Intellectual Property, or "products of the mind," is generally classified as Patents, Copyrights, Trademarks, or Trade Secrets. Each form of Intellectual Property is subject to its own set of laws and rules on how it is created, protected, maintained, and utilized. While future articles will address each of these in more detail, this article will focus on the need to keep a close watch on the details of your Intellectual Property so that you can protect them and get value from them.
Whether your business is a start-up or an established business, managing your Intellectual Property takes an investment on your part, but it is well worth the effort. The sooner you get your Intellectual Property organized with a good database, the more you will save. Sooner or later, you will need the information, and it is much more painful and costly the longer you wait to get organized.
A START-UP BUSINESS
People in start-ups typically do not put a lot of energy into managing their Intellectual Property. Their goal is to acquire Intellectual Property as fast as possible! However, over time, the value of the Intellectual Property can be lost if it is not managed and maintained. You need to manage your Intellectual Property just as you should manage and maintain any of your contracts.
Let's first assume you are working for a start-up. What is the first thing you should do? First, after formulating your idea for a business, you should have a business plan. Second, you should protect this business plan as a trade secret. Failure to treat it as a trade secret can leave it unprotectable. As a result, anyone who likes your business plan will be able to implement your business plan. Therefore, use a Confidentiality or Non-Disclosure Agreement ("NDA") with those you wish to share your business plan. This will show that you are taking the proper steps to protect your trade secrets.
Where do you store these NDAs? How do you track these NDAs? What if someone asks you to sign their NDA? This is a good time to start a database to track information on who has signed a NDA, what information was shared, and what restrictions or time limits were put on the disclosure.
Putting this information into a database frees you from having all the information in your head, or worse, depending on it being in someone else's head. It will allow you to monitor and track your obligations, and the obligations that others have implemented.
Is your business plan based on patented subject matter? If this is the case, make sure you keep your inventions protected by NDAs at least until a patent application is filed. Once you do file for a patent application, there will be additional information you will have to track.
Do you have copyrighted material? Have you registered your copyright? Do you have agreements that assign ownership of the copyright to you or your company? Once again, the sooner you track this information in a database, the sooner you will be organized and efficient.
You will need to register your copyright if you wish to file a lawsuit. It is much easier to prepare your registration if you have all of your information on ownership lined up in advance.
What starts out as a few documents soon turns into a file cabinet full. If you track this information as it arrives, you will not have to go back and put it into a database on a rush basis when it is needed.
ESTABLISHED BUSINESSES
What if you are a few years into your business and you have that filing cabinet or cabinets full of contracts, agreements, and information on your Intellectual Property. What can you do to get things organized?
When initially setting up your tracking system, perform an audit of your Intellectual Property and contractual agreements. See if you can provide documentation to support typical due diligence type questions (see a list of Due Diligence questions later in this article). Your goal is to be able to easily track, maintain, and search your Intellectual Property.
CATAGORIES OF INTELLECTUAL PROPERTY
The following is a little more detail about some categories of Intellectual Property. It is provided as background to support the need to have detailed information on the ownership or licenses that impact your Intellectual Property.
(a) Copyrights
Copyrights are a set of exclusive rights granted to the owner of original works of authorship fixed in any tangible medium of expression. If you are the owner of the copyright, you can authorize others to practice any or all of the rights, such as to reproduce, prepare derivative works, and distribute copies of the copyrighted work. But, if you are not the author, you will have to show a chain of title from the author to you authorizing you to do these things with the copyrighted work.
One way to show the chain of title is by use of a "Certificate of Originality." Like the answers to the audit questions, a Certificate of Originality shows a clear chain of title from the author of the copyrighted material to you.
It is a good idea to produce a Certificate of Originality for any software created in-house, or to ask for a Certificate of Originality from any supplier of software for which you take a license. You must demonstrate how you or your company obtained the rights to use the software. By necessity, this requires that you have proper employee and/or contractor agreements in place requiring the assignment of copyright to you or your company. In the case of a license, it will show that the supplier of software can demonstrate ownership and/or the right to license the software to you.
(b) Patents
Patents grant the owner of the patent the right to prevent others from making, using, selling, offering for sale, or importing into the United States any product that would infringe the patent.
In the United States, patents are always issued to an individual, not to a corporation. Therefore, you must have the proper assignments of the inventions from the inventor(s) to you or your company. This will require that you have proper employee or contractor agreements in place requiring the assignment of any inventions to you for any work performed as an employee or under a contractor agreement.
Do you have documents supporting the chain of title from the inventor to you? If patents have issued, do you have the original copy stored in a safe, secure place? Do you know what the patents cover? Do you know if your competitors are infringing your patent? Given the long life of a U.S. patent (currently 20 years from the date of filing), the technology changes and the possibility of people changing jobs, an individual who understood all of the patents, may no longer be around to advise you as to what the patents cover. Therefore, it is a good idea to regularly perform a review of your issued patents and make a determination of their value based upon the current technology and the foreseeable technology. In addition, maintenance fees will be due on U.S. patents, so you will need to schedule these payments and make these payments or lose the patent for failure to make a payment. On the other hand, if you determine that the patent has lost value, you may decide not to pay any additional maintenance fees and allow the patent to go abandoned. In either event, it would be an informed decision–to keep the patent or to let it go abandoned.
(c) Trade Secrets
"Trade secret" means information, including a drawing, cost data, customer list, formula, pattern, compilation, program, device, method, technique, or process that: (a) derives independent economic value, actual or potential, from not being generally known to the public or to others who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. ORS 646.461(4)
What procedures are you using to properly protect your confidential information? Do you have employee agreements and contractor agreements that require them to protect your trade secret information? Do you have agreements with the parties with whom you share the trade secrets? Are there any special restrictions on what you can or cannot do with the information? How are you tracking the various agreements?
(d) Trademarks
A trademark can be a name, symbol, or mark, or even a color, smell, or sound that signifies to the consumers a source of a good or service. Do you have any trademarks? Are you protecting them with common law or with federal registration? What were your dates of first use? Did you do a search? Are others using your trademarks? Have you licensed others to use your trademarks? Do you have any licenses to use a trademark that belongs to another party?
INTELLECTUAL PROPERTY DUE DILLIGENCE
The following is a reduced set of high level due diligence questions directed at Intellectual Property. No mater the size of your company, you should be able to answer these questions, and have the supporting documentation to back it up.
(a) Patents
If you have any patents, then for each of the following patent-related property, locate copies of the documentation from both local and foreign jurisdictions:
- invention disclosures
- patent applications
- issued patents
- assignments
- licenses
(b) Copyrights
Provide a list of and description of the following items used or incorporated into your products and documentation, in both local and foreign jurisdictions:
- registered copyrights
- significant unregistered copyrighted works
- employee agreements regarding copyright
- contractor agreements regarding works for hire, or copyright assignments
- list of those who authored any copyrighted work listed
(c) Trademarks
Provide a list of and description of the following items used, owned or controlled by, or incorporated in your products and documentation, in both local and foreign jurisdictions:
- trademarks and service marks, and common law marks, if applicable
- registered trademarks and service marks
- trade names, brand names, designs, and logos
- pending applications
(d) Trade Secrets
List of items considered by you to be trade secrets of your business and descriptions or copies of your trade secret protection policies and procedures, in both local and foreign jurisdictions, including such items as follows:
- business methods and processes
- customer and marketing lists and databases
- unpatented inventions
(e) Security Interests
Description of all third party rights in or liens or encumbrances on your patents, copyrights and trademarks.
CONCLUSION
It is never too late to set-up a system to track your Intellectual Property and key agreements. Of course, the sooner you get started the less daunting the task. Perform an audit of your files to gather all of your supporting documentation and then create a database with all the key information. When the time arises, you will have at your fingertips all the information you need to support the ownership of your Intellectual Property and to enforce your Intellectual Property.