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New Ideas, Methods and Products Series
Volume I
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What's Protectable by Patents, Copyrights,
Trademarks and Trade Secrets
INTRODUCTION
When a new idea is conceived or a new product
or method is designed, one of the first thoughts
that occurs is: Can I protect this? Can I
keep competitors from copying this? This
concern deals with the very real and practical
reasons for protecting your new idea. Investors
are loathe to put money into a venture that
cannot establish a unique product niche for
itself. Stockholders will challenge a corporation's
investment of its resources in a program
that can be easily copied once introduced
to the market. All the time, effort and money
invested in perfecting the idea, as well
as advertising and promoting it, can be wasted
if imitators can enter the market on your
heels with products just like yours. Moreover,
the imitators can cut prices because they
have not incurred start-up expenses you had
to endure to bring the idea from conception
to a mass-producible, reliable and appealing
product or service.
The things that may be protected include,
for example, a new product, new method or
process, new service, new promotional or
merchandising scheme or approach, new packaging
or new design.
There are a number of types
of protection:
patent, trade secret, trademark
and copyright.
In some cases overlapping
protection may
be obtained. This brochure
explains the kinds
of items protected by each
of these types
of protection and the nature
of the protection.
Other brochures in the
series explain: what
must be done to obtain
the protection; why
and how to obtain foreign
protection; licensing
of ideas and products;
various agreements
used to protect the ideas
and products such
as employment agreements,
confidential disclosure
agreements, consultant,
supplier and customer
agreements, and visitor
forms; infringement
and litigation; the step-by-step
procedure
for obtaining protection
from conception
of an idea to interaction
with the Patent
and Trademark Office and
the Copyright Office;
and from invention to patent
the inventor's
role.
PATENT COVERAGE
There are two kinds of patents: Design and
Utility. Utility patents are the kind most
commonly referred to when one seeks to protect
an invention. They are granted for any new
and useful process, machine, manufacture
or composition of matter or any new and useful
improvement thereof, including new uses of
old devices or new combinations of well-known
components. Design patents cover only the
new design of an object-its ornamental appearance.
Utility patents are viewed
in three classes:
chemical, electrical, and
general/mechanical.
Chemical inventions covered
include new compounds,
new methods of making old
or new compounds,
new methods of using old
or new compounds,
and combinations of old
compounds. Biological
materials and methods,
drugs, foodstuffs,
drug therapy, plastics,
petroleum derivatives,
synthetic materials, pesticides,
fertilizers
and feeds are all protectable.
General/mechanical
inventions include everything
from gears
and engines to tweezers
and propellers. For
example, complex textile
weaving machines,
space capsule locks and
seals, and diaper
pins are all protected.
This area also includes
everything from zippers
to fur-lined keyhole
appliques; from Jacques
Cousteau's SCUBA
regulator to stirrups for
short men to make
love to tall women. Electrical
inventions
include everything from
lasers to light switches,
from the smallest circuit
details to entire
system architectural concepts.
Computer software is patentable
in its various
forms. Application programs,
such as the
software that runs in a
computer that controls
a chemical processing plant
or a rubber molding
machine, are patentable.
Software that runs
a cash management account
at a brokerage
house or bank is patentable
too. Even the
microcode in a ROM which
embodies the entire
inventive notion of a new
tachometer is patentable.
Internal or operations
programs which direct
the handling of data in
the computer's own
operations are also patentable.
The basic requirement for
obtaining a utility
patent is that the idea
be new and that it
be embodied in a physical
form. The physical
form may be a thing or
a series of steps
to perform.
Design patents too are
awarded for new ideas.
Hockey uniforms, ladies'
dresses, computer
housings, automobile bodies,
buildings, shoes
and game boards are all
protectable with
this type of patent. But
it covers only the
appearance, not the idea
or underlying concept.
What you see is what you
get. Design patents
are generally less expensive
than utility
patents and in some cases
are all the protection
needed or obtainable.
There are more than one
thousand utility
and a few hundred design
patents issued each
week. Summaries of each
patent are published
each week in the Official
Gazette of the
Patent and Trademark Office.
Copies of every
issued patent are obtainable
from the Patent
and Trademark Office.
TRADE SECRET COVERAGE
Trade secrets cover everything that patents
cover, and much more. They protect any knowledge
you have that gives an advantage in business
over your competitors. A trade secret is
knowledge, which may include business knowledge
or technical knowledge, that is kept secret
for gaining an advantage in business over
one's competitors. Customer lists, sources
of supply of scarce material, or sources
of supply with faster delivery or lower prices
may be trade secrets. Certainly secret processes,
formulas, techniques, manufacturing know-how,
advertising schemes, marketing programs and
business plans are all protectable. There
is no standard of invention to meet as with
a patent. If the idea is new in this context,
if it is secret with respect to this particular
industry or product, then it can be protected
as a trade secret. Unlike patents, trademarks
and copyrights, there is no formal procedure
for obtaining trade secret protection. Rather,
it is established by the nature of the secret
and the effort to keep it secret.
Trade secrets are protected
eternally against
disclosure by all those
who have received
it in confidence and all
who would obtain
it by theft for so long
as the knowledge
or information is kept
secret. In contrast
to patent protection, there
are no statutory
requirements for novelty
or restrictions
on the subject matter.
Lesser and different
inventions may be protected
relative to patent
protection.
The disadvantage of trade
secrets over patents
is that there is no protection
against discovery
by fair means: accidental
disclosure, independent
inventions, and reverse
engineering. Many
important inventions, such
as lasers and
the airplane, were developed
more or less
simultaneously by different
persons. Trade
secret protection would
not permit the first
inventor to prevent the
second and subsequent
inventors from exploiting
the invention the
way a patent would. Trade
secrets are not
invoked only against those
who stole them.
They are equally well suited
to lucrative
licensing programs and
often can be more
valuable than patents.
The interplay between patents
and trade secrets
was illustrated in a case
in which a woman
who designed a novel keyholder
immediately
filed a patent application.
It was a simple
design and easily copied
once seen. While
the patent was still pending,
she licensed
it to a manufacturer for
a 5% royalty, with
the agreement that if the
patent didn't issue
in five years the royalty
would drop to 21/2%.
The patent never issued,
and the royalty
was dropped to 21/2%. Over
the period of
14 years, on sales of $7
million, the manufacturer's
edge eroded as others freely
copied, so the
manufacturer repudiated
the contract on the
ground that this agreement
required payment
forever for the small jump
that the manufacturer
got on its competitors,
while the patent,
had it issued, would have
given only 17 years'
exclusivity. The Court
nevertheless held
the manufacturer to its
requirement to pay.
The ruling allowed the
inventor to receive
21/2% royalty for so long
as the manufacturer
continued to sell the keyholder.
Had the
patent issued, royalties
would have lasted
only 17 years.
Many companies use both
approaches by filing
a patent application on
a trade secret. When
the patent application
is ready to issue,
the company re-evaluates
its position. If
the competition is close
they pay the fee
and have the patent issue.
If not, they don't
pay the fee and allow the
patent application
to go abandoned and preserve
the trade secret.
The values of certain trade
secrets have
been appraised at many
millions of dollars
and may be virtually priceless
in some industries.
For example, the formula
for Coca-Cola is
one of the best-kept trade
secrets in the
world. Known as Merchandise
7X, it has been
tightly guarded since it
was first invented
100 years ago. It is known
by only two persons
within the Coca-Cola Company
and is kept
in a security vault at
the Trust Company
Bank in Atlanta, Georgia,
which can only
be opened by a resolution
from the company's
Board of Directors. The
company refuses to
allow the identity of those
persons who know
the formula to be disclosed
or to allow those
persons to fly in the same
airplane at the
same time. The company
has elected to forego
producing Coca-Cola in
India, a potential
market of 550 million persons,
because the
Indian government required
the company to
disclose the secret formula
for Coca-Cola
as a condition for doing
business there.
While some of the mystique
surrounding the
Coca-Cola formula may be
marketing hype,
it is beyond dispute that
the company possesses
trade secrets which have
been carefully safeguarded
and which are extremely
valuable.
COPYRIGHT COVERAGE
Copyright covers all manner of writings,
and "writings" is very broadly
interpreted. It includes books, advertisements,
brochures, spec sheets, catalogs, manuals,
parts lists, promotional material, packaging
and decorative graphics, fabric designs,
photographs, pictures, film and video presentations,
audio recordings, architectural designs,
and even software and data bases. Software
and databases are protected not only in written
form but also as stored in electronic memory.
It is said that copyright
does not protect
a mere idea; it protects
the form of the
expression of the idea.
But this is broadly
interpreted. For example,
one can infringe
a book without copying
every word. The theme
is protected even though
upon successive
generalization the theme
will devolve to
one of seven non-protectable
basic plots.
This is apparent in the
software area, where
using the teachings of
a book to write a
program has resulted in
copyright infringement
of the book by the computer
program. In another
case a program was infringed
by another program
even though the second
program was written
in an entirely different
language and for
an entirely different computer.
The form
of the expression protected
was not merely
the actual writing, the
coding, but the underlying
concept or algorithm: the
flow chart. Copyright
is a very strong and readily
achievable source
of protection.
Utilitarian objects cannot
be the subject
of copyright: a hypodermic
needle, a hammer,
a lamp base. Yet stained
glass windows, software,
piggy banks and a sculpture
useful as a lamp
are granted copyright protection.
Copyright has a term of
the life of the author
plus seventy years. For
corporate "authors"
or works made for hire
the period is 95 years
from first publication
or 120 years from
creation, whichever is
shorter. During the
life of the copyright the
owner has the right
to reproduce, perform and
display the work
and exclude all others
from those rights.
TRADEMARK COVERAGE
Trademark protection is
obtainable for any
word or symbol or combination
thereof which
is used on goods to indicate
their source.
Any word, even common words,
can become a
trademark - look, life,
time, apple - so
long as the word is not
used descriptively.
Apple for fruit salad might
not be protectable.
Apple for computers certainly
is.
Common forms, such as geometric
shapes (circles,
triangles, squares), natural
shapes (trees,
animals, humans), combinations
of shapes,
or colors may be protected.
Even the single
color pink has been protected
as a trademark
for building insulation.
Three-dimensional
shapes such as bottle and
container shapes,
building features (McDonald's
golden arches)
can also be protected.
While people generally
only speak of trademarks,
that term encompasses other
types of "marks".
A trademark is specifically
any word or symbol
or combination of both
that is used on goods
to identify its source.
However, a service
mark is a word or symbol
or combination of
both used in connection
with the offering
and provision of services.
BLUE CROSS/BLUE
SHIELD, PRUDENTIAL INSURANCE,
McDONALD'S
are service marks for health
insurance services,
general insurance services
and restaurant
services, respectively.
There are also collective
marks and certification
marks. Collective marks
indicate membership
in a group - labor unions,
fraternities,
trade associations. Certification
marks are
used to indicate that a
party has met some
standard of quality: Quality
Court motels,
Underwriter's Laboratory,
Good Housekeeping's
seal of approval.
If you use it to identify
and distinguish
yourself, then think "trademark"
protection.
Ownership of a trademark
allows you to exclude
others from using a similar
mark on similar
goods which would be likely
to confuse consumers
as to the source of the
goods. This right
pertains for so long as
the owner owns the
mark. Federal trademark
registration must
be renewed every 10 years.
State trademarks
have various terms and
also require renewal.
Trademarks can be more
valuable to a company
than all of its patents
and trade secrets
combined. Consider the
sudden appearance
and abrupt increase in
the worth of trademarks
such as CUISINART, HAAGEN
DAZ and BEN &
JERRY'S. Consider also
the increased value
that the name IBM, KODAK
or GE brings to
even a brand new product.
It is important to be able
to determine
at the earliest stage just
what type of protection
is available for your idea
or product - patent,
trade secret, trademark,
copyright - so that
the proper steps can be
taken and loss of
rights can be avoided.
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