protecting what‘s yours: how intellectual property law can help ucb new business practicum © 2014
TRANSCRIPT
PROTECTING WHAT‘S YOURS: HOW INTELLECTUAL PROPERTY LAW CAN HELP
UCB New Business Practicum © 2014
THIS DOES NOT SUBSTITUTE FOR LEGAL ADVICE
Just as a reminder:● This is an Introduction to Legal
Issues that commonly affect our clients
● This is not a substitute for working with a Lawyer or coming directly to us with your issues, which is always recommended
What is Intellectual Property?
▪ Intellectual property refers to any creation of the human intellect.
▪ It requires protection because of its potential commercial value to the creator.
Why protect it?
The purpose of IP law is to:1) Encourage artists/inventors to create and
share works;2) Enable commercialization- its use can be
sold, it can be valued and protected like other business assets
Types of IP
Intellectual Property law is comprised of 5 separate areas of law that are enforced under state or federal law :
▪ Trade Secrets▪ Copyright▪ Patents▪ Trademarks▪ Contractual IP
Each type of IP protection differs as to what is protected and how you can obtain protection.
COPYRIGHT
What is a copyright?
●Protects original works of authorship. ●The work should be fixed in a tangible
medium of expression. ●Covers a broad range of works- books,
works of art, musical recordings, plays, movies, software, advertisements, architectural drawings, etc.
A copyright gives to the owner of the work the exclusive right to:
▪ reproduce copies of the work;▪ develop derivative works based on the
copyrighted work;▪ distribute copies of the work; ▪ perform the work publicly;▪ display the work publicly.
What cannot be protected by copyright?
▪ Copyright does not protect facts or ideas.▪ The protection afforded by copyright
extends only to original expression.▪ EXAMPLE: I have an idea to throw a
masquerade party with a specific type of mask. Can not be copyrighted.
Fair Use DoctrineThe use of a copyrighted work, other than by the owner of
the work, is allowed for: ▪ criticism,▪ comment, ▪ news reporting, ▪ scholarship, ▪ and research.
Use which is transformative of the original work is ‘Fair Use’. For instance:
▪ a commentary on the copyrighted work▪ a criticism of the work▪ a parody.
Duration of protection:
▪ From the minute your create it▪ Individual Creators- life of the creator +
70 years. ▪ Work Made for Hire-95 years from the
year of publication of the work, or 120 years from the year of creation, whichever occurs first.
Additional Information Pertaining to Copyrights:
Employee
Employer is the owner of the work.
Independent Contractor
Independent Contractor is the owner of the work.
These presumptions can be changed by a contract to the contrary.
TRADE SECRETS
Meaning
▪ Trade Secret refers to any information that provides competitive advantage to the business, so long as it remains secret.
▪ If a Trade Secret is disclosed, then the value that the business would have gained from it is lost.
What can be a Trade Secret?
Almost anything that is commercially valuable to the business can be a trade secret. For instance:
●business and marketing plans;●customer lists;● financial statements; ●supplier terms;●product formulas;●custom software, etc.
Requirements for Protection
▪ The company should have taken reasonable steps to guard the secret.
▪ ‘Reasonable Efforts’ is generally judged by industry standards.
Reasonable Efforts
1. Storing trade secrets in safes or locked cabinets2. Restricting access by key/combination 3. Using password protection to restrict access to
computer files 4. Using non-disclosure agreements with employees 5. Using non-compete agreements with employees6. Disclosing confidential information on a need to know
basis7. Avoid discussing confidential information when
visitors are present8. Marking as “Confidential” important documents
Forms of Protection:
There are two ways in which trade secrets are commonly guarded with workers:
▪ Nondisclosure Agreement between the company and the employee.
▪ Noncompetition Agreement between the company and former employee.
Non-Compete agreements are rarely enforced. If confidential information is used unfairly by a former employee, then they are certainly enforced.
TRADEMARKS
Trademarks
A trademark distinguishes the goods/services of one company from those of another.
A good trademark can signify a company using: a word or set of words, a symbol, a sound.
Choosing a Trademark:▪ Distinctiveness: The trademark must have a distinct
flavor. Distinctive marks allow consumers to identify the products with the owner.
There are certain marks which are considered to be inherently distinctive. For instance:
▪ Fanciful marks such as “KODAK” for cameras;▪ Arbitrary marks such as “APPLE” for computers; ▪ Suggestive marks like “GLEEM” for toothpaste.
Descriptive Marks▪ Descriptive marks which directly describe the
product cannot be strong trademarks.
▪ Descriptive marks can only be protected when a significant number of consumers start to associate the product with the producer.
▪ Marks that are lifted from the common usage to describe a product can never be protected.
Trade Dress
▪ Trade Dress: Trade Dress refers to the packaging, design of a product.
▪ A trade dress should not be functional, such as a shape which is necessary for the performance of the product.
Trademark Search
▪ It is important to perform a preliminary search, to ensure that the trademark has not already been adopted by another company. You can perform such a search yourself, or with the help of an attorney.
▪ The cost is about 325$ to file a name and a logo. http://www.uspto.gov/trademarks/process/index.jsp
Creating Rights in the Trademark
▪ Use the mark in commerce. ▪ Register the mark though it is not
mandatory. Registration allows the trademark to become incontestable after five years of continuous use.
PATENTS
Patents▪ A patent is a right granted to an inventor
for an invention. ▪ It gives the inventor the exclusive right to
make, use and sell the invention. ▪ Inventors must file for a patent within 1
year of public disclosure or use
Types of Patents
▪ Utility Patents: Covers a machine, a process, articles of manufacture, new compositions of matter.
▪ Design Patents: Covers ornamental designs, shape of items.
▪ Non-Patentable Subject Matter: Natural Phenomena, abstract ideas, and laws of nature.
How to Obtain a Patent▪ An invention must belong to subject matter that is
patentable, be useful, and novel. ▪ Novelty means that the invention must not already
have been invented, or described in a publication.▪ The patent application must describe the invention
in detail.▪ Some inventors file patents on their own, though
most usually work through an attorney. Also, the legal fees for filing a patent can be substantial- recent figures quoted by veteran Bay Area attorneys noted the cost at about 10K.
▪ The patent Lasts for 20 years from the date the patent application is filed.
Contractual IP(Make Your Own)
What it Means▪ Intellectual Property can be assigned or
licensed by agreement.
▪ Intellectual Property can also be acquired through a license or an assignment.
QUESTIONS?
Additional Helpful Resources: ▪ See handout ▪ The NOLO Books;▪ Copyright Office: http://www.copyright.gov▪ Patent & Trademark Office- www.uspto.gov/
Issues for Entrepreneurs...
▪ The IRS and CA put workers into 3 distinct BUCKETS – even if you don’t▪ Employee▪ Independent Contractor▪ Unpaid Intern/Volunteer
▪ We recognize that traditional reasons that workers stay with a business may not apply (i.e., wages) – people pitch in for a variety of reasons (friendship, future expectations, altruism, personal development, etc.)
▪ We urge you to observe the “BUCKETS” as best you can because there are some distinct risks associated with these relationships...
Potential risks...
▪ Maintaining “fluid,” undefined relationships with workers can lead to:▪ Gov. audit▪ Misunderstandings with your workers▪ CA Dept. of Employment Development/Dept. of Industrial Relations
hearing with a disgruntled worker▪ Contact lawsuit by ex-worker trying to enforce a promise (even if there
was no written agreement)
▪ If a court or other review board ever has to review your activities, they will identify which “bucket” a worker falls into if there was a “mis-filing”
▪ The preference here will always be to find that the person was an Employee – the relationship with the strictest requirements
▪ The following presentation gives you a sense of these “buckets” and what will be expected for each category.
Employees...
▪ Overlay of Federal, State, and Local Laws, and Sound Business Practices
▪ How to Set Up
▪ Government Requirements: 17-pt Employer Checklist
▪ Minimally Necessary: Application, Interview, Check References, Offer Letter, Supervision
▪ Optimal: Personnel Policies - See CA Chamber resources – HR California – note, subscription required
▪ Practical Points:
▪ Recommend using a Payroll Service to keep track of everything
Additional Risks with Using Employees...
Hiring employees exponentially increases the company’s risk of liability▪ More people working for you = more possible screw-ups▪ Public will treat employees as your AGENTS – have to watch
what they say/how they act▪ Respondeat Superior Doctrine: if employee is acting within
scope of employment, then employer will be responsible Additional measures needed to manage risk:▪ Check References▪ Interview▪ Train & Supervise▪ Provide Guidance (e.g., Personnel Policies Manual)▪ Cover with General Liability Insurance▪ Keep Records of All Incidents/Issues Involving Employees
What Makes an Independent Contractor
Different?▪ Make sure you treat your independent contractor as such. The key aspect to attend to is CONTROL.
▪ Factors to consider:o Compensation and benefitso Use of company resourceso Skills and type of work
▪ Also see HR California for more guidance
Weigh the Pros and Cons…
EmployeePros● Increased Loyalty● Performs Multiple
Roles● Smooth Work Flow
(no need to juggle contractors/work)
Cons● Added Moral
Responsibility● Extra Overhead for
Workspace● Management / HR
Issues● More Paperwork
ContractorPros▪ Specialized
Knowledge▪ No Health Benefits,
Workman’s Comp▪ Work on Demand and
Only When Needed▪ May Shield Company
From LiabilityCons▪ Lack of Control▪ Vague contracts =
potential for dispute
>>There’s always some amount of risk in taking on an unpaid worker:▪Potential misunderstandings about lack
of compensation and potential for later hire
▪Potential liability if unpaid worker is injured or injures someone else
▪Lack of clarity about who owns the work
▪ For Non-profits: Unpaid workers(“Volunteers”) are common, but not very regulated ▪Should spell out above terms in a
contract▪ For For-profits: Unpaid workers (“Interns”)
are common and VERY regulated… ▪Spell out in a contract the following terms
Criteria for Unpaid Internship...
▪ Training is similar to training that would be given at vocational school
▪ Training is for benefit of interns▪ Interns do not displace regular employees, but
work under close supervision▪ Employer does NOT derive immediate
advantage from activities of interns- Employer may actually be harmed occasionally
▪ Interns are not necessarily entitled to a job at conclusion of training
▪ Interns understand that not entitled to wages for time training
Recommendation...
▪ To be safe – only set up short term internships, and make them part of a formal school program.
▪ BUT, know that generally, the government expects interns to be more trouble than they are worth.
Overall Recommendations...
▪ Try to utilize Independent Contractors when workers can meet the IRS test (i.e., lack of full control)
▪ Try to formalize fuzzy relationships into Independent Contractors if possible:
▪ Identify specific projects for the Contractor▪ Allow as much autonomy as possible for Contractor▪ Create written agreements identifying the Worker as
anIndependent Contractors▪ Pay the Contractor on a per project, or hourly basis (does not
have to meet CA minimum wage if “per project”)
▪ Hire workers as employees when you can’t meet the IRS test
▪ Use a payroll service, if needed, to keep track of the full checklist of employer requirements
