Intellectual Property Protection
In the fast-paced world of technology and innovation, the protection of intellectual property (IP) has become more crucial than ever, particularly in the Information Technology (IT) sector. If we look at the S&P 500 companies, 90?percent of their asset value was intellectual property, and just 10 percent consisted of tangible assets in 2020, according?to?the study by Ocean Tomo. Thus, today, it is brands, design, and technology, rather than physical assets, that determine a business's ability to grow and compete.
This article explores the significance of intellectual property and provides guidelines for its protection.
Let's start with the basics of intellectual property, namely what it is. According to the World Intellectual Property Organization, intellectual property is defined as intangible property created by the mind, such as inventions, literary and artistic works, and designs used in commerce. IP is legally protected, allowing individuals or businesses to receive recognition and determine how to exploit what they have invented or created.
Intellectual property rights, which can be protected by law, are primarily categorized into:
Copyright is a type of intellectual property that protects?original works of authorship once they are fixed in a?tangible form of expression. There are many different types of works in copyright, including paintings, photographs, etc. In the IT industry, copyright is what you need to protect source code, object code, and user interfaces.
Patent is?an exclusive right granted for an invention or utility model. In the IT industry, patents serve as a means of protecting software architecture.
Trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Apple, Nike, and Coca-Cola are examples of well-known trademarks.
Trade secrets are IP rights on confidential information that has intrinsic economic value and can be sold or licensed. In general, any confidential business information that provides an enterprise with a competitive edge and is unknown to others may be protected as a trade secret. One of the most famous and notorious examples of trade secrets is the Google search algorithm, which is used to extract and present information according to the user's request.
Industrial design constitutes the ornamental or aesthetic aspect of an article. A great example of an iconic industrial design is the Coca-Cola "Contour" bottle, which has become famous all over the world and is used by many people every day.
Why do you need to protect your Intellectual Property?
With the advent of the Internet, companies have been able to carry out their business activities at a reduced cost, but this has also increased the likelihood of intellectual property theft. Investing in IP protection may initially seem like an unnecessary expense, especially for small and medium-sized enterprises. Failure to do so, on the other hand, might be tremendously costly in the long run.?
In a case that sounds more like the plot of a spy novel, American Superconductor, an energy technology company, has entered into a partnership with Sinovel, a Chinese wind turbine manufacturer, and opened a branch in China. As part of the agreement, AMSC developed a technology to power Sinovel turbines, which generated billions in revenue for the company. The plot began with an attack, in the style of an intricate Cold War spy game, when Sinovel refused to pay for a $70 million shipment it had already received from AMSC and to accept the next shipment that was ready to go. As it turned out, Sinovel had bribed an AMSC employee, received the source code for the wind turbine control software, and thus no longer needed AMSC's services. This story culminated in a lawsuit filed by AMSC against Sinovel, with a total worth of $1.2 billion. The company's losses due to an unscrupulous counterparty and the costs of litigation almost killed AMSC. However, the outcome was positive for the company: an investigation was conducted, and the court ordered Sinovel to pay AMSC's losses.
As a conclusion from this case example, it is critical for businesses to invest in safeguarding their IP assets.
If you are still in doubt about whether to invest in intellectual property protection, we have grouped the main reasons for making a positive decision, especially for the IT sector.
Investors are more inclined to fund projects or startups that have a solid foundation of intellectual property protection.
Controlling and licensing your intellectual property opens up new revenue streams and business models. This might be particularly beneficial for smaller businesses with limited resources to engage in research and development.?
When a business takes the necessary steps to protect its IP, it demonstrates its commitment to quality, innovation, and the seriousness of the business itself. This, in turn, enhances a company's reputation and builds trust with clients and stakeholders.
Collaboration is a cornerstone of the IT industry. Intellectual property protection allows these collaborations to occur with greater trust and transparency, as each party's rights and responsibilities are clearly defined.
By protecting their IP assets, businesses can reduce the likelihood of legal disputes and ensure that they can defend their rights if necessary.
How is intellectual property protected?
It may seem initially nerve-racking or time-consuming, but protecting your IP is well worth the time and effort and isn’t as difficult as you may think. As mentioned before, the protection of your intellectual property may differ depending on its type. In order not to overwhelm you with various aspects of intellectual property protection, below we will briefly summarise each type of IP, which will consist of answering 3 questions: 1. whether registration is required for protection; 2. what does protection give me; and 3. how long is the protection period.
Copyright.
1. Obtained automatically without the need for registration. However, most countries have a system in place that allows voluntary registration.
2. The right to use in any manner; the right to claim authorship; the right to allow or forbid the use of the work by other persons.
3. Moral rights have no expiration date. Economic rights have a time limit, which is usually equal to or longer than 50 years after the creator’s death.
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Patent
1. It is necessary to go through the procedure of patent registration.
2. The right to decide who may or may not use the patented invention or utility model.
3. Granted for a limited period, generally 20 years from the filing date of the application.
Trademark
1. To be able to prohibit others from using an identical TM, you need to register it. However, if you only want to use the TM, registration is not necessary.
2. Trademark registration will confer an exclusive right to the use of the registered trademark, and to prohibit its use by others.
3. The term of trademark registration can vary but is usually ten years. It can be renewed for the same period on payment of additional fees.
Trade secrets
1. Protected without registration.
2. The right to prevent the information lawfully within their control from being disclosed, acquired, or used by others without their consent in a manner contrary to honest commercial practice.
3. Protected for an unlimited period, unless it is discovered or lawfully acquired by other persons.
Industrial design
1. It is necessary to go through the registration process. However, in many countries, there is a concept of unregistered design rights.
2. The right to restrict third parties from making or selling articles bearing or embodying a design that is a copy, or substantially a copy, of the protected design.
3. A registered design remains valid for five years from the date on which you filed for protection. The registration can be extended up to a maximum of 25 years.
Besides registration, we recommend taking the following precautionary measures to ensure that your intellectual property rights are not infringed:
The NDA will prevent your employees or business partners from disclosing confidential company information, whereas the NCA will prevent your employees from competing after the expiration of their employment or service agreement.?
As proof of the effectiveness of this preventive measure, I will cite a real-life case in which a semiconductor chip company received $845 million in compensation after its trade secrets and proprietary information were stolen. The circumstances of the case were that two employees of ASML, a Dutch semiconductor company, stole confidential data and sold it to a competitor, XTAL. However, the employees were bound by an NDA, while XTAL's acts were found by the court to violate fair competition. As a result, XTAL was ordered to pay a substantial fine, and ASML was able to quickly protect its intellectual property.
This may require taking measures such as separating teams to prevent file sharing, training employees on your company's best security practices, and updating passwords frequently.
Intellectual property belongs to its creator unless it is created by an employee in the course of his or her employment. For example, if you contract out the creation of copyright works, such as website design, you will not own the copyright works unless there is an agreement in place, typically called an assignment, to transfer ownership to you and your business.?
It is also worth noting that it is vital for you to document your discoveries. If another company receives your confidential information as a result of a leak and attempts to repurpose or reproduce your ideas, IP creation or invention records can prove the legitimacy of your intellectual property rights.
As there are costs associated with protection, you need to adopt a sound commercial strategy for protecting your IP. Deciding what and when to protect should be based on maximizing the benefit of protection, minimizing the risk of using the IP, and creating the best cost/benefit approach.
All of the aforementioned guidelines are preventative measures that should be taken as soon as possible. Otherwise, if your intellectual property rights are infringed, challenged, or not recognized, you have no choice but to seek mediation or to initiate administrative or judicial proceedings. In this instance, you must retain the services of a knowledgeable intellectual property lawyer, whose fees are frequently prohibitively expensive. Given this, it is worthwhile to take preventive actions to decrease the potential for intellectual property infringement.
Conclusion
Intellectual property protection is instrumental in shaping the trajectory of the IT sector. It encourages innovation, attracts investment, improves market competitiveness, and propels economic progress. As the IT industry continues to evolve and innovate, ensuring effective IP protection is vital to nurturing a culture of creativity and sustaining growth in this dynamic and competitive field.?
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10 个月Exciting read on intellectual property protection! ??