By Susan E. ChetlinAll businesses have intellectual property (IP), whether they know it or not. Be it a brand, an invention or website content, IP is an intangible asset that, when properly protected, can enhance the overall value of a business. By the same token, using IP assets of others (no matter how innocent or unwitting that use might be) can threaten the business with liability for unanticipated costs. Here are 10 points to consider about your IP and those of others in the New Year:
1. Patent, trademark, copyright – keeping them straight. Generally speaking, utility patents protect functional ideas embodied in devices, methods and compositions of matter by excluding others from practicing the invention. A trademark is a distinctive word, symbol or device used in connection with goods in commerce to (a) indicate the source of the goods and (b) distinguish them from goods of others. A copyright protects creative expression fixed in a tangible medium, such as videos or literary works including computer software.
2. Consider the value of your brand. With the pervasiveness of social media, protecting your brand has become all the more important. Trademarks (which may be your company name, products, logo or a combination) derive their value from being distinctive. Distinctive marks are stronger and can be more valuable than descriptive ones. For example, for the first time, in 2019 Amazon topped the list of the world's most valuable brands, beating out Apple and Google which had been battling for the top spot for 12 years. The value of the Amazon brand is an eye-popping $315.5 billion.[1] Apple comes in second at $309.5 billion, followed closely by Google at $309.0 billion. These marks are valuable in part because they are distinctive and do not describe the products or services. While many people are often tempted to use marks that are descriptive, descriptive marks are weak and subject to diminished protection, if they can even be protected at all.
3. Make sure you own the IP your employees create. Employees are an important piece of the IP protection puzzle. A solid employee IP agreement will require employees to protect your IP by making it clear that: (a) your company owns the IP they develop on the job or in your industry while they work for you; (b) the employees are required to keep your proprietary and confidential information secret; and (c) they cannot walk out the door with your IP or your secrets when they leave, among other things. Sorry has been the start-up team who discovered too late that their now-former founder never assigned the valuable IP the founder created to the company.
4. Make sure you own the IP your independent contractors create. Believe it or not, paying your consultant, vendor or independent contractor to develop your website, computer software or marketing materials does not mean that you automatically own the IP for which you have paid them. Without an agreement that says you own it, likely you don't. And, yes, they can turn around and sell what you thought was exclusively yours -- website content, computer software and marketing materials -- to your competitor. Sorry has been the company owner who learned this lesson the hard way upon discovering that "their consultant" had sold another copy of the very same custom software developed for the company to its direct competitor.
(1) BrandZ Global Top 100 Most Valuable Brands 2019, www.brandz.com.
5. Protect what you have created or paid for. Once you are sure your company owns what it has created or paid a third-party to create, then put a plan in place to protect that IP through the appropriate protection vehicles or combination or vehicles. The most effective protections can be a web of patents, trademarks, copyrights and trade secret protections developed specifically with your business objectives and business model in mind.
6. Register your copyrights early. To sue for copyright infringement of U.S. copyrights, U.S. copyright registration is now a pre-requisite. In 2019, the U.S. Supreme Court settled a split among various Circuit Courts of Appeals when it issued a decision in Fourth Estate Public Benefit Corp.,[2] holding that in most cases the U.S. copyright registration process must be completed prior to suing for infringement based on U.S. copyrights, which can take many months.[3]
7. When you haven't created it, be sure that you have the rights to use the IP someone else created. Just because you find material posted on the internet does not mean you have the right to use it. Works of creative expression on the internet, such as images, articles and content, are still the subject of copyright protection even though they are publicly available. If you intend to use images or content from the internet for commercial purposes, you will need to secure the right to do so from the copyright owner. By the same token, just because others find material posted on your website does not mean that they have the rights to use that material either. Become familiar with take-down procedures for internet service providers and consider employing mechanisms to improve your ability to have infringing content promptly taken down. Suing for infringement of that material posted on your website will now require a U.S. copyright registration. See No. 6.
8. When you haven't created it, be sure that you have the rights to use the IP someone else created. Reprise. I repeat this point again specifically with reference to images copied from the internet. Stock photo agencies and services use image matching technology to continuously look for copies of copyright holders' images (or even image portions) on the internet. If they happen to find one on your website, you will likely receive a cease and desist letter from an attorney representing the stock photo agency demanding damages for copyright infringement under threat of a lawsuit. These companies are persistent and do not go away.
9. When picking a trademark, be mindful of big company trademarks. Some large, well-recognized companies can be very aggressive in enforcing their trademark rights taking an overly expansive view of the breadth of their trademark rights. Sometimes referred to as "trademark bullies," these companies use the threat of litigation with its huge costs to scare smaller companies into narrowing the scope of their own trademark rights or giving up on trademark protection all-together even when the nature of the goods or services may be very different as between the two trademark owners.
(2) Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. ___, 139 S. Ct. 881 (2019).
(3) Some limited exceptions to the registration requirement apply, such as live broadcasts. Id.
10. Be mindful of big company trademarks. Reprise. Designs for goods, clothing, shoes, toys, sports apparel to name a few can also be registered as trademarks if they function as a source identifier. U.S. Trademark registrations for those designs, as well as for words, symbols and logos, can be recorded with U.S. Customs and Border Protection ("CBP") to stop infringing products from entering the country. Well-resourced companies who aggressively enforce their trademark rights often take advantage of this protection by recording their trademark registrations with CBP. Once the U.S. trademark registrations are recorded with CBP, CBP will check them against imported goods before they are allowed to enter the country. Goods found to be infringing will be detained at the border with little hope of ever having them released without significant expense, if at all. You can investigate CBP records before importing goods from abroad.
Sue Chetlin is an Intellectual Property attorney at Burch & Cracchiolo, P.A. She can be reached at 602.234.8785 or schetlin@bcattorneys.com.
[1] BrandZ Global Top 100 Most Valuable Brands 2019, www.brandz.com.
[2] Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. ___, 139 S. Ct. 881 (2019).
[3] Some limited exceptions to the registration requirement apply, such as live broadcasts. Id.