There are four primary types of intellectual property: copyright, patent, trade-mark, and trade secret.1
A copyright involves exclusive rights given to the creator of an original, expressive work (literary, musical, dramatic, architectural, etc.) that allow the owner to reproduce, copy, distribute, perform, display, or sell their work. These rights are usually extended for a specific time period. They protect the form of expression, not the subject matter of the work. In the United States, these rights are automatically granted to the creator, though formal registration of copyrighted works can provide additional benefits to the copyright holder. These rights are constrained by a series of limitations and exceptions, such as the first-sale doctrine (which allows you as a customer or second-hand bookstore, for instance, to resell a used book) and fair use doctrine (which permits the creative reuse of copyrighted works in many cases, including allowing comedians to parody the works of others in certain circumstances, for example).
A patent gives a holder the legal right to prohibit others from using, making, selling, or importing a new and useful invention without permission. This invention may be in the form of an idea, or in some countries, a business method. A patent usually has a time limit and does not give the holder ownership rights (beyond the right to restrict others’ use of the product) if the holder did not originally possess those rights.
A trademark distinguishes a product from others in the marketplace and indicates its origin. Although a trademark can protect a wide range of modes of expression (words, phrases, or logos), it has to be distinctive and must represent something sold in the marketplace to receive federal protection in the United States. Trademarks ought to be registered with the US Patent and Trademark Office or similar offices around the world in order to be effectively licensed or defended.
A trade secret is information a company utilizes in its business that is kept secret in the ordinary course of business to maintain the company’s competitive advantage over competitors. It cannot be readily ascertainable by those who could profit from its disclosure and must derive independent economic value. Trade secrets can include formulas, patterns, processes, and devices. Google’s search algorithm or Coca-Cola’s formula are both examples of important trade secrets.
Other key terms used throughout the book are:
Character and Entertainment Merchandising
Character and entertainment merchandising involves the authorized use of the well-known personality features of a celebrity or fictional character in connection with the sale of goods or services. The primary goals of character or entertainment merchandising are to generate income for the owner of trademark and copyright interests in the original works as well as encourage customers to buy the product or service due to their affinity with the celebrity or character. The licensing of children’s characters is a particularly strong area. Dora the Explorer, Sesame Street characters, Mickey Mouse, and others generate substantial income for the holders of the rights, and can help sell materials to young consumers and their parents. For nonprofits, licensing may also serve other crucial functions, such as funneling young people back to a Web site or program where they can gain educational benefits.
Court of Appeals for the Federal Circuit
In the United States, this special appellate court—also referred to as the “CAFC”—handles matters related to patent and trademark, among other specialty subjects. The Court of Appeals for the Federal Circuit is one of thirteen appellate courts and is located in Washington, DC.
Intellectual Property Audits
Intellectual property audits are evaluations of the merits, legal status, and value of a company’s intellectual property assets. Audits help companies and other organizations determine what intellectual property assets they own, and discover current or potential legal problems or opportunities regarding their claims of ownership. An audit can also help a company determine if it has any unprotected assets, and from there, the necessary steps to protect these assets. Audits are useful for companies in the process of selling or acquiring property assets from a third party as well.
Intellectual Property License
An intellectual property license is an agreement through which an owner gives a licensee permission to use the owner’s intellectual property (a patent, trade-mark, name, etc.) in connection with the licensee’s product or service. The right may not be exclusive but it is usually granted for a finite time period, in a specified location and for a particular purpose.
Merchandising licensing entails an agreement through which the owner of a product (artwork, television program, book character, etc.) gives a company permission to manufacture items that use either the product or parts of it in exchange for compensation. The owner’s item must be protected under trade-mark or copyright laws for the agreement to be valid.
Reasonable and Nondiscriminatory Licensing Terms
Reasonable and nondiscriminatory licensing is used during industry standard-setting procedures. It is a mechanism by which companies that hold patents that are essential for organizations to conform to standardization efforts agree to allow their intellectual property to be licensed by other participants at a reasonable fee.
Sports licensing refers to licensing agreements by famous athletes, professional sports organizations, and universities with companies to use their name, logo, or related entities for purposes such as selling merchandise. For instance, the large professional sports leagues—such as Major League Baseball and the National Football League in the United States, and professional soccer (football) associations around the world—reap large profits from the sale of merchandise with logos and other protected intellectual property printed on them. Major colleges and universities, especially those with prominent sports teams, similarly earn substantial returns from licensing.
Trademark and Brand Licensing
Trademark and brand licensing refers to a company licensing its name, logo, or brand to be used on products sold by another entity. This is a dynamic segment of the licensing industry at large.2
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
The TRIPS agreement is the most comprehensive international treaty on intellectual property rights. Countries that have signed the TRIPS agreement commit to provide a minimum level of protection for other members’ citizen’s intellectual property rights. The treaty’s purpose is to promote the effective protection of intellectual property rights, reduce obstructions to international rights, and ensure that a country’s regulations do not restrict trade. The TRIPS agreement also provides a mechanism for addressing intellectual property disputes.