Just about every business, including your family business, likely owns some form of intellectual property (“IP”). IP can include trademarks, patents, copyrights or trade secrets. IP rights allow your business to protect economically valuable intangible assets. Once secured, IP rights allow your company to develop powerful competitive advantages in the marketplace where your goods and services are sold.
IP rights are often among the most important and valuable legal rights a family business can own. They allow your business to protect the various sources of information that define and comprise your company’s goods and services against theft and infringement by your competitors. IP rights also ensure that when you establish a unique brand in a marketplace the law will prohibit your competitors from using similar symbols to identify their brands in the same marketplace.
The most relevant, core IP rights for a family business are trademarks, copyrights, patents, and trade secrets. There are other intellectual property rights, but other IP rights are generally related to these four core types of rights.
Trademarks
Trademark law protects words and symbols that identify the source of your company’s goods and services, and distinguishes your goods and services from ones provided by other companies operating in the same market place. A trademark can consist of words, logos, slogans, and even sounds, colors and smells. Anything can be trademark so long as it serves as a source identifier for goods or services provided by a particular company.
In the United States, trademark rights are acquired through use in a particular marketplace. Once a trademark is introduced in commerce in a marketplace, that business has enforceable common law legal rights in that trademark.
Federal registration of your company’s trademark confers additional benefits, such as nationwide recognition of your trademark rights, and advantages for enforcing those trademark rights against third parties who use the same or similar marks.
While federally registered trademark rights must be renewed every 10 years, if done so correctly, the trademarks can last forever so long as the mark is being used to sell or distribute goods or services in interstate commerce.
Patents
Patent law protects inventions. For an invention to be patentable it must meet five primary requirements: (1) patentable subject matter, (2) utility, (3) novelty, (4) non-obviousness, and (5) enablement.
Patentable subject matter is broadly defined to include new and useful processes, machines, manufacturing methods, compositions of matter, or improvements to any of these things.
Next, your invention must be useful. The Patent Office’s guidelines require that utility asserted in an application must be credible, specific and substantial otherwise the invention won’t meet the utility requirement.
Your invention must also be novel, which means it’s new and has not been in public use or on sale in the U.S. more than one year prior to the date of your patent application.
Your invention must be non-obvious, which means the invention and the prior art, when taken together, cannot be obvious to a person having ordinary skill in the art at the time the invention was made. If it is, it can’t be patented.
And finally, enablement requires you to describe your invention, and the manner and process of making and using it, in specific enough terms in your application to allow any person skilled in the subject matter area to which the invention applies to make and use it.
If your invention meets these five criteria, you may patent it. Keep in mind that patent rights are only conferred on those who own a patent to the invention. And to own a patent to an invention you must be the inventor. A patent gives the owner the exclusive right to prevent others from using and exploiting the new invention for up to 20 years from the date of application. Generally this means the owner is the only party who can use and exploit the invention for commercial gain, which is typically done through licensing.
Copyrights
Copyright law protects an author’s expression of an idea reduced to tangible medium of expression – like paper or a computer – but not the idea itself. For example, anyone can write a story about a boy raised by animals in the wild, but copyright law prevents the copying of Rudyard Kipling’s expression of those ideas in the Jungle Book. Copyright law covers most types of expression, including literary works, art, music, movies, software, and building designs. Notably it does not cover clothing. Copyright protection also does not extend to functional aspects of a design such as the tines of a fork. That would be covered by a patent.
Copyrights attach immediately upon the creation of a work. That means that as soon as you write a word on a page, or type a formula into a spreadsheet you, the author, have a common law copyright in that work. However, even though those rights exist, to enforce those rights against a third party in the United States it is wise, and sometimes necessary, to register those rights with the U.S. Copyright Office.
Copyrights exist for a fixed period of time depending on who is the author, but will eventually pass into the public domain for use by anyone when that time period expires. There are also limited exceptions to copyrights where a copyrighted work can be used by a third party at any time, but it typically cannot be used in a way that competes with the copyright owner or seeks to commercialize the copyrighted work for financial gain.
Trade Secrets
A trade secret is information, including know-how, formulas, recipes, product formulations, patterns, compilations, techniques, program devices, methods, techniques, processes or processing techniques, that (1) derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Trade secrets can include sale processes, financial models, consumer profiles, marketing strategies, social media contacts, formulas for mouthwash, and lists of suppliers.
Unlike the other forms of IP law, trade secret law has historically been sole province of state law. Each state had its own trade secret statute and case law. In 2016, Congress passed the Defend Trade Secrets Act, which created a federal trade secrets act that applies nationwide for the first time. The Act supplements and does not preempt any state trade secret statutes.
The owner of a trade secret must take reasonable steps to maintain the secrecy of the information it wishes trade secret law to protect. Reasonable steps include having appropriate non-disclosure agreements with employees and third parties with access to the information. A trade secret can be protected indefinitely if its owner takes the appropriate steps.
Understanding the types of available intellectual property can help your family business to protect your valuable property effectively and consistently.
About the Finkel Law Group
Finkel Law Group, with offices in San Francisco and Oakland, has assisted many family owned businesses protect their intellectual property rights in an assortment of technologies and industries. Our attorneys are skilled at working with you and your team to develop a plan to ensure your intellectual property rights are secured. When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you with an intellectual property problem you may be confronting please contact us at (415) 252-9600, (510) 344-6601, or info@finkellawgroup.com to speak with one of our attorneys about your matter.