Protecting the Secret Sauce: What You Need to Know About Intellectual Property (IP)
Intellectual property (IP) rights may apply to a multitude of things, from corporate branding names and new inventions to product designs and secret recipes. Do you have a secret sauce whether a novel or a novel idea? How is your secret sauce best protected?
Types of Intellectual Property (IP)
In the US, intellectual property rights violation awards can reach eight figures. (Business Insurance)
There are four main types of IP rights. Which one to choose to protect your IP depends on what you are protecting: a slogan for your business, your granny’s recipe for pop tarts or a new operating system.
Trade secrets (Uniform Trade Secrets Act and Defend Trade Secrets Act)
A trade secret may be a recipe, formula, technique or process you don’t want anyone to know about. According to commercial law firm Lewis Roca Rothgerber Christie LLP, there are two types. The first are secrets that for some reason don’t fulfill the criteria for being patented, e.g. they aren’t inventive enough. The second are secrets so hush-hush, an inventor does not wish to patent them. One of the main reasons an inventor would choose to keep an invention a trade secret is because patents expire, trade secrets don’t. The classic example is Coca-Cola, which is not patented. If it had been at the time of its invention in 1886, the formula would have been in the public domain 20 years’ later, as patents are time limited.
- According to The Hustle, in 2007, three Coca-Cola workers were sent to prison for offering Pepsi insider information about a new Coca-Cola product. They were indicted for wire fraud and conspiracy to sell trade secrets. The trio received sentences between five and eight years, and had to pay restitution. The most interesting thing about this case was that it was Pepsi who tipped Coca-Cola off about being offered insider information.
Patents (United States Patent and Trademark Office)
Protects against the exploitation or use of a new or innovative invention, like an idea or product, for a period of 20 years. In exchange, the inventor must make full disclosure of their invention. When the patent expires, the information can be used by anyone. In a competitive industry like technology or medicine, an organization would prefer to patent their invention before their competitor (working on a similar product) does. In the pharmaceutical world, drug companies use the technique of evergreening to extend the life of their medical patents, e.g. by patenting modifications. An average of 3500 patents are published weekly in the US.
- Amazon in 1999 challenged Barnes and Noble for copying its 1-click purchase technology, for which it had a patent. The case was settled out of court in 2002. Amazon’s patent has since expired and the 1-click concept now has its own entry in Wikipedia. Variations on 1-click payments are used by PayPal, eBay and PayPal.
Trademarks (United States Patent and Trademark Office)
Essentially branding collateral, e.g. logo, name, lyrics, colors. A classic example is the Nike checkmark. A trademark allows you to use the registered trademark symbol.
- Twitter was unable to trademark the word “tweet” as another company, Twittad, had already trademarked “let your ad meet tweets”. So, Twitter went to court, claiming it had been using the word “tweet” long before Twittad. The courts didn’t agree. The two companies eventually settled their differences out of court and in 2011, Twittad subsequently transferred the registration of the “tweet” trademark to Twitter.
Copyright (United States Copyright Office)
Automatically protects authors of intellectual works, e.g. literary, music, sculptural, computer software and images.
- Napster – a file-sharing site – was sued by the Recording Industry Association of America (RIAA) for allowing users to download files for which Napster did not have copyright. Napster lost and now charges a download fee, which it uses to pay licensing fees. While you could weigh up the cost of infringing another organization’s copyright versus the cost of coming up with your own original “next best thing”, legal fees could put you, as they did Napster, temporarily out of business.
What is the importance of IP?
“Intellectual property has the shelf life of a banana.” Bill Gates
- Fosters innovation – Without IP, organizations would not bother so much about investing in Research and Development that could be copied and improved on by competitors
- Compensates innovators and artists – Without IP, individuals and corporates would suffer the loss of royalties for music, design, books, scientific research, new technologies, etc.
- Protects consumers – IP ensures consumers are not at risk from unsafe, insecure clones of products, e.g. medicine or counterfeit machine design
- Ensures competition – Organizations cannot compete efficiently in the marketplace if their branding is copied by the competition
10 tips to protect your IP
Reported by USA Today, ‘According to the 2017 report of the Commission on the Theft of American Intellectual Property, the annual cost to the United States economy of IP theft alone “could be as high as $600 billion.”’
- Ensure you implement strong identity and access management controls and be aware of insider threats
- Don’t be too quick to file patents as, once you do, your innovation is “out there” and a “hacked” version of it could be created and subtly redesigned
- Always use a non-disclosure agreement for employees
- Publicize your IP so people associate it with your brand; you want the public to be saying: Hey, didn’t so-and-so already do this?
- Spend money on researching your IP in the various official IP offices to ensure it hasn’t been discovered by someone before you. Look what happened to Twitter; doubly annoying as Twittad isn’t even in the same league
- Keep innovating to stay ahead of your competitors. Once your idea is in the public arena, it may be easy to protect your slogan but difficult to protect the idea behind it, as Amazon found out.
- Unless you’re a specialist IP attorney, rather spend money on expert advice than trying to Google it
- If your product or service is a global one, research the IP laws in the countries you do business with
- Document (and back up) your IP and communicate about it through a medium that keeps track of the dates and people you’ve discussed it with
- Be prepared to sue infringements on your IP or you will have wasted your money registering your ideas
- How Much Does a Patent Cost: Everything You Need to Know, Up Councel
- 10 Effective Ways To Protect Your Intellectual Property, Forbes
- Ten tips for protecting your intellectual property, Marketing Donut
- Uniform Trade Secrets Act, Evergreening, Defend Trade Secrets Act and 1-Click, Wikipedia
- United States Patent and Trademark Office, USPTO
- Patents vs. Trade Secrets – Giving Your Business the Competitive Edge, Lewis Roca Rothgerber Christie LLP
- The botched Coca-Cola heist of 2006, The Hustle
- Twitter vs Twittad Lawsuit Ends, Twitter gets “Tweet” Trademark, Internet Marketing Inc.
- Top 5 Intellectual Property Disputes, Legal Zoom
- Recent US patents, Free Patents Online
- China must stop forcing U.S. firms to share intellectual property, USA Today
- Intellectual Property Quotes, Brainy Quote
- Multinationals overlooking intellectual property risks, Business Insurance