available
from the Innovation Clinic, 2 White Street, Concord, NH 03301. To order it
send $2.00 and a self-addressed mailing label. The Innovation Clinic also
has a set of HyperCard stacks (for Macintosh computers) covering several
topics of interest to inventors and small business owners. These are
available for $5.00 and a self- addressed mailing label.
Write to the Copyright Office, Washington, DC 20559, indicating the subject
matter in which you are particularly interested, for example, music or arts.
"Patents Trademarks and Copyrights", Lawrence E. Evans, Jr., 1986, Gunn, Lee
and Jackson, Eleven Greenway Plaza, Suite 1616, Houston, TX 77046.
You may want to consult one or more of the many inventors' handbooks
available at public libraries. One example is "How to Profit From Your
Ideas", Flemming Bank, 1985 ($12.95). Bank and Associates, P.O. Box 20365,
Portland, OR 97220. This is a step-by-step guide that shows how you can make
money by turning your creative ideas into marketable products.
APPENDIX B: INFORMATION RESOURCES U.S. Small Business Administration (SBA)
The SBA offers an extensive selection of information on most business
management topics, from how to start a business to exporting your products.
This information is listed in "The Small Business Directory". For a free
copy contact your nearest SBA office.
SBA has offices throughout the country. Consult the U.S. Government section
in your telephone directory for the office nearest you. SBA offers a number
of programs and services,including training and educational programs,
counseling services, financial programs and contract assistance. Ask about:
- Service Corps of Retired Executives (SCORE), a national organization
sponsored by SBA of over 13,000 volunteer business executives who provide
free counseling, workshops and seminars to prospective and existing small
business people.
- Small Business Development Centers (SBDCs), sponsored by the SBA in
partnership with state and local governments, the educational community and
the private sector. They provide assistance, counseling and training to
prospective and existing business people.
- Small Business Institutes (SBIs), organized through SBA on more than 500
college campuses nationwide. The institutes provide counseling by students
and faculty to small business clients.
For more information about SBA business development programs and services
call the SBA Small Business Answer Desk at 1-800-8-ASK-SBA (827-5722).
Other U.S. Government Resources Many publications on business management and
other related topics are available from the Government Printing Office
(GPO). GPO bookstores are located in 24 major cities and are listed in the
Yellow Pages under the "bookstore" heading. You can request a "Subject
Bibliography" by writing to Government Printing Office, Superintendent of
Documents, Washington, DC 20402-9328.
Many federal agencies offer publications of interest to small businesses.
There is a nominal fee for some, but most are free. Below is a selected list
of government agencies that provide publications and other services targeted
to small businesses. To get their publications, contact the regional offices
listed in the telephone directory or write to the addresses below:
- Consumer Information Center (CIC), P.O. Box 100 Pueblo, CO 81002. The CIC
offers a consumer information catalog of federal publications.
- Library of Congress Copyright Office, Register of Copyrights, Washington,
DC 20559
- Patent and Trademark Office (PTO), Washington, DC 20231. Public Service
Center: (703) 557-INFO
- U.S. Department of Commerce (DOC), Office of Business Liaison,14th Street
and Constitution Avenue, NW, Room 5898C, Washington, DC 20230 DOC's Business
Assistance Center provides listings of business opportunities available in
the federal government. This service also will refer businesses to different
programs and services in the DOC and other federal agencies.
Nongovernment Organizations - Software Publishers Association, 1101
Connecticut Avenue, NW Suite 901, Washington, DC 20036
- United States Trademark Association, 6 E. 45th Street, New York, NY 10017
For More Information
A librarian can help you locate the specific information you need in
reference books. Most libraries have a variety of directories,indexes and
encyclopedias that cover many business topics. They also have other
resources, such as
- Trade association information - Ask the librarian to show you a directory
of trade associations. Associations provide a valuable network of resources
to their members through publications and services such as newsletters,
conferences and seminars.
- Books - Many guidebooks, textbooks and manuals on small business are
published annually. To find the names of books not in your local library
check "Books In Print", a directory of books currently available from
publishers.
- Magazine and newspaper articles - Business and professional magazines
provide information that is more current than that found in books and
textbooks. There are a number of indexes to help you find specific articles
in periodicals.
In addition to books and magazines, many libraries offer free workshops,
lend skill-building tapes and have catalogues and brochures describing
continuing education opportunities.
|
