Got IP? Top Ten Tips for Identifying, Protecting, and Making Money from Intellectual Property.
About a decade ago, I had the opportunity to ask my grandmother, who was then in her nineties, what she considered to be the most amazing invention of her lifetime. In the moment that it took her to answer, many possible answers came to mind, including computers, the airplane, and the telephone. As soon as she answered, I realized just how much I have taken for granted. “Electricity,” she replied. “The old oil lamps were awful. You had to clean the chimney, trim the wick, and keep them filled with oil. It was a lot of work for not a lot of light.”
“A lot of work for not a lot of rights” is probably how some would describe the process of securing intellectual property rights today. And especially the process of securing patent rights. There are, however, some simple and effective ways for companies to create, identify, protect, and profit from intellectual property.
1. Patent your patentable ideas.
In order to get a patent, your idea has to meet four basic requirements:
- First, your idea must be subject matter that Congress has defined (and the courts have interpreted) to be patentable. Machines, processes/methods, and compositions of matter are examples of patentable subject matter. Algorithms and laws of nature (e.g. E=mc2) are examples of subject matter than cannot be patented.
- Second, your idea must be new.
- Third, your idea must be useful.
- Fourth, your idea must be non-obvious.
While there can be disagreement about whether your idea is new or useful, most of the back-and-forth discussions between inventors and the USPTO concern the non-obvious concept of non-obviousness. When the USPTO rejects your idea as obvious, it puts itself in the position of one skilled in the subject matter of your idea and combines ideas from multiple prior art references (some would say in hindsight) to come up with your idea.
Here are some real world patent strategies for you to consider:
- Be aware of the “statutory bars” that can prevent you from ever getting a patent on your invention. These include publishing your invention and selling (or offering to sell) your invention. Once these events have occurred, you have a one-year grace period in which to file your patent application.
- Be aware of your competition. Are they working on the same technology, and are they likely to file for a patent on it?
- Keep good records of invention. The United States uses the “first to invent” system. Most of the rest of the world grants patent priority to the first inventor to file a patent application. Filing is important in the United States as well, but if a dispute arises, invention notebooks and the like will be used to determine which inventor invented first.
- File at the right time. You obviously don’t want to file too late (see the statutory bars above), but you also don’t want to file too early. One common mistake that inventors make is to file a Provisional Patent Application (PPA), which is a relatively easy and inexpensive way to get “patent pending” status without having to spend $5,000 to $30,000 for a Regular Patent Application (RPA). But if you file your PPA and are unable to turn your idea into money in the next year, then you will have lost the benefit of the earlier filing date. Furthermore, if you also publish or sell (or offered to sell) your invention while your PPA is pending, then you’ll still have to file your RPA within one year of those events. In other words, by filing your RPA too soon, you can inadvertently prevent your invention from getting patented. Having a patentable invention is great, but you also have to convince others to pay money for it.
- Fifth, quit your day job. It’s 10% inspiration, 90% perspiration. In order to succeed as an entrepreneur, you have to commit to it 100%.
While we are not quite at the point where “anything under the sun made by man” can be patented, we’re not far off. The emergence of software and business method patents means more companies are applying for patents. Some of those companies may be your competitors.
For more information, see “Patents vs. Trade Secrets.”
2. Un-patent your un-patentable ideas.
Sometimes, you will have an idea that you could have patented, perhaps should have patented, but never did patent. What can you do? You may want to consider preventing your competitors from patenting it.
One of the worst things that can happen to your company is to have a competitor patent something that you could have patented first. In the worst case scenario, the competitor would then ask you to license their patent for what was your idea! One way to prevent your competitors from getting patents on your unpatentable ideas is to publish those ideas. And the best place to publish ideas is in the specification of a patent application. Why? Because the USPTO is best at searching patent applications, not non-patent publications.
Sometimes you will see a patent application that contains a large specification and only a few claims or claims with a very narrow scope. This type of patent could be an example of a defensive patent, one in which the applicant discloses numerous inventions in the specification but only claims one of them. Your publication will prevent applications filed a year after your publication from receiving a patent.
For more information, see “Patents vs. Trade Secrets.”
3. Keep your other ideas secret.
Businesses should choose to protect their best ideas with either patents or trade secrets. The two are mutually exclusive. A trade secret is anything that a company would not want its competitors to know. But it does a company no good to “choose” trade secret protection and the implement no policies to ensure that its secrets, in fact, remain secret.
Employees should sign invention, confidentiality, and noncompetition agreements. Trade secrets should only be shared outside of the company on a need-to-know basis, and even then nondisclosure agreements should be used. Nondisclosure agreements need not be complicated. The following nondisclosure agreement fits on a postcard:
I CAN KEEP A SECRET - I PROMISE [COMPANY NAME] wants to tell you a secret. The secret is some information that is in or is about the products and product plans of [COMPANY NAME] and one that [COMPANY NAME] hasn't told anyone else (at least, not unless they signed an agreement like this one - or one drafted by our lawyers, which, of course, is much tougher and longer). Because we're telling you our secrets, we ask you, in return, not to tell them to others. At least not until we tell other people ourselves without asking them to sign a friendly little agreement like this - or we let you know that it is OK to tell others. We would appreciate your signing this on the dotted line below so our lawyers won't yell at us. By signing, you agree on behalf of yourself and your company to keep our secrets. However, in case we forget about you, we agree that what we are telling or showing you won't be a secret any more than five years from now, at which time you can use this piece of paper for confetti - provided you've honored it in the meantime. By___________________________ _____________________________ [COMPANY NAME] Representative (Yes, this is a dotted line.) _____________________________ _____________________________ Date Printed Name _____________________________ _____________________________ Phone Title _____________________________ _____________________________ Relationship Company
Also, note that pending patent applications are still trade secrets and should be treated as such. Also note that filed applications will be published (and hence rendered nonsecret) unless the applicant opts for nonpublication. If nonpublication is elected and if your pending U.S. application is finally denied or abandoned, you can still keep your invention a trade secret.
4. Interview a spy.
“A secret is something two people can keep if one of them is dead.” –Ben Franklin
To test your company’s trade secret policies, you should hire a spy to apply for a job at your company. Get the spy-for-hire to sign a nondisclosure agreement first. Do you have good policies for interviewing prospective clients? Policies that keep your trade secrets, in fact, secret? Many companies forget about this and disclose confidential information to job applicants.
Your trade secret policies must be defined, communicated, tested, and enforced. I’m guessing that Coke does of good job of not disclosing its secret formula during interviews.
5. Trademark your domain names.
In order for trademarks to be registered by the USPTO, they must be 1) not descriptive, 2) not generic, and 3) distinctive. So if you have followed my suggestions for picking a good company name, then you’ve also chosen a good trademark. There are other considerations as well, but these are the main requirements.
Can you trademark a domain name? The short answer is that it depends if you are using your domain name as a trademark. Is your domain name being used to identify the source of the products or services you offer? If so, and if it passed the other three tests above, then you may be able to secure federal registration for it.
One reason you might want to register your domain name as a trademark is to prevent “cybersquatters” from using confusingly similar marks. For about two years, AmaXon.com had its own web site (http://web.archive.org/web/*/www.amaxon.com), but now “amaXon.com” is owned by Amazon.com. For more information on this topic, see “Trademark Registration
of Internet Domain Names” by the USPTO (http://www.uspto.gov/web/offices/tac/domain/
).
For more information, see “How To Name Your Company, Trademark Your Domain Name, and Domain Name Your Trademark.”
6. Domain name your trademarks.
You should register your company name, trademarks, product names, service names, and slogans as domain names. You should consider registering different versions of your domain name. I recommend that companies register their names in the “big three” Top Level Domains (TLDs) (i.e. .com, .net, and .org). Registering multiple domain names is cheap insurance to protect against possible infringing use. For the same reason, register both the singular and plural versions of your domain name. Finally, you may want to prepend “www” to your domain names and register all of these too, since omitting the dot between the “www” and the domain name is a common typo made by Internet users. This is why, for example, Amazon.com has also registered “wwwamazon.com.”
For more information, see “How To Name Your Company, Trademark Your Domain Name, and Domain Name Your Trademark.”
7. Reverse lookup your domain names.
Sometimes a company owns domain names and doesn’t know it. This can happen when one company purchases another and domain name records have not been carefully maintained. As part of a periodic intellectual property audit, you should lookup domain names that are registered to the same mailing address as your company (and all previous mailing addresses). I know of one company that “found” a $500,000 domain name by using this method.
This sort of domain name search is sometimes called a “reverse lookup.” Thomson & Thomson offers this feature via their SAEGIS service (http://www.saegis.com/), and Alldomains.com (http://www.alldomains.com/) has promised the D-Tective service with reverse whois functionality.
8. Write a book.
If you have written a business plan, a marketing plan, a web site, product documentation, or a white paper, then you already have the material you need to write a book. Entrepreneurs starting new businesses frequently struggle to get their message out. You could write a business plan, print a few dozen copies, and mail them to local venture capitalists and angels. Or you could write a book, publish it, and send your book to the same investors. Which do you think would be more effective? I’m not suggesting that you give away all of your best ideas in a book, but chances are you can separate the book fodder from your trade secrets.
For more information, see “How To Write, Copyright, and Publish Your Own Book.”
9. Be Aware of the BSA.
You should protect your own intellectual property and you should respect the intellectual property rights of others. You should also keep your employees happy. If you fail to keep your employees happy, and if you fail to respect the intellectual property rights of others, you may find your employees quitting and reporting your unlicensed software to the Business Software Alliance (http://www.bsa.org/).
Make sure all of the software on your computers is legally licensed. A utility called Belarc Advisor (http://www.belarc.com/) can analyze your system’s hardware and software, create a detailed report, and save the report as an HTML file that you can view with your web browser.
10. Mark it, use it, keep track of it.
Mark all of your trademarks with “TM” and all of your federally registered trademarks with “®”. Trademark rights attach when you first use a mark, and no registration is required to used the “TM” symbol.
Similarly, you don’t have to register works in order to get a copyright. Copyright rights exist as soon as works are in a fixed form. However, registering copyrighted works with the Copyright Office does provide additional remedies if a dispute with a copier arises at a later date. Similarly, you don’t have to mark your copyrighted works, but you should. Nevertheless, if you are creating copyrightable works, you should mark them with a copyright notice as soon as they are in a fixed form to put others on notice. For example, the copyright notice for this article is “Copyright 2002 Clock Tower Law Group. All rights reserved.”
Register domain names as part of your intellectual property strategy.
Keep your trade secrets secret.
Lather, rinse, repeat. Creating, identifying, protecting, and profiting from intellectual property is a process, not an event.
For more information, see “Top 10 Things Every Business Should Know About Intellectual Property.”
For more information, see “Intellectual Property Audit.”
