Avoiding Patent, Trademark And Copyright Problems
Patents, copyrights and trademarks, as well as know-
how or trade secrets, are often collectively referred
to as intellectual property. Many firms have such property
without even being aware of it or of the need to take
measures to protect it.
Many people's notions of intellectual property are
unrealistic. Some believe, for example, that having a
patent on a product will enable one to succeed in the
marketplace. Consequently, they may spend thousands of
dollars to obtain the exclusive rights to market something
that no one wants or can afford to buy. Others may
conclude that intellectual property protection is not
worth the expense and bother.
People who may not be interested in protecting their
own rights still must take precautions to avoid infringing
on the rights of others. This calls for more than the
avoidance of copying. Copying is unavoidable; it is a way
of life and one way in which we learn. But, one can easily
infringe on the rights of others without deliberately
imitating specific features of goods or services.
This publication addresses the steps newcomers to a
market should take to avoid infringement and when they
should take them.
Most people have heard variations on a remark
attributed to Ralph Waldo Emerson: If a man can make a
better mousetrap than his neighbor, though he builds his
house in the woods the world will beat a path to his door.
To keep the discussion concrete, let's imagine a present
day inventor of a new mousetrap who not only invents a
better mousetrap but is also successful in marketing
it. The higher the inventor's profit margin, the more
others will want to copy his invention. Let's assume that
the inventor selects Figaro as the brand name and actively
promotes the product. However, he does not legally protect
his invention, but relies on the consumers' loyalty,
goodwill and brand identification to ensure future sales.
Taking measures to develop loyalty and goodwill may be
sufficient until a larger and better known competitor
turns up. For example, what if economies of scale and lack
of development costs mean that the competitor can sell the
same mousetrap for 20 percent less? Goodwill may not be
enough to ensure customer loyalty at a higher price. A
patent would be much more helpful, because it would
prevent the competitor from selling the new trap until
well after the original firm had a chance to get on its
feet. This situation illustrates that it is the smaller
firm that often has the most to gain from protecting
As bad as the situation is without patent protection,
it could be worse. Let's assume that customers are so
taken by the Figaro promotion that they are willing to pay
the 25 percent premium the firm charges in order to stay
in business. Imagine what would happen if the company had
to stop using that name or had to face an expensive
lawsuit. Imagine what would happen if it turns out
that someone else actually has a current patent on one or
more features of the better mousetrap. By failing to
consider the intellectual property of others, the new firm
would not only be forced to stop selling under the name
Figaro, but might be forced to stop selling the mousetrap
AVOIDING PATENT INFRINGEMENT
Utility patents - what people usually mean when they
use the term patents - provide 17 years of exclusive
rights for inventions that deal with the way things work.
Design patents afford 14 years of protection for
significant improvement in the appearance of useful items,
such as car bodies or furniture. Both of these patents do
more than prevent copying; they forbid the making, using
or selling of an invention similar to or the same as the
protected invention, even though the second invention was
independently created. (Plant patents, which will not be
covered in this discussion, may not give the same
Copying may actually be a way to avoid infringement.
The inventor of the mousetrap might have avoided potential
problems by using technology that was described in a
printed publication, publicly used or on sale. Products
that are on sale and give no notice of patent coverage are
relatively free from the risk of infringement.
Any person trying to market fairly new technology that
doesn't appear to be patented should keep in mind that an
inventor has one year from public sale or disclosure
within which to file a patent application. In addition,
because patents often take two or more years to obtain,
there is still a chance that a patent could be issued at a
later time. Although there is no liability for
infringement prior to issuance of a patent, a competitor
would have to cease making, using or selling the
technology once the patent was issued, thus risking the
loss of both start-up costs and inventory.
Of course, if our inventor was determined to make a
better mousetrap, there would be no interest in copying
something else in the market. Still, before spending too
much time and money on research, the inventor should
ensure that others do not have exclusive rights in the
area being explored. The inventor certainly should not
assume that, because a product is not on the market, it is
unpatented. As many independent inventors have learned to
their chagrin, it is usually easier to patent something
than to market it profitably.
A PATENT SEARCH
The inventor should hire a patent attorney or agent to
conduct an infringement search. A patent agent is a
technically trained person who has passed a special
examination given by the U.S. Patent and Trademark
Office; a patent lawyer is one permitted to draft
contracts and provide other general legal services. Patent
searches can be expensive if one must consult foreign
records; it is much less costly to determine whether
technology is currently patented in the United States.
Yet, as we will see, there is value in going somewhat
beyond that point.
A search might reveal that (1) someone else had a
patent that has since expired, i.e., the information
patented is now in the public domain; (2) no current or
expired patents cover the area of proposed research or (3)
someone else has a current patent covering all or part of
the proposed design. Let's consider these potential
results in order.
THE INVENTION IS IN THE PUBLIC DOMAIN
If the mousetrap (or an obvious variation) was
disclosed in an expired patent, the inventor is free to
manufacture and market it without concern for the patent
laws. Also, even if the inventor didn't find exactly what
he or she originally had in mind, a host of good and
freely used ideas that are even better might have
been discovered. These alone could be worth several times
the price of the search in saving research and development
ONE OR MORE ELEMENTS OF THE PROPOSED
MOUSETRAP APPEAR TO BE NEW
If, after a thorough search, our inventor's proposed
improvements to the mousetrap seem not only to be novel
but also to offer significant advantages over the prior
design, the inventor may seek a patent and/or begin
selling the mousetrap without further ado. If, however,
the inventor begins selling without first filing a patent
application, he immediately forfeits possible protection
in many other countries and also forfeits any possibility
of patent rights in the United States after one year.
ASPECTS OF THE PROPOSED DESIGN ARE COVERED
BY A CURRENT PATENT
If an unexpired patent is found to cover any part of
the proposed mousetrap design, the inventor knows that he
is not free to use it without a license. Infringing on a
current patent exposes one to a suit for damages as well
as an injunction against future use. Even an injunction
might mean substantial costs, including the loss of
current inventory, and a patent covering even a small
feature of the new mousetrap might give rise to the need
to retool. Although deliberate infringement is more
serious,ignorance of others' patents is no defense.
Trademarks (or brand names) indicate commercial
source. Trademarks may be words, logos or other symbols
indicating that goods come from a particular company. They
may even be sounds, three-dimensional symbols (such as the
well-known McDonald's golden arches) or colors. There are
also service marks, which indicate the source of services,
and other kinds of marks that will not be considered here.
As with patents, one can infringe on another's marks
without copying them or even being in direct competition
with their owner. All that is necessary is to use the same
or a similar mark under circumstances in which consumers
may be confused as to the source or sponsorship of the
goods or services.
A TRADEMARK SEARCH
A trademark search is the only way to find out whether
Figaro or something confusingly similar is being used by
others as a mark for a mousetrap (or perhaps such things
as rodenticides) in the proposed market area. It is also
necessary to determine whether the mark has been
registered in the U.S. Patent and Trademark Office, which
could give the registrant rights well beyond the market
areas currently occupied.
There are two reasons why a search may not be
sufficient. First, in the United States, it is unnecessary
for a firm to do more than use a good mark to have
trademark rights in its market area. Consequently, a
search may not locate all such prior users. Second,
people may be able to prevent the use of a potential mark
without having used it as a mark themselves; for example,
when a trademark can be associated with others in such a
way that consumers might presume that some kind of
relationship might exist. This is where the mark Figaro
would run into trouble.
As you may recall, Figaro is the name of the cat in
the Disney film Pinocchio. Although the Walt Disney
Company does not have a monopoly on the use of the name,
it might nevertheless be able to prevent it from being
used on a mousetrap. If that seems too farfetched,
consider the company's concern if "Mickey" had somehow
been part of the mousetrap name!
A copyright provides an owner with the exclusive
rights to reproduce a certain work for a specified period,
subject to some basic limits. The term of a copyright is
the lifetime of the author plus 50 years in the case of
identifiable, living authors. Copyrights arise
automatically and are inexpensive to register.
Searching for a prior copyright is probably
unnecessary. Copyright infringement can be avoided by
establishing that a work was independently created.
Therefore, records showing independent creation are
helpful to avoid liability. Even with such records,
establishing independent creation may be difficult if the
original work was widely disseminated or otherwise
available to the alleged infringer. In one such case, the
court held that,although copying may have been
unconscious, the original was nevertheless infringed.
One of the limits to copyright protection is that
ideas (compared to expressions) and technology (computer
software aside) are generally not protected. This means
that our inventor is free, at least as far as copyright
laws are concerned, to use any information that can be
found in books on mousetrap designs and to make and sell
working copies of anything shown or described. Copyright
gives the owner only the right to prevent reproduction
of the text or drawings themselves.
What if the inventor wants to use some of that text,
for example,in an advertisement? There is a remote
possibility that such use might be protected under the
"fair use" defense, but it would be very unwise to proceed
without getting permission from the copyright holder or
seeking expert advice.
Trade secrets overlap the subject matter of copyrights
and patents. As long as efforts have been made to preserve
secrecy, a suit may be brought to redress the
misappropriation (or wrongful taking) of almost any kind
of information of competitive value. Misappropriation
includes industrial espionage and breaches of
confidential relationships (for example, by former
employees), but it does not include reverse engineering.
Thus, a trade secret suit will not succeed if an aspect of
a product's design or construction was obtained by
examining an item purchased in the marketplace. Nor will a
suit be useful against those who independently discover a
secret process or recompile commercially valuable
The risk of being accused of misappropriating a trade
secret is never very high, particularly if one seeks
competent legal advice before using unlicensed information
that has not been obtained through reverse engineering.
THE NEED FOR EXPERIENCED COUNSEL
Any attorney admitted to practice in any state in the
country is technically qualified to register trademarks
with the U.S. Patent and Trademark Office or copyrights
with the U.S. Copyright Office in Washington D.C. Unlike
the situation with patents, no special examination is
given to determine whether the attorney is familiar with
the copyright or trademark law or registration
procedures, for example. Clients are advised to seek an
attorney who specializes in such matters.
Whether or not our mousetrap inventor takes measures
to preserve the intellectual property, he or she certainly
should avoid infringing on the rights of others. Although
this is not difficult in the case of copyrights and trade
secrets, patents and trademarks are another matter
Unquestionably, it costs precious start-up capital to
have patent and trademark searches performed; however,
proceeding in a new venture without doing so is equivalent
to erecting a building or signing a long-term lease
without checking the real estate title. Searches will not
make the product appeal to the public, but they will
ensure enjoyment of any hard-won market success. A patent
search is comparatively cheap insurance against the
possible need to retool or to absorb inventory losses.
Moreover, a close look before adopting a trademark is
cheaper in the long run than the cost of advertising and
new promotions designed to advise customers to seek the
mousetrap under a new name.
APPENDIX A: FURTHER INFORMATION ON
Patent and Trademark Office, Washington, DC 20231, or
the United States Trademark Association, 6 E. 45th Street,
New York, NY 10017. Both publish free or inexpensive
A booklet for independent inventors, "So You Have An
Idea", is available from the Innovation Clinic, 2 White
Street, Concord, NH 03301. To order it send $2.00 and a
self-addressed mailing label. The Innovation Clinic also
has a set of HyperCard stacks (for Macintosh computers)
covering several topics of interest to inventors and small
business owners. These are available for $5.00 and a self-
addressed mailing label.
Write to the Copyright Office, Washington, DC 20559,
indicating the subject matter in which you are
particularly interested, for example, music or arts.
"Patents Trademarks and Copyrights", Lawrence E.
Evans, Jr., 1986, Gunn, Lee and Jackson, Eleven Greenway
Plaza, Suite 1616, Houston, TX 77046.
You may want to consult one or more of the many
inventors' handbooks available at public libraries. One
example is "How to Profit From Your Ideas", Flemming Bank,
1985 ($12.95). Bank and Associates, P.O. Box 20365,
Portland, OR 97220. This is a step-by-step guide that
shows how you can make money by turning your creative
ideas into marketable products.
APPENDIX B: INFORMATION RESOURCES
U.S. Small Business Administration (SBA)
The SBA offers an extensive selection of information
on most business management topics, from how to start a
business to exporting your products.
This information is listed in "The Small Business
Directory". For a free copy contact your nearest SBA
SBA has offices throughout the country. Consult the
U.S. Government section in your telephone directory for
the office nearest you. SBA offers a number of programs
and services,including training and educational programs,
counseling services, financial programs and contract
assistance. Ask about
- Service Corps of Retired Executives (SCORE), a
national organization sponsored by SBA of over 13,000
volunteer business executives who provide free counseling,
workshops and seminars to prospective and existing small
- Small Business Development Centers (SBDCs),
sponsored by the SBA in partnership with state and local
governments, the educational community and the private
sector. They provide assistance, counseling and training
to prospective and existing business people.
- Small Business Institutes (SBIs), organized through
SBA on more than 500 college campuses nationwide. The
institutes provide counseling by students and faculty to
small business clients.
For more information about SBA business development
programs and services call the SBA Small Business Answer
Desk at 1-800-8-ASK-SBA (827-5722).
Other U.S. Government Resources
Many publications on business management and other
related topics are available from the Government Printing
Office (GPO). GPO bookstores are located in 24 major
cities and are listed in the Yellow Pages under the
"bookstore" heading. You can request a "Subject
Bibliography" by writing to Government Printing Office,
Superintendent of Documents, Washington, DC 20402-9328.
Many federal agencies offer publications of interest
to small businesses. There is a nominal fee for some, but
most are free. Below is a selected list of government
agencies that provide publications and other services
targeted to small businesses. To get their publications,
contact the regional offices listed in the telephone
directory or write to the addresses below:
- Consumer Information Center (CIC), P.O. Box 100
Pueblo, CO 81002. The CIC offers a consumer information
catalog of federal publications.
- Library of Congress Copyright Office, Register of
Copyrights, Washington, DC 20559
- Patent and Trademark Office (PTO), Washington, DC
20231. Public Service Center: (703) 557-INFO
- U.S. Department of Commerce (DOC), Office of
Business Liaison,14th Street and Constitution Avenue, NW,
Room 5898C, Washington, DC 20230 DOC's Business
Assistance Center provides listings of business
opportunities available in the federal government. This
service also will refer businesses to different programs
and services in the DOC and other federal agencies.
- Software Publishers Association, 1101 Connecticut
Avenue, NW Suite 901, Washington, DC 20036
- United States Trademark Association, 6 E. 45th
Street, New York, NY 10017
For More Information
A librarian can help you locate the specific
information you need in reference books. Most libraries
have a variety of directories,indexes and encyclopedias
that cover many business topics. They also have other
resources, such as
- Trade association information - Ask the librarian
to show you a directory of trade associations.
Associations provide a valuable network of resources to
their members through publications and services such as
newsletters, conferences and seminars.
- Books - Many guidebooks, textbooks and manuals on
small business are published annually. To find the names
of books not in your local library check "Books In Print",
a directory of books currently available from publishers.
- Magazine and newspaper articles - Business and
professional magazines provide information that is more
current than that found in books and textbooks. There are
a number of indexes to help you find specific articles in
In addition to books and magazines, many libraries
offer free workshops, lend skill-building tapes and have
catalogues and brochures describing continuing education
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