Some good, thought-provoking reads from the IP blogs:
Over at IP Watchdog, Stephon Sharon discusses the future of global copyrights. Sharon looks at the challenging issues presented by an increasingly global, networked economy. What does Sharon pinpoint as the best solution? Consistency, to start:
“It pains us to see our intellectual property ripped off in front of our faces, but even more so when it is done overseas and we feel powerless to stop the infringement. We have made small steps toward achieving some level of consistency, but looking at the big picture we are not heading down the right path.”
Dennis Crouch at Patently-O details the implications of US patent filings falling in 2009 – for the first time in 13 years. Does that signal a step back in innovation? Not necessarily, says Crouch – the lag between invention and patent filing, changes in patent law independent of innovation, and the multi-year lag between foreign innovation and US patent filings discounts the concern that the US just isn’t as creative.
“It’s a real crapshoot to spend tens of thousands of dollars to patent an idea you thought up in the shower one day.
So, how to protect your ideas in a world where ideas spread?
Don’t.”
DBC asks:
“So, IP ecosystem – this is how you are thought of by people who have a very large impact on public opinion – what do you think and what are you going to do about it?”
Copyrights protect your creative works, such as books and other texts, recorded music, pictures and photographs, and movies and other audiovisual recordings. The owner of the copyright to a creative work has the right to prevent others from making or distributing copies of the work without permission.
Copyrights now arise automatically when such a work is created, without any action on the part of the author and without any cost. The copyright is initially owned by the person or people who made the creative work, unless the work was made as a “work for hire” for another entity, for example by an employee for his or her employer as a part of the employee’s job, in which case the employer owns the copyright.
Registering Your Copyright With the Government Costs Money
Unfortunately, copyrights are not worth much if they are not registered with the government. For example, you cannot bring a copyright infringement lawsuit based on an unregistered copyright. Therefore, there is no practical way to enforce your copyrights unless they are registered. I explain many of the benefits of copyright registration here.
It costs $35 to register a copyright online with the Copyright Office, or $50 to register a copyright using a paper Form CO with printed barcode, or $65 for registering a copyright using a simple paper form. Almost all copyright registrations can be applied for either online or using Form CO, depending on your preference. Beyond the cost savings, it is a good idea to file electronically because the wait time for a copyright registration is about one year longer for paper filings than for electronic filings.
Because there is a wait of up to 9 months for an electronic application to be processed and up to 22 months for a paper filing, it is best to apply for registration early. If you find it necessary to obtain a rush copyright registration in order to file suit against a copyright infringer, the cost of expedited processing of your application at the Copyright Office is $760.
A full list of copyright costs is available at the Copyright Office website here.
For Many Copyrights, the Cost of a Copyright Attorney’s Help is Justified
Of course, if you use a copyright attorney to help you with the application for copyright registration, you must add the attorney’s fees to the government costs given above. You can expect an attorney’s help with preparing and filing a copyright application to cost a minimum of a couple hundred dollars.
If you have some experience with filing copyright applications, and/or your copyright claim is very simple, you may be able to get away with not using an attorney. But, I would recommend using a copyright attorney at least for the first time you register a certain type of work, especially if there are any issues such as a work for hire, transfer of ownership, multiple authors, multiple works, a portion of the work you are not claiming copyrights to, etc.
A copyright attorney will save you a lot of time trying to figure out the Copyright Office system and will avoid costly mistakes that could result in delay of your copyright registration or necessitate a whole new application.
Thus, the total cost of a copyright registration including a copyright attorney’s help is about $200-300, or potentially much more if you choose to use an expensive attorney.
A trademark is anything used in commerce to distinguish the products or services of one company from those of others. Logos, brand names, and slogans are common examples of trademarks. Under U.S. law, trademark rights arise when the trademark is first used in commerce, and continue as long as the trademark continues to be used in commerce. Thus, trademark rights can last indefinitely.
Many famous trademarks, such as Coca-Cola, Budweiser, the Bass logo, and Nestle have lasted for over 100 years. Trademark rights generally cease only when the trademark is abandoned and no longer used.
Federally Registered Trademarks
Federal trademark registrations are governed by additional rules. Placing a trademark on the federal trademark register at the United States Trademark Office bestows many additional benefits on the trademark owner, for example the right to exclude others from using a similar trademark anywhere in the country.
However, to keep the benefits of a registered trademark, the trademark owner must abide by the requirements of the Trademark Office. These requirements include the obligation to file a renewal application every ten years and to verify that the mark continues to be used in connection with the products and services listed on the trademark register.
Thus, a trademark registration lasts for ten years, at which time it must be renewed. If regularly renewed in a timely fashion, the trademark registration can last forever. Please note that there are some additional requirements during the first ten-year term of a trademark registration which also must be satisfied for a trademark owner to continue enjoying the benefits of registration. Please review the requirements carefully and contact a trademark attorney to aid you in ensuring that you meet all of the relevant dates.
Other Ways Trademark Rights Can Be Lost: Genericity, Failure to Enforce, Authorizing Uncontrolled Use
Trademark rights can be lost under some circumstances other than abandonment or failure to meet official filing requirements. For example, trademark rights are lost when a trademark becomes generic, and is used to identify a certain category of products or services, rather than those of a certain company.
Examples of trademarks that became generic include Aspirin, Cellophane, Crock Pot, Dry Ice, Escalator, Trampoline, and Zipper. Each was originally a trademark used only on the product of a certain company, but was so popular that it became known as the generic name for any similar product.
As a result, the original trademark owners are no longer able to prevent their competitors from using the same words in connection with their own products. “Genericide” is the colorful term used to describe the process of losign trademark rights due to genericity.
You can also lose your trademark rights by failing to enforce your trademark against known infringers or by allowing others to use your trademark without controlling the quality of the products or services they provide under your mark.
Summary
Continue to use your trademark in commerce and your trademark can last forever. But to maintain your federal trademark registration, you must renew every ten years and take other steps required by the Trademark Office. Genericity, failure to enforce your trademark rights, and failing to control the quality of authorized users of your mark can also lead to premature loss of trademark rights.
In this post, I discuss how to deal with cybersquatters. Cybersquatters register domain names similar to a domain name or trademark of an established business for profit. They may profit by selling the domain name to the established business or, more commonly, by monetizing the traffic generated on the domain by the popularity of the established business.
Typosquatters
A typosquatter is a type of cybersquatter who registers domain names that are common typos of a popular existing website, capturing Internet users who mistype the website domain name when entering it into the address bar. When the domain name is mistyped by Internet users seeking that website, they are instead directed to the typosquatters website. This website is typically automatically generated and will be full of pay-per-click advertisements from Google Adwords or other online advertisement programs for websites similar to the one the user was originally looking for.
In the Google Adwords program, an advertiser pays Google to get Internet users to click on the advertiser’s ads and visit its website. Google then automatically places the ads in search results and on websites wherever its system decides that such clicks are most likely to come from. A Google advertiser may therefore find its ads placed on the websites of typosquatters.
The typosquatter is paid some amount of money, generally a few cents to a few dollars, for every user who clicks through one of its links. Users looking for the popular website who end up at the typosquatter’s site instead will many times see a link back to the site they were originally looking for and just click it. The typosquatter is paid a couple dollars for the click, and the owner of the popular website pays a few dollars to Google Adwords for the click on their advertisement.
Thus, the typosquatter diverts existing customers of the popular website, who are attempting to navigate directly to that website, and channels them back to the website through sponsored links to generate income for themselves at the expense of the website owner.
In another common scenario, a user who inadvertently is diverted to the typosquatter’s site is likely to see a sponsored link to a competing website and navigate there instead. The popular website in that case has lost an existing customer to the competition, due to the actions of the typosquatter.
The Cybersquatter Business Model
In the early days of the Internet, cybersquatting was an activity participated in by a large number of individuals and small entities. Today, cybersquatting activity is concentrated in a small number of large, efficient cybersquatting companies.
These companies use automated software to determine which domain names are receiving or are likely to receive traffic, register those domain names, and throw up an automatically generated website with sponsored links as described above. If the domains are not returning enough income to cover the cost of registering and parking them, they are canceled. Otherwise, they will be added to the company’s portfolio, even if they are only generating a few dollars each year.
These companies may have hundreds of thousands of domains in their portfolio, generating large amounts of passive income for the owners. These domains are treated as assets with income streams, and are bought and sold freely between companies.
Cybersquatting is a big business that has grown with the Internet, and a big problem for companies with a significant online presence. Have you encountered a cybersquatter? Tell me about it in the comments.
This book by William Patry is the latest offering in the recent spate of anti-copyright books aimed at the general public. I agree with the author’s overall conclusion that copyrights have been strengthened excessively, to the point that they achieve the opposite of the intended result- less creative works rather than more. However, I did not care for this book, a review copy of which was sent to me pre-publication by the publisher, Oxford University Press.
Patry is at his best when dealing with facts. Patry is undeniably a copyright expert and has an array of interesting and important historical information and data at his command. I enjoyed learning more about the history of copyrights and about the statistical shortcomings of the copyright industries. However, such content is unfortunately uncommon. Although the book is over 20% citations, Patry seems mostly to cite to the opinions of others, not to supporting facts or research.
This lack of intellectual rigor unfortunately causes the book to go off the rails on multiple occasions, never moreso than when he attacks the free market, and particularly Alan Greenspan, for our nation’s copyright ills. Frankly, the free market could not have less to do with copyright law, which is wholly a creation of government, as Patry acknowledges. It puzzles me that Patry attacks the copyright industries throughout the book for their anti-competitive lobbying, but fails to come to the conclusion that the problems with copyright law are simply a result of successful rent-seeking by large corporations, similar to the agricultural subsidy debacle and other government failures.
Instead, Patry spends most of the book eviscerating the movie industry for its use of metaphor. Metaphor is a common rhetorical tool and I remain unconvinced that it is a significant cause of the problems we face in copyright law. As a lawyer, surely Patry is familiar with the idea of putting forward the best and most convincing argument possible in support of one’s position. This obsession with the use of metaphor also seems unproductive as his book is not going to end the use of metaphors- I suppose he is attempting to reduce the effectiveness of such metaphors on the public?
My long-awaited podcast is finally out and you can find it here as well as on iTunes. In case you missed my earlier post, KANDLcast is a monthly podcast broadcasting interviews with experts in various areas related tobusiness and entrepreneurship. The interview is targeted to what entrepreneurs and small and medium sized business owners need to know about intellectual property to avoid costly legal conflicts and maximize the value of their businesses.
Once you have learned what trade secrets are, you may wonder when it is appropriate to utilize trade secret protection. Trade secret protection is used when patent, trademark, or copyright protection cannot be obtained or is inadequate.
When Other IP Protection is Not Available
A requirement for patent, trademark, or copyright protection is originality. Therefore, collections of data cannot be protected by either of those types of intellectual property. You did not create the data, you merely collected and assembled it. If you create a database of client names and contact information, you cannot patent or copyright that information.
However, this information is not generally known and affords you a competitive advantage- therefore it constitutes a trade secret. If you take the proper steps to maintain the confidentiality of this information, it will be entitled to legal protection as such.
When Other IP Protection is Inadequate
Trade secrets are most often used as an alternative to patents. Patents can be very powerful and valuable IP assets, but they have some drawbacks and are not appropriate in every situation. Patent protection begins at the time your patent is granted, which may be three, four, or even more years after you initially file your application, and only lasts 20 years from the time your application is filed. Patents also must be enforced by the patent owner.
When Patent Protection is Too Short or Begins Too Late
Software applications generally have one of the longest wait times at the Patent and trademark Office. If you have some software that you invented that is going to be obsolete in three years, it may not make sense to file a patent application that is not going to issue for five years. On the other end of the spectrum, if you have a recipe that you may be using for 100 years (e.g. Coke), you don’t want your protection to expire after only twenty years, leaving your recipe in the public domain (patents are publicly available).
When Enforcement of Your Intellectual Property Rights is Difficult
With some technology it is difficult to prove that someone is infringing your patent. For example with software, the code may be run on a remote server and may be inaccessible to you. Therefore, it may be difficult to get enough information about the suspect software to determine if it is worth spending the money to initiate a patent infringement lawsuit. Why get a patent and disclose your invention to the public if it will be difficult or impossible to stop your competitors from using that information?
Conclusion
The use of trade secrets should be a part of your overall intellectual property strategy. When it is time to decide whether you can protect a given asset, or how best to protect it, consider the relative benefits and drawbacks of different types of protection. You should at least consider trade secret protection when 1) your intellectual property cannot be protected by patents, trademarks, or copyrights, 2) when the term of patent protection would be too short or start too late, or 3) when a patent would be difficult to enforce.
The three types of intellectual property (IP) that you hear about the most are patents, trademarks, and copyrights. However, a fourth category of intellectual property, trade secrets, also exists.
Trade Secrets are Governed by State Law
Trade secrets are generally governed by state law, as opposed to the first three types of IP, which are almost entirely governed by federal law. Therefore, the rules can change somewhat from state to state. However, most (46) states have adopted the Uniform Trade Secrets Act (UTSA), so the law is pretty similar in most places. This post will be about trade secret law in general- there could be differences in your state.
Definition of Trade Secrets and Confidentiality Requirement
Trade secrets are any business knowledge or information that is not generally known or reasonably ascertainable and that conveys an economic advantage. A classic example of a trade secret is the formula for Coca-Cola.
The law protects trade secrets if reasonable efforts are made to maintain their confidentiality. At a minimum, trade secrets should be marked confidential and access to them should be restricted to those employees with a specific need. If you must discuss a trade secret with an outside party, a non-disclosure agreement should be used.
When Trade Secrets are Useful
Trade secrets are generally the protection of last resort. Trade secret protection is relied on when patent, trademark, or copyright protection cannot be obtained or is not adequate. Trade secrets are frequently relied on to protect databases of client or vendor information, market analysis, business plans, office processes, etc.
Trade Secret Remedies
If a trade secret is stolen or given or sold to a competitor by a present or former employee, trade secret protection entitles you to collect damages from both the party revealing the secret and the party receiving it. An injunction preventing the secret from being revealed more widely can also be obtained.
As an example, if Pepsi paid a Coca-Cola employee to reveal the secret Coke formula, both Pepsi and the Coca-Cola employee could be sued for monetary damages and to prevent them from revealing the formula to anyone else. They also could be guilty of a federal crime under the Economic Espionage Act.
Yes, I am alive. I have been very busy moving into my new home and getting everything ready for the arrival of the newest member of the Hyra family in November, but never fear I will have some new content for you soon.
In the meantime, mark your calendars for September 9, when KANDL will be releasing a new podcast featuring yours truly. The podcast is about 45 minutes long and touches on many aspects of intellectual property that are of special concern to small- to mid-sized businesses. If you have ever been curious about patents, trademarks, or copyrights, I encourage you to listen to this free podcast. It came out very well and is chock-full of valuable information.
