201511.20
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Protecting Intellectual Property in Your Silicon Valley Business

in Business Law, Minimizing Risk

Patents, trademarks, copyrights, trade secrets; these terms are often used interchangeably when discussing intellectual property (IP). However, they are very different legal vehicles for maintaining your rights over an idea. Misunderstand them, and you could easily end up undermining your IP rights; and consequently, the health and future of your business.

Before getting into the details of each type of intellectual property, there are three important concepts to understand:

IP rights are not necessarily static. Just ask the companies Frisbee, Xerox, and Escalator; if you are not careful with usage, especially with trademarks, you can devalue them and drag your intellectual property into the realm of common usage. IP rights must be associated with something tangible. For example, a unique process you use to optimize workflow can be made concrete by laying it out in your operations manual.
IP rights must be re-evaluated regularly to establish that they are still critical to your business objectives and are still supported by your business practices.

Here are some of the specific characteristics of the four major forms of IP:

Trademarks

Trademarks (and their often-ignored cousins, service marks) are a vital part of nearly every business, representing and protecting their identity. This group includes a business name, logo, and tagline, but can also include unique elements; such as a color (Tiffany’s Blue), set of sounds (the Old Spice whistle), shape (the Oscar statuette), and even, in very rare cases, scents (Smead Manufacturing infuses its paper goods with a trademarked peppermint scent) or even textures (the David Family Group wraps its wine bottles with a faux leather substance that has a trademarked texture). Places (e.g. Palo Alto, San Francisco, etc.) may not be trademarked unless they are fictional constructs used for marketing (e.g. Hidden Valley).

Trademarks exist so that no other company is legally allowed to adopt a “confusingly similar” method of setting apart a similar product. Trademarks registered with the United States Patent and Trademark Office (USPTO) can be searched online, which is always a wise thing to do before investing in any kind of trademark for your business.

When filing for trademarks virtually all of the aspects that give your business a unique identity within the marketplace (and are not functional aspects of your process or product) can and should be trademarked. This includes those names and other unique identifiers given to your business by customers. For example, “Mickey D’s” as a name for McDonalds started in various New York City communities in the early 70s, was used in advertising (in Ebony Magazine) in 1976, and was trademarked in 1982.

Copyrights

A copyright is the right to make, modify, publish, sell, or perform iterations of a specific set of information. Because any given instance of information must be expressed in tangible or transmittable form, copyright covers the legal right to create any tangible (e.g. video cassette, print-off, T-shirt) or transmittable (e.g. website, concert, demonstration) instance of a specific set of information.

Copyright is automatically given to the creator of a work, who may then pass it along to anyone they choose. But unless a copyright is registered with the United States Copyright Office, it loses a significant amount of the protections offered by the full force of copyright law. Even in its unregistered form, however, the law is strong enough to make it a useful protection for ideas that do not quite reach the level of a trade secret, but are still important enough to keep out of competitor’s hands; the workflow section of your training manual, for example.

It is important to note that the copyright registration system is significantly faster, more straightforward, and less expensive than the trademark or patent systems. It is still not quite practical for your everyday Silicon Valley startup to register every document utilized by the business, but the process is easy enough that it is practical to register the core documents of the business; with the exception of documents that contain trade secrets, because every document registered by the copyright office becomes publicly accessible by request.

Trade Secrets

Trade Secrets consist of information that has economic value because it is not generally known. For example, if everyone knew exactly how Google’s search algorithm was coded, it would lose a huge amount of value because the many Google-wannabes would become immediately indistinguishable from the real thing. Ideas, methods, processes, formulae, future plans, vendor and customer lists, product or service ideas, software code, and of course recipes all have the potential to become trade secrets.

There is no registration system for trade secrets, simply because the act of registering them (which requires them to be made publicly accessible) would make them no longer secret. The net result, however, is that trade secret protections are actually more flexible and powerful than other forms of IP regulation. For example, trade secrets do not expire unless they lose their economic value.

The major vehicle for the maintenance of trade secrets is the non-disclosure agreement, signed by absolutely everyone who interacts with a trade secret; even the janitors that clean the room where the relevant documentation is kept. In addition to the NDA, the law requires that a business take “reasonable measures” to keep the information secret; such as password-protecting computers, locking filing cabinets, and marking the material as secret.

Patents

Patents are essentially “idea registrations.” If you hold the patent for an idea, you have the right to keep anyone else from making, selling, or even using the item you have patented. The USPTO grants patents, but only after insuring that four criteria are met:

  • The idea must be an invention.
  • The invention must have utility.
  • The invention must be novel.
  • The invention must be non-obvious.

That last point is where many patent applications are rejected; if the invention is merely a rearrangement of parts already known to exist by those engaged in the relevant endeavor, it cannot be patented. Because filing for a patent is expensive (multiple thousands of dollars) and time-consuming, it is always best to perform extensive due diligence to determine the utility, novelty, and non-obviousness of your invention before you begin the process.

Jeffrey Miller is a Palo Alto business attorney and member of the Palo Alto Area Bar Association (PAABA). He provides skilled guidance on intellectual property (IP) rights and all other legal matters for Bay Area businesses. To schedule a consultation about your business’ IP protections, call attorney Jeff Miller today at (650) 321-0410 or email him at jeff@jeffmillerlaw.com.