Mistakes Triggered by the Many Meanings of “Intellectual Property”

Tech industry professionals use “intellectual property” to describe two different creatures. They also use “IP lawyer” for a broad list of professionals with little in common. Few recognize the many meanings of “intellectual property”, so the term generates a lot of confusion — and screws up lots of contracts and other legal work.

Two Contradictory Meanings of “IP”

  1. Knowledge about technology; expertise; confidential information. This definition is so widely used that it’s hard to call “wrong” … but it is. At least, it’s a misleading colloquial use that can get you in trouble.
  2. Inventions, artistic works, business names, and other intangible assets protected by law; creations of the mind subject to legal monopolies under patent, copyright, trademark, or trade secret law. This is a wordy, lawyery definition, but it’s right — and it won’t get you into trouble.

The problem is that many professionals don’t realize the two definitions are separate, so they blend them in their minds — and their contracts. They think their company’s knowledge is IP (per definition 1), so they assume IP law protects that knowledge (per definition 2). As a result, their contracts say things like, “Customer agrees that TechCo’s methods for developing the software and providing the solution are TechCo’s intellectual property, protected by applicable law.” Unfortunately, that sentence may provide no protection at all. That’s because IP law does not protect knowledge or expertise or confidential information — and saying it does won’t change it. If you want to protect the “methods” mentioned in the sentence above, you need an NDA or some other contract term saying what the customer can and can’t do with those methods.

Intellectual property law protects four categories of assets in most countries. (Some would quibble with the list of four, adding small additional categories like “mask works”: a hybrid form of copyright. But the four below are widely accepted.)

  • Patent: inventions that have been granted a patent.
  • Copyright: text (e.g., software, novels), images, music, sculpture, and other works of authorship that are recorded (“fixed”) on paper, on a disc, in stone, etc.
  • Trademark: names and logos used in commerce.
  • Trade Secret: confidential business information that isn’t generally known, gives its holder a competitive advantage because it’s not generally known, and is subject to reasonable efforts to preserve secrecy.

The closest IP law comes to protecting knowledge and confidential information is trade secrets law. But as you can see above, not all knowledge or confidential information will qualify as a trade secret.

At Silicon Valley receptions, it’s fine to talk about “intellectual property” using definition 1. But don’t let it creep into your thinking when you draft contracts. In a contract, keep definition 2 firmly in mind.

Many Meanings of “IP Lawyer”

Many companies retain an intellectual property lawyer only to find that he or she knows very little about their needs. Or worse, they retain the lawyer and don’t realize he/she lacks the necessary expertise. (The same goes for IP expert witnesses.) That’s because “intellectual property law” covers a long list of barely-related fields. “IP Lawyers” include patent prosecutors, patent licensors, patent litigators, trademark lawyers, copyright litigators, entertainment contracts lawyers, IT contracts lawyers, and more. Some lawyers practice in more than one of these fields, but I doubt that anyone covers them all.

Ask your would-be lawyer what type of IP work he or she has done. And keep in mind that lawyers in our field — tech contracts, the subject of this website — may not even focus on “intellectual property” in describing their work. IP plays a role in what we do, but it’s not always a big role. Tech contracts lawyers specialize just as much or more on commercial contracts law, as it relates to software and other information technology.

David Tollen is the founder of Tech Contracts Academy and our primary trainer. He is an attorney and also the founder of Sycamore Legal, P.C., a boutique IT, IP, and privacy law firm in San Francisco. His practice focuses on those same topics, and he also serves as an expert witness in litigation about software licenses, cloud computing agreements, and other IT contracts.

© 2018 by Tech Contracts Academy, LLC. All rights reserved.

Thank you to Pixabay.com for great, free stock photos!

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Originally published at techcontracts.com on September 7, 2018.

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David Tollen

David Tollen is the founder of the training company, Tech Contracts Academy. He’s also the author of the bestseller, The Tech Contracts Handbook.