Tuesday, December 20, 2005

Intellectual property primer

Intellectual property (IP) generally falls into 4 categories in most countries in the world:

Copyright - rules on copyrights protect artistic, written, and musical works. The owner of the copyright can control how the work is used, if it is copied, etc. If you wrote a book, it would be covered under this category.

Trademark - rules on trademarks protect logos, slogans, and similar used by a business to identify a product and distinguish it from those of its competitors. For Coca-Cola, the Coke logo (down to the colors used), the slogans they use ("It's the real thing", etc.), and even the shape of their bottle are all considered trademarks. If a logo, slogan, etc. is used by a service to distinguish their work from others, the mark is officially termed a "service mark", but the rules are the same for service marks as trade marks.

Patent - covers inventions. In almost all countries, the invention must be novel, useful, non-obvious, and man-made. A patent gives the patent holder the right to have a monopoly on the use of the invention for about 20 years (length varies from country to country). Patents are enforceable only in the jurisdiction that issues it (and the 3 areas where most patents are currently issues are US, Europe, and Japan).

The U.S. allows patents on designs, software, and business processes, which are not always offered in other countries.

Trade Secrets - Nolo defines trade secrets as "a formula, pattern, physical device, idea, process, compilation of information or other information that 1) provides a business with a competitive advantage, and 2) is treated in a way that can reasonably be expected to prevent the public or competitors from learning about it, absent improper acquisition or theft." So a trade secret is just that - a secret. In regards to an entrepreneur, just about anything that they would write in a business plan would be considered a trade secret, and should be treated appropriately. One way to get additional protection off trade secrets is to use a non-disclosure agreement (NDA) when you need to share the trade secret with others.

In general, unless you are working on leading edge works (developing new technology or working in a laboratory), I would not recommend getting a patent. The filing fee is a few thousand dollars, legal fees can run many times that, and it currently takes over 3 years from time filed to when given. And this is all assuming that the process goes smoothly... None of the products I worked on were considered to be so new as to justify patents, so I have never gone through the patent process. Instead, we have used trade secrets.

I had recommended books by Nolo before, and find they are also an excellent reference point on intellectual property for the United States - for more information, check this web site.

Outside of the developed world, things can get awfully murky. It has always amazed me to be in China or Thailand and walk through malls offering counterfeit and duplicated goods for sale. All forms of intellectual property was blatantly ignored. This is obviously a challenge both to people wanting to do business in those countries. Less obviously is the challenge it brings about to that country as the country tries to become more developed and move towards being more developed (and inventing more things themselves). IP protection is meant to foster innovation, and without protection, there may be limits to innovation in these countries.


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