Protecting Your Business

What business owners need to know about intellectual property law

By Ginny McCabe

Intellectual property rights in the United States are significant to the business community, no matter the size of your business. We spoke with one Ohio expert, who shared what businesses need to know to avoid intellectual property infringement and how to best protect their most valuable, often intangible, assets.

According to Tom Humphrey, a partner at Wood, Herron & Evans, LLP, which is based out of Cincinnati, there are four types of intellectual property—patents, copyrights, trademarks and trade secrets.

Unauthorized use of intellectual property (IP) is enforceable by federal law, and it can have significant consequences for businesses. IP infringement can occur anytime a protected work is copied or used without the owner’s permission.

“Generally, I begin with trademarks. ‘Trademark’ is a general category for things that are about brand and company identity. There’s federal law on this, and there’s state law on this, and there’s multiple systems of registration of trademarks, but then, there’s also protection, even if you don’t register a trademark. So, it’s a multiple-faceted legal structure, but all of it is designed to protect corporate identity and product identity from confusion,” Humphrey explains.

Tom Humphrey

The most valuable intellectual property that companies have in many cases are their brand names. The authority of the trademark law is about protecting those brand names, where others cannot trade off an identity that ought to be exclusive to one party, Humphrey says.

“The second one we talk about is copyright. The copyright is a protection for creative material that is captured in some kind of written, or documented, form. Photographs, paintings and other creative content is protected by a copyright. Now, importantly, it’s not about concepts. So, if you copyright a recipe, it doesn’t mean someone else can’t make that food, and it also doesn’t mean somebody else can’t decide how to make the food using different words than your words in your recipe,” Humphrey says. “It is basically the right that protects you from being stolen from.”

Copyrights apply to tangible and intangible creative works, such as musical compositions, movies and other creative expressions.

“Patents are another form of intellectual property. What patents are is a system of registration with the government, where you say, … I have created a unique recipe for a tortilla with a particular beef and spice combination that nobody has ever done before, and it’s super tasty, and you go to the patent office and you say, ‘I want to get a government patent that says I have exclusive rights to make that for at least the next 20 years.’ You basically ask the government to recognize, or to agree that you are the person that created that idea, and no one else had that idea before you, and that idea is exclusively yours for a limited period of time,” Humphrey says.

Commonly, patents are granted for machines, and the way a machine works, for an electronic system or computer system, a chemical formula, or refining oil, he says.

“All of them come back to this idea that I have done something that nobody else has done before, and I want protection of my concept,” Humphrey says. “This one is different from the others because you do have to go through the government to get it. You have to ask for it, you have to apply, and you have to wait for them to get around to you, which can take a couple of years, and then you have to convince the examiner that you do have something new that hasn’t been done before.”

A trade secret is basically the idea that the government will help you if you keep a secret as part of your business. Famous trade secrets include recipes for brands, such as Kentucky Fried Chicken and Coca-Cola.

“With the proverbial Coca-Cola secret formula, nobody knows exactly what makes those spices that go into Coca-Cola, and Coca-Cola works hard to try keep only a limited number of people knowing that, and they all have confidentiality agreements, that say, ‘It’s a trade secret,’” says Humphrey. “If someone takes and starts making use of that secret, it’s unauthorized use, or if they threaten to publish it, the government will help you. The courts will recognize your right to have your secrets kept secret.”

Humphrey says intellectual property rights are a key component in business valuation. He urges companies to plan and take the necessary steps to protect themselves when it comes to intellectual property.