By Evan Smith
For entrepreneurs, intellectual property
rights are a key business tool that can enhance profit margins, market share, and name
recognition. Without these rights, companies with financial clout or superior distribution
channels may copy your approach and take over your market. Understandably, venture
capitalists like to see business plans that include protecting and exploiting proprietary
There are four major categories of
intellectual property protection: Patents, Trademarks and Unfair Competition, Copyrights,
and Trade Secrets. Each has a specific function and provides a different kind of
protection. Thus, each should be considered (and implemented where appropriate).
Patent Law protects
new products, features, methods, and operating sequences. A patent covers specific
features of a product or steps of a process (defined in the patent's claims) and the
patent can be enforced to prevent competitors from offering those features or performing
those steps. In internet-based businesses where a product or service is delivered using
unique custom software, patent coverage may be particularly important. If your method of
doing business is unique, the software that implements it may also be unique, and a patent
on the software could make it impractical for others to copy your business concept.
Design Patents are a
special category of patents that protect the unique ornamental appearance of a product or
Trademark Law protects
the "brand names" and domain names that distinguish your products and services
from those of competitors. These laws prevent another company from using a trademark or
service mark that is so close to yours that it is likely to confuse customers. Trademark
and service mark rights are established by using the marks in commerce, and the marks can
be registered to enhance protection.
laws are closely related; for example, the federal Lanham Act prohibits practices such as
copying product packaging or appearance in a way that creates confusion among customers.
Copyright Law prevents
others from copying (in whole or in part) the unique expressions of a writer, artist, or
programmer. Copyright does not protect the underlying ideas, systems, or factual
information disclosed in a copyrighted work, nor can it protect purely functional objects.
Copyright does not prevent others from creating similar material without having seen
yours, and does not prevent copying of short words and phrases (for example, trademarks
Trade Secret Law
protects business or technical information that has value because others do not know this
secret information. Examples include business plans, financial data, formulas, source
code, and future product ideas. Trade secret rights are established by carefully guarding
the information, using techniques such as physical security and confidentiality
agreements. If you are careful to maintain secrecy, yet your secrets are improperly
disclosed (for example by an employee or business associate violating a confidentiality
agreement), you may be able to obtain damages and prevent those receiving the secrets from
Consult your attorney for detailed advice
about how different forms of intellectual property protection can be applied to your
Copyright © 1997 Greenberg
Traurig - All rights reserved.
Used with permission.
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Resource Center Ground Rules.