A lot of companies are missing the boat when it comes to protecting all aspects of their intellectual property, and that could ultimately mean missing out on big bucks, a lawyer with expertise in IP warned colleagues recently.
More elusive forms of IP that are often overlooked can provide significant value to the net worth of a business, said Ralph N. Gaboury, a senior associate at Duffy Sweeney & Scott Ltd., speaking on June 15 at the Rhode Island Bar Association’s annual meeting.
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On the other hand, failing to identify and protect such IP assets can come back to haunt a company, he said.
“Because of the intangible nature of intellectual property, a lot of times it’s just not on the radar,” Gaboury said. “Potentially valuable IP that can add to the value of the company is not thought about, and it’s just sitting there.”
Types of IP that are commonly overlooked include non-traditional trademarks such as trade dress, sound marks and certification marks, patentable product designs, and copyrights on Web sites, advertising materials and even the shape of microchips and ship vessel hull designs, he said.
Patents, which offer arguably the most powerful IP protection, most commonly protect machines and technology but can sometimes be applied to business methods and even software, Gaboury said.
For example, Amazon.com won a landmark lawsuit preventing Barnes & Noble and other brick-and-clicks or online retailers from using Amazon’s patented one-click sales process, which revolutionized Internet sales, he said.
“That’s a powerful competitive advantage,” Gaboury said. “If you’re in a business that deals with technology and deals with software and you have some unique stuff, you should definitely just look at it.”
Because patent law in the United States protects an invention from the moment it is conceived, it is crucial that engineers, technicians and designers keep detailed notebooks that document every step of the invention process to prevent problems down the road when applying for, enforcing or licensing the patent.
And companies need to be aware that employees who invent new products or business processes hold the rights to the patent unless it is assigned by the inventors to the company they work for. The chain of title on all patents should be updated whenever there’s a change in ownership, or even in cases of a change of name or form, such as a move to a limited liability corporation (LLC) from a standard corporation (Corp. or Inc.), Gaboury said.
While trademarks most commonly protect identifiers such as the Nike swoosh logo and Coca-Cola’s signature script, other more elusive trademarks are available, including ones for product packaging, such as Listerine’s trade dress on the shape of its mouthwash bottle.
The design of products themselves also can be trademarked if the design isn’t necessary for optimal functioning of the product. For example, Apple received a trade dress on the shape and color signature of its iMac computer after it was able to demonstrate that, following extensive promotion and advertising of the product line, consumers now see the iMac’s shape and colors as distinctive to the product, Gaboury said.
Along the same lines, sound marks, such as the deep-voiced “Ho Ho Ho” of Betty Crocker’s Green Giant vegetable brand, or NBC’s distinctive three-note chime, can be trademarked by companies that have established the rights over time. Even colors used in product designs can be trademarked, such as Owens Corning’s trademark on the color pink for fiberglass insulation.
Consultants, teachers and companies or organizations that provide training should consider seeking trademarks on the certifications they bestow, such as Microsoft’s trademarked certifications or even the trademarked “Good Housekeeping seal of approval,” Gaboury said.
Though copyrights are typically thought of as protecting IP in books, music and software, copyright law also applies to copy found on Web sites, advertising materials and other more elusive sources, he said. This often-overlooked fact is increasingly coming back to haunt companies seeking to sell or merge with others, who discover during the due diligence process that they don’t own the rights to valuable Web sites and advertising campaigns, Gaboury said.
“This is almost a crisis situation,” Gaboury said. “If you hire an ad agency to make print, radio or digital advertising, absent a specific written agreement to the contrary, they own all that stuff. In the case of Web sites, ownership is often subdivided, like land, so that text, digital images, Flash animation and design are all under different ownership.”
Without a written agreement to the contrary, even the copyright on a company’s logo will be owned by the design firm that created it, even as the company itself owns the trademark rights, he said.
“Imagine the nightmare scenario here,” Gaboury explained. “You never got an assignment, they get PO’d about something, you have a falling out, and they yank their implied license. Now suddenly you’re creating en-masse copyright infringement with every product you’re shipping out.”
Copyrights on software have been complicated by the open-source movement in the technology industry. Increasingly, companies are denied copyrights on their software and forced to make their code available on the Internet because programmers designed the product as a modification of existing code downloaded for free from the Internet that carried open-source licensing terms, Gaboury said.
The first, crucial step that companies must take to protect their patents and trademarks is to make sure no one else is using it, or something close. Companies and organizations should build copyright registration into their regular business processes, he said.
“The bottom-line message is, you need to be cognizant of this and think about it, and you want to do it before you’re in a situation where someone is asking you about due diligence on some kind of transaction,” Gaboury said.
