New Product Exclusive2018-09-13T19:49:31+00:00


5.  Protecting Exclusivity
Patents, Trademarks, Copyrights Etc. . .


Why Intellectual Property
Is So Important


The group of people who will want to buy your product is the "market" for your invention. A fundamental feature of the captialist economy in the United States, and in many other countries, is that product markets are competitive. This means that when there is a market (demand) for a product, there is freedom for multiple businesses to enter the market to and sell to customers.


The different businesses who enter the market compete against one another to sell to customers. Fair competition between businesses supplying a product is a good thing because businesses will try to win the competition for product sales by outperforming their competition with a better product at a better price. So customers benefit from market competition by having greater choice, better products, and lower prices.


While competition in the market is generally considered a good thing, there are laws in place to make sure that the competition among businesses is "fair". It is also recognized that innovation in the market, including the creation of new technologies and products, greatly benefits the market. However, businesses would be discouraged from investing in the creation of new and innovative products if other "copy cat" businesses could simply enter the market with a copy of the product at a lower price.


So there are laws that, if properly used by an innovator business, can prevent copy cat competitors from doing this. Many of the laws that help keep competition fair and protect the investment in innovative and creative works are called "intellectual property" laws.


COMMON FORMS OF INTELLECTUAL PROPERTY
  • Trade Secrets

  • A trade secret is information that (1) has economic value on account of it not being generally known or ascertainable through proper means by others who could exploit it commercially; and (2) which is the subject of reasonable efforts to keep secret.


    For example, an idea for a new product, whether or not it is an invention eligible for patent protection, is information which may have economic value. In particular, an idea for a new product can give you a valuable head start to market over competitors. If the idea for a new product is subject to reasonable efforts to keep it secret (e.g. only disclosing it to those who have signed a non-disclosure agreement), then it is eligible for protection under the law as a trade secret until it becomes publicly known (such as by offering it for sale).


    Trade secret protection gives you a legal remedy against those who would misappropriate or steal the information (e.g. a disgruntled partner). However, it doesn’t give you any exclusive rights to stop others who develop the same information independently, and doesn’t allow you to stop others from copying your product once it becomes publicly available. For that type of protection you must look to other laws, such as patent and copyright protection.


    Trade secret protection is not just for new product ideas, but is available for other types of information as well, such as the internal financial information of a business, lists of customers or suppliers, etc. . . To take advantage of the protection it is important that you identify the economically valuable information and take reasonable steps to keep the information secret.


  • Patents

  • United States patents protect new and useful processes, machines, articles of manufacture, and compositions of matter. It is often the only way to legally protect a new product against copying by competitors.


    A U.S. patent gives its owner the "exclusive" right to make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States. It doesn’t matter if somebody else independently comes up with the same product later, or can easily copy the product covered by the patent: If they infringe one of the exclusive rights of a valid patent without permission from the owner(s), then the owner(s) can sue them in U.S. federal court. If successful a patent owner will be entitled to an award of money, not less than a reasonable royalty, for any infringement that happened after notice was given in compliance with the patent marking and notice statute. The patent owner may also be able to obtain a court order against further infringement.


    The only way to get a U.S. patent is to file an application with the United States Patent & Trademark Office, which is an agency of the U.S. government.


    The process for investigating and obtaining good patent protection is often complex and expensive (at least several thousand dollars), and usually will involve the assistance of a qualified registered U.S. patent attorney.


    A U.S. utility patent (the most common type) provides protection from the date the patent issues until a date twenty (20) years after the patent application was filed, assuming all of the required maintenance fees are paid. A U.S. design patent provides protection for fourteen (14) years from the date it issues.


  • Trademarks

  • A trademark or "brand" includes any word, name, symbol, or device, or any combination used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. The law extends protection to "branding" primarily through trademark law. Essentially trademark law prohibits competitors from using brands on their products that are so similar to the brand of another product that there will be a likelihood of confusion in the mind of a customer as to the source, affiliation, or endorsement of the competitor’s product.


    Trademark rights in a brand are acquired by being the first to use the brand as a trademark on certain types of goods. A business can seek to register its brand with the United States government and/or in any individual state where the trademark is used. However, registration alone does not create any trademark rights, which only arise from actual use by the business of the brand in commerce.


    Trademark protection in a brand generally lasts as long as the brand is being used by the business.


    If a business does enter the market using a brand that is confusingly similar to an already existing brand of another business, then that may be an act of trademark infringement. Businesses with trademarks have powerful legal remedies available to them against trademark infringers, including the ability to get a court order requiring the competitor to stop using the confusingly similar brand (which may require the competitor to recall and destroy any infringing merchandise, and perhaps also pay for corrective advertising). The business may also be able to receive a money from the infringer for damages it suffered on account on the trademark infringement.


  • Copyrights

  • Copyrights protect original works of authorship fixed in any tangible medium (paper, optical media, magnetic media, canvas, film, etc. . . ). Examples of the types of works of authorship subject to copyright protection include literary works, musical works, motion pictures, etc. . . Subject to some exceptions, the owner of a copyright has the exclusive rights to do, and to authorize, the reproduction, distribution, display, performance, or creation of any derivates for the work of authorship.


    Even though a functional product itself may not be eligible for copyright protection (functional products are protected with patents), many things commonly associated with a product or the sale of it frequently are copyrighted, such as software, artwork, instructional materials, etc. . . .


    Copyright in a work created on or after January 1, 1978, subsists from its creation and, if it is not a work for hire, endures for a term consisting of the life of the author plus 70 years after the author’s death. For works made for hire and anonymous and pseudonymous works, the duration of copyright is 95 years from first publication or 120 years from creation, whichever is shorter.


    It is not necessary to apply to the government in order to get copyrights. Copyrights come into existence the moment the original work is fixed in a tangible medium. However, a work may be registered with the United States copyright office, and this carries certain valuable benefits, including the one that until a work is registered with copyright office you will not be able to sue anyone in federal court for infringing the copyrights.


    If someone infringes your copyrights in a work, and you have registered the work with the copyright office, you can sue them for money damages and a court order prohibiting further infringement, and requiring corrective measures (e.g. the destruction of remaining infringing merchandise).


Intellectual property laws can help a business capture and maintain market share for a product by preventing competitors from unlawfully entering the market. In other words, intellectual property laws are used to "exclude" the competition, or prevent the theft of valuable secret information.


By using intellectual property laws to protect valuable secret information and exclude the competition, the innovator business can in principal have, for at least a limited time, all of the sales to be made in the market for its new product. Also, if there is no competition, then the innovator business can charge a premium price for its new product. This premium price can be much higher than the actual cost to manufacture and sell the new product. This means that the innovator business can make potentially very high profits, and more quickly recover the investment it made to develop the new product. However, once competitors can lawfully enter the market they will generally offer lower prices to customers. To keep sales from going to the competition the innovator business may have to lower its prices, thus reducing its profits, and perhaps extending the time needed to recover its initial investment in developing the new product.


The world we live in today has technology that allows competitors to very quickly copy and start selling a new product. Because of this, the availability of effective intellectual property protection for a new product can often be a critical factor in its success. Without intellectual property protection it may not be possible for a business to capture and retain enough market share, or charge high enough prices, to create a potential return on investment that is high enough to justify developing the new product. Accordingly, the availability and creation of intellectual property protection is something that should be addressed early on in the product development process.


Because ownership and control of the intellectual property pertaining to a new product can be so critical to success, it is important to take the necessary steps to establish such ownership and control.


Just because you think that you will own and control the intellectual property doesn’t mean that you are correct. Establishing ownership and control of intellectual property depends upon the type of intellectual property being dealt with, and can be affected by the things you do, or don’t do.


It is important to understand is that ownership and control of intellectual property can be acquired, or lost, through agreements or working relationships that you enter into with others. For this reason it is recommended that (1) you should always have clear written agreements with anyone you work with on a product idea concerning ownership and control of the intellectual property, and (2) always be certain that you understand any agreements that you enter into and that they protect your interests when it comes to ownership and control of intellectual property rights. Discuss any agreement or relationship you are considering entering into with a qualified attorney before making a commitment.


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5.  Protecting Exclusivity
Patents, Trademarks, Copyrights Etc. . .


Why Intellectual Property
Is So Important


The group of people who will want to buy your product is the "market" for your invention. A fundamental feature of the captialist economy in the United States, and in many other countries, is that product markets are competitive. This means that when there is a market (demand) for a product, there is freedom for multiple businesses to enter the market to and sell to customers.


The different businesses who enter the market compete against one another to sell to customers. Fair competition between businesses supplying a product is a good thing because businesses will try to win the competition for product sales by outperforming their competition with a better product at a better price. So customers benefit from market competition by having greater choice, better products, and lower prices.


While competition in the market is generally considered a good thing, there are laws in place to make sure that the competition among businesses is "fair". It is also recognized that innovation in the market, including the creation of new technologies and products, greatly benefits the market. However, businesses would be discouraged from investing in the creation of new and innovative products if other "copy cat" businesses could simply enter the market with a copy of the product at a lower price.


So there are laws that, if properly used by an innovator business, can prevent copy cat competitors from doing this. Many of the laws that help keep competition fair and protect the investment in innovative and creative works are called "intellectual property" laws.


COMMON FORMS OF INTELLECTUAL PROPERTY
  • Trade Secrets

  • A trade secret is information that (1) has economic value on account of it not being generally known or ascertainable through proper means by others who could exploit it commercially; and (2) which is the subject of reasonable efforts to keep secret.


    For example, an idea for a new product, whether or not it is an invention eligible for patent protection, is information which may have economic value. In particular, an idea for a new product can give you a valuable head start to market over competitors. If the idea for a new product is subject to reasonable efforts to keep it secret (e.g. only disclosing it to those who have signed a non-disclosure agreement), then it is eligible for protection under the law as a trade secret until it becomes publicly known (such as by offering it for sale).


    Trade secret protection gives you a legal remedy against those who would misappropriate or steal the information (e.g. a disgruntled partner). However, it doesn’t give you any exclusive rights to stop others who develop the same information independently, and doesn’t allow you to stop others from copying your product once it becomes publicly available. For that type of protection you must look to other laws, such as patent and copyright protection.


    Trade secret protection is not just for new product ideas, but is available for other types of information as well, such as the internal financial information of a business, lists of customers or suppliers, etc. . . To take advantage of the protection it is important that you identify the economically valuable information and take reasonable steps to keep the information secret.


  • Patents

  • United States patents protect new and useful processes, machines, articles of manufacture, and compositions of matter. It is often the only way to legally protect a new product against copying by competitors.


    A U.S. patent gives its owner the "exclusive" right to make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States. It doesn’t matter if somebody else independently comes up with the same product later, or can easily copy the product covered by the patent: If they infringe one of the exclusive rights of a valid patent without permission from the owner(s), then the owner(s) can sue them in U.S. federal court. If successful a patent owner will be entitled to an award of money, not less than a reasonable royalty, for any infringement that happened after notice was given in compliance with the patent marking and notice statute. The patent owner may also be able to obtain a court order against further infringement.


    The only way to get a U.S. patent is to file an application with the United States Patent & Trademark Office, which is an agency of the U.S. government.


    The process for investigating and obtaining good patent protection is often complex and expensive (at least several thousand dollars), and usually will involve the assistance of a qualified registered U.S. patent attorney.


    A U.S. utility patent (the most common type) provides protection from the date the patent issues until a date twenty (20) years after the patent application was filed, assuming all of the required maintenance fees are paid. A U.S. design patent provides protection for fourteen (14) years from the date it issues.


  • Trademarks

  • A trademark or "brand" includes any word, name, symbol, or device, or any combination used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. The law extends protection to "branding" primarily through trademark law. Essentially trademark law prohibits competitors from using brands on their products that are so similar to the brand of another product that there will be a likelihood of confusion in the mind of a customer as to the source, affiliation, or endorsement of the competitor’s product.


    Trademark rights in a brand are acquired by being the first to use the brand as a trademark on certain types of goods. A business can seek to register its brand with the United States government and/or in any individual state where the trademark is used. However, registration alone does not create any trademark rights, which only arise from actual use by the business of the brand in commerce.


    Trademark protection in a brand generally lasts as long as the brand is being used by the business.


    If a business does enter the market using a brand that is confusingly similar to an already existing brand of another business, then that may be an act of trademark infringement. Businesses with trademarks have powerful legal remedies available to them against trademark infringers, including the ability to get a court order requiring the competitor to stop using the confusingly similar brand (which may require the competitor to recall and destroy any infringing merchandise, and perhaps also pay for corrective advertising). The business may also be able to receive a money from the infringer for damages it suffered on account on the trademark infringement.


  • Copyrights

  • Copyrights protect original works of authorship fixed in any tangible medium (paper, optical media, magnetic media, canvas, film, etc. . . ). Examples of the types of works of authorship subject to copyright protection include literary works, musical works, motion pictures, etc. . . Subject to some exceptions, the owner of a copyright has the exclusive rights to do, and to authorize, the reproduction, distribution, display, performance, or creation of any derivates for the work of authorship.


    Even though a functional product itself may not be eligible for copyright protection (functional products are protected with patents), many things commonly associated with a product or the sale of it frequently are copyrighted, such as software, artwork, instructional materials, etc. . . .


    Copyright in a work created on or after January 1, 1978, subsists from its creation and, if it is not a work for hire, endures for a term consisting of the life of the author plus 70 years after the author’s death. For works made for hire and anonymous and pseudonymous works, the duration of copyright is 95 years from first publication or 120 years from creation, whichever is shorter.


    It is not necessary to apply to the government in order to get copyrights. Copyrights come into existence the moment the original work is fixed in a tangible medium. However, a work may be registered with the United States copyright office, and this carries certain valuable benefits, including the one that until a work is registered with copyright office you will not be able to sue anyone in federal court for infringing the copyrights.


    If someone infringes your copyrights in a work, and you have registered the work with the copyright office, you can sue them for money damages and a court order prohibiting further infringement, and requiring corrective measures (e.g. the destruction of remaining infringing merchandise).


Intellectual property laws can help a business capture and maintain market share for a product by preventing competitors from unlawfully entering the market. In other words, intellectual property laws are used to "exclude" the competition, or prevent the theft of valuable secret information.


By using intellectual property laws to protect valuable secret information and exclude the competition, the innovator business can in principal have, for at least a limited time, all of the sales to be made in the market for its new product. Also, if there is no competition, then the innovator business can charge a premium price for its new product. This premium price can be much higher than the actual cost to manufacture and sell the new product. This means that the innovator business can make potentially very high profits, and more quickly recover the investment it made to develop the new product. However, once competitors can lawfully enter the market they will generally offer lower prices to customers. To keep sales from going to the competition the innovator business may have to lower its prices, thus reducing its profits, and perhaps extending the time needed to recover its initial investment in developing the new product.


The world we live in today has technology that allows competitors to very quickly copy and start selling a new product. Because of this, the availability of effective intellectual property protection for a new product can often be a critical factor in its success. Without intellectual property protection it may not be possible for a business to capture and retain enough market share, or charge high enough prices, to create a potential return on investment that is high enough to justify developing the new product. Accordingly, the availability and creation of intellectual property protection is something that should be addressed early on in the product development process.


Because ownership and control of the intellectual property pertaining to a new product can be so critical to success, it is important to take the necessary steps to establish such ownership and control.


Just because you think that you will own and control the intellectual property doesn’t mean that you are correct. Establishing ownership and control of intellectual property depends upon the type of intellectual property being dealt with, and can be affected by the things you do, or don’t do.


It is important to understand is that ownership and control of intellectual property can be acquired, or lost, through agreements or working relationships that you enter into with others. For this reason it is recommended that (1) you should always have clear written agreements with anyone you work with on a product idea concerning ownership and control of the intellectual property, and (2) always be certain that you understand any agreements that you enter into and that they protect your interests when it comes to ownership and control of intellectual property rights. Discuss any agreement or relationship you are considering entering into with a qualified attorney before making a commitment.


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Next Guide Section