Intellectual property (IP) Includes copyrights, trademarks, patents, and trade secrets. This creative and knowledge based property is important for start-up companies.

A start-up company may own IP for many reasons. Three common reasons include protection, marketing, and, most importantly, establishing a business asset. Protection: Intellectual property is protectable from unauthorized use by others. That helps reduce competition and increase market share. Marketing: Trademarks are invaluable for establishing a brand. Advertising patented or patent pending may be valuable for distinguishing a product in the marketplace. Business Asset: Intellectual property is intangible business property. It is an asset that has value like any other business property. Intellectual property is particularly appealing to investors who like the comfort of knowing the company owns more than the people capital.

Start-up companies need to be wary of IP owned by others. Any IP infringement, even if unintentional, can result in the company being sued. This can be particularly damaging to a start-up company at a time when it needs to use its funding to grow and establish its business.

Copyright Protection

Copyrights protect creative expressions. A creative expression is any original work by an author, published or unpublished. Common examples include books, music, and movies. For software, source code and object code can be copyrighted. So can the output and display screens, particularly for games.

You cannot copyright protect titles, names, slogans, short phrases, recipes, or forms. Nor can you copyright protect inventions, ideas, or discoveries.

A copyright exists as soon as the work exists in a fixed form. But a copyright can only be enforced after it is registered with the US Copyright Office. By default, the author owns the copyright except work made for hire, where the employer owns it.

To register a copyright a copyright application must be filed. The application is a simple form that can be done on-line at www.copyright.gov The Copyright Office changes a fee of $35 for on-line applications. Revisions and derivative works must be separately registered, although they will reference the original work.

In order to enforce a copyright it must be first registered. If the copyright is registered before the infringement, statutory damages can be collected. The statutory damages range from $750 to $30,000 per infringed work. Damages can go as high as $150,000 if the infringement was willful or as low as $200 if innocent.

Copyright Infringement

Any unauthorized use or copying of another's copyright protected work can result in a lawsuit for copyright infringement. Literal infringement is where part or all of the copyrighted work is copied and used or sold. Software has additional risks because some courts find copyright infringement for copying the sequence, structure, and organization of another's software. A prime example of this is the recent case of Oracle America, Inc. v. Google, Inc.. Google used the Java API headers for the Android operating system. On appeal, the court determined that the sequence, structure, and organization of the Java API is copyrightable. The case is still pending to determine if Google's use falls under the Fair Use exception.

Fair use is copying of copyrighted material that is not considered infringing. Fair use is not well defined, but relies upon a subjective evaluation of the facts. Typically, four factors are evaluated: 1) the purpose and character of the use, 2) the nature of the copyrighted work, 3) the amount and substantiality of the portion taken, and 4) the effect of the use upon the potential market. As is often the case with disputes that end up in court, the final outcome may be determined by who is the "good guy" and who is the "bad guy." See Stanford document on Fair Use and U.S. Copyright Office Fair Use Index

Trademarks

A trademark is a word, phrase, symbol, or design that identifies the source of a product or service. A service mark is the same as a trademark, except it relates to a service as opposed to a product.

The strongest trademarks are whimsical or arbitrary, for example, Kodak® and Verizon®. Generic or descriptive marks cannot be enforced as trademarks. Neither are marks that are deceptively mis-descriptive. Suggestive trademarks are those that are not descriptive, but invokes the consumer's imagination to link the product to the trademark. Word marks are typically considered stronger than design marks or logos. 

A trademark can be a common law mark, it can be registered by the state, or it can be federally registered through the Patent and Trademark Office (PTO).

A common law mark is a trademark that is protected because it is being used and treated as a trademark. The superscript ^TM designates a trademark that is not registered. Common law trademarks have the weakest protection of the three types.

A state registered trademark offers limited protection of the trademark against others in the state using confusingly similar marks for the same or related products. A state trademark registration does not protect the mark owner from others using the same mark outside the state.

A federally registered trademark is the strongest form of trademark protection available in the United States. Federally registered trademarks use the symbol ® to identify the mark as federally registered. The PTO operates a web site in which owners can file an application to register their trademark. Trademark applications can be filed before or after they are actually used in interstate commerce. But the mark must be used in commerce before it can be fully registered.

A federal trademark application requires that the owner file an application and pay a filing fee. To be registered, the trademark must be in actual use in commerce, although, the application can be filed before the use starts. This establishes an early priority date. The cost to obtain a federal trademark typically ranges from $1000 to $5000. It is also advisable to perform a trademark search before filing the application.

Trademark infringement is the unauthorized use of a trademark for related goods or services. Infringement also includes using a mark similar to another's trademark where there is a likelihood of confusion between the two marks.

Patents

A patent gives the patent owner a limited monopoly for what is claimed in the patent. A patent embodies a property right granted by the Government of the United States of America. That right is for the owner “to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States” for a limited time in exchange for public disclosure of the invention when the patent is granted.

Patents issued in the United States are either a Utility Patent, a Design Patent, or a Plant Patent. Utility patents protect the functional aspects of an invention and are enforceable for 20 years after the earliest filing date. Utility patents include a written description of the invention, including how the invention is made and used. The features of the invention must also be illustrated in drawings. Most importantly, a utility patent includes claims that define what the patent protects.

Design patents protect the aesthetic design or appearance of an invention and are enforceable for 14 years after the patent issue date. Because a design patent protects the aesthetic appearance of an invention, the drawings are the claims defining what is being protected. Generally, it is best to prepare the design patent after the production prototype is completed so as to capture the design that is planned on being sold.

Plant patents protect invented or discovered, asexually reproduced plant varieties. There are few plant patents. Knox Patents does not prepare plant patent applications.

Two primary requirements for having a United States patent issue is that the invention be novel, never been done before, and that the invention not be obvious, based on what has been done before. These two requirements are closely examined by the Patent and Trademark Office (PTO) during the examination of a patent application.

There are other requirements that need to be noted. Effective March 16, 2013, the United States has a First to File system instead of the previous First to Invent system. A inventor cannot get a patent if there was a public use or an offer for sale before the patent application was filed. With respect to public disclosure, it is typically best if a patent application is filed before any public disclosure, although the inventor has a year to file a patent application after the first public disclosure.

Disclaimer

The information in this document is not legal advice. The information provides a brief, general statement of intellectual property law for the United States. It is always advisable to seek the advice of an attorney regarding your specific circumstances, rather than rely upon general information, such as provided here.

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