By Harley Blosser and Clayton Zak
When many companies consider protecting a new product line (or a newly acquired one), they automatically start (and stop) thinking of intellectual property (IP) protection by thinking “get a patent”. And patents should almost always be a major tool to consider in a company’s IP Toolbox as it is quite literally the most powerful economic tool in the free world. A well-written U.S. patent can be an absolute government-sanctioned monopoly allowing small and medium-sized companies to stand up toe to toe with the big boys of commerce in their field for up to twenty years.
Also, if fully calculated in terms of economic power, the cost of obtaining a U.S. patent (especially compared to elsewhere around the globe) is a substantial bargain, a real winner of a “bang for your buck” – again, if it’s description and claims are crafted to give meaningful protection for your products or processes.
Moreover, once patent protection is established (to a certain extent, even applied for), there is no need to worry about keeping your innovation secret. In fact, your patent will be published to the world and in most instances, you are required to mark your covered products, either literally or virtually, to provide notice to the world that you have obtained patent protection.
But, given their obvious attraction, why stop your IP deliberations at the patent waterline? Many economically valuable innovations simply can’t be patented. For example, there are growing numbers of areas that the Supreme Court and other federal courts have carved out as exceptions to patent protection. Prime examples are many areas of process innovation; business methods and even diagnostic techniques. Even the field of computer and digital software must be looked at to see if patent claims can be crafted in such a way as to pass muster at the USPTO.
Additionally, while “up to twenty years” of patent protection may seem quite long, it is nonetheless time-limited, and the public disclosure of the patent may make your innovation a prime target for competition. Competitors can use the public disclosure as a road map for designing around your issued patent claims and to evade enforcement of your monopoly.
Moreover, many innovations, such as a company’s insider information on making a competitively better product or service, may simply be more valuable as company secrets than splashed across the USPTO’s Patent Gazette for all to see.
Thus, your company should always look at trade secret IP protection as a possible alternative to, or better yet, an add on IP to strictly relying just on patents alone. To make a finer point, where appropriate, the most significant advantage of trade secrets is that they need never die. Just ask the folks at Coca-Cola® who recently celebrated the 130th anniversary – or the equivalent of at least 6 and ½ patent lives and ticking on – of their “secret formula” for making their highly valuable coke.
Of course, to be amenable to trade secret protection, your company must meet certain requirements. The principal requirements are: (1) the information to be deemed a trade secret is actually secret; (2) the information confers a competitive advantage, and (3) the information is subject to reasonable efforts to keep it secret. While the first two are somewhat no-brainers, number (3) can be slippery, and, in our opinion, should be a well-designed program entered into with the assistance of an experienced IP attorney. Unfortunately, once gone, trade secret protection can often not be recaptured. Thus, programs for their protection must be safeguarded, sometimes both physically, but also with appropriate paperwork to prevent their walking out the door, e.g., with a former employee.
Trade secret protection also has limitations. If the trade secret can be reverse engineered by a competitor, for example based on your publicly available product, then the competitor is free to use the subject of the trade secret. In other words, trade secret protection protects against corporate espionage, not fair competition, and independent development. In contrast, a patent protects against competitors’ infringing products even when such products are developed independently and/or without knowledge of your patent.
Another important tool in the IP tool chest to keep in mind, e.g., particularly where software innovation may be the key value proposition, is copyright protection, or copyright coupled with either or both patent and trade secret protection. A major benefit of copyright protection is that it last so long – many decades at a minimum. Copyright protection is the most basic protection for software and will typically prevent a competitor from copying code for its own software. Copyright has limitations though in that it does not protect an underlying idea or information. Rather copyright just protects the expression of that underlying idea or information. A competitor who develops software that provides the same functions as your product with code that is not similar to yours (e.g., in another programming language, with different structure and/or syntax, etc.), does not infringe your copyright even though it accomplishes the same functions.
In order to get the most protection for a software related innovation, a combination of IP protection should be considered. This can also serve as a good example of how the different types of IP protection can be layered together. Taking software as an example, a copyright registration can be used to protect the expression of the code. This can be useful in protecting against direct copying. A patent can be layered on to protect the functionality of the software innovation beyond the exact expression of the code found in the copyright. The patent can therefor provide protection for features coded for in a different manner by a competitor. The copyright registration still provides value though because in a direct copying situation a copyright registration is often simpler to enforce and a copyright registration provides additional value and tools (e.g., statutory damages which patents do not provide for).
Trade secret protection can also be used for software innovations in combination with other forms of IP protection. Typically, trade secret protection is not used in combination with copyright registration because the secret must, well, be kept secret, and copyright registration requires providing a copy of the code to the copyright office (with a somewhat complicated exception). However, an application for a patent essentially only requires a description that allows a person of skill in the art to make and use the invention. Depending on the type of software innovation, some related information may be held as a trade secret. For example, if the innovation is in providing a new type of functionality or process and later development is used to determine optimum values for the innovation (e.g., optimized coefficients for an algorithmic process), then a patent application can be filed for the overall process while the optimization (e.g., the values of the coefficients) is held as a trade secret. This allows for trade secret protection beyond the term of the patent while also providing the expanded protection of the patent during its lifetime.
As demonstrated by this example, the whole IP toolbox should always be considered when protecting an innovation. The different tools each have strengths and weaknesses and offer different, but often overlapping, protection. Getting the most effective protection for your innovation is a big job; one that more often than not requires more than one tool.
Beyond what we have mentioned in some detail here, there are other forms of IP that may be usefully employed in a “full-protection” package in order to maximize your company’s competitive advantage. For example, you can also seek to protect your products’ aesthetic (non-functional) features, and possibly some eye-catching product packaging features as well, through the use of our U.S. design patent system. Similarly, you will likely want to consider trademark and trade dress protection to protect your company’s branding and developed good will in selling and marketing your key products and services. These latter IP protections are essentially unlimited in time, subject to simple renewal and/or continuous use requirements and can propel your products’ primacy in the marketplace as the trusted originator well past the typical life of a U.S. patent.
Our bottom line take away for you from this article: consider all of your IP tools when deciding how to best protect your company’s products and services, and your new innovations as to them as you move forward. It is rare that any two situations line up precisely the same. Therefore, fashioning your optimum IP set of solutions will just as likely vary in the tools employed as well.