Oregon State Bar Bulletin — OCTOBER 2015
Legal Practice Tips
Intellectual Property:
What Every Lawyer Needs to Know
By Leonard DuBoff
Intellectual property lawyers focus their practice on patents, copyrights, trademarks, trade secrets and the like, but every lawyer, regardless of the type of practice he or she engages in, deals with some form of intellectual property.
While it is impossible to identify every interaction between I.P. and other legal disciplines in a brief article such as this, I will point out some important issues that you should bear in mind.
Patents
The patent law has been in effect since this country began, though the law has been revised numerous times. In fact, the Leahy-Smith America Invents Act (AIA),1 passed in 2011, represents the most significant change to the U.S. patent system since 1952.
Most of the changes were quite technical and important only to patent lawyers, though you may find the new rules with respect to marking an item as patented interesting.
In the past, a patent owner could be precluded from recovering damages for infringement if the patent owner’s products were not physically marked with the word “patent” and the applicable patent number(s).
The AIA modified the law to provide that patent notice can also be provided through virtual marking, which involves putting “patent” or “pat.” on the product, along with a URL where interested persons can obtain more information about the applicable patent(s) without charge.2
The AIA also amended the false marking statute,3 which makes it illegal to label products with false or expired patent numbers “for the purpose of deceiving the public.” Before the AIA amendments, anyone could bring a lawsuit for false marking. If successful, the private plaintiff could keep half of the $500 penalty, with the other half going to the government.
This wasn’t a problem until a 2009 case4 held that the penalty applied on a per-article basis rather than a per-offense basis. In other words, if a company sold a million falsely marked widgets, it could owe a penalty of $500 million instead of $500.
This ruling created a new industry of “false-marking trolls,” who looked for products bearing incorrect or expired patent numbers and sued, although they hadn’t been injured by the false marking. Now, under the AIA, only someone who has “suffered a competitive injury” can file a private action.
The U.S. Supreme Court has also been active in addressing patent issues. In June 2015, in Kimble et al. v. Marvel Entertainment, LLC,5 the court held that a license to use a patent cannot extend longer than the life of the patent, even if the contract says it does. This means that businesses that agree to open-ended patent licenses may stop paying for those licenses when the patent expires, which is 20 years from the date the patent application was filed.
Frequently a client will discuss an invention with relatives and friends. A client may even discuss it with you. In situations like this, it is essential to make it clear that an application for letters patent must be filed within 12 months of first disclosure, or the invention will become unpatentable prior art.
A client can delay filing a formal patent application for one year by filing a “provisional application,” which is less expensive and less demanding. You should encourage the client to file either a regular application or a provisional application as soon as possible, since the AIA changed the U.S. from a first-to-invent jurisdiction to a first-to-file jurisdiction.6
Copyrights
Any “original work of authorship” is protected once it is put in a tangible form.7 This means that art, music, literature and even software may be protected by the copyright laws. As a result, virtually everyone deals with some form of copyrightable material, from vacation photos to personal letters.
If you learn a client has any copyrights that may be valuable, you should suggest that they be promptly registered, because although copyright protection is automatic, no infringement lawsuit can be filed without a registration or application, depending on the jurisdiction. The 9th Circuit allows use of an application when a case is to be filed.8
Also, the remedies for infringement are much better if the copyright is registered before an infringement occurs. Statutory damages and attorneys’ fees are available to a prevailing plaintiff in a copyright infringement suit only if the copyright was registered either within three months of the item’s first “publication” or before the infringement.9
Statutory damages are important, since actual damages are often difficult, if not impossible, to prove in copyright infringement cases. Statutory damages are no less than $750 and no more than $30,000, though if it can be established that the infringement was willful, they may be as high as $150,000, and damages for an innocent infringer may be as low as $200.
Attorneys’ fees in copyright litigation can be quite high, and they, too, are available only if the work was registered before the infringement or within three months of first publication.
You should also counsel clients about the importance of having contracts clearly state who owns the copyright in materials created for them, since, without a written agreement to the contrary, independent contractors retain the copyright in work they create for others. 10 Without appropriate contractual protection, your client may be shocked to learn that it does not own the rights to its logo, website, marketing materials, product photographs or other copyrightable works.
Attorneys assisting clients with estate plans rarely consider the fact that most estates contain some copyrightable material. The disposition of these items may be important since they may be quite valuable. It would thus be appropriate for estate planners to determine the extent of the client’s copyrightable items and make appropriate arrangements for them. The lawyer should determine whether there are any other forms of intellectual property in the estate as well, and appropriate disposition of those items should also be made.
Trademarks
Names, symbols, logos or combinations of these items are trademarks when they are used to identify the source of a product or service.11 Trademarks can be registered under state and federal laws, though the mere use of a trademark in interstate or foreign commerce provides common law protection. It is, therefore, important for you to determine whether a client has a trademark so that appropriate steps can be taken to protect it.
Many business owners believe that filing an assumed business name with the state provides protection for that name. It does not.
In order to reap the rewards a trademark can provide, the owner should first have an appropriate search conducted to be sure that the mark does not infringe the rights of others. This should be done before investing a great deal of time and money in promoting the mark. It is also essential to select a protectable mark since certain things are not protectable.
The strongest trademarks are fanciful; for example, “Xerox” for copiers. Suggestive trademarks such as “Shell” for oil are also quite good. If a mark is merely descriptive, then it is not protectable until it has achieved some market recognition. Thus, “TV Guide” is descriptive, yet it has been so publicized that almost everyone knows what is being referred to when TV Guide (the magazine) is mentioned. It has achieved a secondary meaning.
Generic marks are not protectable at all; that is, the noun describing a product or service such as chair for the thing you sit in, or desk for the item you put your computer on, is not protectable.
You should caution your clients to use their protectable trademarks consistently and, if they permit others to use the marks, appropriate quality control measures must be taken so that the quality of the item identified by the trademark will be consistent with that of the original owner of the mark.
It is also essential to advise your clients to determine whether others are using their marks without permission, since those who sit on their rights for too long may lose them. Laches is the only statute of limitations in federal trademark law.
Trademarks have taken on an even greater significance today because of the Internet. When a URL is obtained, the purchaser agrees to be subject to the rules promulgated by the World Intellectual Property Organization (WI.P.O), which provides for an online arbitration of disputes over URL ownership. 12
The arbitrator determines which party has a better right to that domain name. One criterion is whether the URL has been legitimately used in business. Good evidence of that use includes registration and proper use of that trademark. When both parties have registered trademarks, the arbitrator will determine which mark was registered first.
Trade Secrets
Every state in the U.S. has adopted a trade secret law, and most businesses have some protectable trade secrets. In order for a trade secret to be protectable, it must have some commercial value and be treated as a secret.
This type of intellectual property can be extraordinarily valuable since trade secret protection can last longer than patent protection. Indeed, the recipe for Coca Cola is still a protected trade secret after more than 125 years.
Business clients realize the importance of their customer lists, supplier lists and the like. You should take the time to advise your clients to set up trade secret programs. Employees should be counseled regarding the proper treatment of trade secrets and, if outsiders are given access to those items, they should also be required to sign restrictive agreements.
Other Forms of Intellectual Property
Domain names, email and social media accounts are the newest forms of intellectual property, and they, too, have value. Their disposition should be considered on preparing estate plans and selling businesses. You should consider the importance of these assets when assisting your clients with their other legal matters as well.
While intellectual property lawyers focus on the methods for protecting and enforcing I.P. rights, it is clear that all attorneys, regardless of their specialties, must be sensitive to the importance of intellectual property and take the steps necessary to assist a client in protecting these important assets.
Endnotes
1. Pub. L. No. 112-29, 125 Stat. 284 (2011).
2. 35 USCS § 287.
3. 35 USCS § 292.
4. Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009).
5. Kimble v. Marvel Entm’t, LLC, 134 S.Ct. 2401 (2015).
6. 35 USCS § 102.
7. 17 USCS § 102.
8. Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, 606 F.3d 612 (9th Cir. 2010)
9. 17 USCS § 412.
10. 17 USCS § 201.
11. 15 USCS § 1127.
12. See http://www.wipo.int/amc/en/domains/.
ABOUT THE AUTHORS
Leonard DuBoff is author of more than 20 books, including Deskbook of Art Law (Oxford University Press) and Art Law in a Nutshell (West Publishing Group). He is a frequent contributor to this publication and has written numerous law review articles.