The Anvil’s Intellectual Property 101

How not to steal ideas (and know to protect your own)

So you made a cool thing…

and it’s so cool, everybody wants it!

But what if Evil Joe copies what you made and starts taking credit for your cool idea?

As a human being who makes things, you should probably know how to protect the cool stuff you make from being stolen by Evil Joe. In most countries today, we do that under the legal framework (and common-sense implications) of intellectual property (IP).

IP law has a rich and complicated history, most of which I couldn’t explain to you myself. But 99% of IP cases are also extensions of common sense about how creators and makers own their work, and it’s handy to know if you make something for other people to use.

So I’ve boiled down what I think are the most important, IP-101 ideas into this post. This way, the next time you go up to a designer or contractor and talk about IP, you’ll at least sound like you know what you’re talking about.

Of course, this article is accompanied by the customary disclaimer, no part of this article is qualified legal advice, and is offered as-is, with no guarantee of accuracy. Few things typed out on a Sunday night by a college student are. But we’ve tried to make sure what we say is correct enough, to the best of our abilities.

Lastly, I’ve tried to divide up this rather long post into sensible sections, and bold-face the most important parts, so if you’re short on time and just skimming, look out for the headers and the bold-text.

With that in mind, here goes.

“Intellectual Property” is Property

Intellectual property covers everything from artists’ music and production to the shape of a Nike logo, to the figure of a Coca-Cola bottle, and the Fox News jingle. It’s a class of property, just like physical property, that you can own. IP belongs to “legal persons” (companies, governments, and people, usually) and it means a creator of a piece of information, creative work, or technology owns the thing they created, and has the last say on whether someone else can use it, and how they can use it.

The general term IP can cover a huge range of works. The common cases include writing, code, music, and video; but more obscure cases can include things like rights to fair compensation of skill, rights to publicly perform something, and publicity rights. In the majority of cases, though, entrepreneurs and creative freelancers will deal with three main classes of IP: copyright, patents, and trademarks.

Each of these three types of IP are protections that are given by governments, which apply to different types of creative work. This post will assume we’re talking about US intellectual property laws, but most countries will share similar laws with the biggest differences in the details.

Copyright

Copyright (not copywright or copy-write) is protection against unauthorized reproduction, (re)distribution, or display of a specific instance of creative work, and it is granted automatically to any copyright-able work upon creation, and expired away after a finite number of years, usually following the death of the author.

For example, I am the author of this blog post, and everything here is my (and my below co-authors’) original work. So automatically, the content of this post belongs to me, and is protected under copyright law; if anyone steals it and shares it somewhere else without my permission, I would be right to say that they infringed my copyright by reproducing my work without my permission. I didn’t have to take any legal action beforehand to ensure that I have copyright protection here.

It’s important to know that just claiming that “I don’t own the copyrights” or “the copyrights go to the original owner” doesn’t excuse a copyright infringement. Any reproduction of creative work without permission is copyright infringement. In addition, having a license to use copyright work for a specific purpose — like licenses on software libraries— doesn’t necessarily give you the rights to use it in ways that aren’t allowed in the license. A license typically defines how other people can use copyrighted work, but doesn’t grant the ownership itself of the copyright to anyone else.

Some notable examples of licenses that allow the public to reproduce freely include open-source software licenses like the MIT License, and the Creative Commons licenses. These retain some minimal restrictions, like requiring citation of the original author, but are permissive, in that they allow free reproduction of code or images that belong to somebody else, as long as you follow the rules outlined in the license.

Copyright applies to any instance of work, like a piece of graphic design, an article, a book, or a specific recording of a song. (interesting fact: the lyrics, composition, and the recording of a song are copyrighted separately; an artist can own copyright to the words or the tune as a songwriter, but a producer / singer may hold the recording / production copyright.)

Notably, copyright isn’t granted for a generic idea or concept. So what if you want to protect the design of your company logo or slogan? For that, there are trademarks.

Trademark

A trademark (or a service mark) is a recognizable symbol of a product or service, what we usually call a “brand”, and may optionally be “registered” with the US Trademark and Patent Office (USPTO) to have a stronger legal ground in court. Brand names like iPhone, Gmail, Coca-Cola, and Louis-Vuitton are all trademarks of their respective companies, because they each represent a uniquely recognizable symbol for a product or service. If you start a company, you’ll probably have a name for the company. That name becomes a trademark of your products.

The (TM) that you see above some brand names refers to “trademark”, and the (R) that you occasionally see in their place means the trademark is registered with the government.

Registering a trademark within the US is a pretty straightforward process, requiring little more than paying the registration fee and submitting a form to the USPTO with a description of your service or product.

You don’t have to do anything to receive the de-facto trademark protection, as long as you are selling products or services with your trademark in the marketplace. By selling products with the trademark, the trademark comes to belong to the seller. If I invented a new product with a unique name and started selling it, that unique name would be a trademark that belonged to me by default.

I say “by default” because, occasionally, two companies may discover that they’ve been selling their different, perhaps competing products under the same trademark. In that case, one of the companies may choose to take legal action against the other to make sure that their trademark stays a unique, recognizable symbol for their own company.

The company could simply make the argument that they’ve been in the marketplace for much longer, or have a vastly larger customer base. But the only way to protect a trademark without room for dispute is to register the trademark with the government. This takes time and money, and most likely isn’t worth the hassle for dorm-room startups or small business with a flexible name, at least in the beginning, until the company starts investing money into growing the trademark’s public presence.

Infringement of trademark doesn’t necessary require an exact match of names or logos; if I created a company called “Dairy King” and started selling fast food with brightly colored merchandise, the real Dairy Queen would probably have good grounds to take down my company’s new name.

It’s also worth noting that the same name or mark could be registered by two different companies, if they operate in industries that are distinct enough.

One interesting example of a trademark is the iconic Coca-cola glass bottle, whose curved design was trademarked in the United States — the only packaging to hold trademark protection in the US. And as an iconic, uniquely identifiable asset to the coke business, it rightly deserves that recognition.

Patent

Lastly, a patent is a right specifically granted by individual governments to an inventor of an innovation, for them to be able to have exclusive ability to produce products with that innovation. Patents have to be registered with individual governments to hold any legal ground, and expire after a time limit to exclusivity — 20 years in the US. Filing and keeping a patent is also quite costly and time-consuming, often involving legal help, and almost always costing a lot out of pocket to file and then hold.

Theoretically, patent law also comes with a pretty high bar on exactly what kinds of inventions can be patented: they have to be 1) novel, 2) not obvious, 3) reproducible from its description, and 4) useful. But some people disagree today on whether all patents registered in the US today clear this high bar.

Before patents, inventors would protect their inventions simply by keeping it secret. Very few inventors would share the details of their innovations publicly, and that way, they could profit from their ingenuity and protect their business. But this also meant that ideas weren’t being shared as efficiently as they could be, and this created room for inefficiencies in how quickly technology moved forward in the public.

The “spirit of the law” of patents is to protect inventors from others stealing their innovations, but at the same time motivate them to share their original ideas publicly, in hopes that it would spur faster innovation and better sharing of ideas. For this reason, to benefit from patent protection, the makers of the invention have to apply explicitly for a patent from the government, and publicly describe the invention. Some notable examples of widely patented and used technologies include GSM, CDMA, and HSPA, which are the core protocols behind 3G and 4G data connections to your phones. Each of these technologies are a tight knot of hundreds of patents owned by a few different companies around the world.

The implementations of patent law has become quite cumbersome and complex over the decades, but the basics remain the same. If you or your company invents some new technology or design innovation, and you want to make sure nobody else steals it or takes credit, you can apply for a patent with each country’s government to make sure your innovation’s IP is protected formally. This will give companies legal ground to stand on when a competitor copies the technology without permission.

In the United States, patents are valid for 20 years. During those 20 years, the company or inventor has a government-granted monopoly on that idea, and if anyone else wanted to take that idea and use it, they usually have to pay royalties on the idea to the original inventor. But after the expiration of the patent, the invention enters the public domain, free for everyone to use.

“Fair use” and grey areas that are usually black

There is an oft-misused grey-area in copyright law practice called “fair use”. You may have heard of it when reproducers of videos or music argue that their work is a parody or critique of the original, and is considered “fair use,” not an infringement of copyright.

Fair use refers to instances of unauthorized reproduction of a copyrighted material whose intention isn’t to simply re-create the original work and benefit off if it, and so is not considered copyright infringement; almost all correct cases of fair use fall into either critique or parody. Critique comes into play when a review of a book has to quote from the source material to make a point, for example, and parody is an extension of critique, usually involving a slanted reproduction of the original work for comedy or satire. Notably, this definition of “parody” is narrower than the set of YouTube videos titled “PARODY” that are actually just thirsty copies with no tangible message looking for a viral wave — that kind of parody won’t count in court.

Fair use is also a grey area, in that the lines in the sand for what “counts” as fair use is not defined by the letter of the law but by its spirit and by legal precedents.

There are legitimate cases of fair use. When a book or movie review quotes from the original material as a reference, for example, it is considered fair use. Artistic references in music or films that are clearly meant to critique a preceding work as a parody also frequently hold up. As an extension of the “critique” condition, some instances of using copyrighted material for educational purposes are also considered fair use, though there are a lot more people arguing that they don’t infringe copyright today than there are people who actually demonstrate legal fair use. Here’s an interesting high-profile case about fair use of a design, from a few years ago.

In short, fair use allows certain kinds of reproduction — critique, education, and parody — not to infringe on copyright unnecessarily. Still, beware of cases that sound iffy, because if they grey area seems too murky, it’s probably actually more black than white.

Software patents

Another topic that comes up commonly for first-time tech founders is how to protect software IP.

Under the words of patent law, software innovations can indeed be patented. But experienced founders and lawyers typically caution these founders to weigh the benefits and costs of applying for a software patent before making the call, for some good reasons.

First, patents aren’t a set-once-and-forget-it deal. They require registration fees and legal fees and upkeep for the lifetime of the patent. Because software innovations come and go much faster than hardware inventions, unless a specific algorithm or implementation is really the core competitive advantage of a product, it doesn’t make sense to protect software innovations with patents. However, notable exceptions exist in areas like cryptography, where a patent for an encryption algorithm does indeed make sense, because it’s a long-lasting competitive advantage that can be easily recognized.

Second, because of the way software is written, trying to explicitly file for a protected status doesn’t work too well. Today’s software development is far from an original process. In the process of spinning up a small web server or implementing a simple algorithm, developers rely on hundreds of other layers of software which each have their own individual licenses and conditions of use. Even if a company only builds atop open-source software, that open-source, free software still has an owner, who owns the copyright to that software. Trying to identify and protect a patentable innovation in such an intertwined industry may lead to more losses than wins.

One common way for software companies to protect their IP is through non-disclosure agreements and protecting their innovations as “trade secrets”, which is a looser class of protected intellectual property than copyright or patents. I won’t go deep into NDA’s and trade secrets here, but we may write about them in the future here at the Anvil blog.

Of course, each case is different, and as we said above, the final decision depends on the “inventor” and the circumstances.

Tips for founders

If you’re founding a software company, and you’re taking paid employees beyond the founding team, it isn’t a terrible idea to consider non-diclosure agreements (NDA’s) to protect your IP. These NDA’s usually grant the company ownership of any idea or work produced by the employee of a company during employment, as long as it’s related to the company’s field of work or interest. We didn’t cover it in detail here, but we might come back to it later.

If you’re founding a hardware company, and you have a piece of innovation whose uniqueness is significant to your competitive advantage, you should consider applying for a patent. Patents, especially approved ones, may matter in fundraising and getting the first customers to buy in, because they demonstrate that you have a unique, competitive advantage that’s protected and wholly owned by you.

But if you’re a start-up and think you should register your fancy new logo with the Trademark Office or go patent the new algorithm the team wrote last night, you should first take a seat, look around, and maybe dial down your ego. There are usually many, many better ways to spend time as a startup founder than worry about registered IP, and in most circumstances, intellectual property is protected rather fairly by default.

Whew! That was a whirlwind tour of the basics of intellectual property. Special thanks to Drew Atkinson, Rishabh Tukra, and Daniel Painter for offering suggestions on this piece.

And if you have something to add or fix, or have a question, please get in touch! We love hearing from you.

References

I referenced a few articles at the World Intellectual Property Organization for this post.

Stanford Library’s resources on fair use also seem like a good place to start.

And the USPTO’s pages on Trademarks and Patents, as authoritative sources, are also good for reference.