The Importance of Intellectual Property

What do we learn?

a.     What is intellectual property and its importance?

Ø  What is intellectual property?

·         Intellectual property: any product of human intellect that is intangible but has value in the marketplace.

·         Called “intellectual” property because it is the product of human imagination, creativity, and inventiveness.

Ø  Importance

·         Traditionally:  businesses have thought of their physical assets, such as land, buildings, and equipment as the most important.

·         A company’s intellectual assets are the most important.

Ø  What intellectual property to protect?

·         If the intellectual property is directly related to the firm’s competitive advantage.

·         If the intellectual property has value in the market place.

Ø  What are the common mistakes in regard to protect their intellectual property?

·         Not properly identifying all of the intellectual property.

·         Not fully recognize the value of their intellectual property.

·         Not legally protecting the intellectual property that needs to be protected.

·         Not using the intellectual property as part of the overall plan of success.

b.    4 key forms of intellectual property

1.      Patents

·         Patents: a grant from the federal government conferring the rights to exclude others from making, selling, or using an invention for the term of the patent.

·         patent does not give its owner the right to make, use or sell an invention.

·         3 basic requirments:

1.      Useful: it must have utility.

2.      Novel: it must be different from what has come before.

3.      Not obvious: it must not be obvious to a person of ordinary skill in the field.

·         3 types:

1.      Utility patents: New or useful process, machine, manufacturer, or composition of material or any new and useful improvement there of. ( duration: 20 years from the date of the original application)

2.      Design patents: Invention of new, original, and ornamental design for manufactured products. (duration: 14 years from the date of the original application)

3.      Plant patents: Any new varieties of plants that can be reproduced asexually. (duration: 20 years from the date of the original application)

·         Business method patents: A business method patent is a patent that protects an invention that is or facilitates a method of doing business.

·         Who can apply for patent-> the inventor of the business.

·         6 steps:

1.      Make sure the invention is practical.

2.      Determine the type of application to file.

3.      Hire a patent attorney.

4.      Conduct a patent search.

5.      File a patent application.

6.      Obtain decision from the government patent and trademark office.

·         Patent infringement: Takes place when one party engages in the unauthorized use of another party’s patent.

2.      Trademarks

·         Trademark: any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those product or services from others.

·         provide consumers with useful information.

·         4 types: (Renewable every 10 years, as long as  the mark remains in use)

1.      Trademarks: Any word, name, symbol, or device used to identify and distinguish one company’s goods from another. (ex: del, nokia)

2.      Service marks: Similar to trademarks, used to identify the services or intangible activities of a business, rather than a business’s physical products. (ex: amazon.com, eBay)

3.      Collective marks: Trademarks or service markets used by the members of a cooperative, association, or other collective group. (ex: international franchise association)

4.      Certification marks: Marks, words, names, symbols, or devices used by a person other than the owner to certify a particular quality about a good or service. ( ex: ISO 9000)

·         What is protected under trademark law?

o   Words

o   Numbers and letters

o   Designs and logos

o   Sounds

o   Fragrances

o   Shapes

o   Colors

o   Trade dress

·         Exclusion from trademark protection

o   Immoral/ scandalous matter

o   Deceptive matter

o   Descriptive marks

o   Surnames

·         3 steps:

1.      Select an appropriate mark.

2.      Perform a trademark search.

3.      Create rights in the trademark.

3.      Copyrights

·         Copyright: a form of intellectual property protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work.

·         What is protected by a copyright?

o   Literary works.

o   Computer softaware.

o   Pantomimes and choreographic works.

o   Musical compositions.

o   Dramatic works.

o   Pictorial, graphic, and sculptural words.

·         Exclusion from copyright protection

o   The idea- expression dichotomy: The main exclusion is that copyright laws cannot protect ideas.

·         How to obtain copyright?

o   Copyright protection can be enhanced by attaching the copyright notice, or “copyright bug”  to something.

·         Copyright infringement: occurs when one work derives from another or is an exact copy or shows substantial similarity to the original work.

4.      Trade secrets

·         Trade secret: any formula, pattern, physical device, idea, process, or other information that provides the owner of the information with a competitive advantage in the marketplace.

·         include marketing plans, product formulas, financial forecasts, employee rosters, logs of sales calls, and similar types of proprietary information.

·         Qualification of trade secrets:

o   Not known outside the company.

o   Known only inside the company on a “need-to-know” basis.

o   Safeguarded by stringent efforts to keep the information confidential.

o   Valuable and provides the company a competitive advantage

o   Was developed at great cost, time, and effort.

o   Cannot be easily duplicated, reverse engineered, or discovered.

·         Trade secret protection methods

o   Physical measures:

§  Restriciting access

§  Password protecting computer files

§  Maintaining logbooks for access to sensitive material

§  Labelling documents

§  Maintaining logbooks for visitors

§  Maintaining adequate overall security measures

o   Written agreement: a firm should ask their employees to sign nondisclosure and noncompete agreements.

c.       What is the intellectual audit and its 2 primary reasons.

·         conducted to determine the intellectual property a firm owns.

·         2 reasons for conducting an intellectual property audit:

o   It is prudent for a company to periodically determine whether its intellectual property is being properly protected.

o   To remain prepared to justify its valuation in the event of a merger or acquisition.

·         Process of Conducting an Intellectual Property Audit:

1.      Develop an inventory of a firm’s existing intellectual property.  The inventory should include the firm’s present registrations of patents, trademarks, and copyrights.

2.      Identify works in progress to ensure that they are being documented and protected in a systematic, orderly manner.