Avoiding Patent, Trademark And Copyright Problems

 

   

    INTRODUCTION

    Patents, copyrights and trademarks, as well as know-

how or trade secrets, are often collectively referred

to as intellectual property. Many firms have such property

without even being aware of it or of the need to take

measures to protect it.

   

    Many people's notions of intellectual property are

unrealistic.  Some believe, for example, that having a

patent on a product will enable one to succeed in the

marketplace. Consequently, they may spend thousands of

dollars to obtain the exclusive rights to market something

that no one wants or can afford to buy. Others may

conclude that intellectual property protection is not

worth the expense and bother.

 

    People who may not be interested in protecting their

own rights still must take precautions to avoid infringing

on the rights of others. This calls for more than the

avoidance of copying.  Copying is unavoidable; it is a way

of life and one way in which we learn. But, one can easily

infringe on the rights of others without deliberately

imitating specific features of goods or services.

 

    This publication addresses the steps newcomers to a

market should take to avoid infringement and when they

should take them.

   

    PATENTS

    Most people have heard variations on a remark

attributed to Ralph Waldo Emerson: If a man can make a

better mousetrap than his neighbor, though he builds his

house in the woods the world will beat a path to his door.

To keep the discussion concrete, let's imagine a present

day inventor of a new mousetrap who not only invents a

better mousetrap but is also successful in marketing

it. The higher the inventor's profit margin, the more

others will want to copy his invention. Let's assume that

the inventor selects Figaro as the brand name and actively

promotes the product. However, he does not legally protect

his invention, but relies on the consumers' loyalty,

goodwill and brand identification to ensure future sales.

 

    Taking measures to develop loyalty and goodwill may be

sufficient until a larger and better known competitor

turns up. For example, what if economies of scale and lack

of development costs mean that the competitor can sell the

same mousetrap for 20 percent less? Goodwill may not be

enough to ensure customer loyalty at a higher price. A

patent would be much more helpful, because it would

prevent the competitor from selling the new trap until

well after the original firm had a chance to get on its

feet. This situation illustrates that it is the smaller

firm that often has the most to gain from protecting

intellectual property.

 

    As bad as the situation is without patent protection,

it could be worse. Let's assume that customers are so

taken by the Figaro promotion that they are willing to pay

the 25 percent premium the firm charges in order to stay

in business. Imagine what would happen if the company had

to stop using that name or had to face an expensive

lawsuit. Imagine what would happen if it turns out

that someone else actually has a current patent on one or

more features of the better mousetrap. By failing to

consider the intellectual property of others, the new firm

would not only be forced to stop selling under the name

Figaro, but might be forced to stop selling the mousetrap

altogether.

   

    AVOIDING PATENT INFRINGEMENT

    Utility patents - what people usually mean when they

use the term patents - provide 17 years of exclusive

rights for inventions that deal with the way things work.

Design patents afford 14 years of protection for

significant improvement in the appearance of useful items,

such as car bodies or furniture. Both of these patents do

more than prevent copying; they forbid the making, using

or selling of an invention similar to or the same as the

protected invention, even though the second invention was

independently created. (Plant patents, which will not be

covered in this discussion, may not give the same

protection.)

   

    Copying may actually be a way to avoid infringement.

The inventor of the mousetrap might have avoided potential

problems by using technology that was described in a

printed publication, publicly used or on sale. Products

that are on sale and give no notice of patent coverage are

relatively free from the risk of infringement.

 

    Any person trying to market fairly new technology that

doesn't appear to be patented should keep in mind that an

inventor has one year from public sale or disclosure

within which to file a patent application. In addition,

because patents often take two or more years to obtain,

there is still a chance that a patent could be issued at a

later time. Although there is no liability for

infringement prior to issuance of a patent, a competitor

would have to cease making, using or selling the

technology once the patent was issued, thus risking the

loss of both start-up costs and inventory.

 

    Of course, if our inventor was determined to make a

better mousetrap, there would be no interest in copying

something else in the market. Still, before spending too

much time and money on research, the inventor should

ensure that others do not have exclusive rights in the

area being explored. The inventor certainly should not

assume that, because a product is not on the market, it is

unpatented. As many independent inventors have learned to

their chagrin, it is usually easier to patent something

than to market it profitably.

   

    A PATENT SEARCH

    The inventor should hire a patent attorney or agent to

conduct an infringement search. A patent agent is a

technically trained person who has passed a special

examination given by the U.S.  Patent and Trademark

Office; a patent lawyer is one permitted to draft

contracts and provide other general legal services. Patent

searches can be expensive if one must consult foreign

records; it is much less costly to determine whether

technology is currently patented in the United States.

Yet, as we will see, there is value in going somewhat

beyond that point.

 

    A search might reveal that (1) someone else had a

patent that has since expired, i.e., the information

patented is now in the public domain; (2) no current or

expired patents cover the area of proposed research or (3)

someone else has a current patent covering all or part of

the proposed design. Let's consider these potential

results in order.

   

    THE INVENTION IS IN THE PUBLIC DOMAIN

    If the mousetrap (or an obvious variation) was

disclosed in an expired patent, the inventor is free to

manufacture and market it without concern for the patent

laws. Also, even if the inventor didn't find exactly what

he or she originally had in mind, a host of good and

freely used ideas that are even better might have

been discovered. These alone could be worth several times

the price of the search in saving research and development

time.

 

 

    ONE OR MORE ELEMENTS OF THE PROPOSED

MOUSETRAP APPEAR TO BE NEW

    If, after a thorough search, our inventor's proposed

improvements to the mousetrap seem not only to be novel

but also to offer significant advantages over the prior

design, the inventor may seek a patent and/or begin

selling the mousetrap without further ado. If, however,

the inventor begins selling without first filing a patent

application, he immediately forfeits possible protection

in many other countries and also forfeits any possibility

of patent rights in the United States after one year.

 

 

    ASPECTS OF THE PROPOSED DESIGN ARE COVERED

BY A CURRENT PATENT

    If an unexpired patent is found to cover any part of

the proposed mousetrap design, the inventor knows that he

is not free to use it without a license. Infringing on a

current patent exposes one to a suit for damages as well

as an injunction against future use.  Even an injunction

might mean substantial costs, including the loss of

current inventory, and a patent covering even a small

feature of the new mousetrap might give rise to the need

to retool. Although deliberate infringement is more

serious,ignorance of others' patents is no defense.

 

   

    TRADEMARKS

    Trademarks (or brand names) indicate commercial

source.  Trademarks may be words, logos or other symbols

indicating that goods come from a particular company. They

may even be sounds, three-dimensional symbols (such as the

well-known McDonald's golden arches) or colors. There are

also service marks, which indicate the source of services,

and other kinds of marks that will not be considered here.

 

    As with patents, one can infringe on another's marks

without copying them or even being in direct competition

with their owner. All that is necessary is to use the same

or a similar mark under circumstances in which consumers

may be confused as to the source or sponsorship of the

goods or services.

 

  

    A TRADEMARK SEARCH

    A trademark search is the only way to find out whether

Figaro or something confusingly similar is being used by

others as a mark for a mousetrap (or perhaps such things

as rodenticides) in the proposed market area. It is also

necessary to determine whether the mark has been

registered in the U.S. Patent and Trademark Office, which

could give the registrant rights well beyond the market

areas currently occupied.

 

    There are two reasons why a search may not be

sufficient. First, in the United States, it is unnecessary

for a firm to do more than use a good mark to have

trademark rights in its market area.  Consequently, a

search may not locate all such prior users. Second,

people may be able to prevent the use of a potential mark

without having used it as a mark themselves; for example,

when a trademark can be associated with others in such a

way that consumers might presume that some kind of

relationship might exist. This is where the mark Figaro

would run into trouble.

 

    As you may recall, Figaro is the name of the cat in

the Disney film Pinocchio. Although the Walt Disney

Company does not have a monopoly on the use of the name,

it might nevertheless be able to prevent it from being

used on a mousetrap. If that seems too farfetched,

consider the company's concern if "Mickey" had somehow

been part of the mousetrap name!

 

    COPYRIGHTS

    A copyright provides an owner with the exclusive

rights to reproduce a certain work for a specified period,

subject to some basic limits. The term of a copyright is

the lifetime of the author plus 50 years in the case of

identifiable, living authors.   Copyrights arise

automatically and are inexpensive to register.

 

   

    Searching for a prior copyright is probably

unnecessary.  Copyright infringement can be avoided by

establishing that a work was independently created.

Therefore, records showing independent creation are

helpful to avoid liability. Even with such records,

establishing independent creation may be difficult if the

original work was widely disseminated or otherwise

available to the alleged infringer. In one such case, the

court held that,although copying may have been

unconscious, the original was nevertheless infringed.

 

    One of the limits to copyright protection is that

ideas (compared to expressions) and technology (computer

software aside) are generally not protected. This means

that our inventor is free, at least as far as copyright

laws are concerned, to use any information that can be

found in books on mousetrap designs and to make and sell

working copies of anything shown or described.  Copyright

gives the owner only the right to prevent reproduction

of the text or drawings themselves.

 

    What if the inventor wants to use some of that text,

for example,in an advertisement? There is a remote

possibility that such use might be protected under the

"fair use" defense, but it would be very unwise to proceed

without getting permission from the copyright holder or

seeking expert advice.

 

  

    TRADE SECRETS

    Trade secrets overlap the subject matter of copyrights

and patents. As long as efforts have been made to preserve

secrecy, a suit may be brought to redress the

misappropriation (or wrongful taking) of almost any kind

of information of competitive value.  Misappropriation

includes industrial espionage and breaches of 

confidential relationships (for example, by former

employees), but it does not include reverse engineering.

Thus, a trade secret suit will not succeed if an aspect of

a product's design or construction was obtained by

examining an item purchased in the marketplace. Nor will a

suit be useful against those who independently discover a

secret process or recompile commercially valuable

information.

   

    The risk of being accused of misappropriating a trade

secret is never very high, particularly if one seeks

competent legal advice before using unlicensed information

that has not been obtained through reverse engineering.

 

  

    THE NEED FOR EXPERIENCED COUNSEL

    Any attorney admitted to practice in any state in the

country is technically qualified to register trademarks

with the U.S. Patent and Trademark Office or copyrights

with the U.S. Copyright Office in Washington D.C. Unlike

the situation with patents, no special examination is

given to determine whether the attorney is familiar with

the copyright or trademark law or registration

procedures, for example. Clients are advised to seek an

attorney who specializes in such matters.

 

   

    SUMMARY

    Whether or not our mousetrap inventor takes measures

to preserve the intellectual property, he or she certainly

should avoid infringing on the rights of others. Although

this is not difficult in the case of copyrights and trade

secrets, patents and trademarks are another matter

altogether.   

 

    Unquestionably, it costs precious start-up capital to

have patent and trademark searches performed; however,

proceeding in a new venture without doing so is equivalent

to erecting a building or signing a long-term lease

without checking the real estate title.  Searches will not

make the product appeal to the public, but they will

ensure enjoyment of any hard-won market success. A patent

search is comparatively cheap insurance against the

possible need to retool or to absorb inventory losses.

Moreover, a close look before adopting a trademark is

cheaper in the long run than the cost of advertising and

new promotions designed to advise customers to seek the

mousetrap under a new name.

 

   

    APPENDIX A: FURTHER INFORMATION ON

INTELLECTUAL PROPERTY

    Patent and Trademark Office, Washington, DC 20231, or

the United States Trademark Association, 6 E. 45th Street,

New York, NY 10017.   Both publish free or inexpensive

booklets.

   

    A booklet for independent inventors, "So You Have An

Idea", is available from the Innovation Clinic, 2 White

Street, Concord, NH  03301. To order it send $2.00 and a

self-addressed mailing label.   The Innovation Clinic also

has a set of HyperCard stacks (for Macintosh computers)

covering several topics of interest to inventors and small

business owners. These are available for $5.00 and a self-

addressed mailing label.

 

    Write to the Copyright Office, Washington, DC 20559,

indicating the subject matter in which you are

particularly interested, for example, music or arts.

 

    "Patents Trademarks and Copyrights", Lawrence E.

Evans, Jr., 1986, Gunn, Lee and Jackson, Eleven Greenway

Plaza, Suite 1616, Houston, TX 77046.

   

    You may want to consult one or more of the many

inventors' handbooks available at public libraries. One

example is "How to Profit From Your Ideas", Flemming Bank,

1985 ($12.95). Bank and Associates, P.O. Box 20365,

Portland, OR 97220. This is a step-by-step guide that

shows how you can make money by turning your creative

ideas into marketable products.    

   

    APPENDIX B: INFORMATION RESOURCES

    U.S. Small Business Administration (SBA)

   

    The SBA offers an extensive selection of information

on most business management topics, from how to start a

business to exporting your products.

 

    This information is listed in "The Small Business

Directory". For a free copy contact your nearest SBA

office.

   

    SBA has offices throughout the country. Consult the

U.S. Government section in your telephone directory for

the office nearest you. SBA offers a number of programs

and services,including training and educational programs,

counseling services, financial programs and contract

assistance. Ask about

  

     - Service Corps of Retired Executives (SCORE), a

national organization sponsored by SBA of over 13,000

volunteer business executives who provide free counseling,

workshops and seminars to prospective and existing small

business people.

   

     - Small Business Development Centers (SBDCs),

sponsored by the SBA in partnership with state and local

governments, the educational community and the private

sector. They provide assistance,  counseling and training

to prospective and existing business people.

   

     - Small Business Institutes (SBIs), organized through

SBA on more than 500 college campuses nationwide. The

institutes provide counseling by students and faculty to

small business clients.

      

    For more information about SBA business development

programs and services call the SBA Small Business Answer

Desk at 1-800-8-ASK-SBA (827-5722).

   

    Other U.S. Government Resources

    Many publications on business management and other

related topics are available from the Government Printing

Office (GPO). GPO bookstores are located in 24 major

cities and are listed in the Yellow Pages under the

"bookstore" heading. You can request a "Subject

Bibliography" by writing to Government Printing Office,

Superintendent of Documents, Washington, DC 20402-9328.

   

    Many federal agencies offer publications of interest

to small businesses. There is a nominal fee for some, but

most are free.  Below is a selected list of government

agencies that provide publications and other services

targeted to small businesses. To get their publications,

contact the regional offices listed in the telephone

directory or write to the addresses below:

 

     - Consumer Information Center (CIC), P.O. Box 100

Pueblo, CO 81002.  The CIC offers a consumer information

catalog of federal  publications.

 

     - Library of Congress Copyright Office, Register of

Copyrights, Washington, DC 20559

   

     - Patent and Trademark Office (PTO), Washington, DC

20231.  Public Service Center: (703) 557-INFO

   

     - U.S. Department of Commerce (DOC), Office of

Business Liaison,14th Street and Constitution Avenue, NW,

Room 5898C, Washington, DC 20230  DOC's Business

Assistance Center provides listings of business

opportunities available in the federal government. This

service also will refer businesses to different programs

and services in the DOC and other federal agencies.

 

  

    Nongovernment Organizations

     - Software Publishers Association, 1101 Connecticut

Avenue, NW Suite 901, Washington, DC 20036

   

     - United States Trademark Association, 6 E. 45th

Street, New York, NY 10017

   

    For More Information

    A librarian can help you locate the specific

information you need in reference books. Most libraries

have a variety of directories,indexes and encyclopedias

that cover many business topics. They also have other

resources, such as

 

     - Trade association information - Ask the librarian

to show you a directory of trade associations.

Associations provide a valuable network of resources to

their members through publications and services such as

newsletters, conferences and seminars.

   

     - Books - Many guidebooks, textbooks and manuals on

small business are published annually. To find the names

of books not in your local library check "Books In Print",

a directory of books currently available from publishers.

 

     - Magazine and newspaper articles - Business and

professional magazines provide information that is more

current than that found in books and textbooks. There are

a number of indexes to help you find specific articles in

periodicals.

   

    In addition to books and magazines, many libraries

offer free workshops, lend skill-building tapes and have

catalogues and brochures describing continuing education

opportunities.