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Intellectual Property

     When developing a new invention or product many legal questions arise, including: How do I protect the information, invention or innovation from imitators?;  Can the invention be legally protected?; For how long?; How much will this cost?.   The answers are complicated by the fact that several legal concepts may apply to any given innovation, product, process, or creative work.  These intellectual property rights include: patents, utility models, trademarks, copyrights, and trade secrets.  For maximizing your protection, it is important to know which are applicable and appropriate.  Laws vary somewhat from jurisdiction to jurisdiction.  The advice of a U.S. registered patent attorney - a lawyer that specializes in intellectual property and your business / corporate philosophy regarding IP protection rights - is always recommended. 

Definition: Intellectual Property

     In law, intellectual property (IP) is an umbrella term for various legal entitlements which attach to certain names, written and recorded media, inventions and other "creations of intellect".  The holders of these legal entitlements may exercise various exclusive rights in relation to the subject matter of the IP including making, using, offering for sale, licensing, or assigning.   The term "intellectual property" reflects the idea that the defined subject matter is the product of the mind or the intellect.  The term implies that intellectual works are analogous to physical property but it includes business and theoretical concepts and business methodologies.  Intellectual property laws and enforcement vary widely from country to country.   The 1994 World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) and other treaties before and since have facilitated and provided more uniformity in IP protection in most industrialized countries around the world.

Confidentiality / Non-Disclosure Protection (NDA)

      An inventor or company can protect its confidential information or intellectual property through Confidentiality & Non-Disclosure Agreements (NDA) (as separate agreements or as clauses formal services agreements or contracts).   Additionally a company may include a non-compete clause (within the constraints of employment law, including only restraint that is reasonable in subject matter, geographic and time scope).  Based on the NDA, the law effectively allows a perpetual monopoly in respect to the trade secret information - it does not expire as would a patent.   Of course, the protection only lasts as long as the trade secret is keep strictly confidential, so upon offering a product for sale the trade secret protection for the product is lost.  In addition, some types of IP cannot be protected by trade secret law, there are certain steps that must be adhered to for the IP to be protected as a trade secret, and the protection provided by trade secret law is generally much weaker than that provided by a patent.  

      The lack of formal protection of a signed Confidentiality and NDA agreement means that a third party is not prevented from independently duplicating and using the secret information once it is discovered.  Additionally, once an idea or patentable invention is shown in a public forum the inventor has 12 months to proceed into patent process or he or she effectively gives up patent rights.  When working with a design group or corporation, NDA agreement may have an effective 3-5 year period which can be updated as needed.  

      The use of an NDA to protect trade secret information from public disclosure is an important legal aspect to protect an individual’s or company’s overall rights and economic value.  An individual or company typically invests significant time and costs in generating information regarding development of proprietary products, machines, refinements of process, and operations. The reasoning for such protection is that if competitors had access to the same information, the company's ability to survive or maintain its market share or dominance would be impaired.

     Based on the nature of product development and consulting business and new Client opportunities, WD’s NDA covers all confidential information including trade secrets, but WD can not sign any NDA beyond a five year term or with non-compete clauses. The NDA may be updated as required.  See NDA - Confidentiality Agreement
Trade Secret

       A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information used by a business to obtain an advantage over competitors or customers.  The precise language by which a trade secret is defined varies by jurisdiction. There are three primary factors that are common to all such definitions -- a trade secret is some sort of information that:

  • is not generally known to the relevant portion of the public;
  • confers some sort of economic benefit on its holder (where this benefit must derive specifically from its not being generally known, not just from the value of the information itself); and
  • is the subject of reasonable efforts to maintain its secrecy.

See Reverse Engineering
 

Patents, Trademarks & Copyrights

       A U.S. patent is a set of exclusive rights granted by the federal government to a patentee for a fixed period of time in exchange for a disclosure of the protected invention.  Patents provide the rights to exclude others from making, using, offering to sell, selling, or importing into the country.  There are three types of patents: Utility Design, and Plant  patents.

Utility patents protect inventions whose innovation includes a functional feature.  Design patents protect inventions whose innovation lies in a decorative or ornamental aspect of the product.  And plant patents protect asexually reproduced varieties of plants.  Generally, when someone uses the term “patent” they are referring to utility patents.  Utility patent protection is available for a wide range of inventions, including all types of mechanical and electrical devices and articles of manufacture, processes such as manufacturing processes, business methods, software, etc., and compositions of matter such as pharmaceuticals.  Additionally, as mentioned above, it is critically important to keep in mind that once an idea or invention is described in a printed publication, in public use, or on sale, the inventor has 12 months to file a patent application or he or she effectively gives up any available patent rights.  The rules on what actions can trigger the 12-month grace period are not entirely straightforward, and the advice of a registered patent attorney should be sought when this issue is present. 

Trademarks are words, symbols, or other devices that identify and distinguish the source of goods or services.  And copyrights protect works of authorship such as books, paintings, maps, musical lyrics, compositions, and performances.  In addition, copyright law can be used to protect software, computer displays, and original aspects of non-functional articles.  Patent, trademark, and copyright applications may be prepared and filed with local patent offices in countries where such protection is available. 

See Patents, Trademarks & Copyrights.

Royalties

        Royalties are typically usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. Royalties are usually determined periodically as a percentage of gross or net sales derived from use of the asset or a fixed price per unit sold  A royalty interest is the right to collect a stream of future royalty payments based on future production of or revenues for a given product.

License Agreement  

       A license agreement defines the terms under which intellectual property such as patents, trademarks and copyrights is licensed by one party to another, either without restriction or subject to a limitation on term, business or geographic territory, type of product, etc.  License agreements are typically private contracts that follow a general structure. However, every situation is different, so using a “form” license is not recommended because it carries the risk that the agreement is not well-suited for the particulars of a given case.  In addition certain types of franchise agreements have comparable provisions.  See Royalty - License Agreement.

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