Netpreneur Exchange.. Intellectual Property Resource Center

INTELLECTUAL PROPERTY OVERVIEW

By Evan Smith

For entrepreneurs, intellectual property rights are a key business tool that can enhance profit margins, market share, and name recognition. Without these rights, companies with financial clout or superior distribution channels may copy your approach and take over your market. Understandably, venture capitalists like to see business plans that include protecting and exploiting proprietary rights.

There are four major categories of intellectual property protection: Patents, Trademarks and Unfair Competition, Copyrights, and Trade Secrets. Each has a specific function and provides a different kind of protection. Thus, each should be considered (and implemented where appropriate).

Patent Law protects new products, features, methods, and operating sequences. A patent covers specific features of a product or steps of a process (defined in the patent's claims) and the patent can be enforced to prevent competitors from offering those features or performing those steps. In internet-based businesses where a product or service is delivered using unique custom software, patent coverage may be particularly important. If your method of doing business is unique, the software that implements it may also be unique, and a patent on the software could make it impractical for others to copy your business concept.

Design Patents are a special category of patents that protect the unique ornamental appearance of a product or screen icon.

Trademark Law protects the "brand names" and domain names that distinguish your products and services from those of competitors. These laws prevent another company from using a trademark or service mark that is so close to yours that it is likely to confuse customers. Trademark and service mark rights are established by using the marks in commerce, and the marks can be registered to enhance protection.

Unfair Competition laws are closely related; for example, the federal Lanham Act prohibits practices such as copying product packaging or appearance in a way that creates confusion among customers.

Copyright Law prevents others from copying (in whole or in part) the unique expressions of a writer, artist, or programmer. Copyright does not protect the underlying ideas, systems, or factual information disclosed in a copyrighted work, nor can it protect purely functional objects. Copyright does not prevent others from creating similar material without having seen yours, and does not prevent copying of short words and phrases (for example, trademarks and slogans).

Trade Secret Law protects business or technical information that has value because others do not know this secret information. Examples include business plans, financial data, formulas, source code, and future product ideas. Trade secret rights are established by carefully guarding the information, using techniques such as physical security and confidentiality agreements. If you are careful to maintain secrecy, yet your secrets are improperly disclosed (for example by an employee or business associate violating a confidentiality agreement), you may be able to obtain damages and prevent those receiving the secrets from using them.

Consult your attorney for detailed advice about how different forms of intellectual property protection can be applied to your situation.

Please read the IP Resource Center Ground Rules.