Chapter 12. The Importance of Intellectual Property

I.                    The Importance of Intellectual Property

Intellectual property is any product of human intellect that is intangible but has value in the marketplace. It is called “intellectual” property because it is the product of human imagination, creativity, and inventiveness. Common mistakes that entrepreneurial firms make are not properly identifying all their intellectual property and not taking sufficient steps to protect it.

1.       Determining What Intellectual Property to Legally Protect

(1)    Determine if the intellectual property in question is directly related to its competitive advantage.

(2)    Determine whether an item has value in the marketplace

2.       The Four Key Forms of Intellectual Property 

II.                  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.

1.       Types of Patents

-          Utility: New or useful process, machine, manufacture, or composition of material or any new and useful improvement thereof.

-          Design: Invention of new, original, and ornamental designs for manufactured products.

-          Plant: Any new varieties of plants that can be reproduced asexually.

2.       The Process of Obtaining a Patent

(1)    Make sure the invention is practical

(2)    Determine what type of application to file

(3)    Hire a patent attorney

(4)    Conduct a patent search

(5)    File a patent application

(6)    Obtain a decision from the USPTO

III.                Trademarks

Any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those products or services from other.

1.       The Four Types of Trademarks

-          Trademark

-          Service mark (identify the services or intangible activities)

-          Collective mark (used by the members of collective group)

-          Certification mark (used by a person other that its owner to certify a quality)

2.       The Process of Obtaining a Trademark

(1)    Select an appropriate mark

(2)    Perform a trademark search

(3)    Create rights in the trademark

IV.                Copyrights

Grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economics benefits from the work (tangible form).

1.       What Is Protected by a Copyright?

-          Literary work

-          Musical composition

-          Computer software

-          Dramatic works

-          Pantomimes and choreographic works

-          Pictorial, graphic, and sculptural works

2.       How to Obtain a Copyright

(1)    Enhanced for anything written by attaching the copyright notice/bug (©)

(2)    Further protection can be obtained by registering a work with the US Copyright Office

V.                  Trade Secrets

Any formula, pattern, physical device, idea, process or other information that provides the owner of the information with a competitive advantage in the marketplace. There is no single government agency that regulates trade secret laws, instead they are governed by a patchwork of various state laws.

1.       Trade Secret Protection Methods

a.       Physical Measures

·         Restricting access

·         Labeling documents

·         Password protecting confidential computer files

·         Maintaining logbooks for visitors

·         Maintain logbooks for access to sensitive material

·         Maintaining adequate overall security measures

b.       Written Agreements

VI.                Conducting an Intellectual Property Audit

1.       Why Conduct an Intellectual Property Audit?

-          It is prudent for a company to periodically determine whether its intellectual property is being properly protected.

-          To remain prepared to justify its value in the event of a merger or acquisition.