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foundations and issues for netpreneurs:

intellectual property 101

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the audience: q&a

Mr. Sherman: This is your chance to interact with three or even four lawyers without getting billed for it in any way, shape or form. That's a real testimonial to the great work of the Morino Institute and We have a few questions already turned in, so I'll start with those. The first question is: Can you trademark a url?

Mr. Fingerhut: The answer is yes, if it's used as a trademark. That depends upon how it shows up on the Web page and whether or not you're actually rendering services under that domain name. The trademark office generally doesn't accord any distinguishing significance, however, to the generic top level domain—the .com, .net .org, etc.

Mr. Sherman: Another question: Is there some form of interim protection between nothing and a full-blown patent application?

Mr. Kaufman: Yes. The brief answer is that there's patent pending protection, which means you have a patent application on file. This affords you no real legal protection, other than putting others on notice that you consider the particular subject matter to be proprietary and expect to achieve patent protection at some time. This often has a chilling effect on others going ahead and copying that particular subject matter. You can achieve patent pending status by filing a formal patent application. That can be relatively expensive. You can also do it by filing what is known as a provisional patent application, one that has very few formal requirements and doesn't require patent claims. Claims are the portion of the patent that actually define the metes and bounds of the invention. They are difficult to draft and thus can be very expensive to prepare. Often, in the case of business methods, your business plan can be submitted to the Patent Office as a provisional patent application.

There are two caveats, though. Number one, the provisional patent application will never become a patent and will, in fact, become abandoned one year after filing if you don't follow with a non-provisional patent application. In the meantime, however, you will have patent pending status for what that's worth. The other caveat is that when you file a non-provisional after a provisional, you can obtain the filing date of that provisional patent application which gives you procedural advantages, but only to the extent that the provisional application disclosed what you are claiming. Again, these claims are the legal part of the patent application that define the invention. You get the date of the provisional only to the extent that the provisional supported these claims fully. So, in order to ensure that, you or your attorney need to put some thought into what you're going to claim. That takes away some of the economic advantages of a provisional patent application.


Mr. Sherman: To build on one topic we didn't really talk about much this morning is, can you weigh in on trade secrets as another method to protect a concept or idea?

Mr. Kaufman: As I mentioned earlier, trade secret is a good way to do that. There are two primary requirements. In the case of a business method, number one is that it provides you some commercial advantage over your competitors, and, number two, you have to maintain its secrecy. That doesn't mean total secrecy, however. You can tell others on a need-to-know basis under a confidential disclosure agreement, but, generally, every disclosure has to be with the understanding that it's confidential.

Trade secret protection can be very powerful, however, one limitation is that reverse engineering is a defense to trade secret appropriation. That means that if somebody comes up with the same business method you have by looking at your results and without access to your proprietary material, they can appropriate the trade secret either through reverse engineering or if they invent it independently.


Mr. Sherman: If you register a .org or .net url, and cannot get the .com, what exposure do you have from whoever has the .com? Also, how many different classes of use should you claim in the trademark application?

Mr. Fingerhut: The answer depends upon what type of activity is being undertaken at the .com address. Is it like the West Coast Video case where the .com owner is simply sitting on the domain name and doing nothing with it? In that case, it's not generating any trademark rights so there shouldn't be anything to worry about. If there is an active Web site, however, take a look at what type of business is being conducted and how much public recognition the company has. If it was and just happened to be available, I would say that's probably not a good idea., at this point, rises to the level of a famous mark. If it's just some company you've never heard of and your .net business is something different from the commercial activity taking place at the .com site, traditional trademark analysis would apply and you'd go through a "likelihood of confusion test." You'd examine the differences in the businesses, the differences in the customers, the strength of the mark and all the regular factors that go into that type of analysis. It really depends on what's happening at the .com.


Mr. Sherman: Here's a timing question. "We launched our Web site,, about a year ago. Can we still go for patent protection for the business method?"

Mr. Kaufman: That depends on whether it was more or less than a year ago. A person ordinarily has a one-year grace period from the time of their public disclosure to file a patent application in the US. Let's assume for a moment that a Web site is a public disclosure and that it tells enough about the method to enable someone to use it , that it's out there for the world. You can still file a patent application if it's within one year of when the site became public. Whether the site is a public disclosure or not is a factual determination. The problem here is that in virtually every other country in the world, the one year grace period doesn't exist. If it is, in fact, a public disclosure, most likely you've waived your rights to foreign patent protection.


Mr. Sherman: Are proper names of people covered under the anti-cybersquatting legislation you mentioned?

Mr. Fingerhut: Yes, they are. Under the anti-cybersquatting legislation, any person with a name can take action. Brad Pitt, for example, already filed a lawsuit under that statute. The person's name does not have to be used as a trademark. There was some concern in the Clinton administration initially when the bill came across that they'd be creating a federal right of publicity, but the law got signed anyway.


Ms. Shack: Good morning, I'm Ann Shack with If you have a trademark registered in the US and someone wants to register the same mark in a foreign country and take it global, is that company precluded from interfering with your US trademark registration?

Mr. Fingerhut: Trademark rights are territorial. A trademark registration in the US gives you absolutely no protection in Germany, for example. A German company could, if it filed an application or obtained trademark registration in Germany, go to other countries throughout the world where you hadn't gone (we're assuming the businesses are identical or at least related and the names are identical). That actually happens quite frequently. You would still hold the trademark in the US, assuming they hadn't made any usage here. Remember, however, you're talking about a global medium, so it presents interesting issues.


Mr. Jacobson: My name is Jim Jacobson with A lot of people have problems with the word "conscious," so we registered all the different ways of misspelling it. Is that necessary with the new legislation? Also, is it important to get the .net and .org or does the legislation protect you there also?

Mr. Fingerhut: Starting with the second question because the answer may be easier, I always counsel clients that if the .net and .org are available, you'd be well advised to get them for the $70 that it costs to register each of those domain names. In many ways, the distinction between .com and .net is becoming illusory, so that's certainly a good idea. Of course, it begs the question as to whether or not you want to go to the next level and register in some of the more popular country code top level domains in jurisdictions where you think you're going to use the mark—assuming there are no legal presence requirements that prohibit you from those codes.

On the first question, if you're concerned about some type of bad faith activity, and assuming that would be regarded as a distinctive mark, the anti-cybersquatting legislation would afford you some level of protection, at least in the US. If, however, you're just trying to cover your bases and you think that some of your customers don't know how to spell your name, it might serve you some additional protection to have variations of the domain names registered. That touches on a related topic, which is: Do you register potentially derogatory expressions of your name like or any of the other variations? Many companies choose to do that. It's not inexpensive and those who are trying to make their speech known to the world will find a way to do it regardless of what you come up with, but there are some obvious ones that you may want to register.


Mr. Jacobson: What's the disposition of the case in Greece? Is that similar?

Mr. Fingerhut: You mean "Greece's biggest book store?" About seven or eight months ago, a Greek company reserved the domain name (.gr is the country domain for Greece) and was touting itself as "Greece's biggest book store." It wasn't just a name issue; they had copied the entire look and feel of the Web site. When you went to their site, you thought you were dealing with The Greek company, however, for whatever reasons, had incorporated in Wilmington, Delaware, so that gave rise to US jurisdiction. filed suit and the case eventually settled.


Mr. Sherman: Suppose two companies are negotiating a joint venture. One has the idea for the software and the other has the tools to develop it. Which one gets to keep the IP and how do you best structure that deal?

Mr. Capuano: The short answer is that the joint venture gets to keep the IP. The way we set up our joint ventures in Europe, we're both bringing distinct talents and property. Proxicom has certain IP associated with having built 800 Internet applications to date. In the case of Ericsson, our joint venture partner in Rome, they're bringing certain technologies such as wireless. We're both bringing disparate IP, but the whole idea is to grow the joint venture, so we agreed that the joint venture would own any IP associated with the deliverables we put out. Obviously, we each have an equity stake in the joint venture.

Mr. Kaufman: There is something I see happening all the time that is a huge mistake. In the US, inventors generally own the rights to the patent. They own the patented subject matter regardless of who they work for or who they're developing it for, absent some contractual obligation to assign the invention. You have to make sure that anybody who is working on potentially patentable subject matter has an employment agreement or other agreement that obligates them to eventually assign the rights of the subject matter to the company or to whoever you want it assigned to. That can be fashioned any way you want, but some companies run without these agreements. They have an invention that looks like it's going to be huge, the employee has left the company or gets wise and says, "Hey, wait a minute, I'm the inventor here and I own this." They can hold you hostage, and it can be a huge problem.

Mr. Capuano: Marc's making a very good point. The standard operating procedure for every company should be to have a one-page assignment agreement that basically assigns to the company any and all inventions, work product, etc., that are developed. Frankly, ours is pretty broad—while you're an employee of the company, whether you're at work or at home—so we don't have any issues with that. Marc's point is right on, especially when you get into more complicated structures down the road, like joint ventures. It should be something that every company has.

Mr. Presant: Hi. Jim Presant, In protecting a url business name, how much protection do you get if you put the trademark symbol (™)? What if you have a couple checks proving income from interstate commerce? What's the next best investment? Do you try and get the .org and the .net? Trademark the .com? Do you have exposure if somebody gets a trademark on the .com without the url?


Mr. Fingerhut: On your first question, in the US you acquire trademark rights by virtue of your use. The "™" symbol doesn't give you any legal protection in and of itself. It's just a notice that tells the world that you're claiming trademark rights in this particular slogan and it may ward off some people from trying to trade on that reputation. Even without a registration, you can always prove your common law rights. Basically, you have to prove to a court that your customers know that this is your trademark.

Regarding whether you have revenue, the requirement to get federal trademark protection in the US is that you have to be using your mark in some type of commerce that's regulated by Congress, whether that's interstate commerce, territorial commerce or commerce in the District of Columbia. Many times a trademark lawyer will ask his or her client for documentation of their first interstate use; however, you can acquire trademark rights simply by virtue of your use even in the absence of federal registration. It's just that the registration constitutes prima facie evidence of the validity of the mark, and that's significant. It's one thing you don't have to prove when you go to court and try to sue somebody.

To the question about obtaining trademark protection for .net or .org when you are a .com, the Trademark Office only gives trademark protection to marks that you're using. If you are and that's how your mark shows up on your Web site, the trademark office is not going to give you a federal registration on because the mark doesn't appear that way. Typically, in that situation you purchase the other urls so your customers can find you when they type .net by accident.

Mr. Morse: I'm Brian Morse with GlobeStreet Consulting. What if you have a standard distribution agreement giving limited license for your information to someone who's going to display it on another platform? For example, I sell my information from my database to Yahoo!, and they show it via the Web on a wireless platform. Who owns the rights to that page?

Mr. Capuano: Since it's a license, you retain ownership of the content. Yahoo! owns the surrounding page and frames, etc. You retain copyright to the content contained therein.

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Statements made at Netpreneur events and recorded here reflect solely the views of the speakers and have not been reviewed or researched for accuracy or truthfulness. These statements in no way reflect the opinions or beliefs of the Morino Institute, or any of their affiliates, agents, officers or directors. The transcript is provided "as is" and your use is at your own risk.

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