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“Jump on Your Intellectual Property Rights”

If you are a startup business looking for financing, you should already have (1) acquired your IP rights (patents, trademarks, and copyrights) and (2) cleared your business of any IP infringement. Investors and competitors respect the value of patent and trademarks and applications for them. Investors should not invest in a startup, unless they are assured that its product or service is not infringing another’s IP rights.

There is a saying in the law, “don’t sleep on your rights.” If you do not affirmatively acquire what could become your patent and trademark rights, you will lose the opportunity to do so. To often today a startup is shut down because it is infringing another’s patent or trademark rights. That shut down could have been avoided with appropriate foresight. The infringed patent or trademark is one that the startup could have obtained for itself by applying for those IP rights, — if it had acted early enough. Alternatively, an early due diligence search could have identified another’s IP rights that covered the proposed product or service, thereby providing time for a design around and negotiations for a license to the problem IP rights.

Patents provide a limited monopoly on your company’s new product or process. Monopoly translates into high profit margins due to a lack of competition. Patents can be obtained on almost any product or process that is useful, novel, and non-obvious. Under prevailing case law, usefulness extends to any method of calculating a number that has real world utility, including business methods, and the novelty and non-obviousness requirements are not as high a standard as many people believe.

Trademarks (and service marks) indicate the source or origin of a product or service. Source or origin means that a consumer can identify your product or service in the marketplace, and thereby avoid using another’s similar product or service.

United States patents and trademarks are obtained by filing an application for them in the United States Patent and Trademark Office (USPTO). The USPTO then examines the application for compliance with all statutory requirements, and eventually issues complying applications and rejects noncomplying applications. Obtaining these IP rights is expensive, primarily due to the amount of high hourly rate attorney time required to prepare an application and guide it through the USPTO. For patents, part of that cost can be deferred by initially filing a relatively simple provisional patent application the filing date of which is prima facie proof of the date of invention. A provisional patent application protects for one year the right to pursue patent protection on the novel aspects of a product or process at a very low cost, and it is accorded respect by inventors and competitors. However, to get a patent, a provisional application must be followed within one year of its filing, by filing a more formal US application and any foreign applications to obtain the benefit of the filing date of the provisional application.

Substantial information on patents and trademarks is provided at the USPTO’s website at http://www.uspto.gov.

Copyright Richard A. Neifeld, President, Neifeld IP Law, PC

If you have any other questions or need further information please feel free to contact us via email at www.Neifeld.com

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We’ve all been there before.

There’s some graphics or content (or even website legal documents) on the web that you like… there’s no copyright notice associated with it.

You’d like to take it and incorporate it into your site, right?

It’s so tempting, but DON’T do it!

Copyright Infringement Issues

Under the US Copyright Act, there is a principle some refer to as the “rule of automatic copyright”. This rule provides that once an author or artist:

* creates a work of authorship (text, graphics, content),

* that is fixed in a tangible medium of expression (can be perceived by a person even if a machine or device is required to do so),

* copyright automatically vests in the author or artist (regardless of whether the work has a copyright notice or whether it is registered with the Copyright Office).

So, you need to secure the appropriate permissions before using the graphics or content. Failure to do so, can cost you dearly.

An illustrative case is the case of Photo Resource Hawaii, Inc. v. American Hawaii Travel, Inc., No. 07-00134 DAE-LAK (Dist. Hawaii Dec. 12, 2007). In this case, the defendant never had rights to the content, and he was ordered to pay $48,000 in statutory damages, $5,145.55 in attorney’s fees, and $386 in court costs.

The same result is true if you had permission to use the material, but the permission expires or terminates. Even if use was originally with permission, use after expiration or termination will get you sued. In the case of Chase Jarvis v. K2 Inc., No. CO3-1265Z (W. Dist. Washington Dec. 12, 2003), the defendant was nailed for infringement because his content license had expired.

Ditto For “Borrowing” Someone Else’s Website Documents

You realize that it’s past time for you to add the website disclaimers and documents to make your site legally compliant.

So, what to do? You consider “borrowing” legal agreements from another website. After all, it’s there for the taking. Right?

Wrong! For starters, it may be copyright infringement to copy the other guy’s documents without permission. That’s reason enough not to do it.

The other reason is that just as with most things… one size does not fit all. You should realize that each ecommerce business is unique. The other guy’s policies regarding the collection, use, sharing, storing, and security of customer data most certainly will not match yours.

Additionally… the other guy’s assumptions may be different.

For example, the other guy’s site may not incorporate blogs, forums, or chat rooms. If your site does incorporate a blog, then his documents will not have the DMCA notice (and you will not qualify for the “safe harbor” from copyright liability; you’ll be liable without even knowing it). Even if his site incorporates a blog, do you want to bet that it has the DMCA notice in proper form?

Another example… I recommend that you assume that you will need broad rights to collect and use passive information from site visitors, so I recommend that you reserve broad rights to collect passive information from them – even if you do not actually utilize all the methods you reserve rights for at the outset, you probably will later – if the other guy’s privacy statement does not make the same assumption, and only reserves rights for a relatively narrow range of collection methods, you may be in breach of your Privacy Policy and not even know it.

Finally, your website disclaimers and documents and the other elements of website compliance must work together as a system, so documents are not interchangeable. For example:

* your Terms of Use and Customer Agreement relate to your DMCA Registration Form and to your disclaimers,

* disclaimers that are merely notices in your Terms of Use carry over to your customer agreement where they become a part of a binding contract,

* notices in your Terms of Use regarding the location of your site’s servers become critical in terms of your Privacy Policy, especially for personal information transferred from users located in the European Union,

* and so on.

Conclusion

In summary, do it right. Don’t cut corners with something so important as your website content and website documents. Use your own content, documents, policies, and rules for your website.

Only then will you have the confidence and peace of mind that you will not be faced with a demand letter, or worse — a lawsuit — from the content owner.

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If you have a specific design or invention you wish to protected, you must apply for a patent through the United States Patent and Trademark Office. It is important that you do not use terms such as “patented” or “patent pending” prior to applying for or being granted a patent, because doing so is a violation of federal law. Applying for a patent through the United States Patent and Trademark Office can require special legal knowledge. It may be in your best interest to consult with a patent attorney. Here are the basic steps outlining how to obtain a patent.

The first step you will want to take to obtain your patent is to visit a local branch of the United States Patent and Trademark Office. If that isn’t convenient, you can find most of the information and required forms at the U.S. Patent and Trademark Office Web site.

Next, you will need to prepare a full and detailed proposal of your design or invention. The proposal must contain specific descriptions in English and detailed drawings. You will then prepare and execute a brief declaration that the design or invention is an original, and that it does not infringe on any existing patent.

After making the appropriate number of copies and following all instructions, you will submit your proposal and declaration to the director of the U.S. Patent and Trademark Office at your local branch or through the Internet. Upon submission, you will be required to pay filing fees for a search and examination of your proposal.

If the U.S. Patent and Trademark Office presents any objections or requests any modifications, you must address them in a timely fashion.

Obtaining a patent through the U.S. Patent and Trademark Office can be a lengthy process. If everything in your proposal is accurate and there are no objections or requested modifications, the process will be completed in approximately 18 months. If there are objections or requested modifications, the process can take much longer.

Once you obtain a patent, you will be required to pay maintenance fees. Maintenance fees are required at three to four-year intervals following the grant date. You will typically be afforded a six-month grace period to pay your maintenance fees. You must renew your patent prior to the expiration date. Patents typically last for a period of 20 years, although design patents expire after a period of 14 years. Design patents include those that improve upon or act in conjunction with another patent.

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Registered patent attorney Patricia McQueeney http BrinkleyMcNerney.com explains, Intellectual property can be broken down into four types patents, trademarks, copyrights, and trade secrets.

A patent deals with a completely new invention  a useful item, a novel look on an already existing item, or a new plant species. Depending on the type of patent, they are good for between fourteen and twenty years. The scope of a patent is defined by its claims. A claim is only one sentence but it may go on for pages, which is why its best to hire an experienced patent attorney.

Copyrights protect creative expression  books, web sites, songs. There is such a thing as common law copyright, which means that you have rights when you create something. The difficulty lies in proving you were first to create it.

For only 30 you can register with the U.S. Copyright Office httpwww.copyright.gov. The forms arenot complicated, and you have a lot more protection in an infringement suit. The copyright is good for your lifetime and seventy years after you die, and you can make it assignable to anyone upon your death.

Copyrights donot protect the information found in a book or on a web site, but they protect the lay out and presentation. For web sites, registering your first and last twenty-five pages of code protects the code for your entire web site and the creative expression of your display screens.

A trademark designates an objects source  its a mark or name associated with quality. In trade mark law, arbitrary names are encouraged  Kodak, Kleenex, Apple. The less your trademark describes your product, the stronger it is. If you sell film, using Film as a trademark wonot hold up in court. Again there are common law trademarks, but they’re hard to prove and offer less protection than a state or federal trademark

Trade secrets are governed by state laws and vary from state to state. They encompass a variety of things from formulas think Coke to customer lists to product sources. Many companies have contracts that expressly prohibit their employees and vendors from giving away any information they are exposed to while doing business with them. Commonly known facts arenot considered trade secrets so its good to be discreet with your valuable information.

Its important to remember that copyrights and patents give rights to the person who comes up with the idea, not the company that employs them. So if you hire someone to design your web site, the creator owns it unless you have the copyright assigned to you in writing. Thats why many business owners state in their employee agreements that any works or useful inventions created on company time with company funds will be assigned to the company. Cautions McQueeney, You do not own it unless you get it written over to you.

When an employee or consultant obtains works without a license and they are used within a business (such as photographs or software), they will infringe copyright. In the ordinary course, employers are vicariously liable for the acts of employees during the course of their employment and for the acts of independent contractors. A copyright owner is likely to have several courses of recovery for the infringement against:

the employee or consultant for authorising the infringement by the employer;

the employer on the basis of vicarious liability;

a person responsible for a place of public entertainment, for allowing or permitting to be used for performance of a literary, dramatic or musical work;

a person providing the means by which to reproduce the work.

Obviously, the employer is the most likely target for a claim to damages, as they are seen to be 1. a stable enterprise with a vested interest in avoiding litigation followed by a damages payment; and 2. the employee is more than likely not going to be in a position to satisfy a judgment and the legal fees incurred in the conduct of a claim.

The Measure of Compensation

Damages are said to be at large in copyright cases, as they are not fixed to any particular measure. Damage caused by infringement of copyright is quantified by the value by which the copyright is diminished as a chose in action.

The measure of pecuniary damage likely to be ordered in an action for copyright infringement is that of its commercial value. The commercial value of a work in the circumstances of infringement is reached by one of two methods. Firstly, where the infringing works are sold (by the defendant), the commercial value is represented by the loss of profit to the owner, as the owner has been deprived of the opportunity to sell licenses for the work. The alternate means applies where the work is simply used by the defendant, and not resold by them.

Sales of Goods and Diversion of Customers

When a copyright work is copied and sold, the owner of copyright is entitled to recover their loss of profit caused by the diversion of trade to the defendant. Thus, in a case where the claimant was in the business of producing Christmas cards and offering them for sale to the public, the claimant was awarded the profits that the claimant was deprived by the actions of the defendant.

This is not to say that the claimant would be entitled to recover for all of the sales made by the defendants, as the claimant may not have sold as many as the infringer; whether the claimant will be entitled to recover for all of the infringing sales of the defendant depends on the circumstances of the case at hand. In the events that the particular copyright work is sold at reduced prices serves aggravate the damage suffered by the claimant.

The owner is also entitled to recover for the loss to the reputation of the original copyright work. A loss of reputation will take place where the works are sold at a reduced price, at a reduced quality or in a vulgar or distasteful fashion, such the claimants’ own sales in the future would be prejudiced.

Reproductions without Sale

Where the defendant does not trade in the goods copied, such as using photographs on a website, or uses infringing software, the method of calculation described above (which accounts for loss of profits for diversion of trade) is not the appropriate measure for calculating damages. The proper measure in these circumstances is a reasonable license fee that the copyright owner would reasonably charge for a license to use the photographs in the particular circumstances. The award of damages will be that of a willing copyright owner and a person in the position of the notional licensee, being the defendant.

Conclusion

Simply because a copyright owner seeks to recover from business, does not prevent the business seeking recovery from the employee or consultant who was responsible for, that is, authorized the infringement by obtaining the copyright work unlawfully and making it available to the business for use.

Despite frequent claims of excessive damage by owners, they are not in a position to enforce a claim for a sum of compensation greater than the loss that they are able to prove with reasonable certainty. This process takes in a process of ascertaining on the particular facts what the copyright owner would in fact be entitled to recover at law.

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An intellectual property law firm should have attorneys with several years of experience protecting the rights of artists, designers, engineers, and business developers. There are several different types of intellectual property, so a law firm might employ lawyers that specialize in individual topics such as copyrights, patents, trade secrets, trademarks, and industrial designs.

Why are Intellectual Property Law Firms Useful?

Intellectual property law gives incentive to those who create new ideas by offering them exclusive rights to earn money from their ideas for a certain period of time. One might see intellectual property law as a type of temporary monopoly that allows the creator to earn money without competing with others who might try to use the idea, process, design, or work of art for their own profit. An intellectual property law firm can help those who create new ideas prevent others from taking advantage of their work without paying the inventor or creator.

Who Needs an Intellectual Property Law Firm?

There are many different types of intellectual property, so there are also many different types of professionals who might need the services of an intellectual property law firm. Those who work in technology development almost certainly need an intellectual property law firm to make sure no one steals their ideas, programs, or designs. Musicians, writers, and artists of all types might also need an intellectual property law firm to make sure they get all royalties that are due to them from the commercial sale of their creations. Even business professionals might need intellectual property law firms to protect their management concepts.

The Two Categories of Intellectual Property

There are two types of intellectual property, so you might want to choose an intellectual property law firm that specializes in the one that affects you most. The first category gives exclusive rights to artistic and commercial creations. This could include a movie, book, painting, or computer software. The second type that an intellectual property law firm might specialize in is typically called industrial properties. These are typically inventions that are used in production or industry.

Finding an Intellectual Property Law Firm

Depending on where you live, you might find that there are several intellectual property law firms for you to choose from. If you work with other professionals and artists who use the services of an intellectual property lawyer, then you might want to ask them which firms they prefer. Colleagues who have more experience might be able to tell you about the positive and negative experiences they have had with the intellectual property law firms in your area, which will help you develop a short list of firms that you can choose from.

Meet with representatives of the firms that get good reviews from the other people in your field. During your meeting, you might want to ask about their qualifications to help you choose an intellectual property law firm that specializes in the type of products and ideas that you create. You should also ask them how much money they charge so you can choose a firm that is affordable for you.

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