Intellectual Intellectual PropertyProperty

Intellectual Property• Intellectual effort, not by

physical labor• Intangible property• Lawsuits involve

infringement in violation of the owner’s right

• Damages include monetary and injunction

• Major forms include:

– Trademarks

– Copyrights

– Patents

– Trade secrets

Trademark

• A commercial symbol– design, logo, phrase, distinctive mark,

name or word– “brand name” (i.e., Nike, Puma and

others)– Classifications

• arbitrary and fanciful (most favored)• suggestive• descriptive• generic--not protected

Registration

• Can be done online• Payment of $335 for each class of goods using

a mark• Submission of copy of mark (a specimen)• Description of the goods that will use the mark• Declaration that applicant has no knowledge

that mark will conflict with other marks• Good for 10 years, after which must be

renewed• International protection of trademarks is

encouraged by International Bureau of the World Intellectual Property Organization (WIPO) via the Madrid Protocol

Trade Names

• Name of company or a business• Some products, such as Coca-Cola, have

same trademark as the trade name of producer

• Cannot be registered under the Lanham Act• Protected by common law• Protection applies to areas in which name

has meaning– National protection cannot be claimed unless there

might be confusion– Ex: because Coca-Cola is known worldwide, no one

may use trade name in any business. For instance, cannot open Coca-Cola Motel.

Goodwill• Reputation of a firm that gives value to

trademarks and other forms of intellectual property

• Prized asset of many firms• Gain trust of many customers = Goodwill• Benefit of advantage of having an

established business and secured customers

• Upon sale of business, goodwill can be evaluated.

• Often closely tied to trademark or brand name

Copyright © • Rights of literary property recognized by law

• Books, written works, etc.• Easiest to get• Works must be original• Was life of author plus 50

years; now (since 1999) is life plus 70 years; 95 years for work for hire (by employees)

• Gives owner exclusive right to:– reproduce– publish or distribute– display in public– perform in pubic– prepare derivative works based

on original

Patents

• Exclusive right to make, use, or sell a product for 20 years

• Anyone who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent”

• Strong protection during life of patent

• But expensive, technical and time-consuming process

• Since patent divulges all info to competitors, some prefer trade secrets

• If Coca Cola had gotten a patent instead of trade secret it could be used by others after 1907

• WIPO (World Intellectual Property Organization) encourages IP (Intellectual Property) worldwide.

Trade Secrets• Coca-Cola has held secret the formula for Coke for

over 100 years - a patent would not provide such long protection

• Most trade secret lawsuits are common law actions of stealing & using secrets

• Prosecutors can also press criminal charges• Protection in other countries is difficult• Information is a trade secret if:

– it is not known by the competition– business would lose advantage if competition were

to obtain it– owner has taken reasonable steps to protect the

secret from disclosure• See Issue Spotter: “Protecting Valuable Information”

re: company representatives who leave to work for a competitor

Economic Espionage

• Usually trade secrets based on common law and enforced by litigation claiming misappropriation; violations of a secret; or violations of secrecy agreement

• Economic Espionage Act of 1996 concerns theft of commercial trade secret:– “Whoever, with intent to convert a trade secret, that is

related to or included in a product that is produced for or placed in interstate or foreign commerce to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will injure any owner of that trade secret,” is subject to prosecution

• Punishment for a person can be up to 10 years in prison

• Firms may face fine up to $5 million