Got a Patent, Now What?
After applying for a patent, inventors frequently find themselves in a position where they lack the resources to develop and market their inventions. Others with the necessary capital and resources sometimes approach inventors to offer funding to license patents and technology (at times before an actual patent is granted). The inventor, theoretically, will then receive a share of sales profits as defined in the license agreement. Such arrangements may be beneficial to all parties.
Problems may arise, however, because the inventor:
- Lacks the sophistication to evaluate the license agreement
- Is anxious to exploit the new invention and start enjoying some of the economic benefits or proceeds and therefore may not pay as close attention to the provisions of the license agreement as advisable
- May be in an unequal bargaining position with the potential licensee
Often licensees offer “up-front” money, as an added inducement, but the license agreement may be so one-sided that the inventor later regrets entering into the licensing agreement.
An optimistic, sometimes naive, inventor, offered substantial advance royalties, may assume that the license agreement represents a partnership with a licensee that believes in the invention and its marketability. However, the licensee may only want to keep competitors from licensing the invention or want to develop a similar product “around” the patent and thereby avoid a patent infringement suit by the inventor. The licensee may have no intention of ever actually producing the invention, yet may insist on an exclusive license (i.e., prohibit others from obtaining a license for the product), with no obligation to actually produce and sell the invention.
Licensing Agreements May be the Key to Protection
It is not unusual for the licensee’s attorney to draft the license agreement, however the inventors may retain their own legal representation in negotiations, or at least have an attorney review the license agreement, to ensure that their interests are properly protected. Typical provisions of license agreements may include:
- Definitions (of what is being licensed, etc.)
- Statement of rights assigned to the licensee
- Warranties about ownership and status of patent rights
- Actual granting of the license
- Payments to the inventor – fixed amounts or percentage of net profits
- Formula for calculating net profits, if necessary
- Ownership of rights being licensed
- Provisions for termination or cancellation of the license and consequences
As noted, licensees frequently want the license to be exclusive, while it may be more advantageous for the inventor to retain the power to contract with others. The scope of the license may be negotiable.
Cancellation Clause
It may also be possible for the inventor, depending on the circumstances, to insist on a clause in the agreement to allow cancellation of the license, if certain minimum sales and production requirements are not met. Such a provision may be helpful in the event the licensee does not produce and sell a specified number of the inventions within a set period of time. This may seem like common sense; however, this detail is often overlooked by trusting inventors with an unrealistic perspective of the process. As stated earlier, the involvement of an experienced attorney in negotiations and/or reviewing the agreement is advisable. It may prevent an inventor from bargaining away crucial rights.
Can I Protect My Invention Overseas?
Once you apply for a US patent, you may want to consider filing for a patent in other countries, if you plan to manufacture, sale, promote or use the invention in other countries. However, the cost to file in each country would be very expensive if an applicaiton had to be drafted for each country where patent protection may be desired. To help simplyt the patent application process for international patent protection, the Patent Cooperation Treaty (PCT) of 1970 was created. Prior to the PCT, the primary means for obtaining international patent protection was the Paris Convention for the Protection of Industrial Property. Under the Paris Convention, still in effect, applicants are required to submit separate filings to secure patent protection in each country where protection is sought. However, under the PCT, with over 120 signatory countries, applicants may secure patent protection for all signatory countries simultaneously with fewer procedural steps. On a practical level, where patent protection is only sought in only one or two countries, choosing to utilize the Paris Convention would likely be more cost effective and expeditious.
Initial Filing of the PCT Application
The inventor files an initial PCT patent application designating the contracting countries in which they intend to seek patent protection. This application is generally filed in the national patent office of the country where the inventor resides. The PCT application is then subject to an international search by a national patent office, resulting in an “international search report.” This report contains a listing of all of the items which could possibly affect the patentability of the invention in any of the countries designated in the application, e.g., prior art.
Upon receipt of this report, the inventor has the option to withdraw the application if it seems unlikely that a patent will be granted. If the application is not withdrawn, the international application and search report are then published by the International Bureau and sent to each office designated in the PCT application.
After filing the PCT, an applicant may at any time opt to enter the national stage, a phase in the patent process where the application is sent to each designated country for national filing. Some member countries, however, have time restrictions in place, requiring national or regional applications to be filed within 20 months of the initial PCT application. Such countries may extend this deadline where the applicant has requested an “international preliminary examination report.”
Advantages of Filing under the PCT
Applicants gain additional time for filing through their participation in the PCT rather than filing separate applications in each country where they wish to gain patent protection. The applicant, due to the additional available time, may obtain translations of the patent application and pay the filing fees in the foreign countries with greater ease. The burden on each national patent office is reduced greatly through the generation of the international search report on the patentability of the invention. The extensive international search performed by a national patent office allows the applicant to make an informed decision on whether to continue to pursue the PCT application, thereby saving both time and money.
Amendments and Updates
Each year, the number of international patents filed increases substantially. One reason the PCT continues to enjoy such popularity is the fact that it is frequently updated for increased efficiency. Since its introduction, it has been amended or modified three times, including revisions in its procedures to increase efficiency and ease of use. Such reform has been encouraged due to the designation of two committees created to receive suggestions for areas of reform: the Working Group on Reform of the PCT and the Committee on Reform of the PCT.
A notable revision took effect in January 2004 when a reform process, initiated in 2001, culminated with numerous changes to increase fairness and accessibility of the international patent process. The World Intellectual Property Organization noted that the changes included increased search capabilities, increased accessibility of international preliminary examination reports and reduced duplication in the application process.
Why Should I Register a Trademark?
While a “trademark” has a certain level of protection from the moment the mark is first used in commerce, without being registered on the federal or state level, there are several significant advantages to federal registration. To register a mark with the U.S. Patent and Trademark Office (USPTO), the mark must first meet certain eligibility requirements.
Purpose of Trademark Law
A “trademark” is any word, name, symbol or device, or a combination thereof, that identifies and distinguishes the source of goods or services. The Lanham Act is the federal law on trademarks. In general, the main purpose of trademark law is to protect consumers from deceptive and misleading use of trademarks in the marketplace. The Lanham Act enables consumers to identify the source of the goods or services to ensure that they are receiving consistent and preferred quality. This federal law also protects trademark owners against unfair competition by preventing competitors from using the same or a similar mark to sell their own goods or services.
Eligibility for Federal Registration of Trademarks
In order to receive nationwide protection, a trademark must meet certain eligibility requirements for federal registration with the USPTO. Two threshold requirements include that the trademark is “distinct” and that it will be used in connection or affect goods/services in “interstate commerce,” or that cross state lines. The Lanham Act provides that no trademark shall be refused registration unless the mark is:
- The same or similar to an existing mark on similar or related goods or services;
- Immoral, deceptive or scandalous;
- Disparaging or falsely suggestive of relationships with persons, institutions, beliefs or national symbols;
- A governments’ flag or coat of arms;
- Merely descriptive or deceptively misdescriptive;
- Geographically descriptive or misdescriptive;
- Primarily a surname; or
- A name, portrait or signature identifying a living person without their consent or of a deceased U.S. President during the life of his widow without her consent.
Distinctiveness of Trademarks
In order to qualify for registration, a trademark must be “distinct,” and thus capable of distinguishing particular goods or services from others. For this reason, it is important to select a mark that is not too generic. Categories of marks may include:
- Fanciful – invented words for goods or services (e.g., Kodak for cameras)
- Arbitrary – common words that do not describe goods/services (e.g., Apple for computers)
- Suggestive – words that suggest but do not describe goods/services (e.g., Nickelodeon for children’s television program)
- Descriptive – words that describe the goods/services (e.g., Personal Finance for a financial investment magazine)
- Generic – names of the good/service itself (e.g., Aspirin)
Fanciful, arbitrary and suggestive marks are typically considered to be inherently “distinct.” Descriptive marks will only receive protection by “becoming distinct,” where the owner can show that there is a common secondary meaning of the mark that is held by the public. Generic marks will never receive trademark protection.
The USPTO Official Gazette
Once the basic eligibility requirements for federal registration are met and the application has been accepted by the USPTO, the trademark will appear in the USPTO’s weekly publication, the “Official Gazette.” The purpose of the Official Gazette is to announce trademarks as candidates for federal registration. This publication provides existing trademark owners with the opportunity to object. Upon an objection the USPTO will hold a hearing to resolve the dispute. If there is no objection, the USPTO will respond to the application. If accepted, the trademark will be placed on either the Principal Register or the Supplement Register.
Principal and Supplement Registers for Trademarks
An eligible trademark may be registered with the USPTO on either the Principal Register or the Supplement Register. Generally, the Principal Register grants all of the rights and protections that are typically associated with trademarks. Registering a trademark on the Principal Register offers the following advantages:
- Validity of the mark and established ownership of the registrant;
- The trademark owner has exclusive rights in its use;
- Nationwide protection from infringement (vs. state or common law protection);
- Broad protection for “related” products or services;
- Far-reaching judicial remedies and availability of substantial damage awards;
- The mark may become incontestable (of the highest status) after five years.
The Supplement Register is designed to provide some protection for descriptive marks that have not yet acquired a secondary meaning. The Supplement Register still places others on notice of the use of a mark and can be used as evidence of ownership in an infringement action. However, unlike the Principal Register, a mark must already be used on goods or services in commerce to be placed on the Supplement Register and the bona fide “intent to use” the mark will not suffice.
Duration of Trademarks
Trademarks placed on the Principal Register are good for 10 years with the indefinite option to renew. However, the owner must file a “Declaration of Continued Use in Commerce” within six years after the registration in order to prevent their registration from being cancelled.
What to Do When a Website Infringes Your Mark?
Over the past few years, Internet search engines, such as Google or Yahoo, have generated large revenues by selling advertising through sponsored links or pop-up ads. For example, businesses pay a fee to Google to have their advertisements “pop-up” when certain keywords or search terms have been entered. Disputes over this process have arisen due to the fact that the search engines are selling the ads to businesses that are purchasing rivals’ trademarks as search terms. However, whether this act constitutes trademark infringement or fair use is unclear.
Keyword Advertising
Often businesses want to advertise their goods or services on the internet in order to maximize their profits. A common method of advertising over the internet is through “keyword advertising.” Internet users often find what they are looking for by entering keywords on search engine sites, such as Google or Yahoo. Since keywords have the power to drive search traffic to particular websites, advertisers bid on certain keywords related to their business. The search engine then sells those words to advertisers and either their sponsored links appear next to search results or their text ads “pop-up” when those terms are entered as keyword searches. Inherent in this process, search engines end up selling some trademarks of a rival business as keywords.
Search Engine Policies on Keyword Advertising
Several search engines, such as Overture Services (i.e., Yahoo’s commercial division), Netscape, and Google, have engaged in search-related advertising since it has produced significant profits. However, the particular policies of each search engine regarding keyword advertising vary.
Google’s initial policy on keyword advertising was to “screen” for trademarks and to prevent advertisers from purchasing distinct marks of a rival. However, Google did sell words that it considered to be “descriptive” or “generic” terms. Then, in April 2004, Google changed its policy to stop policing for trademarks in selling keywords to advertisers under its AdWord program. As a result, Google has had to endure several trademark infringement actions, both domestically and internationally, with mixed outcomes. Presently, outside the U.S. and Canada, Google does not permit the use of a business’ trademarks to trigger a rival’s advertisement.
Trademark Infringement
The cornerstone of a trademark infringement action is that the infringement is likely to cause consumer confusion. Trademark owners must show that the consuming public would be confused, misled or deceived as to the origin of another’s goods or services caused by the use of their trademark (or a confusingly similar mark).
Factors that courts typically consider in determining whether there is a likelihood of confusion include:
1. The degree of similarity between the marks and of the goods and services;
2. The strength (or distinctiveness) of the plaintiff’s mark;
3. Any evidence of actual confusion by consumers;
4. The intent of the defendant in adopting its mark;
5. The physical proximity of the goods or services in the retail marketplace;
6. The degree of care likely to be exercised by the consumer; and
7. The likelihood of expansion of the product lines.
Lawsuits filed against search engines engaging in keyword advertising claim that the misuse of their trademarks to trigger rival’s ads or sponsored links confuses the public as to the source of goods or services.
International Infringement Cases Against Google
Google has changed its policy regarding its keyword advertising outside the U.S. and Canada. This change has likely come from Google losing trademark infringement actions in Europe. Two French courts ruled against Google for trademark infringement in using its AdWord program. Le Meridien Hotels and Resorts and Louis Vuitton filed separate actions against the search engine alleging infringement for allowing rivals’ text ads to appear using their trademarks as keywords. Google was ordered to cease the infringement and pay fines. However, Google is appealing at least one (Le Meridien) and possibly both of these cases.
Domestic Infringement Cases Against Google
Google has battled trademark infringement cases throughout the United States as well. In May of 2004, Geico Insurance Co. filed suit against Overture, Inc. and Google claiming they infringed its trademark by selling ads linked to keyword search results. Geico alleged that the search engines allowed the word “Geico” to trigger rivaled ads in violation of U.S. federal trademark laws. Overture and Geico settled before judgment.
In December of 2004, a Virginia District Court judge dismissed one of Geico’s claims against Google, based on use of Geico’s trademark to trigger “sponsored links” but the case will continue regarding the pop-up ads. Similar cases are pending against Google and other search engines elsewhere in the U.S.
Because the trademark or service mark of your company is a valuable business asset which helps identify your business from that of your competition you should actively monitor the use of your mark in the marketplace. If you believe someone is using your trademark on their website, or in their keywords, please contact us to review your legal rights and recourses against these potential infringers.
Why Provide Copyright Notice?
As they say, an ounce of prevention is worth a pound of cure. When it comes to copyright law, providing Copyright notice on a work before an infringing activity occurs can contribute to the sucess of a later claim of Infringement. U.S. copyright laws give protection to authors and artists for “original works of authorship.” Such works include literary and dramatic works, music, choreography, paintings, sculpture, sound recordings, and movies. The copyright holder has the exclusive right to take certain actions related to commercial exploitation of the work, or to authorize others do so.
As copyright laws have been amended over the years, obtaining and protecting a copyright has become simpler in some ways. For example, registration of the copyright is no longer required. A copyright is deemed to exist in any original work at the time it is created and “fixed” in a tangible medium of expression from which it can be perceived, reproduced or otherwise communicated, directly or indirectly, with the aid of a machine or device. Registration with the U.S. Copyright Office (USCO) may, however, be necessary to protect the copyright in court.
Copyright Notice Requirements and Advisability
Both the 1909 and 1976 Copyright Acts required that a notice of the copyright be given in or on published works, even those published abroad. Notice has never been required on unpublished works. The consequences for failing to include the notice could be draconian. The copyright could be lost for failure to attach the required notice, although some specified actions could remedy the omission or error.
The Berne Convention Implementation Act of 1988, by which an international treaty was, in effect, made a part of U.S. law, made placement of the copyright notice optional for works published after March 1, 1989. There may, however, still be residual notice requirements for works published before, but distributed after, that date (the USCO takes no position on this issue). “Publication” is defined as “the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”
However, proper notice may still aid in a lawsuit for infringement damages. The presence of the notice precludes infringers from claiming in court they had no knowledge of the copyright or that they were infringing on it. The “innocent infringement” defense can result in a lower damage award, but the presence of the notice defeats the defense.
“Visually Perceptible Copies”
The form of copyright notice to be used for visually perceptible copies, i.e., copies that can be seen directly or with the aid of a machine (such as films), should contain three elements:
- The copyright symbol “©,”which is the letter “c” enclosed in a circle, or the word “copyright,” or its abbreviation “copr.”;
- The year of first publication; and
- The name of the owner of the copyright, for example, “Copyright ©2000, XYZ Corporation.”
The U.S. is a member of the Universal Copyright Convention (UCC). It requires that the symbol be used in the notice (not the word or abbreviation), along with the second two elements, to guarantee copyright protection in all UCC member countries.
“Phonorecords of Sound Recordings”
The term “phonorecords” includes LP’s, 45’s, audio tapes, cassettes, CD’s and other forms of recordings. Copyright notices on phonorecords also call for three elements:
- The letter “P” enclosed in a circle (akin to the © symbol);
- The year of first publication; and
- The name of the owner of the copyright.
General Requirements for Notice
The notices should appear on works in such a way as to provide “reasonable notice” of the copyright claim. On phonorecords, there may have to be two notices: one for the underlying musical work and one for the sound recording itself, as both are copyrightable. The USCO has issued regulations about the proper placement of the notice, for example:
- For books, on the title page, the page immediately following the title, the front or back of the book, or the first or last page of the body of the work.
- For motion pictures/audiovisual works, etc., with or near the title, with the cast or credits, immediately following the beginning or immediately preceding the end.
- For pictorial, graphic or sculptural works, on the front or back, any backing mounting or framing, or, if attachment is impractical, on a tag or durable label affixed to the work.
Errors and Omissions in the Notice
As noted above, failure to include the copyright notice could result in loss of the copyright under former law, and inclusion of the notice on a work eliminates certain defenses in a infringement action. However, certain errors in the notice may result in treatment as if the notice had been entirely omitted, for example:
- Lack of the symbol or the word “copyright,” or allowable abbreviation.
- A notice showing a date more than one year after the date of first publication.
- Lack of, or erroneous, copyright holder’s name or the date of publication.
- Notice placed on the work in such a way or in such a place that it does not give reasonable notice of the copyright claim.
Providing notice of Copyright, although not required, helps to rebute some defenses against infringement. If you believe your copyrightable material is being infringed, please contact one of our Attorneys to discuss your valuable legal rights.