Intellectual Property (IP) law plays a central role in the B2B industry. Most of the business professionals assume every idea or innovation is owned by someone, but that isn’t true. Ideas and innovations are as free as a bird under US law.

If you come up with an idea and share it with the person next to you, they are free to exploit, monopolize, and monetize it (possibly make millions of it). Penicillin, the antidote, became a classic example of patent wars. Alexander Fleming understood the potential of his creation and ensured it was freely available to as much of the world’s population as possible. He transferred his patent knowingly to the US and UK governments which were able to mass-produce it and save millions of lives.

Intellectual property (IP) helps with securing and enforcing legal rights to such ideas, inventions, designs, and artistic works. IP shouldn’t be viewed as a rule but an exception.

🛠Breaking it Down!

What is Intellectual Property and its various types? Where is it applicable?

Intellectual Property refers to the creations of mind, such as inventions, literary and artistic works, designs and symbols, names, and images used in commerce. Such consistent innovations and progress make it difficult for businesses and individuals to keep up with the trend. This makes them resort to faster and less expensive methods like imitating and copying.

As a result, one must understand the various types of Intellectual Property and access the perceived value, longevity, and cost-effectiveness of your Intellectual Property rights.

  • Patent

It allows the inventor to enjoy exclusive rights. A patent prevents others from using, buying, or selling the invention for a certain period of time without prior permission. The inventor can sell or transfer the ownership at a profit to another person or business.

The rights of a patent will be valid for up to 20 years depending on the patent type you apply for. But you have to be aware that your patent protection will be denied if the invention is obvious, not useful or morally offensive.

For example – Softwares are usually patentable as they function using algorithms and mathematics. But a software whose only purpose is to perform mathematical problems that convert one set of numbers to another cannot be patented. This makes the invention seem obvious.

Patent - Revvsales
Source: Bob Thaves Tom Thaves

The three different types of patents that you will get:

  1. Utility Patent: Concerned with innovation and technological advances and has validity for a minimum of 20 years from the date of application
  2. Design Patent: Concerned with the new and original designs for items with a validity that lasts for a 14-year term.
  3. Plant Patent: Concerned with the invention and discovery of a distinct or new variety of plants with a validity that lasts for a 20-year term from the date of application.

Patent protection lets the inventor enjoy the benefits of their research and help the economy grow by promoting creativity and knowledge sharing.

  • Trademark

A trademark is a distinct sign in form of a text, word, design, symbol, signature, shape, smell, color, sound, packaging, texture, or a combination of these elements. It allows the customer to identify the product or service and helps distinguish competitors from one another. It creates goodwill or reputation for the manufacturer or service provider.

For eg- Any person who looks at the below symbol will be able to associate it with Apple company and not the fruit. This symbol is apple’s trademark.

Trademark - Dealdesk
Source: Apple

Once a trademark is registered in the name of an individual or business, it will remain in their name, unlike patents, it will not expire.

  • Copyright

The primary role of copyright law is to protect the time, effort and creativity of the creator’s work. It grants the creator the ‘exclusive right’ to sell, publish and reproduce its literary and artistic creations. It is critical to know that copyright covers tangible forms of creation and not merely an idea. This differentiates copyright from a patent.

For eg – You had an idea to create an app and shared it with a friend. S/he used that idea and created another app on his own and registered it under copyright. Since you did not create a tangible form of your idea, this cannot be treated as infringement even though the idea was yours.

Copyright - Intellectual property
Source: 1111 Comics

What role does copyright play with open source code?

When you write code for software, that work is under exclusive copyright by default, but it comes with its own exceptions if it is open-source code. Open source is an unusual circumstance where the author expects others to use, modify, and share the work. But because the legal default is still exclusive copyright, the author needs a license that explicitly states these permissions. This is how open-source code works.

  • Trade secrets

Some secrets are best kept hidden. Here the secrets are of a business that gives them an edge over their competitors. Leaking such secrets can harm the business’s reputation and even suffer losses. Article 39 of the agreement on trade-related aspects of intellectual property (TRIPS) defines key aspects of trade secrets as follows:

  1. The information must be confidential
  2. It must have a commercial value
  3. It must be subject to reasonable security by the rightful holder to ensure the secrecy of information.
Trade secret - revvsales
Source: Baldwin, Mike

For eg – A very famous trade secret example is KFC’s recipe which was originally kept in Colonel Sander’s head. Eventually, he wrote it down which is now safely stored in Kentucky. The recipe is accessible by only two employees who are in a binding confidentiality agreement.

How can IP clause protect from infringement and benefit individuals and businesses?

Unauthorized use of intellectual property leads to infringement. To protect against infringement, one should notify the relevant audience of the existing rights. In case of a product, it can be done by marking the product with the patent number assigned by the patents and trademarks office. Also, a notice of trademarks and copyrights is given by placing the appropriate symbol (â„¢, ©, etc.) on the material, and then registering the mark or copyright so that it can be added to the government’s database.

When an IP asset is a product or a software license, the relevant audience can be notified through the terms set in the contracts. It will state who is the owner, who is using it, etc. It explains whether the agreement is to license your product or IP to another company (license-out) or license the product or IP from another company (license -in).

Such actions help to deter infringement by making owners right visible to those who might violate them inadvertently. This helps the owners to safeguard their creations and use it according to their wishes.

Contracts and Intellectual Property – The perfect mix!

Infringement - contracts
Source: Bob Thaves Tom Thaves

Contracts and IP go hand in hand and call for attention to detail. Complex contracts can result in litigation and unnecessary expenses. The clause should be defined with a view to maximize output and avert unprecedented damages. This is because, through contracts, IP can be sold, licensed or even open-sourced. A thorough review process is critical to safeguard your IP assets.

The risky areas are contracts with employees and contractors (third-party vendor) where the conflict of ownership for ‘work’ comes into the picture. This gives rise to two possibilities – an employee or contractor becomes the author or owner of the ‘work’, or
– move towards joint ownership with the company.

Therefore, it is essential to have a contract laid out with clear terms and conditions even before the work starts. It must specify who owns the IP that is created and how the IP will be treated in the future.

Intellectual property is pervasive, especially in the technology industry. It can be found in virtually any agreement and has to be protected and promoted. By striking the right balance between the interests of innovators and the wider public interest, the IP clause agreement aims to foster an environment in which creativity and innovation can flourish. The progress of humanity rests on its capacity to create and invent new works. Legal protection to these creations encourages commitments for further innovation leading to progress and development.

Dealing with Intellectual property clauses can be difficult. Do you have this clause in your contracts? How do you go about managing it? Share your experience and thoughts with us!