America at work
IP 101: What you need to know about intellectual property
Takara Small | April 26, 2016

As the world celebrates World Intellectual Property Day on April 26—an annual event established by the World Intellectual Property Organization (WIPO) in 2000—intellectual property defenders have a victory to celebrate.

Earlier this month, the U.S. Senate approved a trade secrets bill known as the Defend Trade Secrets Act of 2016 (DTSA). The bill would afford companies better protection for their commercial secrets—which along with copyright, patents and trademarks are often collectively known as intellectual property. The DTSA now awaits approval by the House of Representatives, where it has strong bipartisan support. The White House has also voiced support for the bill, saying that protecting trade secrets is key to promoting the “innovation that is the engine of the nation’s economy.”

Intellectual property theft is a major issue for American businesses. This type of crime costs the United States about $300 billion a year, according to a report by the Commission on the Theft of American Intellectual Property. The law will allow businesses to sue other companies in federal court if trade secrets are “misappropriated” (acquired through unlawful disclosure by, for example, ex-employees) or stolen. It would also let companies seek compensation for damages, impose injunctions, which could require related material returned or prevent the information from from being shared, including with a competitor.

In addition, the DTSA would create a more streamlined path to settle disputes in federal court, since firms currently looking for legal redress are usually consigned to the state level. State courts have their own unique “patchwork” of laws, which means pursuing trade secret claims can turn into a lengthy and expensive ordeal, according to Reuters.

That intellectual property protections are garnering bipartisan support in Congress is a good sign for American businesses. But it also leaves many Americans with more questions than answers about the different types of IP and why each of them matter. So here’s a quick primer for those outside the IP world.

Copyright: A copyright is sometimes referred to as author’s work, and that’s exactly what it is – a legal term that guarantees exclusive rights to ownership, distribution and reproduction to the author, creator, or owner of a piece of work. Copyright items can include books, computer programs, maps and paintings.

In the United States, basic copyright registration starts at $35, while in some countries, copyright is automatically obtained without any registration requirements.

Patent: A patent is a legally protected right for a new technology or invention, and it typically lasts 20 years. A patent precludes others from “making, using, offering for sale, or selling the invention in the United States or importing the invention into the United States,” according to the U.S. Patent and Trademark Office (USPTO).

Companies have the right to sue rivals that infringe on their patents, of which there are three types.

  • Utility patents cover a wide variety of “new and useful” inventions and discoveries, including manufacturing processes, manufactured goods, machines, or “compositions of matter,” such as a new chemical composition.
  • Design patents, as the name implies, cover designs and plant patents—plants, as in the kind you grow in the soil, not manufacturing facilities.
  • Trade secrets: A trade secret is confidential information that’s vital to a company’s strategy or production process and/or gives it a competitive advantage. What counts as a trade secret? Information that’s not readily accessible to the public, has commercial value, and that the company has taken reasonable steps to keep private.

The decision of whether to apply for a patent versus maintaining trade secrets often hinges on a company’s underlying strategy and objective. . When a company files for a patent to protect a new invention, that invention becomes public and can inspire other companies for future innovation. According to the WIPO, “the obligatory publication of patents and patent applications facilitates the mutually-beneficial spread of new knowledge and accelerates innovation activities by, for example, avoiding the necessity to ’re-invent the wheel.’”

Conversely, by keeping information secret, companies forego the legal protection of a patent, but they also keep their rivals in the dark. The Coca-Cola company, for example, has never patented the recipe for its trademark soft drink.

Trademark: Companies can file for trademarks on symbols, designs, phrases or words that distinguish their products from others. Think logos, slogans, and the like, although firms can also get considerably more creative than that. Companies have trademarked distinguishing features such as the smell, sound, colors, and shape of a product. For example, footwear company Christian Louboutin secured a U.S. trademark for the red soles found on its luxury shoes.

Trademark protection typically lasts 10 years and can be extended by paying additional fees to the USPTO. To register an international trademark, companies can seek protection with trademark offices in individual countries or through the Madrid Protocol, which manages trademarks through WIPO’s International Bureau.