You are three guys with a spectacular idea, a lot of entrepreneurial hunger, and darn little else. At what point should you begin thinking about protecting your company’s assets?
Right about now, insists veteran trademark and copyright attorney Carol DeNatalie. “Eighty percent of most firms’ business rides on their intellectual property,” she says, “and if you’re a startup, often IP is literally your sole competitive resource.”
To help new and would-be business owners launch under the proper legal aegis, SCORE will offer a free workshop, “Intellectual Property Protection,” on Tuesday, December 8, at 6:45 p.m. at the Princeton Public Library. Visit www.scoreprinceton.org.
DeNatalie, an attorney at Porzio, Bromberg, and Newman in Lawrenceville, will define IP, describe what aspects may be protected and how enforcement works, and examine preferable kinds of coverage for specific industries seeking various types of funding.
DeNatalie’s familiarity with law began well before her three decades of practice in copyrights, patents, and trademarks. Raised in Buffalo by an attorney father, both she and her brother undertook legal careers. In 1976 DeNatalie graduated from Mount Holyoke College, then took her law degree from SUNY Buffalo. After working for several boutique IP law houses, she served as in-house counsel with Wyeth, Pfizer, Colgate-Palmolive, and other Fortune 500 companies.
“I liked the in-house work,” DeNatalie says, “but a few years back, I wanted to deal with more small and mid-size companies.” Recently she has practiced global brand strategy, enforcement, and licensing in the trademark and copyright group of Mathews, Shepherd, McKay & Bruneau. Seeking to return to mid-size firms, this past year, she moved to Porzio, Bromberg, and Newman.
“The act of registering a copyright, patent, or company trademark not only provides your company with protection,” says DeNatalie, “it establishes a competitive edge in the field and definitely aids in securing funding.” Briefly, she outlines the means of bundling legal tools to create a total IP protection package.
That cherished idea. No matter how unique and clever, you cannot legally protect an idea. However, it is absolutely vital that the history of these ideas leading up to a concrete product be documented and dated for future patent/copyright applications and for enforcement.
At the next brainstorming session of a software development company, someone may suggest an accounting suite that is easily transferable to marketing, finance, and other departments. No protectable IP yet.
Others might contribute various elements that make up this proposed software. One of the firm’s numbers wizards might even write an algorithm. No IP yet.
Finally, you need a source code that will make the software run. Now you have legally recognized product, which could (and probably should) be protected by a copyright or patent.
Patenting IP. Patents are the government’s way of protecting original, inventive trade secrets. This 20-year term of protection affords the creator time to bring his prototype into production and profitably recoup his development expenses. All trade secrets are IP and may be patented, ranging from marketable items to methods of manufacture; from technologies to dress designs.
Once applied to a concrete item or process, the unique part of belongs to you, and courts uphold your ownership in infringement challenges. However, the U.S. Patent Office is woefully backlogged, and with all the searches and examinations, count on at least a year before bringing that registered patent number home.
For that reason, DeNatalie suggests making a Provisional Patent Application. This instrument’s lower-cost and reduced formality process gives inventors a year’s protected grace period while applying for a full patent. When producing a schematic or document discussing the patented item, be sure to use appropriate markings: e.g. “patent applied/pending”, or “patent #12345” for issued patents.
All rights reserved. Copyrights, like patents, protect the intellectual property behind the finished written product of your work, after it is set to paper. Generally, copyright prevents reuse of written content — words and software — while patents cover inventions, secret processes, and articles of manufacture.
“In some cases your IP protection package may include both a registered copyright and a patent,” says DeNatalie. Taking the case of original software, the source code may be registered under copyright, while the actual disc and methods of production may apply for a patent.
Authors may claim a legally enforceable copyright of their own work by simply stating authorship and date as a footnote on the document. The proper form, states DeNatalie, is circled C, the year of first publication, the author’s name. “All rights reserved” may then be added.
An individual copyright lasts 20 years; if corporately held, protection endures for 95 years from first publication. You can, of course register your copyright, a relatively swift and inexpensive process. DeNatalie suggests that automatically registering all original documents under copyright might be excessive. “The best rule of thumb is to consider whether you expect a lot of potential infringements on the work,” she says.
Branding your mark. Probably no single icon impresses investors more than the R in the little circle, signifying registered trademark. It may be an original word, phrase, designer combination, but the trademark announces the source of the goods or service to all who buy. It also signifies that the company is serious and tends to be around for a while.
Since, like the patent, it is a lengthy, expensive process, prior to receiving the R, many companies use the “TM” or “SM” meaning Trademark or Service Mark, respectively. Each mark denotes the company’s brand name, and, unlike copyright or patent, it lasts forever, if updated every 10 years. To keep things current, however, trademarks require periodic affidavits, which is one reason for doing your IP protection through an experienced attorney.
Trademark registration may be done online for what some say saves half the costs of having a patent attorney handle it. The problem is, too often you get what you pay for. The initial search for your trademark is seldom cut and dry. The law sees trademarks as a way to avoid confusion and aid the consumer in his choice. If yours is a small company making “SureFit” software and a small, registered “SureFit” clothier already exists in another region, you might be able to claim that mark. But what if you are a shoemaker? Gray areas abound, both domestically and internationally.
Also, domain names are not trademarks. Even though perhaps no one holds a website address of Surefitsoftware.com, it does not mean the phrase may fly through the trademark registration searches.
Finally, DeNatalie invariably warns her clients, “the patent, trademark, or copyright doesn’t set any army of government enforcers on alert watching out for your interests. It is only a license to hunt infringers and bring them to litigation at your own expense.”
If your copyright is infringed upon, it is good to know what might be received before actually rushing in to make a claim. Typically, most infringement victims gleefully tally up all the sales made by the infringer and think their best hope lies in getting those profits returned to the copyright owner.
These “actual losses” of profits might be a sizable chunk of revenue, DeNatalie notes, but you could be cutting yourself short. The court frequently wants to send a loud and clear message: Do Not Infringe! Thus they award what’s termed “statutory damages” far in excess of the worth of the products.
In 2000, when sentencing video pirates in the case of UMG Recordings v. MP3.com, the judge looked at the 4,700 illegally downloaded recordings (probably a $10 profit each). He slammed the gavel in favor of the plaintiff to the tune of $25,000 per wrongful copy, making MP3.com fork over $118 million in statutory damages.
So whether made in court or in the marketplace, there lies great money in your ideas. But if their genealogy and history are not scrupulously recorded, and if they are not bundled into a total IP protection package, you might be just generously casting them out to the world at large.