How to avoid the land mines that trademarks, copyrights and patents can create

David G. Henry, Sr., Member, Intellectual Property Group, Dykema Gossett PLLC

With an estimated 80 percent of the value of S&P companies in their intellectual property holdings, businesses cannot ignore the impact of IP on their bottom lines, their equity value and their day-to-day operations.

Intellectual property law is among the most complex and misunderstood fields of law and represents a veritable mine field for businesses, says David G. Henry, Sr., a member of the Intellectual Property Group at Dykema Gossett PLLC.

“Failing to recognize intellectual property issues as they arise, asking the wrong questions, or acting upon the many myths surrounding the proper handling of IP issues can lead to substantial losses and/or liability for a business, its shareholders and its officers,” he says.

Smart Business spoke with Henry about recognizing intellectual property issues when they present themselves and what to ask IP experts before acting in any material way.

What are patents and some of the myths regarding them?

Patents are legal monopolies that allow owners to prevent all others from making, selling, using or importing patented subject matter, which can include machines, chemical compositions, manufacturing processes and business methods.

There is a common perception that you can protect an invention by mailing yourself a letter describing your invention. However, that does little, if anything, to protect an invention, and relying only on that will destroy any patent rights for failing to file a real patent application. Applications must be filed within one year of the first public use of the invention, its sale or offer of sale, or a description of the invention in a printed publication, among other things.

Another fallacy is that you cannot patent something that is just a new combination of old parts. In fact, most new inventions are merely new combinations of old parts. Assuming that it is impossible to patent your invention, or that patents are easily circumvented and not worth the time and expense (another common misconception), you may miss the opportunity to secure your most valuable asset, perhaps costing you millions of dollars in value.

Finally, many people believe they can get around an existing patent simply by changing or adding something to the patented item. However, patent claims often cover much more than the item shown in a patent, and, if you infringe, it could cost you your business.

What are some misperceptions regarding copyrights?

There is often confusion about what a copyright covers. Copyrights protect the expression of ideas and information, not the underlying ideas or information. Items such as books, software, photos, paintings and recorded music may be protected, while mere information like recipes, mathematical theorems and phone listings may not.

There is a common misperception that if you change someone’s work enough, you can get around the copyright. However, copyright covers much more than just literal, verbatim copying, including the making of derivative works. And admitting that you changed someone’s work to get around the copyright may be an admission of infringement.

There is also the perception that if you pay for a copyrighted article that you own it, especially if you paid to have it made. However, ownership most often results from creating the work yourself or having your employee create it as part of his or her job (a true ‘work for hire’ under copyright law). Companies often make the mistake of thinking that because they paid an independent contractor that they own the end product, but they often do not, absent a contractual assignment of the copyright.

There is also the myth that you only have copyright protection if paperwork is filed with the government, but copyright exists the moment a protectable work is reduced to tangible form. You can be liable for infringing on a copyrighted work for which no filing has occurred.

However, before you can sue for infringement, you must register the work in a timely manner. Registering too long after publication and after an act of infringement can cost you the right to statutory damages and attorney fees.

How do trademarks work?

Trademark protection is for words and symbols that distinguish the goods or services of one vendor from those of all others. Trademark rules protect the public from confusion and makes commerce work. Properly selecting and protecting trademarks will help you protect your reputation and market power, and avoid considerable trouble and expense.

Businesses must know what they do and do not own as a trademark. If the Secretary of State’s office merely says a name is available as a corporate name, for example, that doesn’t necessarily means it’s OK to do business under that name. Too often, companies make the mistake of incorporating under a name that, if used as a brand, may infringe trademark rights of a third party. Some also believe that merely filing an assume name certificate (DBA) creates exclusive rights, but such is not the case.

Concerning infringement: Just changing a spelling or adding a word to an existing trademark often does not protect you. Trademark infringement typically exists if your trademark (however spelled or configured) creates merely the likelihood of confusion as to source, sponsorship, approval or affiliation. Trademark infringement is easier to commit than most think, can be very difficult to spot, is expensive to litigate and is potentially ruinous in terms of wasted reputation investment.

Intellectual property is often a company’s most valuable asset and is easily overlooked, lost or destroyed, or infringed upon. By understanding the value of IP and consulting with experts in the field, you can avoid the potential land mines that abound.

David G. Henry, Sr. is a member of the Intellectual Property Group at Dykema Gossett PLLC. Reach him at (214) 462-6439 or [email protected]