Intellectual Property, Part 2

(This column first appeared in the March 8, 1994 issue of PC Graphics Report)

In my last column I discussed the lack of Intellectual Property (IP) disputes in the PC graphics industry, and some possible reasons for this blessing. In this week’s column, I’ll give you an overview of what IP really is so that you and your company can even better avoid any IP disputes in the future (in particular, the nasty scenario I presented at the end of the last column).

IP commonly covers three areas: Copyrights, Trademarks, and Patents.

Copyrights
Perhaps the most basic form of IP, copyrights imbue their owners with precisely what the name implies, namely the right to copy (as well as the right to prevent others from copying).

Every “work”, upon its creation, is automatically copyrighted, just by virtue of its “being”, in a tangible form. This applies to software, ad copy, articles (like this one), new user interfaces (much to my dismay), music, presentations, drawings, pictures, etc. Unless the creator of the work has explicitly transferred his or her rights in the work to another party, such as an employer, then the creator exclusively owns all rights in the work.

This last item is very important to any of you who use consultants, since without a consulting agreement that specifically assigns the rights in a work to you, the consultant owns all the rights to the work, even if it’s being created for you, and even though you are paying to have the work done. Consequently, without an agreement, the consultant would be free to sell the work to others.

There are two types of copyrights, unregistered and registered. Unregistered copyrights are what I just described above, while registering a copyright requires action on the part of the owner of the work. Registering a copyright is quite easy and inexpensive, just a two page form and a $20 registration fee. For written or visual works, a copy of the whole work needs to be sent in. For software, only the first 25 and last 25 pages of the source code need to be sent in for registration. It takes about 2-3 months, from my experience, to get a copyright registered. Copyright registrations are valid for the natural life of a person plus 50 years, or for 75 years after publication for works authored by a corporation (or employees of a corporation as “works made for hire”).

Now, you’re probably asking yourself why you should bother registering a copyright. Quite simply, if someone is infringing on your copyright (i.e. distributing your “work” or a derivative of your work, without your explicit permission), you can’t go after them legally unless your copyright is registered. And, cease and desist letters don’t carry a whole lot of weight if you can’t back them up with proper legal action.

On the flip side, if you don’t go after someone who you know is infringing on your copyright at some point, you may forfeit your right to go after him or her. If you don’t like being proactive, you can register your copyright once you have a dispute, as long as you’re aware that this adds at least another 2-3 month delay to the resolution of the copyright dispute.

To play it safe with your copyrights, it’s important to take some preventative action:

First, make sure you have a visible copyright statement on your work. This usually comes in the form:

Copyright (c) 1994 by Jake Richter – All Rights Reserved

The word “Copyright” must appear, or at least a real “circle-C” (the ASCII’ized version, “(c)” is not really valid without a “Copyright” in front of it). The year indicates the year in which you published the work. If you make changes, as you would in software, over several years, then it’s suggested you should put a range of years in the copyright statement. You must put your name or company name (depending on who holds the copyright) in the copyright statement. The “All Rights Reserved” describes the level of rights you have (i.e. all of them). If you are a non-exclusive licensee of copyrighted material, you can’t use the “All Rights Reserved” because you don’t have all the rights to the material.

Second, for works that are important to you, take the time to register them, just to play it safe.

Finally, if you are providing materials on magnetic media, I would strongly suggest you operate with either a direct license agreement with the people you are providing the software to, or at least a shrink wrap license, which more fully describes what can and cannot be done with the software. If you take a look at the cover of this newsletter, and all the fine print at the bottom, you’ll see something to this effect.

Now, I’ve covered copyrights owned by you, but left a rather large gap, and that is proper care and handling of other peoples’ copyrights. This is now more important than ever because of the explosion of multimedia hardware, software, and demonstrations of the same. So, if you’re thinking of showing video clips of Terminator 2:Judgement Day in your next presentation to demonstrate your great video decompression board, make sure you have written permission from Carolco Pictures. The same goes for those sound bites you may want to use. You may be safe using the prepackaged video clips and sound bites a number of companies are selling (because they licensed the rights from the proper sources), but check the license agreements to see if they can be used for public presentations. I also should mention that you, technically, need permission from the copyright holder to use background music in your trade show booth, your office waiting area, or even for your music-on-hold.

This latter item raises an important issue, namely the fair use doctrine. While it’s an infringement to duplicate copyrighted works for personal gain, or to use copyrighted material for general, public consumption without the copyright owners permission, you may make a limited number of copies of things like magazine articles under something called the Fair Use Doctrine. This permits teachers to photocopy certain copyrighted materials for distribution to his/her students, or use a video clip or sound bite for a private presentation. It does not permit copying of music, nor of software if the software is provided with a license agreement that forbids this. FreeWare and ShareWare software (as opposed to Public Domain software, which has no copyright) may be freely copied, but under their license terms, may require certain credit or payment for prolonged use.

To close out this whole discussion of copyrights, I mentioned earlier that copyrights have a certain longevity. After a copyright expires, the work goes into the public domain, but someone can then take the work, implement it in a different fashion, and copyright that implementation. That’s why a given publisher’s version of Charles Dickens’ A Tale of Two Cities can be copyrighted – that publisher has a copyright on the layout of the book, including the typeface used and the exact positioning of the words on the page, but not on the actual sequence of words (unless the publisher produces a revised, edited edition), since Dickens’ original work is public domain.

Trademarks
The next IP item of interest is the concept of trademarks. A trademark is a unique phrase, name, logo, graphic, or saying (i.e. all considered the “mark”), associated with a particular product or company, in a given industry (i.e. a “trade”). Hence the name, “trademark”.

A trademark allows companies to develop value and recognition in a mark, while protecting it from mis-use or mis-appropriation by other companies in the same, or a similar, industry.

In some cases, this protection applies even if the companies are in totally different industries, but the potentially infringing company might have enough exposure to cause confusion if they used the mark, or at least one similar to it. A good example of this latter situation is when NBC developed a new logo composed of two trapezoids back in the early ’80s. A small company, not even remotely associated to the broadcast industry, in the mid-west, had already developed and been using the logo for some time, and therefore owned the trademark to the logo. NBC had to buy rights to the logo to the tune of several million dollars in order to use it once the infringement become known. That’s because NBC’s use of the mark would have decreased the value that the smaller company had built in the mark by using it to represent something other than the smaller company.

This last item is the key issue in trademark infringements: will the use by Company B of a mark, or something quite similar to the mark owned by Company A cause confusion among Company A’s users? If the answer is “yes”, or even “maybe”, then trademark infringement could be a reality. By the way, ownership of a mark is based on its first use. As with copyrights, trademarks exist upon their creation, and can be registered to strengthen their value and uniqueness. However, creation of trademarks has to do with their exposure to the public versus a copyright being created just by the fixation of a work. Public exposure for product names requires that a product be sold across state lines in order to garner nationwide trademark protection, for example. Having trademarks appear in print, especially in publications that are read in multiple states also helps protect a trademark.

For non-registered trademarks, there are two types to contend with: a trademark as applied to a product, and a service mark, applying to a phrase or slogan. These are designated with a “TM” or “SM”, respectively (usually in smaller print to the upper right of the mark). Any mark you want to protect should bear the “TM” or “SM”, but only needs to do so for the first such reference in a given use (i.e. a brochure, book, advertisement). You should further support your claim to the mark by adding fine print somewhere visible which credits you as the owner of the mark (as well as the owners of other marks you have used in your materials). Take a gander through any issue of PC Week or InfoWorld and look at the full page ads. Most of them do a reasonable job of this.

Registering a trademark is much more laborious than registering a copyright. First, the filing fee is $245, and while it can be done personally, it’s sometimes easier to use a lawyer (which will run you another $500-1000). For trademarks on product names, you can file for registration on the product name at any time, but if there is a conflict, the deciding factor will be the first use date of the mark (i.e. in the case of a product name, the date that product was first sold across state lines). The trademark registration process is also a lot more time consuming than a copyright registration. You should count on a minimum of 14-18 months for a trademark registration. Upon filing your application for registration, your application gets put in a queue. Within a month or so you generally will receive some type of notification, either 1) that you need to make some changes in your application in order to get your application to be accepted (usually this is a request to provide better supporting documentation, or a request to change the scope of your application and more narrowly define the market your mark covers); 2) your application has been rejected because it’s too similar to another trademark or another application which has been accepted for the formal review process; or 3) your application has been accepted for formal review. Hopefully, you’ll sooner or later get your trademark application accepted for formal review. Further research is performed to ensure there is no conflict with existing trademarks, and then your mark is published for public review for 3 months. During this latter review process, any company or individual has the right to oppose your claim to the mark, with the proper supporting documentation. If your mark survives the public review process, then you’ll end up with a registered trademark, about a month after the public review cycle has ended. You have to renew your trademark registration every 10 years, or your mark will be abandoned.

Once you have a registered mark, you may use the “circle-R” in conjunction with your mark. Again, you only need to use it with the first instance of the mark in a given work, and when you credit it in the fine print, you should also mention it is a registered trademark. For example, if I created a brochure describing my company’s products and history, the fine print might look something like the following (note the distinction between the registered and unregistered trademarks):

WinSpeed, DLD, and Panacea are registered trademarks, and PanaSaver, TurboDLD, and The Big Picture are trademarks, of Panacea Inc. VESA is a registered trademark, and VBE, VL-Bus, DPMS, and XBE are trademarks, of the Video Electronics Standards Association. AutoCAD, Autodesk, and ADI are registered trademarks of Autodesk, Inc.

Now, I’ve gone on at length about conflicts, first use, etc., regarding trademarks. In order to save yourself lots of money in the long run, I’d recommend you use a search service like Thompson and Thompson, to see if your anticipated mark will conflict with either registered arks, or ones the service has logged from magazine articles, press releases, or advertisements. This will run you about $500, and a year long trademark watch for about $250 will let you keep an eye out for conflicting marks going through the registration process.

If you find someone infringing on your trademark, you have several options: 1) send them a cease and desist letter (in which you could force immediate withdrawal of the infringing mark from the market, or compromise on allowing existing infringing materials to be used up with a sticker on them explaining your rights); or 2) offer to license the infringer the name for a certain fee as well as clarification of the mark ownership. If neither one of these approaches work, you could take harsher legal measures. In any event, it’s important that you actively defend and protect your trademarks in order to avoid having them cheapened. And, even if the conflict is currently not in the same market, keep in mind that it conflict in the future – the best example I can think of regarding this is Apple Records infringement claim against Apple Computer, which was not a real issue until Apple Computer started producing multimedia (more specifically sound) peripherals.

Patents
The final and perhaps most far reaching IP item is the patent. While copyrights apply only to specific works, patents cover the broader field of inventions and processes. Patents offer much stronger protection than copyrights and trademarks, and are therefore much more difficult and costly to obtain. Patents only come about as a result of filing a formal, detailed application, which can cost many thousands of dollars and take 2 years to be approved in some form. A patent’s life is 17 years from the date it issues, regardless of when it was first filed. In the U.S., a patent application must be filed within one year of the sale or offering of a product incorporating the technology to be patented. However, in some countries, like Japan, selling a product before a patent application is filed will forfeit all patent rights. You can file a patent application yourself, and there are several books on how to do this, but again, an IP attorney is probably a better bet for timely filing (at greater expense, of course).

A patent consists of a series of claims which help define an invention, and usually a sample implementation of the invention. For example, Microsoft has a patent on the mechanism used to power mice off the electrical current available via a serial port, and Compton’s New Media has a patent (hopefully being turned over soon) on data access on a CD-ROM. Any unique, innovative process can be patented these days, although heated discussion is going on about continuing to allow software patents. Software patents were not allowed until just about 5 years ago, and now there are 10,000+ software patent applications pending for review and approval. All this with only 20-30 patent  examiners for software.

Once an application has been filed, a patent examiner reviews it to see if it might conflict with some “prior art”. Prior art refers to other patents and published materials on the topic a patent is being sought for, as well as other products that may clearly have implemented the technology prior to the filing date of the application. There is usually at least   one request by the PTO to the filer to make a change in the application because of one or several claims being too broad.

However, because of the lack of up to date information on all aspects, and the general unfamiliarity of the nuances of a given application, the patent examiners at the U.S. Patent and Trademark Organization (PTO) are woefully unequipped to make sure that only truly unique patents get approved. The Compton’s New Media patent is a perfect example of this, and only by massive pressure by hundreds of individuals and companies has the PTO decided to reevaluate the patent.

If you are threatened by patent infringement, you don’t have a whole lot of choices (as the final scenario in my first IP column a couple of weeks ago indicated). Other than being able to convince the PTO to reexamine a patent (which requires lots of published prior art), the only other way to fight a patent, once it’s been granted, is by spending lots of money in the courts, in addition to producing prior art (published or internal) which may help invalidate the patent. Often it’s just cheaper to pay a licensing fee, or find  something in your patent portfolio that the other company is infringing upon and then offering to cross-license your patent (or patent portfolio) in exchange for both companies being able to continue doing business on a normal basis. The other option is what I would consider a pre-emptive strike, namely licensing a wide range of patents in your company’s field, such as what Microsoft did a while back, namely licensing all of IBM’s software patents for a something in the mid-8 figures.

The United States Constitution protects the rights of inventors, resulting in our patent system following the “first to invent” convention, while the rest of the world pretty much follows “first to file” as its convention. In theory, “first to invent” is designed to protect small inventors, many of whom unfortunately don’t file patent applications, and whose products may never even make it to market.

This lack of filing, or at least public disclosure, on the behalf of smaller and/or ignorant companies and individuals allows other entities to file applications for patents on inventions that may have been developed by others at an earlier time. Proving this type of patent as being invalid is very difficult and costly, because of the lack of real prior art.

Because of these issues, there are discussions sponsored by the PTO to review our current patent system to see what, if anything, needs to be changed to make U.S. patent processing fall in line with the procedures dictated by the World Intellectual Property Organization (WIPO) of the United Nations. As I mentioned above, the first step would be changing our filing system to be a first to file system, which some experts argue might require a constitutional amendment. The other major change would be the publication of all patent applications for public comment and review to ensure that prior art is brought to the patent office’s attention. Since a patent application describes the process in great detail, this has some potentially negative repercussion on the filer of the application, as it discloses technology before it is fully protected, but as a result, forces the filer to do a lot more diligence to ensure that no conflicting prior art exists.

If you want summaries of all the patents being issued, a glimpse at the on-going debate about world wide patent harmonization, and software patent issues, send ‘help’ to patents@world.std.com on the Internet. This is Greg Aharonian’s Internet Patent News Service, which I’ve found to be an absolutely fascinating and timely overview of the latest in patent news.

Conclusion
Intellectual Property is a broad field, and the scary thing is that my extensive diatribe has only scratched the surface. I would also caution you that I am not an intellectual property lawyer, so you shouldn’t rely on just my advice and comments above (although I did have an IP lawyer review them for accuracy). In any event, I strongly encourage everyone who reads this column to start performing semi-annual reviews of their existing and potential IP assets, just as they might do an equipment inventory. In most cases, taking this step will help you defend against claims being made against you or your company, and in some cases protect against real theft and infringement on your intellectual property. But, if you go on the offensive with your IP, keep in mind that usually the only entities that benefit from such efforts are the lawyers.