An effective corporate intellectual property program is extremely important for large and small businesses today. An effective intellectual property program should provide the following:
- Encourage Disclosure: Encourage employees to bring to the attention of management inventions, designs, product names and other "good ideas."
- System of Evaluation: Provide a system to evaluate the "good ideas" so that appropriate protection can be sought for those that may have present or future value.
- Determine Ownership: Ensure that ownership is acquired for all employee developed patents, trademarks, copyrights and trade secrets.
- Proper Documentation: Ensure that all inventions and other technological developments are properly documented and corroborated.
- Minimize Infringement: Provide a system to minimize the risk of infringement upon the intellectual property rights of others.
- Monitoring Protection: Continuously monitor the corporation's commercial products and market position to ensure that patents are providing effective protection.
- Monitoring Infringers: Monitor the competition to identify potential infringers upon your intellectual property rights.
- INVENTION DISCLOSURE FORMS
Employees should be encouraged to disclose to management all of their new developments and ideas. An invention disclosure form usually provides a convenient way for employees to record and submit their ideas.
One method of encouraging invention disclosures, and of providing an incentive to fill out an invention disclosure form, is to provide a cash award, such as $100-$500, for each invention disclosure that results in a patent application being filed. Higher monetary awards, or other corporate recognition, can be given on the grant of a patent.
WARNING: Incentive programs can also cause conflicts between employees regarding who was the actual inventor and other issues. If not implemented properly, a monetary incentive program can actually be adverse to a business in the long run.
- EDUCATING EMPLOYEES
Employees should be educated about intellectual property issues, especially trade secret protection, so that inadvertent public disclosure or an offer for sale does not destroy the company's opportunity to obtain foreign or domestic patent protection. Providing an intellectual property seminar is extremely helpful for educating employees regarding the protection of intellectual property.
SYSTEM OF EVALUATION
Once invention disclosures are received, they must be evaluated to determine their technological merit and their relationship to the immediate and long-term business goals of the corporation. In considering the business interests of the corporation, the evaluation should consider factors such as:
- Product Match: Is the disclosure a product that is or will be made and sold by the corporation?
- Ownership: Will the company own all of the rights or will there be co-ownership involved?
- Licensing Potential: What is the licensing potential for the disclosure?
- Competition: What is the position of the competition with respect to the technology?
- Useful Life: What is the useful commercial life of the technology?
- Costs: What is the time and cost necessary to develop the technology into a commercial form?
- Patentability & Trade Secrets: Is the disclosure eligible for patent protection and/or trade secret protection?
The preliminary screening should be done by an Intellectual Property Committee or a designated representative. The individual(s) reviewing the disclosures must be generally familiar with the legal, business, and technology interests of the corporation. The disclosures that are not sufficiently related to the current or long-term interests of the corporation, or which are too speculative or expensive, can be rejected at this point. If the disclosure is determined by the committee to be eligible for trade secret protection, the committee should ensure that the information is maintained secret. Additionally, a preliminary patent search should be conducted on the Internet of available patents (www.patentdatabase.com).
Patentability Search & Opinion
The invention disclosures that the committee feels are potentially available for patent protection should be the subjected to a patentability search. This search will indicate the likelihood of success in obtaining broad patent protection. The patentability search and opinion typically costs between $400 to $800.
Patents can be very effective in helping a corporation achieve its basic corporate goals. However, the goals of a corporation rarely include the mere acquisition of patent rights, unless their goal is to increase the company's assets.
The acquisition of patent rights should be directly related to other business goals of the corporation - such as establishing and protecting a market, or establishing a licensing program. If the results of the search justify filing a patent application, the committee should authorize the preparation and filing of a patent application. The cost of a preparing and filing a United States patent application is approximately $4,000 to $8,000 depending upon the complexity of the invention. The cost of pursuing a patent to final issuance generally will be an additional $2,000 to $5,000.
- EMPLOYMENT AGREEMENTS
Intellectual property, especially patents, copyrights and trade secrets, is developed and owned by individuals. Unless employees have signed agreements to assign to the company all intellectual property developed by employees, valuable legal rights may be lost. Assignments of each specific patent or copyright should also be made immediately.
All employees should be required at the time of their employment to sign an employment agreement stating that all inventions, copyrights and proprietary information related to the business of corporation, or all inventions made with corporate time, materials or facilities, belong to the corporation. This includes both patentable inventions and inventions that are not patentable but may qualify as trade secrets.
- CONFIDENTIALITY PROVISION
Employment agreements should include requirements for employees to maintain the confidentiality of proprietary information. The corporation should also have a policy to preserve the confidentiality of proprietary information such as reviewing all publications, proposals and contracts to ensure that confidential information is not made public. Also, access to areas of the company where proprietary information may be seen or heard should be limited.
It is extremely important for a company to maintain detailed records of all new inventions. All engineers and other technical employees should be advised of the requirement to keep good lab records. The objective is to create "evidence" on which to rely in the United State Patent Office or in court to establish what was invention and when it was invented. It will also provide evidence that a product was developed independently and not willfully copied from a competitor. (See "Detailed Record Keeping" on page 2).
The consequences for infringing upon another company's intellectual property can be severe. It is extremely expensive to defend an infringement action. Further, an infringement lawsuit may provide negative publicity to the company as a whole.
MONITOR NEW PATENTS - TRADEMARK SEARCHES
As new products are developed, it is always wise to be aware of the competitor's patents. A company should monitor all new patents issued to primary competitors or issued in a particular technology. If there is any question of infringement, it should be investigated and resolved before the product is made and sold. Ideally, this should be done during the development stage, so that any design changes can be made easily. Also, before initiating an expensive advertising and marketing campaign for a new product, make sure that the new name does not infringe upon the trademark rights of another.
A frequent problem for companies is the unsolicited ideas submitted to the company by individual inventors who are not employees of the company. If the idea is rejected and the company comes out with any product arguably related to the idea, the submitter could potentially argue that the idea was stolen. Unsolicited disclosures should be directed to an administrator or secretary of the Intellectual Property Committee. Unsolicited disclosures should not be sent to, or reviewed by, anyone involved in the development of new technology of products until an appropriate agreement has been signed limiting the liability of the company.
MONITOR & REEVALUATE PATENT POSITION
An effective patent program should be flexible. Decisions made today may not be appropriate tomorrow. Since patents are effective for 20 years from filing the application, the decision to obtain and maintain patents in force should be reviewed regularly. The review should determine whether an issued patent is effective in providing commercial protection for current products, or whether the patent is effective in providing royalty income, or whether the patent is helpful in other strategic areas of the corporation.
For example, the existence of a large number of patents may be helpful to attracting and maintaining outside investors. The existence of a large number of patents may also be helpful in establishing a reputation as a leader in a particular technology. For issued patents, an appropriate time to make this review is when maintenance fees are due.
ENFORCE PATENTS & TRADEMARKS
Patents provide the legal right to exclude others from making, using or selling the patented invention. If this right to exclude is not enforced, competitors will not respect it and the patent becomes worthless in providing an exclusive market position. Knowledge of a competitor's infringement, and failure to timely act, may preclude a company from later enforcing the patent against the competitor. Notably in trademark cases, if the trademark is not quickly enforced against an infringer, the company not only potentially loses the right to enforce the trademark against the infringer, but the company may potentially lose all of their rights in the trademark.
Intellectual property is usually a business's most valuable, yet most neglected asset. Proper management of intellectual property requires serious thought and planning not only regarding patents, but also regarding copyrights, trademarks and trade secrets.
Patents constitute a powerful tool limited, of course, to the patented invention. Patents are available for only nonobvious inventions and last for only 20 years from the date of filing. Also, patents are expensive to enforce against infringers. The main benefit of patent protection is that they can be enforced against both types of infringers: (i) copiers, and (ii) independent creators.
Trade secrets are an effective alternative to patent protection as long as the marketed products cannot be reverse-engineered. However, independent development is an absolute defense against a trade secret claim. The main benefit of trade secret protection is that the protection can potentially be perpetual.
Trademarks are registrable at a relatively small cost, relatively inexpensive to enforce, and can be renewed as long as they are being used. Extreme care must be taken to ensure that a trademark does not become "generic."
Copyrights exist from the moment a copyrightable work is fixed in a tangible medium, can be registered cheaply, and can be enforced relatively inexpensively. Copyrights also last the life of the author plus 70 years, 95 years, or 120 years for works after 1978. Unlike patent infringement, copyright infringement requires copying - independent creation is an absolute defense as in trade secrets. Also, copyrights only protect the form of expression, not the idea or information expressed.
When determining which form of intellectual property to use, consider the following:
- Available Types Of Protection: Determine which types of protection might apply to an item;
- Mutually Incompatible: Consider whether they are mutually incompatible;
- Scope Of Protection: Weigh the relative scopes of protection;
- Length Of Protection: Consider the respective durations of protection; and
- Enforcement Costs: Weigh the comparative cost of enforcing against infringers.
After considering the above elements, it is then your choice to determine what form of intellectual property protection, if any, is best for each specific situation.