Intellectual Property and Your Colorado Business

In 1899, Nikola Tesla came to Colorado to set up a new lab for his electricity experiments. His lasting legacy of contributions to electrical technology led to his modern recognition in the “Tesla” electric car company. Unfortunately, Tesla is also known for his long disputes with Thomas Edison and other contemporaries over intellectual property. Legal disputes like his were nothing new in his time, and intellectual property law remains a major legal issue today.

The basic concept of Intellectual Property is that someone should be able to profit from their ideas. Intellectual Property law protects inventions, literary and artistic works, designs, and commercial designs (including names and images). Patents, copyright, and trademarks are legal conventions developed to help people earn recognition and financial benefits from their work.

Intellectual property is the lifeblood of many modern businesses. It’s at the core of their profitability, and it’s what distinguishes them from other enterprises. Without intellectual property protections, society as we know it couldn’t function.

In the age of the Internet, IP is more important than it’s ever been. Since ideas became super-mobile, able to be shared in an instant over the Internet, intellectual property rights are abused more and more often. Anyone who has visited a Chinese metropolis in the last decade can attest to rampant violation of intellectual property there, with knockoff products like cheap, fake Gucci purses to copycat iPhones. The Internet has offered other methods of abuse, too – “Cybersquatting,” for example, where an individual holds a domain name hostage from a business who wants it. Legislative protections against such abuses are only just emerging.

At its core, intellectual property is about allowing people to benefit from their ingenuity while offering that ingenuity’s benefits to the world at large. The United States protects this right by defining intellectual property protections. Legally speaking, intellectual property falls into 6 categories:

 

Copyrights

Copyright is a basic protection that covers any tangible media of expression, both published and unpublished. There is no registration process required to obtain copyright—it’s granted to any author of an original work automatically, the moment it is created. You can “register” a copyright, but this only serves as evidence in case of an intellectual property claim against you. It provides no immunity from litigation, and is not a requirement for original copyright ownership.

Trademarks

In pre-industrial Europe, craftsmen would put their “mark” on things they made, which was usually unique to them. This is where we get the idea for the trademark: words, phrases, symbols, and designs that identify the source of a product or service are protected by modern trademark law. An example: Ford Motor Company makes a vehicle called a Focus. The Focus is a product Ford sells, which is protected by patents, while the Ford logo and name are protected by trademarks.

Industrial Designs

Distinct from the actual function of an invention (which patents are designed to protect), an industrial design is the ornamental or aesthetic aspect of something. Its shape, color, patterns, and visual aspects are considered a separately protected part of its intellectual property.

Patents

Patents are exclusive rights granted to a person or company over an invention. It allows the patent holder to decide how the invention can be used by others. Part of the process of gaining a patent is fully outlining the technical aspects of the invention, which are then publicly available. This way, the patent holder keeps the sole right to profit from their idea, while ensuring the knowledge of its design is preserved.

Trade Secrets

A formula, practice, process, design, instrument, pattern, commercial method, or compilation of information that a company can profit from is considered a trade secret. Distinct from patent law, trade secrets are protected by their own set of laws that differ by state. Colorado’s statute on trade secrets defines them:

“(4) ‘Trade secret’ means the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. To be a “trade secret” the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.”

C.R.S.A. § 7-74-102

In other words, for something to be considered a trade secret, steps had to have been taken to keep it a secret. Since patents are public record, trade secrets aren’t necessarily patented.

Geographical Indications

This part of the law is why only oranges grown in Florida can be called “Florida Oranges.” Also called “Appellations of Origin,” It allows goods or services that are characteristic of a certain region to be stylistically identified as such. Meaning, multiple orange growers in Florida can call their oranges “Florida Oranges” (as part of their trademarks, if they so choose) while an orange grower in California, even if growing the same botanical strain, cannot use the “Florida” distinction. Another example would be Roquefort cheese, which is made from sheep’s milk and processed in the caves of Roquefort, France. Only the cheese made from that place can be marketed with the name “Roquefort.”

 

What to do if Your Intellectual Property is Misappropriated

If a violation of your intellectual property (such as your brand name) does occur, the case can be brought to court. This type of litigation can become a long and costly process if you are not prepared; consult with a business law attorney to make sure you have a well-prepared and thought-out case. There’s always a chance that the facts of the case are more complicated than they first appear. Don’t let that happen to you.

A number of remedies will be available in the event that an intellectual property owner sues and the lawsuit is successful. The court may order an injunction, which means the offender must stop what they are doing. They might also order the offender to pay a monetary sum to the IP owner to answer for damages. Or, the offender may have to agree to a license agreement once the owner’s rights are established. Then the IP owner can continue using their IP without interference.

Successful intellectual property litigation often awards millions of dollars in damages. The legal fees alone are often in the millions; in 2015, for example, Microsoft and Google settled a case in which Microsoft was paid over $14 million—for just legal costs. Or look to Nortel’s sale of their patent portfolio—the price tag was $4.5 billion.

 

Common Types of IP Litigation

In Colorado, we most often see IP-based litigation over trade names, Internet domains, and copyright infringement, but other civil suits also occur.

Trade Name Disputes

These could be as simple as someone using your company’s name without your permission, or as serious as defamation, where someone is deliberately attacking your company’s reputation.

Domain Disputes

These often occur because companies with similar (but not identical) names may seek the same Internet domain. Another common complaint is “Cybersquatting,” where someone buys a domain that is likely to be sought after by a certain company. They hold the domain “hostage,” seeking payment for surrendering the name. The US has passed legislation aimed to stop it with the “Anticybersquatting Consumer Protection Act” (ACPA). In general, according to rules set forth by ICANN (Internet Corporation for Assigned Names and Numbers), disputes can be settled under the Uniform Domain-Name Dispute-Resolution Policy. The policy outlines standards for how to resolve the dispute.

Copyright/Trademark Infringement

Copyright infringement “occurs when a copyrighted work is reproduced, distributed, performed, publicly displayed, or made into a derivative work without the permission of the copyright owner.” Licensing disputes, involving royalties and fees paid to a copyright owner, are common examples of copyright infringement. Copyright litigation can help you secure your intellectual property and recover profits lost from its misappropriation.

Royalty Contracts

Royalty is a percentage or fixed amount the originator of a product or service receives of every sale. This percentage is agreed upon in a contract between the creator and the manufacturer, publisher, distributor, retailer, or agent (depending on what the product/service is and who is selling it). Royalties could be paid for the sale of inventions, books, movies, film scripts, musical compositions, or pretty much anything else that could be sold. Royalty agreements can be complicated, and are uncharted territory for many people who are unaware of the law and their rights. If possible, don’t enter into a royalty agreement without consulting an attorney, who can help draft such an agreement, or make modifications thereto.

Robinson & Henry’s Intellectual Property legal team can help you tackle:

• Case assessment
• Domain name disputes
• Trademark, or copyright infringement
• Trade secret violation
• Industrial espionage
• Unfair competition
• Breach of licensing agreements
• Antitrust suits
• Getting back lost profits
• Anti-competitive conduct

Protect Against Intellectual Property Violations

An IP dispute can have profound ramifications. It can (and often does) ruin businesses on the losing end. Nearly all intellectual property legal cases involve the unauthorized use of ideas or trademarks for profit. This can be as cut-and-dry as stealing the recipe for a drink and then replicating it for sale, or by copying a design too perfectly, causing consumers to mistake the copy for the original. Profiting from stolen ideas is called “Unjust Enrichment.”

Infringement protection begins with the registration of intellectual property through patents or trademarks. Doing so in a timely manner improves the chances of getting a favorable ruling in any future case. That’s because timing is important—if you have a patent, or even just a patent application on file, it’s a concrete record of when your intellectual property came into existence, so if, for example, there’s a claim that you stole the IP, you’ll be exonerated by the dates of registry for patents, trademarks, or copyrights.

Protect your personal data, as well as your company’s. Invest in an encryption solution, and practice data safekeeping. Technical or trade secrets should be known only by those who need the information to do their jobs. In other words, operate with a “need to know” policy. Also, hire people you can trust. Vet your employees thoroughly; this costs very little and in the long term could literally save your business from disaster. Finally, hire an attorney. Even the most exhaustive security strategy isn’t perfect; know your legal options and have a plan.

Get Help from an IP Attorney

If you have created or acquired the rights to something unique, an intellectual property attorney can help you secure, protect, and profit from it in the long term. Alternatively, if your rights as a copyright owner have been infringed upon, you want legal advice to help you fight back. The golden rule of intellectual property is: the stakes are high.

Contact Robinson & Henry at (303) 688-0944 for more information and a consultation today.