Summary Chapter 12



Chapter 12
The Important of Intellectual Property

The Importance of Intellectual Property
Intellectual property is any product of human intellect that is intangible but has value in the marketplace. It’s called intellectual property because it is the product of human imagination, creativity, and inventiveness.
Determining What Intellectual Property to Legally Protect
There are 2 primary rules of thumb for deciding if intellectual property protection should be pursued for a particular intellectual asset :
1.      A firm should determine if the intellectual property in question is directly related to its competitive advantage.
2.      Intellectual property protection should be pursued is to determine whether an item has value in the market place.
The Four Key Forms of Intellectual Property
1.      Patents = a grant from the federal government conferring the rights to exclude others from making, selling, or using an invention for the term of the patent.
The owner of the patent is granted a legal monopoly for a limited amount of time. But however, a patent does not give its owner the right to exclude others from doing so.
Patent are important because they grant investors temporary, exclusive rights to market their inventions.

Types of Patents:
1.      Utility patents = are the most common type of patent and cover what we generally think of as new inventions.
Patent in this category may be granted to anyone who invest or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.
A utility patent cannot be obtained for an “idea” or a “suggestion” for a new product or process. A complete description of the invention for which a utility patent is sought is required, including drawings and technical details.
The requirement that a patent application must be filed within one year of the milestones referred to previously is called the one year after first use deadline.
2.      A business method patent = a patent that protects an invention that is or facilitates a method of doing business.  

The subject of the patent application, whether it is an invention, design, or business method, must be
1.      Useful : it must have utility
2.      Novel : it must be different from what has come before
3.      Not obvious : it must not be obvious to a person of ordinary skill in the field.

3.      Design patents = are the type of patent that cover the invention of new, original, and ornamental designs for manufactured products.
4.      Plant patents = protect new  varieties of plants that can be reproduced asexually.

Who Can Apply for a Patent?
There are notable exceptions to these rules.
1.      If an invention is made during the course of the inventor’s employment, the employer typically is assigned the right to apply for the patent through an assignment of invention agreement signed by the employee as part of the employment agreement.
2.      The rights to apply for an invention can be sold. This option can be an important source of revenue for entrepreneurial firms.

The process of obtaining a patent
1.      Make sure the invention is practical
2.      Determine the type of application to file
3.      Hire a patent attorney
4.      Conduct a patent search
5.      File a patent application
6.      Obtain decision from U.S patent and trademark office
Patent infringement = takes place when one party engages in the unauthorized use of another party’s patent.
2.      Trademark = is any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those products or services form others.
The 4 types of trademarks
1.      Trademark = is any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those products or services form others. The duration can be renewable every 10 years, as long as the mark remains in use.
2.      Service marks = similar to ordinary trademarks, but they are used to identify the service or intangible activities of a business rather than a business’s physical product. And the duration can be renewable every 10 years, as long as the mark remains in use
3.      Collective marks = trademark or service marks used by the members of a corporative, association, or another collective group. The duration can be renewable every 10 years, as long as the mark remains in use.
4.      Certification marks = marks, words, names, symbols, or devices used by a person other than its owner to certify a particular quality about a good or service. The duration can be renewable every 10 years, as long as the mark remains in use.
What is protected under trademark law?
a.       Words
b.      Number and letters
c.       Designs or logos
d.      Sounds
e.       Fragrances
f.       Shapes
g.      Colors
h.      Trade dress
Exclusions from trademark protection
a.       Immoral or scandalous matter : a company cannot trademark immoral or scandalous matter, including profane words.
b.      Deceptive matter : marks that are deceptive cannot be registered.
c.       Descriptive marks : marks that are merely descriptive of a product or service cannot be trademarked.
d.      Surnames : a trademark consisting primarily of a surname.
The process of obtaining a trademark
1.      Select an appropriate mark
2.      Perform a trademark search
3.      Create rights in the trademark

3.      Copyrights = a form of intellectual property protection that grants to the owner of the work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work.

What is protected by copyright?
1.      Literary works = anything written down is a literary work, including books, poetry, reference works, speeches, advertising copy, employee manuals, games, and computer programs.
2.      Musical compositions = a musical composition, including any accompanying words, that is in a fixed form (CD, or an MP3 file) is protectable.
3.      Computer software
4.      Dramatic works = a theatrical performance, such as a play, comedy routine, newscast, movie, or television show.
5.      Pantomimes and choreographic works
6.      Pictorial, graphic, and sculptural works = includes photographs, prints, art reproductions, cartoons, maps, globes, jewelry, fabrics, games, technical drawings, diagrams, posters, toys, sculptures, and charts.
        Exclusion from copyright protection
        The main exclusion is that copyright laws cannot protect ideas.
        How to obtain a copyright
a.       Copyright protection can be enhanced for anything written by attaching the copyright notice or “copyright bug”.
b.      Further protection can be obtained by registering a work with the U.S copyright office.
Copyright infringement = occurs when one work derives from another, is an exact copy or shows substantial similarity to the original work.
4.      Trade Secrets = is any formula, pattern, physical device, idea, process, or other information that provides the owner of the information with a competitive advantage in the marketplace.
Trade secrets include marketing plans, product formulas, financial forecasts, employee rosters, logs of sales calls, and laboratory notebooks.

What qualifies for trade secret protection?

On the basis of these criteria, the strongest case for trade secret protection is information that is characterized by the following:
a.       Is not known outside the company
b.      Is known only inside the company on a “need to know” basis
c.       Is safeguarded by stringent efforts to keep the information confidential
d.      Is valuable and provides the company a compelling competitive advantage
e.       Was developed at great cost, time, and effort
f.       Cannot be easily duplicated, reverse engineered, or discovered

Trade secret protection methods
a.       Physical measures
There are some examples of commonly used physical measures for the protecting trade secrets
1.      Restricting access
2.      Labeling documents
3.      Password protecting confidential computer files
4.      Maintaining logbooks for visitors
5.      Maintaining logbooks for access to sensitive material
6.      Maintaining adequate overall security measures
b.      Written agreements

An intellectual property audit is conducted to determine the intellectual property a company owns.
There are 2 primary reasons for conducting an intellectual property audit:
1.      It’s prudent for company to periodically determine whether its intellectual property is being properly protected.
2.      To remain prepared to justify its value in the event of a merger or acquisition.
The process of conducting an intellectual property audit:
1.      To develop an inventory of a firm’s existing intellectual property.
2.      To identify works in progress to ensure that they are being documented in a systematic, orderly manner.
3.      To specify the firm’s key trade secrets and describe how they are being protected.




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