Joshua Krank, Attorney, SW&L Attorneys
Your Ideas are Only as Valuable as the Protections You Obtain
In today’s highly competitive business world, protecting your intellectual property is more important than ever. In any business, it’s crucial to safeguard your ideas, inventions, creative works, and overall business. A helpful way to do that is through securing your intellectual property, which covers patents, trademarks, and copyrights. Patents protect your physical inventions and give you the exclusive right to make, use, and sell your product or process. Trademarks safeguard your business’s name, logo, and brand identity, helping you distinguish yourself from competitors. Copyrights protect your creative works such as books, music, and artwork, giving you control over how they’re used and distributed.
Many business owners overlook the importance of protecting their intellectual property, thinking it’s too expensive or time-consuming. However, failing to secure your intellectual property can have serious consequences. For example, one inventor, Catherine Hettinger, the inventor of the fidget spinner, filed a US patent in 1997 in an attempt to secure its exclusive rights. By 2005, Hettinger had failed to commercialize her invention and elected instead to abandon her US patent (by not paying the renewal fee) thinking it wasn’t worth spending $400 on what she deemed an unfruitful project. Nowadays, the overall market value of the toy is estimated to be about 500 million dollars. Hettinger never received a penny from her invention.
As you can see, it’s easy to lose control of your inventions, and your competitors could make, use, and sell your ideas or innovations. Is it worth building upon an idea only to spend more in court costs or lose out altogether? Is it worth inventing something awesome only to have a million knock offs crowding the market? In fact, the most valuable part of your business might just be your intellectual property. This article provides a rundown of each type of intellectual property. Think about what’s important to your business and the future of where you want to take it.
Patents:
A patent is a legal document that gives you the exclusive right to make, use, and sell a physical invention or innovation for a certain period of time, usually 20 years from the date of filing. In exchange for this exclusive right, you must disclose in detail how your invention works and how it’s made, so others can learn from it and improve upon it. Patents are published by the United States Patent and Trademark Office, so there are no secrets in the patent world.
Section 101 of the Patent Act states that processes, machines, articles of manufacture, and compositions of matter are patentable. Under this statute, the United States is one of the most inclusive countries regarding what constitutes patentable subject matter. Inventors of physical devices generally do not have to worry about whether their inventions are non-statutory. However, there are certain inventions that are more likely to be challenged as to whether they fall within Section 101. This includes software inventions, AI, discoveries occurring in nature, and life itself.
Why are software and AI hard to Patent?
Well for starters, AI and software are similar in that AI is usually manifested in the form of complex software. Computer code for software is actually a copyright protection, protectable as a literary work. However, this can be problematic as each version of a computer program is considered a separate work and requires a separate application (with a few limited exceptions), and Copyright does not protect functionality. Patents for software were impossible to obtain until recently as courts basically said that software does not meet the patentability requirement of Section 101 (stated above). Inventors tried, stating that they can fall under the umbrella of a process. The other problem under Section 101 was that patents also need to be specific, meaning that they cannot cover abstract ideas. One of the first Supreme Court cases addressing this was Alice Corp. v. CLS Bank International (U.S. 2014), which held that technologies that merely implement an abstract idea with a generic computer are not patentable (the broad concept of software, potentially AI). It was in 2015 that things started to change. The case of Enfish, LLC v. Microsoft Corp. et al., 822 F.3d 1327 (Fed. Cir. May 12, 2016) took a more direct look at software patents. The Court in Enfish stated a few key things. They stated, “We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract ….”. They also mentioned “Software can make non-abstract improvements to computer technology just as hardware improvements can.” Essentially, there was no longer a categorical ban on software patents.
The problem now was that patent examiners had no idea how to handle software patent applications. With the different Court rulings, the USPTO, in 2019, issued a request for comments on the patent eligibility of AI, and other software inventions and subsequently issued a publication for guidance on the topic of patenting AI inventions. Inconsistency in patent examination by examiners decreased by 44% in the 12 months following the issuance of the 2019 guidance. So is it now possible to obtain patent protection for software and AI? Yes, but the application process for these inventions is still new territory that patent attorneys and the USPTO are still trying to figure out.
When it comes to categorizing patents, there are three types:
- Utility patents – A utility patent is the most common type and protects the functionality of an invention. This is the largest area. Utility means that functionality is needed. What one might consider a “classic patent” would fall into this category. The light bulb, the 3-D printer, a new pharmaceutical drug, and the toilet paper roll are a few examples.
- Design patents – A design patent protects its ornamental appearance of functionality (think of the iPhone home button from back in the day, or the unique curvy shape of the Coca-Cola bottle).
- Plant patents – A plant patent is used to protect a new and distinct variety of plant that has been asexually reproduced (think of those weird items like a sweet hot pepper that never existed prior to seeing it in the grocery store).
Patent protection is particularly important for businesses that rely on innovation to stay ahead of the competition. Without patent protection, competitors could copy your invention and sell it as their own, eroding your market share and profits. A strong patent portfolio can also increase the value of your business, making it more attractive to potential investors or buyers. For example, there is a reason why Apple is one of the world’s most valuable companies. They filed 2,541 patent applications in 2021 alone, and they never sell a product without first obtaining intellectual property protection.
Trademarks:
A trademark is a word, phrase, symbol, or design that identifies and distinguishes your products or services from those of others. A trademark can be a brand name, logo, slogan, or any other distinctive feature that consumers associate with your business. A trademark can be filed with the United States Patent and Trademark Office, which gets nationwide protection. A trademark can also be filed with the State to get statewide protection.
People get trademarks to protect the name, identity, and reputation of their businesses. Trademark protection is critical in the path to establishing a strong customer base, brand recognition, and loyalty. By preventing competitors from using similar trademarks on similar goods and services, confusion among consumers is avoided and the reputation you’ve built for your business remains your own.
That reputation means something as well. Let’s say you start a business and build it into a successful, well-known, quality company with name recognition. This opens the door to licensing and franchising. Licensing allows you to earn revenue by allowing others to use your trademark in exchange for a fee, while franchising allows you to expand your business by granting others the right to use your trademark and business model. Alternatively, if you ever sell your business the value in the name that is protected by a trademark can be sold as an asset of your business.
As a real-life example, take any well-known brand—Rolex, Adidas, Nike. These are companies that have built reputations for themselves and their logos and names mean something. Others consistently try to pass their products off as products of these companies or otherwise try to use the logos in a similar way to mirror these brands. Just recently Adidas sued Forever21 when they created “three stripes” design products which were very similar to Adidas’ goods.
It didn’t take Adidas much time to file a lawsuit against the alleged infringer claiming they had invested thousands to design and protect the “three stripes” that identified its company. Furthermore, the design had obviously been registered as a trademark. The three stripes are a pinnacle of the look of Adidas and having those stripes on a product supposed to mean said product comes from Adidas. Getting protection for your brand provides the ability to enforce your exclusive rights to your looks and prevent others from invading the market space by ripping off or using your brand.
Copyrights:
A copyright protects original creative works such as books, music, artwork, and software code. Unlike patents and trademarks, a copyright is automatically granted to the creator of a work as soon as it’s created. However, registering your copyright with the U.S. Copyright Office is required in order to bring a lawsuit to enforce your rights if it were necessary.
Copyright protection gives you the exclusive right to reproduce, distribute, and display your work, as well as the right to create derivative works based on it. By controlling how your work is used and distributed, you can ensure that you receive proper credit and compensation for your creative efforts.
Copyright protection is particularly important for businesses in the creative industries, such as publishing, music, and film. It can also be valuable for businesses that produce software or other digital products.
The best example of this is Disney. There is a reason why no one messes with Disney when it comes to Copyright. They enforce their rights to the fullest extent. Disney understands the value of a Copyright. Take Mickey Mouse for example. The character was created by Walt Disney in 1928, and quickly became an iconic and beloved character. Like many intellectual properties, the original copyright for Mickey Mouse was set to expire after a specific period, which in the United States was initially set at 28 years plus a 28 year renewal. However, as Mickey Mouse’s copyright expiration date approached in the late 1970s, Disney became concerned about losing control over their flagship character. They feared that once the copyright expired, Mickey Mouse would enter the public domain, allowing anyone to use and profit from the character without Disney’s permission. To prevent this, Disney actively lobbied for copyright extensions and successfully influenced changes in copyright law. In 1998, the United States enacted the Sonny Bono Copyright Term Extension Act, also known as the Mickey Mouse Protection Act by its critics. This legislation extended copyright terms for existing works, effectively delaying Mickey Mouse’s entry into the public domain.
Under the new law, copyright protection was extended to the life of the creator plus an additional 70 years, or for works created by corporations, such as Disney, 95 years from the date of publication. This extension ensured that Disney would maintain exclusive control over Mickey Mouse and other characters for several more decades.
The Disney copyright story involving Mickey Mouse demonstrates the company’s commitment to protecting its valuable intellectual property. By actively advocating for copyright extensions, Disney secured extended control over their iconic characters, preserving the commercial and creative value associated with their brand.
Conclusion
Protecting your intellectual property is crucial for the success of your business and can increase the value of your business in general, or make it more attractive to potential investors or buyers. It’s not just about legal compliance, but also about safeguarding what you have worked tirelessly to achieve. In thinking about what’s important to your business and the future of where you want to take it, add intellectual property to the mix.
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