Search
  • Ivan Chaperot

Copyrights, trade secrets, trademarks, or patents? Which does your business need?

Updated: Jun 5

As you likely know, the very first popular video game ever was Pong. What you likely don’t know is that the game wasn’t patented — until it was too late.

Created and produced by Atari in 1972, Pong was a marvel in simplicity: pop a quarter into a boxy machine with a TV screen, and you could play a virtual game of ping pong.

Placed first in Andy Capp’s Tavern in the Silicon Valley, Pong became a runaway hit, with people lining up around the block to play the game and 7,000 units being sold in the first six months. Unfortunately, Atari failed to patent the game for a year, and by that time, the market had been flooded with cheap knockoffs. Pong didn’t ping much longer.

The moral of the story, of course, is that you have to legally protect your products from the get-go, begging the question, which is right for you — copyrights, patents, trade secrets, or trademarks?


Well, it depends on your product, so let’s look at your options.


Copyrights


Copyrights protect the creation of “original works of authorship,” typically (although it can vary) for 70 years. Examples of copyrights include blogs, articles, books, manuscripts, graphics, designs, software code, and user manuals.


Copyrights are created by law as they are created. This sentence is being copyrighted as it is being written. That said, such protection is fairly weak, and so additional and much stronger statutory protections occur when the content is registered.


Pros

  • Protects against copycats creating and distributing knock-off products

  • Absent registration and accordant fees, copyright protection is free


Cons

  • This is a very narrow form of protection

  • Copyrights do not prevent “smart” copies of products that are similar but with some re-designs


Trade secrets

Trade secrets protect information that has value for your business. Most business “secrets” are not considered “trade secrets” — and thereby protectable legally — because they are typically either are not properly protected or are not actually a secret. For instance, trade secrets are not applicable to things that are visible or easy to reverse-engineer. There are four questions you must answer to determine how to protect a trade secret.


While the definition of a trade secret varies by country, there are three general principles in all jurisdictions that connotate just what is a “trade secret”:

  1. A trade secret is a piece of information that has value as a result of not being generally known,

  2. The information would have value to others who cannot legitimately obtain the information, and

  3. The information is subject to reasonable efforts to maintain its secrecy.

Here are some examples: technical information, machine learning data, lines of codes, manufacturing processes, and so on. Trade secrets also include non-technical information, such as sales methods, consumer profiles, advertising strategies, listings of suppliers and clients, etc.


Pros

  • No registration costs. Trade secrets are not registered with any governmental body

  • No limitation in duration (they last until they are no longer secret and as long as there is a value)

  • It is possible to license and sell trade secrets

Cons

  • You cannot publish or disclose trade secrets because, well, they would no longer be secret

  • You can lose trade secrets either by theft or accidental disclosure

  • It is difficult to prove ownership

  • It is also difficult to get a remedy or enforce, in particular, internationally

Trademarks

Trademarks protect brands, for example, the Nike “swoosh” logo and its phrase, “Just do it.” Those are trademarked. Other examples would include the distinctive name of a business — like Amazon, a product — the Apple Macintosh, or even a technological name — Bluetooth.


A trademark can be a word, a symbol or a combination of words and symbols. Trademarks indicate the source or ownership of the product or service. Thus, distinctive words or symbols used to identify goods or services are the subjects of trademark protection.

Utility Patents

Utility patents protect technologies that are new and inventive. For example, there are many patents covering the MPEG-2 video compression algorithms — most of which have expired by now since the general limit for a utility patent is 20 years. A pharmaceutical drug formulation would also be covered by a utility patent. Patentability requirements vary on a country-by-country basis.


Pros

  • Utility patents give broad protection

  • There is no need to maintain secrecy

  • They are flexible, for instance, utility patents can be licensed


Cons

  • It is not possible to patent a technology that is not new

  • They are expensive to get. You would need to hire a patent attorney to file and prepare a patent application, and then to pay for the process until the issuance (“patent prosecution”)

  • It is very expensive to protect utility patent technologies on a worldwide scale, as a patent is needed in each country

Design patents

Design patents protect the appearance of a physical object. For instance, a design patent could cover a new, original, and ornamental design, or a computer’s graphical user interface (as it appears on a physical display screen). The duration of the protection lasts 14 to 15 years, country by country.


Pros:

  • Cheaper to obtain than utility patents

  • Easy to prove infringement

Cons

  • It is a narrow scope of protection due to the fact that it is limited to the product’s appearance. As such, it is smart to have both design and utility patents to cover the appearance and functionalities of a product.


Conclusion


As you can see, there is a lot you can protect in a product or service. Multiple forms of protection could be used at the same time. Software products could be protected by patents and copyrights, for instance. However, some are mutually exclusive — trade secrets cannot be patented, as these would no longer be secrets. You will need to make some trade-offs and choices based on the pros and cons of each form of protection. To navigate through these options, do your homework first: clarify your business risks and opportunities. Then, you can call your intellectual property attorney who will charge a fortune, and will be worth every penny.


© 2020 Novalto · All rights reserved

10 views0 comments