The Right Team
Having been involved in a start-up as an engineer and having worked closely with start-ups as an IP attorney since 2006, I’ve come to realize there are four “pillars” that determine whether a startup will ultimately be successful: Capital, Idea, Team, and Timing. How each of these factors affects a particular venture is ultimately dependent on that particular company. However, it’s clear that if a company fails in any of these categories, your start-up will be winding up quickly, regardless of whether the remaining categories are top-of-class.
The story below is a good lesson related to the “Team” pillar, above. And although this story isn’t about a start-up, it does highlight how a failure within the “Team” can negatively affect your company and ultimately, your bottom line.
Aggressive enforcement of your trademarks is not always a smart move as an outdoor recreation retailer, Backcountry.com, Inc. is learning. As the owner of numerous trademarks that involve the term “backcountry”, the company has been enforcing their marks on other companies that Backcountry.com determined were infringing the company’s rights to the “backcountry” name. Backcountry.com’s enforcement tactics have ranged from sending cease and desist letters, to seeking the cancellation of already registered marks and filing suit in federal court for trademark infringement.
Although these tactics are frequently undertaken by trademark owners, consumers have taken offense to Backcountry.com’s actions in the outdoor industry. Social media soon lit up with the #boycottbackcountry hashtag and urged customers to #scrapethegoat, a reference to removing the company's goat logo from merchandise. The company has since issued the following apology: https://www.backcountry.com/sc/a-letter-to-our-community. However, many of the company’s claims are still pending. It remains to be seen whether the boycott will continue and how it will affect Backcountry.com’s position in the outdoor industry.
Backcountry.com's story isn't just a cautionary tale for companies seeking trademark protection. It's also a cautionary tale about how your Team (here, Backcountry.com’s legal and marketing teams) needs to understand the company’s relationship with the brand it has established.
Understanding Your Space
In many industries, trademark enforcement goes unnoticed. Most consumers wouldn’t change their purchase habits when large corporations choose to enforce their trademarks against smaller players in the industry. Even in the outdoor industry there hasn’t been any objection to other companies enforcing their marks in a similar manner. So why the backlash here? It appears to be a unique blend of how trademark descriptiveness affected a passionate clientele.
Here, Backcountry.com’s ‘backcountry’ mark describes where their products are frequently used. Having this descriptive quality in their mark creates an association in the mind of the consumer that Backcountry.com’s products must be helpful when that consumer is in his or her backcountry. This works well when the company’s values aligns with the consumer’s. Here, Backcountry.com relied on the fact that everyone has a ‘backcountry’ they can access, in selling their backcountry-branded products. That is, the ‘backcountry’ crosses all geographic boundaries. Comparatively, only people in specific geographic regions have a strong affinity to the regions that Backcountry’s competitors, like Patagonia and Columbia, are associated with. Preventing others from using these names doesn’t create the widespread anger that preventing others from using ‘backcountry’ has created. Backcountry.com also miscalculated the passion that their customers have for their backcountry. Many people who access their local backcountry help protect it by volunteering to keep up its trails, donating to organizations that prevent it from development, and abide by the rules to ensure it’s around for future generations to enjoy in a similar manner. By telling others they can’t use the name backcountry, Backcountry.com is running against the grain, amongst their clientele, that the ‘backcountry’ is available to everyone. This created an adverse reaction in people who are passionate about their backcountry.
Related: What Tom Brady, LeBron James & Ohio State University Can Teach You About Advanced Trademark Laws
Legal Needs to Understand Marketing
While Backcountry.com’s legal team failed to understand that the benefits Backcountry.com enjoyed from the descriptive nature of their mark were dependent on their customers associating their love of their own ‘backcountry’ with the Backcountry.com products, Backcountry.com’s marketing team appears to have also failed because they didn’t impress this delicate balance on the legal team. Eventually, Backcountry.com’s legal strategy went too far, ultimately affecting their marketing, brand, and company as a whole. At Neugeboren O’Dowd, we’re highly integrated into the business process, aligning ourselves as a Chief Intellectual Property Officer between the legal, executive, operations, and marketing teams, preventing these types of mishaps by understanding how each corporate function can affect the overall brand. When a rift occurs between a company’s public image and boardroom tactics, that disconnect can be disseminated in a prompt manner in today’s world by former loyal customers, gaining traction amongst like-minded individuals.
A Better Approach
Backcountry.com has rights and it could be equally detrimental for them not to enforce those rights. For example, Backcountry.com was the first to use the ‘backcountry’ term in association with many outdoor-related goods and services. Although Backcountry.com should enforce it’s “first in time, first in right”, it shouldn’t be doing so in relation to its customer’s connection with the Backcountry.com products. Given this landscape, suing people in an attempt to maximize brand value for their private equity owners upon exit is not the course to take, less you risk ultimate brand value. To secure the core value of your brand while preventing actual confusion between Backcountry.com’s trademarks and other trademarks, a better approach would be to enter into agreements with these potential infringers to limit, or otherwise control use.
The Problem With Descriptive Marks
What happened with Backcountry.com is partially the result of adopting a descriptive mark. That's why, from a legal perspective, it's better to use marks that don't have any connection with the goods you sell. However, this is always a tug-and-pull between trademark attorneys and the marketing team who frequently want to create an association between the mark and the product or its use.
Related: Is Your Startup Making These Mistakes With Your IP?
The benefit of using less descriptive marks is that, over time, the strength of the mark will become stronger (i.e., you can more easily prevent others from using marks that are similar to non-descriptive marks). It is also possible to create “catchy” marks that are descriptive and can ultimately be cheaper since there are less chances for confusion. Had Backcountry.com been counseled from the start about the potential inability to prevent everyone from using the name backcountry in the outdoor space, they may have chosen a better enforcement route or even a more suggestive mark if their ultimate desire was to control the name for the entire industry.
Software Patents - “That’s Where All The Action Is”
After graduating from engineering school, I remember speaking to my grandfather, who had worked as a chemical engineer for GE for his entire career after WWII. He asked me the types of projects I was working on as an engineer and I informed him that I was developing software for various systems. His response? “Makes sense. That’s where all the action is.” Well, as a patent attorney years later, I can still tell you that software is indeed “where all the action is.” This is evident in the significant increase in the number of software-related patents since I began drafting patent applications while working as an intern for a law firm back in 2005. Then, software-related patents accounted for just over 40% of all granted U.S. patents. Almost 15 years later, the number of granted U.S. patents that are software-related stands at around 60% of all patents issued by the USPTO.
The fact that 60% of all patented inventions in 2019 are software-related is proof positive that software is the easiest way to solve problems and get people what they need. However, getting to this point has been a long process and one in which the rules of patentability are continually being challenged and changed.
The Challenge of Patentability
Despite the obvious reliance on novel and non-obvious software-run devices, processes, and systems in technological development, there are still challenges for patenting software. For example, in 2014 the Supreme Court placed severe restrictions on the ability to obtain patent protection on software-related inventions. Since that decision, the USPTO has produced numerous guidelines for determining whether software-related inventions should obtain patent protections. These guidelines have been helpful in providing patent attorneys with the tools to ensure their client’s software-related inventions may be protected with an issued patent. Some recent guidelines issued just last month in October, provide that software-related inventions pertaining to an abstract idea, are still patent eligible if these inventions are integrated “into a practical application”. Prior protections for software-related inventions include the protection of software that improves computer functionality. For example, if your code enables a computer to process information quicker, make a display brighter, or process database information differently, these inventions will pass the patentable subject matter test and issue into a patent, as long as the invention is also novel and non-obvious. Today, a body of jurisprudence has been accumulated that allows us to counsel clients as to whether their software-related invention could be patentable under the current guidelines.
Tips and Caveats: The Application Process
As mentioned above, there are three requirements to obtain a patent. Your invention has to be novel, non-obvious, and must comprise patentable subject matter. If you think you may meet each of these requirements, or just aren’t sure, here are a few recommendations to consider when determining whether seeking patent protection on your software-related invention is the course to take:
- Hardware components can help. The patent office typically sees a hardware/software combination as more patentable than software on its own, so developing a device, process, or system that incorporates hardware components into the invention can help ensure patentability, so long as the hardware is not simply a “generic computer” implementation.
- Consider a patent search. Though not applicable to the “patentability” determination, this will provide you with an analysis of whether your software-related invention is likely to be considered novel & non-obvious, based on the results of the search.
- Eyes wide open. Listen to the experts and understand whether a patent application is possible or even useful in your situation.
- Know when to file. Given the U.S.’s “first to file” requirement, you’ll want to file as soon as possible. Preferably, this would include an initial provisional application filed as a proof-of-concept. If development of the underlying software-related product is not complete at this time, filing a second application when initial development is finished (e.g., when you’re in beta-testing) is recommended.
- AI reduces your costs. Third-party AI systems can help draft your software-related patent application, saving you money on legal fees in the application process.
- Focus on other market advantages. Relying on the novelty might not be enough. Timing, money, and your team will determine your success. A patent is just a tool to get you there.
- Keep Developing. New products and features will give you a competitive advantage. They'll also improve your chances of securing a patent if you continue to file.
- Don't give up. Your first application may not issue, or it may be too narrow to provide much value. But if you continue to grow your business and get traction while continuing to innovate, you will produce something unique, valuable, and patentable.
Develop a Strategy
After considering the above, establishing an IP protection strategy that your company adheres to will place you on a path of ensuring what should be protected, is protected, while allowing you to focus on creating and/or continuing a successful product and company. A good business strategy may incorporate provisional patent applications, which were previously mentioned. Another option is to seek protection in an omnibus patent application. Although other options are available, one item that is not optional is timing. No matter where you, your team, or your company is within the development cycle, you should discuss your IP & corporate goals with a patent attorney so they can prepare for enforcement, defense against other enforcement, or even a future sale of the business, product, or IP.
As technology becomes increasingly essential to our lives, software innovations will grow exponentially and the patent landscape will continue to shift to accommodate these innovations. We’re still at the beginning of this seismic shift.
Is a Trade Secret Right for You?
Coca-Cola has one. So does Kentucky Fried Chicken. And of course, there’s the one that Google has that determines what you’ll see in your search results.
I’m talking about trade secrets. Could this lesser-used strategy for intellectual property protection be better than a patent? Let’s take a look at how and when a trade secret might work for your IP portfolio.
What Is a Trade Secret?
A trade secret is information that has some level of value to a company — either the company derives value from that information or, if the information were to be released to the public, it would decrease the value of the company. For information to be classified as a trade secret, there must be reasonable means of keeping it a secret.
If your company has information that might be considered a trade secret, this IP protection option might be right for you.
Commingling Trade Secrets & Patents
Although you can use patents & trade secrets to protect a specific system/process/etc. or related systems/processes/etc., doing so runs the risk of disclosing the trade secret via the publication of the patent application or the issued patent. Once the trade secret information is in the public domain, the information no longer comprises a trade secret. However, there could be a scenario where you employ both protections for related but distinct systems, devices or processes. For example, perhaps an entity is utilizing three different processes that together make up a trade secret system. The entity could seek to patent at least one those processes so long as doing so does not enable reverse engineering of the other two processes/trade secret as a whole.
Although using patents and trade secrets together may make sense, most companies use one or the other to protect their intellectual property.
Related: Should You Pass on a Patent?
The Benefits of Trade Secrets
There are three main benefits to a trade secret over a patent:
- Less information is disclosed to the public.
Patents protect your invention from being used by others who have reverse-engineered your concept, but you must provide complete information as to what makes your invention unique to obtain that protection. For some companies, sharing this information just isn’t worth it. Take Coca-Cola, for example. While they’re legally required to publish their ingredients, they can easily keep their processes and systems under wraps.
Similarly, the Google algorithm is made up of dozens upon dozens of different factors, which frequently change. Google does not produce a description of how their algorithm operates. By keeping their algorithm a trade secret, they’ve protected their algorithm from being lawfully used by others.
- Protection does not have an end date.
Trade secrets can protect your IP for a longer time period than a patent. As long as your trade secret information is not disclosed to the public or reverse engineered, your competitors can not lawfully use the trade secret information.
- They’re typically more affordable and less burdensome than a patent.
Reasonable processes must be established to keep your trade secret information a secret. Although there is a business cost with implementing these processes and legal costs associated with ensuring the processes are reasonable, the benefits from such an implementation can extend into perpetuity. Furthermore, the out-of-pocket legal costs with establishing the protection can frequently be lower as compared to seeking patent protection as patents have hard costs associated with utilizing a patent attorney or agent to draft and submit your application and work with the patent office in obtaining an issued patent. Additionally, once the reasonable processes are in place to protect the trade secret information, the only additional requirement to ensure protection is ensuring the processes are still reasonable with changing circumstances. These trade secret implementation and continuation actions are typically less burdensome than the usual years-long process to obtain an issued patent, which can include frequent intensive discussions with the legal team.
Related: Protecting IP in the Food & Beverage Industry
Trade Secret Drawbacks
While trade secrets offer powerful protection for some circumstances, they do have drawbacks.
- No protection from reverse engineering
Patents are much more prevalent than trade secrets, and for good reason - trade secrets don’t protect you from reverse engineering.
- Legal to compete if the secret gets out.
Once you file a patent application, you have a guaranteed monopoly for 20 years from the filing date upon issuance of the patent. However, with a trade secret, once the information made public, you have no right to prevent others from using your secret. You can only retaliate against the person or entity who stole your trade secret or breached an agreement with you.
A Trade Secret Alternative?
One trade secret alternative is an accelerated patent application to gauge the patentability of your product. You can then withdraw the patent before public disclosure if the application is rejected and it is unlikely the rejection will be overcome.
Here’s how that works:
- You file a patent application and pay the prioritization fee.
- Within a year, you receive a final rejection or a notice of allowance.
- If you receive a final rejection, you can abandon the application and keep your innovation a trade secret instead.
This strategy allows you to seek patent protection without disclosing the invention to the public and if the patent is unlikely to issue, rely on any trade secret protection you have set up to ensure the information is kept secret. Although this option can get pricey, it’s a possibility to consider provided you already have trade secret protections in place when you file your patent application.
Protecting Your Trade Secrets
Is protecting your IP via a trade secret right for you? Then make sure you’re protecting your trade secrets properly.
Limit access to the overall secret, by only providing people the information they need to do their jobs. As a further precaution, all employees who deal with the trade secret, even a small part of it, should sign a non-disclosure agreement.
What Overseas Lawyers Need to Know About Filing U.S. Trademark Applications
The U.S. Patent and Trademark Office recently changed rules that significantly impact how trademark applications are submitted from foreign entities. Our firm has had recent inquiries from overseas attorneys wondering how to navigate these new laws. Read on to learn the ins and outs of pursuing trademark applications in the United States when you’re a foreign corporation.
The New Foreign Trademark Application Law: The Basics
The new rule only applies to trademark applicants: When you're a foreign-based entity (i.e., a company or individual located outside the United States), you are now required to submit your application through a U.S.-based attorney. This rule does not apply to any domestic company or individual. If you reside in the United States or have a commercial establishment in the United States, you may still file trademark applications without the use of an attorney, should you so desire.
Why the Change Was Implemented
The rule change for foreign entities was created due to the influx in foreign companies and individuals submitting trademark applications at the USPTO. Specifically, China has been providing subsidies to anyone who obtains a registered mark in a foreign country. Officially, the Chinese government has stated that this program is to encourage people and companies to grow their business overseas. However, whether knowingly or not, this subsidy program has increased fraudulent trademark submissions to the USPTO.
Prior to the Chinese subsidy program, the USPTO was able to properly manage foreign trademark submissions. However, when the Chinese government began offering $800 for every foreign registered mark obtained, the fraudulent submissions (e.g, fraudulent specimens of use) at the PTO became unruly, requiring action.
Related: Update on China’s Amended Trademark Laws
In the United States, you must establish use of a mark to obtain a registration. In order to obtain a registration of marks submitted from China, the USPTO began to notice an influx of fraudulent specimen. For example, if the applicant was pursuing a registered trademark on an apparel brand, the applicant may cut off the hangtag of the actual brand of the apparel item and replace it with a hangtag displaying the applied-for mark. The trademark office realized this was an issue because the same image displaying a different hangtag was being submitted in additional applications.
The new rule was implemented to prevent fraudulent submissions. Requiring U.S.-based counsel to submit trademark applications/specimen submissions should prevent fraudulent marks from being unknowingly issued, thereby preventing further degradation of the integrity of this U.S. trademark system. This rule also ensures the ability to discipline attorneys who do submit fraudulent information to the trademark office. Prior to this rule being submitted, it was difficult to discipline overseas applicants and attorneys. The new process should help prevent a large number of fraudulent submissions from registering.
Reactions and Implications in the Legal World at Large
Unfortunately, such a rule change will affect all foreign nationals and not just the bad actors. So, if you’re a law firm in Canada or Australia and have been effectively handling U.S. trademark applications on behalf of your clients, you’re no longer able to continue to do so without the help of a U.S.-based attorney or law firm.
However, even with the new rule, the foreign firm will continue to manage the client. The communication with the U.S. firm would likely consist of a request to submit a U.S. trademark application. Given the foreign firm’s prior expertise in U.S. trademark law, such a request would likely include the information necessary to submit the application on behalf of the client/applicant, with potentially little to no color provided by the U.S.-based attorney.
Prior communications between the foreign firm and the U.S. firm could establish specific procedures for submitting trademark applications by the U.S. firm on behalf of the foreign firm and their client. Such procedures may entail prior trademark search requirements to determine the prospect of receiving a likelihood-of-confusion rejection, reviewing the trademark for descriptiveness requirements, and ensuring that the goods and services listed in the application are compliant with U.S. requirements, among others.
Regardless of how foreign firms will comply with the new rule, most foreign attorneys will recognize that the change strengthens both the United States trademark system and their client’s own U.S. trademark registrations.
Related: 5 Common Issues with DIY Trademarks
Working With Neugeboren O’Dowd on Your Foreign Trademark Application
Neugeboren O’Dowd PC frequently works with foreign counsel in dozens of countries on all matters of IP and provides substantial trademark counsel on behalf of foreign applicants at the Trademark Office. Such work includes filing trademark applications, responding to office actions in pending applications, and managing Trademark Trial and Appeal Board proceedings.
We are happy to provide foreign firms with trademark work in their local jurisdiction and have established many long-standing international relationships. We provide the same care and attentiveness to the foreign firm’s clients as our own, and we rest easily knowing that the work provided by the foreign firm is of the same quality that we provide to our clients.
Did You Get Punk’d By a Trademark Spammer or Patent Troll?
The United States Patent and Trademark Office recently issued a caution, saying that a number of private companies are spamming trademark applicants and registrants. These spammers are leading unsuspecting applicants and registrants to believe payment of a fee to the company is required to maintain their application or registration.
Don’t get punk’d by these spammers! Even if they are offering legitimate services, you’re never required to pay any organization outside of the USPTO to maintain your trademark rights.
Trademark spammers aren’t the only threat to watch out for at the USPTO. Patent trolls are also currently on the prowl, out to sue whomever they can. You could very well be caught completely unaware, blindsided with a patent troll letter demanding you either appear in court or pay a hefty settlement fee.
If you’re seeking patent or trademark protection in the U.S. via the USPTO, you need to be aware of how to identify trademark spammers and how to handle a patent troll.
What Are Trademark Spammers?
A trademark spammer is a company or individual mailing trademark holders or applicants, frequently creating the perception that the communication is sent from an official government organization. In the letter, the spammer asks for a fee in a short time frame, such as two weeks, and makes it seem that the recipient will experience major repercussions if they do not comply.
Related: Yes, You Need a Registered Copyright
Usually, they will have a very official-sounding name (like “The United States Trademark Company”) and only sometimes will they print that they’re not affiliated with the USPTO. The letters are generally very legitimate in appearance — for example, containing the seal of the USPTO.
An easy way to determine whether the communication is legitimate is simply by identifying where and to whom the communication was sent. If the trademark owner received the letter but used a trademark attorney to file the application on his/her behalf, then that letter can be thrown away as all official communication will go the correspondence address (physical and email) associated with the trademark in the USPTO. To be sure, send the communication to your attorney and they’ll confirm that the trash bin is the appropriate location to file the letter.
What Are Patent Trolls?
Letters from patent trolls are a different beast altogether. A patent troll is a derogatory term used for a non-practicing entity. In this case, a non-practicing entity is a company that owns a lot of patents — up in the thousands — and then goes around enforcing their patents on people who they believe are infringing upon them. However, the entity isn’t producing a product for their patents. They just hoard up all the patents they can and then sue potential infringers in order to make some quick money. Patent trolls are an economic drain.
Keep in mind that not all non-practicing entities are patent trolls. Universities are also non-practicing entities, but they have research and discovered technology to protect, even though they don’t make a product. Universities are much less likely to sue an infringer, opting instead to license protected technology to users.
Why Doesn’t the Government Do Something About This?
At the end of the day, most of these spammers and trolls aren’t doing anything technically illegal and they can be quite profitable, so they continue on.
Unfortunately, spammers have a lot of sly marketing tactics at their disposal to get inventors to bite the bait. Currently, there’s not a lot of lobbying support for regulations or rules pertaining to these types of spammers, so getting anything passed through Congress to limit their activity would be difficult. Likewise, patent trolls are a problem that still hasn’t been addressed by Congress. There’s no straightforward way to limit their activity.
What to Do if You’re Approached by a Trademark Spammer or Patent Troll
While a trademark spam letter (which will look like a letter asking for payment in exchange for something related to your patent or trademark) can be given to your attorney and then more or less ignored, a patent troll letter will look like a cease and desist and it does have to be dealt with in a timely manner.
In many cases, the sender, often a lawyer, will attach a filed suit or complaint against you. They’ll give you a set number of days to settle with them before you’re required to go to court and defend yourself. For some companies, it’s worth it to fight the patent troll in court; for others, it’s better to just settle.
Related: What to Do When YOU Get a Cease and Desist
The bottom line: Be on the lookout for a proliferation of junk mail and spam after you file a patent or trademark. If you receive a letter regarding your IP and it asks for $800 in return for help with your invention, chuck it in the trash. If you receive a cease and desist letter from an attorney claiming you're infringing upon a patent, take it to your own patent attorney immediately.
Selling Your Company? The Exit Strategy That Doesn't Involve Giving Up Your IP Rights
By Shane Percival
I recently came across an Inc. magazine article published by Basil Peters, CEO of Strategic Exits Corp. In the article, Peters states that if you have a valuable patent, but not $10 million in the bank, the only reasonable business strategy is to sell your company as quickly as possible. According to Peters, the risk-reward ratio related to enforcing your patent on an infringer is too high to make sense for a small company.
Be Wary, Not Fearful, of Litigation
Why is this Peters’ advice? He claims that the probability is too high that your patented idea will be stolen by a larger competitor and the company won’t be able to handle the costs.
Under this logic, it’s tough to see how any start-up reliant on new technology can go public. Although I’m not privy to the financial statements of early-stage companies, I do know that many successful start-ups reliant on patented and patent-pending technology to develop their client base do not have to defend or enforce patents on their competitors before their bank account hits the $10,000.000.00 mark.
Just look at fairly recent IPOs Dropbox and Square, to name a few, and early dot-com era start-up TiVo. I’m sure these companies, their employees, and their investors are happy they did not heed Peters’ advice by selling before they reached the magical $10 million mark. Many future startups shouldn’t either.
You can’t go through life and business being fearful about who you may and may not have to sue. It’s important to be prepared for that potential, but if everyone who doesn’t have $10 million in the bank sells their patents, then you’re left with only established businesses owning patents.
What Exit Strategy is Right for Me?
Determining how best to monetize your intellectual property should take into account the IP owner’s desired goals and future plans.
When the IP is owned by a company, this comes down to maximizing profits for the shareholders. Before deciding to take the exit strategy mandated by Peters, the shareholders should understand the nature of the technology, the patent landscape, and the path towards continued success.
Oftentimes, the shareholders’ understanding of the business fundamentals leads them to choose a path other than a quick exit, even if it may mean greater risk. They know that although difficult, it is possible to sustain increased growth based on a patented technology and reach a much greater return on their investment.
Negotiating a Sale and Licensing Rights
If the shareholders have decided that selling a company that owns valuable patents before hitting the $10 million mark is the proper way to maximize value, ensuring that (a) you’re aware of the details of the IP owned by the company and (b) you own the IP is paramount to obtaining the highest value for your company.
For example, conducting a patent landscape analysis can help determine the potential value of your portfolio. Companies should also ensure that ownership of your IP does not rest in the prior corporate name or any inventor, individual, or employee.
Work with your IP attorney and IP valuation firm to assess the value of the IP in relation to the company itself. This needs to happen before you shop around for a buyer.
Whatever you do, though, don’t feel like you have to sell your business and IP just because you don’t have $10 million in the bank.
Questions about protecting your intellectual property? Schedule a consult.
Yes, You Need a Registered Copyright
A recent SCOTUS ruling in a case between Fourth Estate Public Benefit Corporation and Wall-Street.com, LLC helped finally determine the requirements for suing for copyright infringement.
In the past, federal appeals courts have been split on whether or not a plaintiff must wait until copyright registration is complete before filing a suit. Some courts have said that simply submitting a copyright application is enough; others have said that a registration must be complete, with a final registration from the U.S. Copyright Office.
This prior circuit split was in part due to somewhat conflicting statutory language that states, “No civil action for infringement of the copyright of any United States work shall be instituted until preregistration or registration of the copyright claim has been made…”
SCOTUS ruled in favor of the appeals court that held you must have a complete, registered copyright in order to sue for copyright infringement.
What does this mean for you?
What this means is that if you wish to prevent others from using copyright-able subject matter in the future — from artistic endeavors to software — you must have a registration certificate from the U.S. Copyright Office before you can file a suit. It’s no longer enough to simply have the application on file.
If you have questions about what to do and expect now that this ruling has come down, here are six answers to the FAQ about this latest change to IP protection.
What implications does this ruling have for a company seeking copyright protection on their IP?
This new Supreme Court ruling means that artists, IP attorneys, and others should be filing for copyright protection as soon as a protectable work is completed. This will prevent any issues in being able to enforce your right down the road.
What can a company/entity do to protect their property while awaiting the Register of Copyright’s approval, which can take months?
If you have a timely work of art and need to protect it quickly, there are ways to expedite the copyright process for specific works of art.
- You can acquire a preliminary injunction in order to quickly prevent the release of infringing materials.
- You can also expedite the copyright process if, for example, infringement is already occurring.
What’s the difference between an expedited and a traditional registration process?
In terms of the time it takes to get protection, the difference could mean you obtain your registration with an expedited process months sooner than with an un-expedited process.
For example, if you file an expedited registration in anticipation of litigation, the copyright office can turn your registration around in a week or two rather than if you file traditionally, you could end up waiting as long as nine months.
Do note that there are fees associated with this expedited process and the special handling of a copyright application, in addition to your normal filing fee.
How does this ruling affect the timeline in which a company needs to roll out a new product or service?
It all depends on what your creative endeavor is.
If you’re a software developer, your timeline will be very different than that of a recording artist because you’ll probably be updating the software frequently.
In this case, once you have a source code that you release publicly or maybe even just for beta testing, you would want to file for copyright protection on the source code. Once you have an updated version of the source code, you’ll want to file copyright protection on the new versions, too; otherwise, you won’t have the protection needed on that new code that you’re releasing to the public.
Remember, you may be able to expedite this process in order to properly protect your copyrighted material.
How does this opinion affect different industries?
While some may think that copyright issues only impact the typical creatives such as authors, artists, or videographers, we’re often dealing with startup companies and other non-creatives that are providing a service or a product.
This opinion affects any industry with a trademark, original work of authorship, or logo that meets the minimum requirements of novelty and copyright protection is sought on the work.
Are there any times when it’s not worth pursuing an infringement case?
Before suing, you always want to send a cease and desist letter. Hopefully, this letter will hit home and the other party ceases their infringing activities. Otherwise, you’ll have to make a business decision on whether or not it makes sense to spend your resources on preventing someone else from copying or infringing upon your copyrighted work.
For example, if they’re only producing 100 units of an infringing product, but you’re producing 10,000, does it make sense to spend thousands of dollars on legal fees if your bottom line is only minimally impacted?
Where infringement cases are concerned, you’ll always need to make a business decision on whether or not pursuing a case makes good financial sense for your company.
3 Ways Blockchain Will Change Intellectual Property Law
Blockchain is a peer-to-peer network that validates cryptographic transactions. It does this by encrypting the transactions, time-stamping them, and then relying on multiple pieces of information from multiple sources to ensure the transaction is both accurate and complete.
Blockchain technology is no longer limited to Bitcoin and similar cryptocurrency. Now, it also provides a way for you to protect your intellectual property. Here are three ways we expect blockchain to change IP law in the future.
1. Intellectual Property Becomes Easier to Track.
In the same way blockchain records financial transactions, it can record information regarding IP.
Currently, it can be cumbersome to ensure that an entity owns each intellectual property item it says it does. As the number of IP items grows, so does the workload to ensure the ownership is accurate.
For example, let’s say you have a team of engineers. The team develops a new invention and even files a patent application on the invention. However, the team fails to assign that application the company or, if they do, the assignments are never recorded.
In this instance, every individual on the team would own 100% of the rights to the invention. Those individuals can transfer those rights their at their own will, assuming no employment agreement is found for every inventor.
Now, imagine that the patent application is then transferred in a corporate acquisition to a new company. Years down the road, the patent receives a Notice of Allowance. How do you know definitively who owns the rights to this invention?
When corporate transactions occur, there can be hundreds of patents and trademarks transferred over time. All kinds of errors can occur due to speed, a missed assignment here or there, or simple ignorance.
Blockchain has the potential to eliminate these errors and assure accuracy.
2. The Consumer Receives Protection From Counterfeit Products.
Smart trademarks are a digital likeness of your IP that protects your property as well as the consumer. Smart trademarks may be connected to blockchain technology. Doing so enables smart trademarks to identify:
- When your trademarked product was created
- When it’s sent from the manufacturer
- Who manufactured it
- When it arrived at a distributor
- When it arrived at a wholesaler
- And finally, when it arrived to the consumer
Through the use of smart trademarks, the consumer is then assured they own an actual, trademarked product versus a counterfeit product.
3. Enforcing Your Trademark Becomes Easier
There’s also talk of using blockchain to track trademark use in the marketplace, which could be exceedingly helpful.
For example, let’s say two individuals have similar trademarks. One individual uses the trademark for the first time today. The other uses the trademark for the first time tomorrow.
Blockchain could provide proof of who really used the trademark first, and who has the rights to the trademark. It’s innovations like these that would assist you in enforcing your trademark on someone else.
Would Blockchain Remove the Need for Government Protection?
Even with all these ways blockchain could help inventors better protect their IP, it still does not eliminate the need to file your patent unless the U.S. government makes changes to its own IP protection processes.
But, regardless of how blockchain impacts IP protection in the future, you’ll always have some sort of government entity controlling IP. This way, if needed, you can enforce your IP rights in a government court.
How Soon Can I Expect Blockchain to Impact IP Law?
Whether you welcome or dread changes to IP protection, how quickly can you expect these types of changes to come about?
I expect the change to happen slowly at first, then quickly ramp up. For example, as soon as companies begin relying on blockchain technology to win IP rights in court (i.e., establishing a first-use date for a trademark for certain goods/services), you’ll have more IP attorneys suggesting their clients use blockchain technology.
Savvy companies won’t wait to jump on the bandwagon, either; they’ll see blockchain’s benefits sooner rather than later.
The major delays in implementing blockchain for IP protection on a broad scale would likely come from just getting the right infrastructure and systems — particularly at the government level — up and running.