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Economic development relies partly on protection of IP

Can economic development take place without the involvement of intellectual property? IP plays at least some role in the process, and in some cases maybe even a significant one, because it is a part of every business, and business is the engine that drives economic development.

Lawrence Maxham

Strictly speaking, there is no obvious inherent relationship between the two. However, virtually every new business and product is accompanied by at least one service mark or trademark. All original material, images or writings, created by companies or individuals have copyrights attached while new, useful and unobvious products or processes may be patentable or may contain trade secrets. These are all examples of a business' intellectual property.

Intellectual property is a broad term encompassing patents, trademarks, trade secrets, copyrights and domain names. The contention here is that every business owns at least some intellectual property rights.

New or small growing companies are focused on establishing the enterprise, eventually making money and becoming economically successful. All too often, the legal niceties of intellectual property are pushed to the background and either ignored or completely forgotten. This action assumes that the entrepreneur or company is in fact aware of the existence of intellectual property rights, which, like any property, must be nurtured and carefully protected. Unfortunately, many people in decision-making positions in businesses have never had any reason to learn and fully comprehend the legal implications of intellectual property.

"Failing to take the appropriate steps required to establish and maintain intellectual property early in the formation of the business can be troublesome, costly or even devastating to the business," according to Lawrence Maxham, principal of The Maxham Firm, a San Diego-based professional law corporation specializing in trademarks, patents and copyrights.

For example, a new product is marketed under a "new" trademark without either a proper search or taking the necessary steps to register the new mark. Another business or competitor elsewhere in some other part of the country could conceivably own superior rights to the same or a confusingly similar mark. If the business with the new product and mark discover the conflict early on, the damage resulting from having to change the mark may be relatively minimal.

But, Maxham says, if the problem arises only after substantial goodwill has been established in the new mark, the result of having to change the trademark could have serious consequences for the continued marketing success of that product.

"Such negative impacts, which can cause serious damage to the reputation, identity and image of the business, are in addition to the costs for creating a new mark and having it cleared, printing new labels and marketing materials, and explaining to customers and potential customers that this newly named and marked product is the same one they have come to know and love," Maxham added.

With respect to copyrights, according to Maxham, advertisements, training and instruction manuals, Web sites and others are all copyrighted creative materials. More importantly, so is computer software.

"The interesting fact about copyrights is that the author is automatically the owner of the copyright, and that ownership arises from the moment of creation," Maxham said.

No formal action is required to copyright creative material. Copyrighted works created by employees who were hired to perform such work are normally owned by the company under the work for hire doctrine. Any materials, such as software or advertising copy, created by outside consultants is owned by the consultant, unless there was an upfront agreement to assign the copyright to the company that engaged the consultant.

"This type of situation has been the cause of significant heartburn for many small, and even some large, companies," Maxham added.

While there are no formal documents required to be completed and filed in order to own copyrighted works, Maxham says registration with the Copyright Office is necessary to enforce these rights in federal court. In addition, transfers of ownership (assignments) must be in writing.

Patentable inventions include a condition of timing that does not apply to most other aspects of intellectual property. In the United States, public use, publication, offering for sale, or sale of a product of an invention or a product resulting from an inventive process triggers a one-year grace period. If a patent application is not filed within one year after the first of those actions or events to occur, a patent on that invention can never be legally obtained.

However, even if a patent application is filed within that first year, the right to file for patent protection in most foreign countries will have then been lost.

Trade secrets do not require any formal documentation to be filed in order to maintain those rights.

However, in order to maintain rights in trade secrets, they must be guarded and handled as business secrets. If these secrets are readily perceived by non-employees, then they are probably not secret. If the secrets become public in any way, even through a breach of contract or fiduciary duty, they are nonetheless gone and no longer can be a business asset.

"It is important for business owners and entrepreneurs to realize that intellectual property is a bona fide business asset and not merely a legal expense," Maxham explained.

He said a trademark has an indefinite life, as long as it continues to be used and appropriate renewals are filed. A copyright, for all practical purposes, lives in perpetuity. That is, copyrights owned by individuals last 70 years past the death of the author. If a company owns it, a copyright has a term of 95 years from first publication. A patent has a term, generally, of 20 years from its filing date, subject to a number of variables that can make the term not exactly 20 years. Trade secrets are protected as long as they remain secret and have some economic value. Domain names are related to the Internet and exist only if they are registered and maintained. They continue as long as their renewals are duly filed.

As assets of the enterprise, the preservation of intellectual property rights is essential and also relatively inexpensive when addressed early in the life of a business. But trying to retrieve or preserve rights that were improperly handled from the beginning or engaging in a legal battle over those rights, Maxham said, can range from expensive to catastrophic.

"Large or small, existing or fledgling, all companies must properly and aggressively protect their intellectual property as if it were any other business asset," he said. "Failure to do so could create an insurmountable financial hardship and result in irreparable damage to the image and reputation of the business they worked so hard to build."


Barrett is head writer at Beck Ellman Heald public relations

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