The Four Types of Intellectual Assets and What Your Business Should Know About Them
Every business does at least one thing better than their competition. The thing(s) a business does better than its competition comprises the competitive advantage of that business. But how does a business prevent their competitive advantage(s) from falling into the hands of a competitor?
Often the short answer to that question involves protecting the competitive advantage(s) using various types of intellectual property. Businesses can use intellectual property to protect everything from a secret manufacturing formula to brand names and even things like customer and vendor lists. Below you will find the four types of intellectual assets and what every business should know about them when seeking to protect competitive advantage(s).
What is it?: Information that may be public, but your use of the information is kept confidential. You must derive some economic benefit (e.g. increased sales, increased profit margin) from keeping the information confidential. The information cannot be easy for your competitors to obtain (i.e. cannot be easy to reverse engineer).
What does it protect?: Secret formulas, manufacturing processes, customer lists, vendor lists. In short, any confidential information that your competitor cannot easily reverse engineer can be a trade secret.
How does it protect?: If your business properly establishes the trade secret in advance, the business can file suit to prevent others from misappropriating the trade secret. Courts can award monetary damages and/or injunctive relief (i.e. stopping the misappropriation). The business can even bring suit in the Federal Courts to stop trade secret misappropriation from outside of the U.S.
Things to know: In most states, the business does not register their trade secrets with the government. The business typically establishes trade secrets internally through contracts, policies and procedures.
If your business has a competitive advantage that it wishes to protect as a trade secret, you must take steps in advance (e.g. documenting information as a trade secret, having agreements in place with employees and vendors, restricting access to the information) to protect that information as a trade secret.
Remember, a (trade) secret lasts forever … unless someone discloses the information.
What is it?: A legally granted right to prevent others from making, using or selling an invention.
What does it protect?: Any new or improved product, process, design or plant.
How does it protect?: Patents prohibit anyone but the patent owner from making, using or selling a product, process, design or plant covered by the patent. Patent applications (i.e. “Patent Pending”) deter others from taking the same actions out of fear that the patent might one day grant. Once granted, the patent owner can file suit in the Federal Courts for patent infringement. Damages can include monetary compensation and/or injunctive relief (i.e. stopping the infringement).
Things to know: The Federal Government grants patents, which remain in force for up to twenty (20) years from the date they were first filed.
You must file for a patent application before you can disclose your invention to the public or offer to sell a product or process covered by your invention. Failing to do so is fatal to the patentability of your invention.
The individual inventor(s) own the patent application when originally filed. To protect the business’ competitive advantage, the patent application should be quickly assigned to the business after filing.
What is it?: A legally granted exclusive right to use a name or image that helps consumers identify the source of goods or services.
What does it protect?: Product names, logos, colors, packaging shapes, marketing slogans and other cues that help consumers identify the source of goods or services.
How does it protect?: Trademarks prevent your competitors from improperly associating their goods or services with yours. Once registered, the trademark owner can file suit for trademark infringement. Damages can include monetary compensation and/or injunctive relief (i.e. stopping the infringement). The trademark owner can also submit the trademark to customs and border protection authorities, who will monitor imports for infringing trademarks and seize any such shipments at the border.
Things to know: Trademarks are granted by both Federal and State Governments.
A good trademark is unique (i.e. has no prior association with the goods or services), distinctive (i.e. easy to remember) and non-descriptive (i.e. doesn’t simply describe your goods or services).
Businesses should take steps to ensure that their trademarks don’t become a generic term for the goods or services (e.g. Kleenex, Xerox), or risk losing the trademark registration.
What is it?: A legally granted exclusive right to produce copies of an original work.
What does it protect?: Artistic works, but also many types of business information (e.g. training manuals, advertising materials, test methods, customer & vendor lists, confidential information provided under an NDA).
How does it protect?: The copyright owner can file suit for infringement regardless of whether the copyright is registered. Damages can include monetary compensation and/or injunctive relief. In the U.S., if the copyright is registered, the owner can recover up to $30,000 per copy for each copy of the material that the infringer makes without having to prove that the infringer intended to violate the copyright.
Things to know: Copyrights (in the U.S.) published after they year 1977 last for the life of the creator of the copyrighted material plus seventy (70) years.
The creator of the work owns the copyright immediately upon creation. To protect the business’ competitive advantage, the creator should immediately assign ownership of the copyright to the business.
Company and product logos are artistic works covered by copyright which can also be trademarked. Businesses that don’t obtain ownership of the copyright to their trademark logo(s) are vulnerable to suits for copyright infringement.
Businesses that fail to protect their competitive advantage(s) run the risk of losing those competitive advantage(s), cutting into the business’ sales, profit margins and market share. When properly integrated into the business strategy, a business can use their intellectual assets to protect key competitive advantage(s) from slipping into the hands of a competitor.
If you would like to know more about how your business can protect its competitive advantage(s), please contact us.