INTELLECTUAL PROPERTY BASICS: PATENTS AND TRADE SECRETS

By John Lindsey

DSC_3823cwebOne of the most common areas where our clients come to us with questions is in the key practice area of intellectual property (IP). How do I safeguard my ideas? Does my product need a patent? Or does it need a trademark? What if I don’t want to disclose my “secret recipe?” All of these questions are completely valid and worth shedding some light on to help business owners protect their intellectual property.

“I established intellectual property as a key practice area of the firm, because it speaks to the DNA of so many of our clients,” said James Forrest, founder and lead attorney at the Forrest Firm. “While not every business has protectable IP, most companies have questions and need counsel in this area.”

Intellectual property breaks out into four general categories: patents, trade secrets, copyrights, and trademarks. In part one of this three-part series, we will focus on patents and trademarks.

Patents

What is a patent? A patent is issued by the U.S. Patent and Trademark Office to an inventor who files a patent application for an invention, and is a property right in that invention. A patent gives the owner the right to exclude others from making, using, offering for sale, or selling the invention in the United States or importing the invention into the United States. The patent is not a right, however, to make or sell the invention.

There are three basic categories of patents. First, utility patents are granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter (chemical compositions), or any new and useful improvement thereof. Design patents are granted to anyone who invents a new, original, and ornamental design for an article of manufacture. Finally, plant patents are granted to anyone who invents or discovers and asexually reproduces (reproduced by means other than seeds) any distinct and new variety of plant.

The term of patents is generally 20 years from the date the application for a patent is filed (a design patent’s term is 14 years from the date of grant of the patent). A patent cannot be obtained for an idea or a suggestion, but for the actual invention, and the application must completely describe the invention. Also, a patent will not be granted if the claimed invention was previously patented, previously described in a printed publication, or already in use by the public.

Once the patent is issued, the inventor (and licensees) must mark the article with the word “patent” and the patent number. This marking is important with respect to damages that may be obtained from an infringer. The protection from a patent begins once the patent is granted. Given the complexity of patent rights and patent applications, we recommend that patent counsel be used to determine if an invention may be patented, and to prepare and prosecute the patent application, as well as enforce the patent rights once a patent is issued.

Trade Secrets

But what about trade secrets, many of our clients ask, are these protected by law? The short answer is yes. Trade secret protection is generally covered under state law, and most states have adopted the Uniform Trade Secrets Act. Under that Act, a trade secret is defined as information that derives independent economic value from not being generally known to other persons who might obtain economic value from its disclosure and is subject to reasonable efforts to maintain its secrecy.

Examples of trade secrets may include customer lists, financial information, ideas, recipes, manufacturing methods and formulas, software, or other entity information not readily available to the public and with an economic value to the owner. Some internal company information may not qualify for patent protection but will be protected as a trade secret so long as it is kept secret. Sometimes a company will not want to share the secret with the public through a patent application, and will protect it as a trade secret. (For example, Coca Cola has chosen to protect its Coke formula as a trade secret rather than reveal it through a patent.)

Trade secrets are protected without registration and protection will last indefinitely until public disclosure occurs. In this manner they are not like patents, which have a fixed term for protection. Also, unlike patents, which require the inventor to make a public disclosure of the way to make the invention that is patented in exchange for the patent protection, maintenance of a trade secret requires that it remain secret. Note that a third party may independently discover/develop someone’s trade secret (and protect it as well).

Efforts by owners of trade secrets to ensure their “secret” nature should include employment agreements with employees that contain an obligation to maintain the secrecy of the company’s trade secrets. In addition, owners of trade secrets should require third parties with whom they may share a company’s trade secrets (such as consultants) to enter into confidentiality agreements that contain an obligation to maintain the secrecy of the trade secret.

Look for the next installment in this series in the coming weeks as we explore the fundamentals of copyrights.