The major types of Intellectual Property (and how to protect them)
In "Gone with the Wind," Scarlett O’Hara's father delivers some sage advice to guide her through fortune and misfortune: "Land is the only thing in the world that amounts to anything." And until relatively recently, he might have been right - financially speaking. Today, an organization's intangible assets can be worth considerably more than its cash, liquid financial holdings, buildings, equipment and, yes, even land. In 2020, Intellectual Property (IP) and other tangibles constituted a mammoth 90% of the value of S&P 500 companies, and that figure is only set to grow.
Understanding the distinctions between the major kinds of IP is critical to protecting them appropriately. We overview the modern IP landscape and examine best practices for securing your intangibles while taking advantage of their actual and potential value.
What are the most common types of IP?
The majority of IP assets fall into one of four categories: patents, trademarks, copyrights and trade secrets. It is crucial to remember that the rights these classes afford can sometimes be stacked, applying to different aspects of goods and services for even stronger protection.
These exclusive rights are granted for inventions. In this context, "invention" is a broad category that encompasses machines and manufactured objects as well as technological or industrial processes and systems. In some instances, as with pharmaceutical products or foodstuffs, patents may apply to chemical formulae or compositions. Most regions also have specialized plant patents for uniquely bred plant varieties.
In some jurisdictions — notably the United States — applicable law distinguishes between utility and design patents. A utility patent is used to protect the construction and operation of technical solutions. Meanwhile, as the name suggests, a design patent covers a product's ornamental characteristics, fulfilling the function of what the European Union (and various other jurisdictions) call an industrial design or design right.
Trademarks and service marks identify an enterprise's offerings in the marketplace. These include but are not limited to company, product and service names, logos and even slogans. Easily recognizable and aesthetically appealing trademarks can be among the most valuable assets in a company's IP portfolio and are collectively responsible for building and upholding a brand image. Not only do trademarks communicate a value proposition, but they also act as emotional repositories of how consumers receive and perceive a business.
Copyright protection is reserved for dramatic, literary and artistic works, including those created for hire. To be clear, "artistic" and "literary" are expansive terms here: An architect's drawings can be copyrighted just like those of a comic book artist, as both are the fruit of human imagination. Along similar lines, a white paper produced by a business to inform customers is no less eligible for copyrights than a novel or musical score.
Trade secrets are essential pieces of information regarding an organization's processes, products or services. They are not intended to be publicly known or otherwise distributed, and the owner commercially benefits by keeping them confidential.
Ideally, trade secrets are only made known to other parties (like business partners) if absolutely necessary. This is because the IP owner is legally required to take adequate steps to ensure secrecy. Recipes for food and beverages — like the famous Coca-Cola formula — or algorithms used in software can qualify as this form of IP.
A wider world of IP
However, some IP rights cannot be placed into one of the four classes described above. In addition to their being more niche forms of IP, not all are universally available. These are a few examples.
- Utility models confer limited defense to inventions – innovations typically served by patents. It is easier to meet the requirements of a utility model than a patent, and the associated application fees are lower. On the other hand, only some countries offer utility models, such as Brazil, China, Australia, France, Japan, Spain and the United Arab Emirates.
- Domain names for websites can be guarded against unauthorized use if registered by an organization accredited by the Internet Corporation for Assigned Names and Numbers (ICANN).
- Geographical indications (GIs) certify that a product (usually a foodstuff) originates from a given geographical area. These marks help preserve the unique qualities and reputation of regional fares.
- Database rights are used to secure the contents of a data collection against unauthorized extraction. This sui generis right is available in the EU, Russia and the United Kingdom. In other jurisdictions, either the database's structure or its contents must meet copyright thresholds to come under the aegis of IP law.
How to keep IP assets safe
All categories of IP are governed by some form of regulation or another. Most often, these are codified in the laws of national jurisdictions. In the case of regional legislation, such as within the EU, deferral is typically made to individual member states' laws — so long as they do not conflict or overlap with those of the wider union.
Civil treaties administered by nonpartisan organizations such as the World Intellectual Property Organization (WIPO) and World Trade Organization (WTO) are also important. Some of these oblige ratifying countries to adapt their national laws, while others are not enforceable on their own.
Preserving patents worldwide
A patent holder's rights are codified in the laws of virtually all jurisdictions. Once approved by a patent office, exclusivity can last up to 20 years from the filing date, as long as all required upkeep fees are paid (and any required documents submitted) on time.
Jurisdictions that differentiate between utility and design patents typically ascribe a different lifespan to each. In the United States, for example, a utility patent follows the standard 20-year maximum seen in much of the world. By contrast, a design patent only lasts 15 years but does not need to be renewed. The same is not necessarily true for other nations' industrial designs or design rights. These registrations generally last anywhere from 10 to 25 years, depending on the country or region, and renewal payments may be required at specific intervals. In the EU, a renewal payment is required every five years.
Moreover, states that have ratified the WIPO's Paris Convention or the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement are expected to make patent rights available without discrimination as to the invention's country of origin. Once domestic patent protection has been established, the WIPO's Patent Cooperation Treaty (PCT) filing system can create a solid foundation for achieving patent rights in multiple territories.
Taking care of trademarks
Unlike patents, trademarks do not need to be registered to function; that said, their legal standing is massively strengthened by taking this step. Registered trademarks can be maintained indefinitely so long as renewal fees are paid, typically at 10-year intervals. Mark holders may also be required to prove they are using these IP assets in commerce (or attempting to do so).
The WIPO's Madrid System and the TRIPS Agreement both provide frameworks for international cooperation on trademark rights. However, registration in one nation does not guarantee the same assurances in another.
Copyrights confer remarkably long-lasting legal protection and are received automatically. Once a creative work is produced, the associated copyright applies for at least 50 years after the creator's death in most countries (in the United States and EU, the term is 70 years after death).
The 50-year minimum comes from the Berne Convention, which more than 180 countries have ratified and implemented as the basis for their own copyright law. In disputes where a work's copyright duration in one country is shorter than in another, the shorter term applies.
Also of note, in the United States and some other countries, copyrights can be voluntarily registered to establish firm creation dates and demonstrate an active enforcement policy.
Trade secret confidentiality
Trade secrets acquire legal recognition once commercially relevant data is defined and concealed. The controlled sharing of such information is generally secured by non-disclosure agreements (NDAs) or confidentiality contracts. Parties that break NDAs regarding trade secrets may be subject to civil suits filed by the secrets' originators. NDA violators could even be held criminally liable if disclosure were carried out in the service of counterfeiting.
The TRIPS Agreement includes provisions for trade secrets, but it carries no legal penalties.
Safeguarding your intangible asset portfolio
The expression "you can never be too careful" applies perfectly to IP assets. Registering your IP in every relevant market is critical, especially for patents and trademarks. Entering into the WIPO's PCT and Madrid frameworks will help facilitate more far-reaching protection and can save you money.
If you expect significant infringement risk in specific jurisdictions, registered copyrights can provide additional benefits. Last but not least, trade secrets must be secured with appropriate secrecy mechanisms — e.g., end-to-end encryption or blockchain-based cataloging — and covered by NDAs if they are to be shared for any reason.
Timely renewal and upkeep are essential for most registered IP rights. These should not be allowed to lapse without due commercial and strategic consideration.
Upholding your IP is a multifaceted and continuous process that involves maintaining exclusivity for as long as possible, prosecuting infringements in civil court and looking out for counterfeits. Failing to implement anti-counterfeiting measures is tantamount to surrendering your IP to imitators, with severe repercussions for your organization's reputation and, consequently, its value.
An IP audit from Dennemeyer's impartial experts can help you assess the state of your IP and work procedures to mitigate or eliminate any liabilities that may be present. Dennemeyer has a variety of services to strengthen your IP protection strategy, properly assess its worth and reduce maintenance costs.
No matter their industry, all commercial assets are wont to be touched by time and the fickle winds that varyingly drive and buffet the marketplace.