What is intellectual property (a/k/a "IP")?
Intellectual property, or IP, is generally a property right regarding an intangible asset. It can be in the form of an invention (patent), an expressive work (copyright), an identification mark (trademark), or a commercially valuable secret (trade secret). Although it may appear that IP covers only the high-tech industry, IP can be found in all industries and markets and can include low-tech and no-tech assets.
Also, IP is not necessarily an idea, and it doesn’t have to be one. For example, a trademark – a name brand, a slogan, a logo – is not quite considered an idea but more of a mark that shows consumers the source or origin of a particular good or service.
What is IP law?
IP law is a distinct body of law that governs intellectual property: patents, copyrights, trademarks, and trade secrets. It covers how IP is defined, how it comes to be, how it is maintained, how it is protected, etc.
IP law ultimately protects your intellectual property from unlawful conduct such as unauthorized use, sale, copying, distribution, or disclosure. The type of legal protection you get depends on the type of IP you have. Typically, legal protection only comes with the enforcement of your IP rights.
What is the difference between patents, copyrights, trademarks, and trade secrets?
Patents, copyrights, trademarks, and trade secrets protect different types of information and provide different types of protection.
Patent – A patent is a piece of intellectual property that is issued by the United States through the actions of the Patent and Trademark Office (PTO). A patent only covers an invention that involves a process, machine, manufacture, or composition of matter. The invention must be novel, useful, and not obvious. A patent does not cover laws of nature, naturally occurring things, and abstract ideas (e.g., math formulas, common business methods, some generalized computer functions, etc.). The law on abstract ideas, especially involving software, is a continuously evolving issue in IP law.
A patent is considered one of the strongest types of IP because it grants you the exclusive right to make, use, sell, offer for sale, and import an invention into the United States for 20 years. In other words, it grants you a “limited monopoly” on your invention.
Copyright – A copyright is automatic upon the creation of an original work that is fixed in some tangible form (e.g., recorded). Unlike a patent, which covers function, a copyright only covers expressive works. A copyright protects original works in the form of literature, music and lyrics, dramas, pantomimes and choreography, pictures, graphics, sculptures, movies, audiovisual works, sound recordings, and architecture.
Whereas a patent term generally lasts 20 years, a copyright lasts as long as the author’s life plus 70 years after the author’s death. A copyright term is longer than a patent’s, but it also offers a different set of rights. A copyright generally provides you the exclusive right to make copies of your own expressive work, to prepare derivative works (e.g., related works), to control the sale and distribution of your work, and to control the public performance and display of your work.
Trademark – A trademark is a mark used to indicate the source of goods. Unlike copyrights and patents, which are to promote innovation and the arts, the purpose of a trademark is to prevent the likelihood of consumer confusion. A trademark can take the form of words, names, symbols, or devices that a business uses or intends to use to distinguish its goods from others. In certain circumstances, a trademark can also include shapes, sounds, fragrance, and even color as long as it serves to identify goods and is not an essential functional aspect of your goods.
Not everything can be trademarked. Generic marks, which do not identify the source of goods, receive no trademark protection because it cannot be used to distinguish goods from others (e.g., a Murphy bed no longer means a bed from the Murphy Door Bed Company). Descriptive marks that just describe a product without a secondary meaning also receives no protection because, like generic marks, it does not help identify a source of the good or distinguish the good from others. Derogatory and deceptive marks are also off the table.
Ultimately, trademark law protects a business’s branding efforts. It protects a trademark from confusingly similar marks that might mislead a consumer. Registration is highly encouraged for stronger legal protection, and registration lasts for ten years and is renewable.
Trade Secret – A trade secret is information that is not generally known to all, that has commercial value, and that is maintained in secret through reasonable efforts. A trade secret only covers formulas, patterns, compilations, programs, devices, methods, techniques, processes, and the like.
Trade secret law only protects against misappropriation (unauthorized acquisition, disclosure, or use), so if someone discovers a trade secret through reverse engineering or upon accidental disclosure, no protection will be granted. Absent disclosure, a trade secret can theoretically last forever as long as it is kept secret, has commercial value, and is reasonably protected.
How effective are patent, copyright, trademark, and trade secret in protecting my ideas from being stolen?
A patent, copyright, trademark, or trade secret does not prevent stealing per se. Someone can still conduct an unlawful act even if you have a patent, copyright, trademark, or trade secret. However, what each type of intellectual property provides is consequences for unauthorized acts whether in the form of monetary damages or a court order to stop the infringing activity.
Note that not all types of IP protect ideas and that some types of IP require disclosure of your idea:
· A copyright does not protect ideas. It protects expressive works fixed to a tangible form. In fact, copyright law determines whether a work is copyrightable based on whether it is more of an idea or more of an expression.
· A trademark does not protect ideas; it protects a trademark from confusingly similar marks.
· A patent protects an idea in the form of a novel, useful, and non-obvious invention. However, to obtain a patent, you need to disclose your invention to the public. In applying for a patent, you need to provide enough concrete details so that an expert in the field can recreate your invention without undue experimentation. This sounds absurd at first because you want to protect your idea, but the purpose of patent law is to encourage innovation and serve the public interest. It’s a quid pro quo situation: disclose your invention, and you get a 20-year monopoly over your invention.
· A trade secret protects an idea in the form of formulas, patterns, compilations, programs, devices, methods, techniques, processes, and the like. It does not require disclosure – it requires secrecy to remain protectable. It also requires that the information be commercially valuable and be kept secret using reasonable efforts. A trade secret lasts as long as it’s a secret. If your trade secret is lawfully disclosed or discovered, protection disappears.
When deciding between different types of IP, make sure to consider the type of information you want to protect and the type of protection you want.
I haven't taken any action to protect my IP, what rights do I have?
Depending on your situation, you may have some form of intellectual property despite not having filed any paperwork. Not all forms of intellectual property require registration or application to a federal agency. However, registration usually is encouraged because it offers more legal protection for your IP.
Patents – First, you do not register for a patent; you apply for one. Second, you can only obtain a patent by filing a successful patent application with the Patent and Trademark Office (PTO) and having the PTO issue you a patent. Therefore, if you have not filed a patent application, you likely do not have a patent unless you received patent rights by contract.
Copyrights – A copyright is automatically created upon the time an original work is created and fixed in tangible form. There is no need to file any applications to obtain a copyright, and there is no need to register a copyright. With that said, registration of a copyright with the U.S. Copyright Office provides robust legal advantages including the ability to file a copyright infringement lawsuit in U.S. courts.
Trademarks – Registration is not required for a trademark as long as you can obtain “priority” and provide “notice.” This is legal-speak for showing that you’re the first business to apply the trademark and give notice to the public that you’re asserting your trademark rights. Although not required, federal registration is the best method to obtain legal protection for your trademark because it generally provides constructive nationwide use and the best notice. This gives your trademark the presumption of ownership and validity on a national level.
No Registration Required
Trade Secrets – No registration is required because no government agency keeps a register of trade secrets, and registration of a trade secret would be inherently contrary to the purpose of a trade secret. As long as you have information that is not known to the public, that has commercial value, and that is maintained in secret through reasonable efforts, then you may have a trade secret.
How do I protect my idea in the process of founding a startup?
Many people considering to launch a startup are concerned about protecting their ideas. First, as discussed on this page, not any idea is protectable under IP law. However, there are a number of tools you can use in case you do have an IP-protectable idea or creation.
· Non-Disclosure Agreement (NDA) or Confidentiality Agreement – An NDA or Confidentiality Agreement is a contract that you can have your co-founders, employees, contractors, and any other person sign to promise that they will not disclose or share certain information to the outside world. This agreement does not prevent sharing, but it does provide you the ability to pursue legal action against them if they do share. You can include a non-disclosure clause in your employment agreement as well.
· Provisional Patent Application – If you have an invention that you intend filing a patent for, consider the provisional patent application. For a relatively small fee and disclosure of your invention, you can reserve 12 months to further prepare you non-provisional patent application. It does not require formal patent claims or declarations, but it does require you to sufficiently and completely describe your invention. Properly filing one and then filing a non-provisional application within 12 months will give you an earlier effective filing date and may extend your patent term by up to 12 months. There are some potential pitfalls to a provisional patent application, so make sure you fully consider the requirements and implications before you file one.
· Keep Your Idea Secret – You always have the option to not disclose your idea or to limit your disclosure to certain people you trust. Don’t disclose your idea to those who don’t need to know. Don’t share more than you need to. Coca-Cola, for example, only has a few employees who know its secret cola recipe, and that recipe is housed in a secure vault.
Additionally, it is important to make sure that everyone in your company, including everyone that will be part of your company, be on the same page. Educating them on what is confidential company information, how to identify such information, and how to protect that information is key to having a solid foundation in protecting your IP.
How do I protect my idea when pitching it to investors?
It’s difficult to balance pitching your idea to investors and protecting it at the same time. You want to protect your idea, but investors want to protect their money. Some startups or entrepreneurs rely on contracts such as non-disclosure agreements or NDAs to provide a safe space for disclosure. However, in the venture capital and angel investor community, investors may refuse to do so for a variety of understandable reasons: they hear so many pitches that signing numerous contracts becomes a liability; they are too busy to sit down and read (or have their lawyers read) every single contract before hearing ideas; they are not interested in stealing your idea; and reading and signing NDAs is not time or cost effective.
So what do you do? You can disclose only what you need to in order to persuade investors. Disclose enough so that the investors know what problem you’re solving and what the potential business opportunity is for them. Disclose enough so that they trust that you actually know what you’re doing. Pitching is part (well-executed) idea, part delivery, and a whole lot of trust. Use your own personal judgment in determining who you want to disclose to and how much you want to disclose.
How much should a startup budget for legal expenses related to IP?
The budget you should set for legal expenses depends on what product or service you are offering, what type of protection you want, and what type of law firm you will be hiring.
Intellectual property touches all types of industries and markets but they all differ in cost, protection, and the type of IP they cover. For example, a utility patent is probably one of the most expensive IP out there. There is a filing fee, a search fee, an examination fee, an issue fee, and maintenance fees. Depending on the size of the applicant (micro entity, small entity, regular), a filing fee for up to three patent claims will put you back $70 to $280; a search fee will cost $150 to $600; and an examination fee will cost $180 to $720. All of these fees are just for your application – if you actually succeed in getting a patent, there will be an issue fee of $240 to $960, and fees of hundreds of dollars for maintenance every few years. These fees do not include attorney fees for legal help in getting your application streamlined and hopefully approved. These costs seem excessive, but the government is essentially handing you a monopoly over your invention for 20 years.
Compare these patent costs to those for trade secrets. Trade secrets require no application or registration because they are secret. However, this does not mean that trade secrets are always free. Remember, you must maintain its secrecy with reasonable efforts. This may mean not telling anyone your secret, which will be free. This may also mean setting up a vault, walls, or a security system, all of which take money. Drafting NDAs might also be necessary, which also take money.
Review the information on this webpage to learn the IP basics: which type of IP applies to your good or service and what protection you desire for that good or service. Then review the various fees for each of them: patent, copyright, trademark. (Trade secrets have no fees but costs vary case-by-case.)
As for law firms, there are many law firms out there that practice IP law, and their billing structures vary from a flat fee to by-the-hour. The fees may vary based on your needs and the type of service you want.
Overall, a legal budget for a startup varies on a case-by-case basis. The above is to provide you some guidance on how to determine your budget based on your needs and resources.
How do I transfer my intellectual property?
As with other types of property, intellectual property is transferred (or assigned) by written contract. Among other items, the contract must include the names of the parties, the date of enforcement, the terms and conditions of the assignment, the rights being assigned, and the representations and warranties. Assignment of IP is essentially an asset transfer, so the involvement of an attorney in the contract-drafting process might be worthwhile to ensure that all necessary clauses are included. After all, you cannot enforce IP that you don’t legally own.
If you are assigning a patent or trademark, make sure to record the assignment with the U.S. Patent and Trademark Office. For trademarks, you will have to send a coversheet with a copy of the actual agreement as well as payment of a fee. This can be done online or by paper. Online recordings are generally processed in one business day, while paper recordings are processed within one week. For patents, the same must be done except there are no fees for recording the assignment online.
If you are assigning a copyright, the assignment doesn’t need to be recorded, but recording the assignment with the U.S. Copyright Office provides legal benefits such as validation.
How do I conduct a trademark search?
You can conduct a trademark search online using the Patent and Trademark Office database, the Trademark Electronic Search System, to make sure that your proposed trademark is not already in use. The search is free and is highly recommended before starting a costly, time-consuming trademark application process.
You can also conduct a search of the internet (using a standard search website) to determine whether someone else is using the name or trademark but has not registered it.
How do I register a trademark?
You can apply to register your trademark online through the Trademark Electronic Application System (TEAS) on the Patent and Trademark Office (PTO) website. Depending on your trademark, you can apply to be on either the Principal Register or the Supplemental Register. The Principal Register holds marks with a higher level of distinctiveness than those on the Supplemental Register. For example, “fanciful” or “arbitrary” marks – those that are made up or have nothing to do with the actual product or service being sold – will be on the Principal Register, whereas “descriptive” marks are likely on the Supplemental Register.
Initial application fees range from $225 to $325 and are non-refundable. The PTO offers three different initial application forms depending on what requirements you’re willing to meet for a reduced fee. For $225, the TEAS Plus is the cheapest application generally because you have to complete all mandatory fields on the form, select your goods and services from the PTO Trademark Identification Manual, and agree to electronic communication. For $275, the TEAS Reduced Fee allows you to file an incomplete application, but you still have to agree to electronic communication. For $325, the TEAS Regular allows you to file an incomplete application and communicate with the PTO by snail mail. Additional fees may apply to the TEAS Plus and TEAS Reduced Fee if you don’t satisfy certain filing requirements.
Note that registration is not automatic. Filing an initial application launches a legal proceeding, and there will be a back-and-forth between you and an examining PTO attorney in the form of letters and forms regarding whether your mark will be approved for registration. The back-and-forth is primarily about whether the application complies with all laws, whether all mandatory fees have been paid, and whether there are any competing marks. Make sure that you meet all deadlines on any responses to the PTO or else your application will be marked as abandoned and you will have to start all over again.
The registration process takes several months to several years depending on whether any issues come up during the application process.
How do I conduct a patent search?
The Patent and Trademark Office (PTO) has multiple databases through which you can search for patents, patent applications, and other patent information.
To search patent applications, visit the Public Patent Application Information Retrieval (PAIR) system, which allows you to search publicly available information (including application status, assignments, patent history, and various documents) about a patent or patent application. The Private PAIR allows you to access information regarding your own patent application.
To search through the actual content of patents and patent applications – i.e., run a search of the full-text – visit the Patent Full-Text and Image Database (PatFT) and the Patent Application Full-Text and Image Database (AppFT). Both databases provide quick search, advanced search, and patent number search functions as well as tips on how to conduct a search.
Note that a patent search is not necessarily a prior art search. The tools above are just for searching through U.S. patents and patent applications. Prior art searches require a more extensive search and likely professional help.
What are the most common mistakes in applying for a patent?
Based upon our experience, some common mistakes patent applicants make include:
· Assuming that a utility patent is the only way to go. A utility patent is the most popular type of patent, but it is not the only one worth considering. If your invention is based on a design, then consider a design patent. Compared to a utility patent, it is cheaper to file and maintain; it is simpler in terms of the application requirements; it has a quicker processing time; and it may provide relatively higher damages. However, note that there are some downsides: the term lasts only 14-15 years; it requires a separate application for each distinct design; and there is no provisional application benefit for a design patent. Just don’t assume you’re stuck with the utility patent before considering your options.
· Selling or publicly using the invention before filing a patent application. You can lose any potential patent rights you have by selling or publicly using your invention before filing a patent application. The patent laws provide a one-year grace period for applicants to file a patent application after the invention is disclosed or offered for sale; however, it is best to keep your invention under wraps until an application is filed because any suspicion about a pre-filing disclosure or sale can escalate into an ugly and expensive dispute.
· Conducting an inadequate prior art search. It is very common that inventors conduct their own search for related patents or patent applications on the Internet. However, the world of prior art is vast and cannot be thoroughly searched by a simple Internet search. Prior art includes not only non-patents (e.g., printed publications, publicly known information, etc.) but also international references. In other words, your potential patent can be challenged using some article published in another country in another language. And there are various other laws governing what references can be included in challenging a potential patent. Therefore, a prior art search is not as informal as it sounds and will likely require a patent professional to look through all the nooks and crannies to determine whether your invention is truly novel and non-obvious. Applying for a patent is a costly and time-consuming process. Starting that process with inadequate knowledge about whether your invention is even patentable is a bad – but preventable – mistake.
· Forgetting to reference your provisional patent application in your non-provisional patent application. Patent law requires you to specifically reference your provisional patent application in your non-provisional application in order to claim the filing date of your provisional application. This is called “claiming the benefit” of the provisional application.
· Forgetting that the provisional patent application requires as much detail about the invention as a non-provisional patent application. Many online forums tell startups or inventors to file a provisional patent application for their invention, because it is an “easy” and inexpensive way to buy time in preparing a non-provisional patent application. However, there are nuances in filing a provisional application that are not discussed. While the provisional patent application gives you up to a 12-month “head-start” for your non-provisional patent application and does not require formal patent claims or declarations, you will need to disclose your invention in a complete manner for your subsequent non-provisional patent application to benefit from your provisional application (i.e., get an earlier effective filing date). Your invention must be described such that an expert in the field could recreate it without undue experimentation, and that invention must be reflected in your non-provisional application. If you cannot show that your non-provisional patent application covers the invention of your provisional application, you not only lose your priority filing date, but you may have also lost your ability to patent altogether because that provisional patent was “public information.”
· Drafting a patent without a patent attorney. The patent application process is long, expensive, and complicated. Importantly, it’s a legal process. Drafting a patent application is more than simply describing your invention. Among other things, it’s about drafting an application that will be patentable under patent law, that will be hard to challenge by others, and that will provide enforcement benefits. That is why you see so many patents with convoluted language out there – they are trying to check every box. Essentially, it’s a balance between being too broad and being too narrow. Draft a patent that’s too broad, and your application will be rejected. Draft a patent that’s too narrow, and your patent will be useless. Patent drafting is a legal art – that is why you should seek a patent attorney who knows what will work and what will not work.
Do I need to file a provisional patent application?
No, a provisional patent application is not required to apply for a patent. Lots of online forums talk about provisional patent applications primarily because it can provide an earlier effective filing date for your non-provisional application. This means that, if successful and used properly, your provisional application can set a cut-off date for the prior art that may challenge your non-provisional application, and it can expand your patent term by up to 12 months. A provisional application is also simpler and cheaper than a non-provisional application. However, you must file both within 12 months of each other for the benefits.
Notably, there are several potential pitfalls if you decide to file a provisional patent application. For example, if you don’t file a non-provisional patent application within 12 months of filing your provisional application, you lose all benefits from your provisional application and may have prevented your own invention from being patentable because you already disclosed it to the public.
How do I conduct a copyright search?
The U.S. Copyright Office allows you to search for copyright registrations online using its Public Catalog. The Public Catalog houses only post-1978 records. You can search by title, name, keyword, registration number, document number, or command keyword. For 1891 to 1977 records, you can search the Catalog of Copyright Entries. For records from 1870 through 1977, you will have to travel to the U.S. Copyright Office and thumb through a physical card catalog.
How do I register a copyright?
You can register “basic” copyright claims involving literary works, visual arts works, or performing arts works online through the Electronic Copyright Office (eCO). Basic copyright claims are generally single works, unpublished collections of works with a common author and title, or multiple published works that are published together in the same publication on the same date with the same owner.
You can also register by paper application using the forms provided online by the Copyright Office. Paper applications are required for application corrections, copyright renewals, group submissions, as well as for works involving vessel hull designs and mask works.
Whether online or by paper, the registration application requires three things: (1) a completed application form, (2) a non-refundable mandatory filing fee ranging from $35 to $85, and (3) a non-returnable copy or “deposit” of the work seeking registration. Online applications generally take up to 8 months to process, whereas paper applications take up to 13 months to process.
After an application is filed, you will receive one of three possible responses from the U.S. Copyright Office: a request for additional information (by letter, telephone, or e-mail), a certificate of registration, or a letter of rejection (with explanations for the rejection). Once registration is approved, your copyrighted work receives an effective registration date, which is the date when the Copyright Office received all the required application materials regardless of the length of processing.
I received a patent infringement letter. What now?
Don’t be stressed out too much yet. A letter doesn’t mean that you’re going to get sued, and it doesn’t mean that you’re necessarily infringing someone’s intellectual property. Carefully read the letter to determine its content and its tone. There are generally two different types of infringement letters: (1) notice letters and (2) demand letters.
A “notice letter” is what a reputable patent owner will send in hopes of kick-starting a discussion with you. The patent owner will have done a good bit of research and due diligence before sending the letter, and that research has led the patent owner to honestly believe that you are infringing the patent. These patent owners generally prefer to avoid a patent lawsuit, but they are prepared to litigate if necessary.
A “demand letter” is what a patent bully (or patent troll) sends in hopes of intimidating you into paying a license fee without putting up a fight. These bullies generally have not done much research and send their demand letters to scores (or hundreds or thousands) of business owners. They generally have not done enough work to have a good-faith belief that you are infringing. Patent bullies often attempt to make their letters sound as intimidating as possible and will outright threaten a lawsuit. Ironically, in spite of all their bluster, patent bullies are generally less likely to file a lawsuit.
After you figure out what kind of letter you likely have, you should consider consulting a lawyer that handles patent litigation or patent infringement matters. That lawyer will be able to better determine the credibility of the letter and the chance of getting sued. Although it will cost some money, a patent infringement lawyer should be able to provide a quick assessment at a relatively low cost. Consider it a worthwhile investment in your or your business’s protection – or at least an investment in some peace of mind. After finding an attorney, you and your attorney can determine if or how to respond.
Click on the links below to navigate between pages of intellectual property resources.