Legal Update - July, 2003
Understanding and Protecting Intellectual Property – Part II

In our June update, we discussed two forms of IP that can last forever – trademarks and trade secrets. In this update, we review two forms of IP that have finite durations: patents and copyrights.

Patents

A patent gives its owner the exclusive right to exclude other parties from making, using, selling, offering to sell, or importing an invention in the United States. To be eligible for patent protection, an invention must be new, useful and not obvious to a person skilled in the art or field relevant to the invention. Patents are not granted for mere ideas. It is essential to demonstrate that the invention is operable. A patent application must include a written description of the invention and the manner and process of making and using it.

Utility patents are granted by the U.S. Patent and Trademark Office for any new and useful machine, process (including business methods), article of manufacture or composition of matter, or any new and useful improvement, for a 20-year term from the date of application. Design patents are issued for new, original and ornamental designs for articles of manufacture and expire 14 years from the grant of the patent. If an inventor describes the invention in a written publication, uses it publicly or puts it on sale in the U.S., then the inventor must apply for a patent within one year, or else the inventor will later be barred from obtaining a patent.

Companies should require all outside contractors that will be hired for research and development purposes to assign all rights to, and make prompt disclosure of, all inventions or improvements to inventions. A company should also obtain a written invention assignment agreement from all employees who will be involved in researching or developing any inventions or improvements to them. Under such agreements, employees typically are required to assign all rights to, and to promptly disclose, all inventions (1) they make or conceive during their employment relating to the business of the company, its actual or anticipated research or development, or (2) which result from work the employee performs for the employer or otherwise from the employee's use of the employer's facilities, equipment, supplies or trade secret information.

Some invention assignment agreements also include what are known as "tail" or "holdover" provisions. These require employee disclosure and assignment of inventions related to an employer's business and made or conceived within a reasonable period of time after the employee’s employment terminates. In the first known case in Illinois, FVLD attorneys successfully represented an employer in a lawsuit to enforce such a "tail" provision in invention assignment agreements against a group of former engineering and design employees who had been lured away by a start-up company that wanted to quickly begin competing with our client. Special care must be taken in drafting invention assignment agreements and such "tail" provisions to help ensure they will be enforceable should a dispute later arise. Several states have laws, such as the Illinois Employee Patent Act, that govern the permissible breadth of invention assignment agreements. Some even require employers to provide employees with written notice at the time of entering into an invention assignment agreement as to allowable scope of such agreements.

Copyrights

Copyright protection extends to original works of authorship that are fixed in a tangible medium of expression. Among the expressions protected by copyright are literary, musical, dramatic, audiovisual, pictorial, and graphic works and sound recordings. The breadth of these categories is best illustrated in that computer software programs are viewed as literary works. Copyright law generally gives the owner of a copyright the exclusive right to reproduce the work in copies, to prepare derivative works based upon the work, to distribute copies or phonorecords of the copyrighted work, to perform the copyrighted work publicly, and to display the work publicly.

A mere idea in itself is not protected by copyright. The tangible expression of an idea, however, may be protected by copyright. Titles, names, short phrases or slogans are not protectable by copyright because they are not deemed to have a sufficient level of originality to be eligible for copyright protection.

A copyright is deemed to have been secured automatically when the work itself is fixed in a tangible form of expression. A new work is generally protected by copyright for the author's life and for 70 years thereafter. For works for hire (which are discussed below), copyright protection is for the shorter of 95 years from publication or 120 years from creation.

While registration in the Copyright Office is not required for copyright protection to exist, registration is required before an owner of a copyright may sue in federal court for infringement of a copyrighted work of U.S. origin. There are a number of other important advantages to registration of significant copyrights. Among them are that registration provides a public record of the claim of copyright. Moreover, if registration is made within five years of publication of the work, then the registration will provide evidence for a court to presume the validity of the registration and the facts stated in the registration certificate. Further, if the work is registered within three months after its publication or prior to an infringement action, then "statutory damages" and attorneys' fees may be available to the copyright owner, regardless of whether the owner is able to prove any actual damages or loss of profits as a result of the infringement.

Use of a copyright notice is no longer required on new works, but is highly recommended. A copyright notice serves the purpose of informing the public that the work is protected by copyright, identifying the owner of the copyrighted work and its year of first publication. In addition, use of a proper copyright notice should preclude an infringer from successfully raising an innocent infringement defense that might otherwise reduce an award of damages for the infringement. The form of notice for visually perceptible copies of works is the copyright symbol © and/or the word "Copyright" (or "Copr." for short), followed by the year of first publication and the name of the copyright owner. For example, a proper notice for this Newsletter is: "© 2003, Funkhouser Vegosen Liebman & Dunn Ltd." If full protection under international law is also desired, following the name of the copyright owner, one should also add the words "All rights reserved."

A work prepared by an employee within the scope of his or her employment is called a "work made for hire." An employer, and not the employee, is considered the author of a work made for hire. A company may also be considered the author of a work made for hire by an independent contractor provided that the company obtains a written agreement from the contractor that the work will be considered a work for hire. In cases where the employee or independent contractor status of an individual who will be engaged in creative work may be less than clear, it is therefore wise for a company to obtain a written work made for hire agreement.

Conclusion

In today’s highly competitive high-tech world, organizations must develop a cogent strategy for protecting their intellectual property, be they trademarks, trade secrets, patents, or copyrights.

more news...