What federal or state laws protect owners of intellectual property

By Drew Stevens - February 28, 2020 - Technology & IP

Generally, intellectual property law consists of a framework of federal laws and state laws. For owners of intellectual property, it can be confusing at times as to the scope of what intellectual property law protects.

Traditionally, intellectual property law consists of four major areas  – trademarks, copyrights, patents, and trade secrets. Here, we’ll cover these four areas, as well as a fifth major source of intellectual property ownership – transactional law.

Intellectual Property Law in General

For intellectual property owners, knowing what federal law protects and what state laws protects can greatly aid in developing an intellectual property strategy. At times, federal law can offer a higher, national form of protection while state law can be more pertinent in intellectual property disputes or for intellectual property protected at the state level.

Federal Intellectual Property Law

Federal intellectual property laws specifically protect the registration of patents, copyrights, and trademarks, as well as protect trade secrets. Patents and trademarks can be registered with the United States Patent and Trademark Office, and the USPTO, through the Patent Trial and Appeal Board and Trademark Trial Appeal Board, also handle certain patent and trademark disputes. Copyrights are registered with the United States Copyright Office.

State Laws Protecting Intellectual Property

Intellectual property owners can also look to state law. Generally, at the state level, intellectual property protection includes trademarks and trade secrets. Each state can approach both of these areas of intellectual property law in slightly different ways. For example, in Ohio, trademarks are filed with the Ohio Secretary of State and feature a much faster process than filing with the USPTO, as touched on more below. Further, with trade secrets in Ohio, trade secret law comes from both common and statutory law.

Federal Copyrights

If you are the owner of intellectual property that consists of creative works such as literary, dramatic, or musical works (think movies, music, software, photography, writing, or architecture), you need to consider a copyright. Copyright intellectual property laws protect “original works of authorship” which are “fixed in a tangible medium of expression.”

The owner of a copyright, per the Copyright Act of 1976, has the exclusive right to control the use of the copyrighted work. This extends to the major uses of a copyright such as the distribution, performance, reproduction, and display of the work. Translated to plain English, if you create a movie, someone else generally cannot go and display that movie for others.

A common question for owners of a copyright is when copyright protection actually kicks in. Contrary to the belief of some, you do not actually have to register with the United States Copyright Office for copyright protection to start – copyright protection in fact attaches the minute your work is fixed in a tangible medium.

This said, there can be incredibly powerful benefits to registering your copyright with the USCO. If you were to bring a copyright infringement lawsuit for someone stealing or using your copyrighted work, USCO registration can establish prima facie evidence of the ownership of your copyright. Further, in the event you prevail with your copyright lawsuit, copyright registration may make you eligible for statutory damages and attorney fees.

An important exception to keep in mind for copyrights is the “work made for hire” doctrine. Basically, if you are an employee of a company, and you create a copyrighted work as an employee or within the scope of your employment, the company is the owner of that intellectual property. Even if you are an independent contractor, the work made for hire doctrine may still apply, depending on the terms of your contract, and the company paying you may own the copyright.

Trademarks

If you are an intellectual property owner who is concerned with protecting your brand name, your logo, or your slogan, you should considering filing a trademark under federal or state law. When researching whether to file a trademark, confusion can arise as to whether federal or state laws protect owners of intellectual property and trademarks. The short answer is that both may apply.

Federal Trademarks

Federal trademarks are filed with the United States Patent and Trademark Office and are a product of United States federal law. A federal trademark can help protect ownership of a number of different facets of your business, such as a name, slogan, phrase, or logo. You may even be able to trademark things like colors, sounds, and holograms.

Federal trademark laws can protect marks that you are currently using in commerce and marks that you may want to use in the future. If you are currently holding your mark out to the general public, you’ll likely want to file a 1(a) application. In order to successfully complete a 1(a) application and have your trademark protected, you’ll need to submit examples to the USPTO of how you are currently using your mark.

In terms of laws protecting intellectual property and trademarks that you may pursue in the future, you may want to consider the 1(b) application. With the 1(b) application, you are filing for a trademark that you are not currently using at the time of application, but you may use in the future. Given that laws protecting trademarks can sometimes boil down to “first come, first serve”, a 1(b) application can be critical to reserving future rights.

Once a 1(b) application is approved by the USPTO, you have six months to demonstrate use of the trademark. However, keep in mind that you can request a limited number of extensions for additional six-month periods.

Another key point to understand in protecting intellectual property and trademarks is the class system for filing trademarks. When you file a trademark, try and think of taking all possible services and products that exist and dividing them into forty-five different classes. Depending on a business owner’s services or products, you may want to file in a particular class or even multiple classes.

For example, say you run a technology company that offers certain consulting services, including an app. To file a trademark for the app, you would file in international class 009. For the overall technology services offered by your company, you may file in class 042. And finally, for the consulting services aspect, you may also file in international class 035.

State Law and Trademarks

Trademarks can also be filed at the state level. One of the more important distinctions between the state trademark and the federal trademark is the geographic scope. With a federal trademark, the scope of the trademark protection extends across the national level. With a state trademark, you are just protected for the particular state in which you file a trademark.

In contrast to the federal trademark application, a state trademark application can be approved in a fraction of the amount of time it takes for registration of a federal trademark, depending on your state’s laws. In Ohio for example, a state trademark can be approved in a matter of weeks.

State trademark applications can also be much simpler than their federal counterparts. A number of states, including Ohio, feature applications that are not more than a few pages. In Ohio, Ohio Secretary of State Form 555 is three pages and only asks for basic information regarding the trademark and the owner of the trademark. The filing fee for a State of Ohio trademark is also a fraction of the federal filing fee. If you are concerned about your protected intellectual property at a state level, a state trademark can be a cost effective and efficient solution.

Federal Patents

A cornerstone of ownership of intellectual property, patents can be a tremendous asset for any growing company. When you have a patent, you have the legal right to exclude competitors from making, selling, using, or importing your invention for a specified period. Holding a patent can equate to a certain competitive advantages or ability to monetize your invention, including in the form of licensing your patent to others.

To be able to patent your invention, it must be novel, nonobvious, and useful. To meet the novel requirement, your invention has to be substantially different from anything in the public knowledge. This generally includes anything available on the open market or anything that has been previously patented.

To be considered nonobvious, your invention must be viewed as surprising or unexpected from the perspective of someone who is skilled in the particular field of your invention. This can be a particularly confusing requirement, and whether your patent is nonobvious can come down to an interpretation by your assigned patent examiner.

A patent protects owners whose inventions are useful. To be useful, the invention must provide some practical benefit and be operable. In other words, at least in theory, your invention must work.

Types of Patents

Federal law protects different types of patents in different ways. The two main types of patents – utility patents and design patents – have different characteristics and periods of protection.

Utility patents generally protect the way your invention functions and how it is used. Utility patents are available when you create a process, a machine, a manufacture, a composition of matter, or an improvement of an existing idea. Utility patents generally are good for up to 20 years, starting on the date when you first file the patent application.

Design patents help protect the way an invention looks. Design patents are primarily mean to address ornamental, non-functional features of your invention. Federal law protecting design patents stipulates that design patents are good for 14 years, starting from the date the design patent is first granted.

Trade Secrets

A common question we field is whether federal or state laws protect trade secrets. The answer is both, but only really as of fairly recently. Up until a few years ago, state law was the primary forum for the protection of trade secrets. However, the Defend Trade Secrets Act, passed in 2016, created a definition for trade secrets at the federal level and a right of action for trade secret misappropriation.

Federal Laws Protect Trade Secrets

Under the DTSA, the definition of a trade secret is quite broad. This includes “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.”

The DTSA also goes into detail regarding what constitutes misappropriation. One case of misappropriation occurs when there is an acquisition of a trade secret where the acquisition is known (or there is reason to know) to have occurred by improper means.

Another example of misappropriation is where disclosure or use of a trade secret occurs without express or imposed consent by a person who (i) used improper methods to acquire knowledge of the trade secret; (ii) acquired the trade secret where the person was required to maintain confidentially of the trade secret or limit the use of the trade secret; or (iii) derived the trade secret from or through a third person who was required to maintain confidentially of the trade secret or limit the use of the trade secret.

State Laws Protect Ownership of Trade Secrets

At the state level, most states have adopted or have implemented modified versions of the Uniform Trade Secrets Act. As the name suggests, one of the main goals of the UTSA was to establish fair and uniform standards and definitions of trade secrets and protection of trade secrets.

Ohio is one of the states that has adopted the UTSA. The definition of a trade secret is codified in Ohio Revised Code section 1333. Ohio law defines a trade secret in a similar manner as what is found in the DTSA in that the trade secret must derive economic value from not being generally known and is the subject of efforts to maintain its secrecy

Further guidance on trade secrets has come from Ohio case law, most notably from the Ohio Supreme Court. Ohio laws state a six-factor test in determining whether certain information is a trade secret. The six factors include:

1. The extent to which the information in question is known outside the business.

2. The extent to which the information is known to those inside the business.

3. The precautions taken by the owner of the trade secret to guard the secrecy of the information.

4. The savings effected and the value to the holder in having the information as against competitors.

5. The amount of effort or money expended in obtaining and developing the information.

6. The amount of time and expense it would take for others to acquire and duplicate the information.

Transactional Intellectual Property Protection

By now, hopefully you have gathered that intellectual property protects a variety of components of a company’s IP portfolio like patents, copyrights, trademarks, and trade secrets.

For some businesses though, protecting the company’s intellectual property might occur most often through the contracts that it enters into with a variety of groups, such as vendors, suppliers, partners, and employees. Here, one of the most powerful forms of intellectual property protections occurs with well drafted provisions that touch on ownership of intellectual property, scope of confidentiality and proprietary information, and licensing.

Intellectual Property Rights and Software Development Agreements

To better illustrate this, let’s examine two versions of a software development agreement. With a software development agreement that is favorable for the developer, intellectual property rights may be defined very broadly. Typically, this would include something like all registered and unregistered rights, including but not limited to all patents, copyrights, trademarks, trade secrets, and other intellectual property rights in any jurisdiction in the world.

We would then take that broad definition of intellectual property rights and combine that with another broad definition, this time for what constitutes work product. The definition for work product would include the actual software itself, the ultimate deliverables, and any documentation related to the work product.

The developer-friendly software development agreement then basically states that all right, title, and interest to the work product and intellectual property is owned by the developer. The agreement then licenses the work product, deliverables, and intellectual property rights to the customer, but the customer does not actually own any of the above.

The end result is that all of the intellectual property rights stay with the developer, and this gives the developer an incredible amount of leverage should the customer breach the software development agreement, by for example, failing to pay the developer.

Now, contrast this with a customer-friendly version of the software development agreement. The customer version would also want to have the broad definitions contemplated above for intellectual property rights and work product. However, this time, the agreement states that all of the work product and intellectual property rights are owned by the customer.

Such ownership would include having the agreement stating that all work product and associated intellectual property rights are irrevocably, and in perpetuity, transferred to the customer. This would also include classifying the work product as “work made for hire” under the Copyright Act.

The end result this time around is that, generally, regardless of agreement termination or developer issues, the work product and intellectual property rights are owned by the customer. This would likely enable the customer to take the software to another developer for work in the event the original developer is failing to meet its obligations and milestones.

Intellectual Property Law and Employment Agreements

Another great illustration of transactional intellectual property protection lies in a well-drafted employment agreement. A good employment agreement will go into great detail regarding what intellectual property is owned by the employer. At minimum, the agreement should state that all inventions, techniques, modifications, designs, and works that are created, conceived, or developed by the employee are property of the employer when:

1. any of the above were developed while the employee was performing his or her duties for the company;

2. any of the above were developed using any of the employer’s resources, such as office space, technology, equipment, or facilities; or

3. any of the above is based upon any of employer’s confidential or proprietary information.

Having a proper definition for confidential and proprietary information is also crucial. At minimum, this definition should include operations information, any computer code, trade secrets, pricing, customer lists, products and services specifications, and all financial information.

Finally, your employment agreement should make clear that when the employee leaves the company, the employee is contractually obligated to return all company property. This includes things like all company documentation and records, laptops, and hard drives.

Protect Intellectual Property at your Company

Working to protect your intellectual property can entail addressing multiple aspects of your business, including filing for traditional intellectual property registrations and rights and improving your contracts. Contact one of our Columbus intellectual property lawyers in the event you feel that your company’s approach to intellectual property needs assistance.