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Intellectual Property - What is it?

July 24, 2016

If you ask the average person on the street what he or she thinks of when he or she hears the word “property,” chances are that person will list a number of items that he or she owns, ranging from jewelry to real estate. Ask what he or she thinks when you mention “intellectual property,” and the odds are pretty good that you will be met with a blank stare. After all, our common perception of “property” is something that we can physically possess.

The law, however, has an entirely different concept of property. To the law, property is commonly considered a “bundle of rights.” This “bundle” is made up of such rights as the right to use something, the right to possess that thing, the right to dispose of that thing, and the right to prevent other people from interfering with your rights respecting that thing.

For example, the owner of a house has the right to use the house, the right to possess the house, the right to dispose of the house (that is to sell it, not burn it—that’s a felony known as arson, and possibly insurance fraud), and the right to exclude others from interfering with his or her use, possession, or disposition of the house. The same holds true for our other common notions of property, such as cars, jewelry, boats, and tennis rackets.

In addition to these tangible forms of property, there are “intangibles”—those things that we cannot touch, taste, smell, hear or otherwise sense—that carry with them the exact same bundle of rights. Although we cannot physically perceive intangibles, we can still exercise dominion over them. We can still possess it, use it, dispose of it, and exclude others from interfering with it—even though the “it” cannot be felt, tasted, smelled, heard or otherwise physically perceived.

Some intangibles such as stocks, bonds, and notes are evidenced by documents. So, while your Google stock certificate may be nice to show your friends and relatives when you want to impress them, if it were to be mistakenly used to light your barbecue, you would still own shares in Google. You could still use those shares--as security for a loan, for example. You could still sell the shares. You just wouldn’t be able to impress your friends and relatives as easily.

Stocks, bonds, and notes, although forms of intangible property, are not “intellectual” property (especially not that GM and Enron stock you bought a few years ago). Rather, intellectual property is a type of intangible property that is the product of the mind, talents, and intellect of creative people. Intellectual property is divided into four classifications: a) Trademark, b) Copyright, c) Patent, and d) Trade Secret.

You would be hard pressed to find any commercial enterprise that does not possess some form of intellectual property. For many companies, their intellectual property is among their most valuable and most important assets. Network marketing companies are no exception.

Trademarks, copyrights, and trade secrets are the most common types of intellectual property possessed by network marketing companies. Although some network marketing companies have proprietary products that are the subject of patents, they are in the distinct minority. In this rest of this article, the four types of intellectual property will be briefly described. In future articles at this site, the protection of each type of intellectual will be discussed in more detail.

1. Trademark

Generally speaking, a “trademark” is any unique word, name, symbol or device or any combination thereof used by a manufacturer or merchant to identify and distinguish its goods from those manufactured or marketed by another. A trademark, if registered, is usually accompanied by the “®” symbol while those that are not registered are designated by the “™” symbol. You may have also heard the term “service mark”.  A service mark is the same thing as a trademark, except that a service mark is used to identify and distinguish a service. (MCDONALDS® is a well-known service mark for a particular restaurant service.)

The principle functions of a trademark are to identify and distinguish the source of goods or services and to serve as a merchandising short-cut that induces a purchaser to select what he or she wants. Trademarks do not protect the proprietary nature of products or services, and do not protect inventions, discoveries, ideas, creations or processes. Instead, trademarks protect how products and services are marketed, promoted, sold and regarded by the public.

Although a trademark is typically a word or a short phrase, symbols (Nike’s so-called “swoosh”), numbers (7-ELEVEN®), slogans (General Electric’s WE BRING GOOD THINGS TO LIFE®), the appearance of a product container or the product itself (the classic shape of a Coca-Cola® bottle), and even fragrances can serve as trademarks.

2. Copyright

Perhaps the most commonly confused types of intellectual property are trademarks and copyright. While a trademark is a word, name, symbol, or device that is used to indicate the source of goods and services and to distinguish them from the goods and services of others, copyright is a form of protection provided to the authors of original works of authorship.  Such works of authorship include literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture. Copyright protects these works, whether they are published or not.  

As the word suggests, copyright generally gives the owner of the work the exclusive right to reproduce it (the right to copy it), to prepare derivative works, to distribute copies or recordings of the work, and to perform or display the work publicly.  The copyright protects the form of expression but not the subject matter of the expression.  For example, a written description of a widget could be copyrighted, but this would only prevent others from copying the description of the widget. The copyright would not prevent others from writing a description of their own or from making and using the widget.

3. Patent

While a trademark designates the source of product, and copyright protects the written description of that product, a patent protects the rights of the inventor of the product. A patent for an invention is the grant of a property right to the inventor, issued by the patent office in the country in which protection is sought (in the U.S., the United States Patent and Trademark Office).  The right conferred by the issuance of a patent to the inventor is the right to exclude others from making, using, offering for sale, or selling the invention or importing the invention. Thus, a patent does not grant to the inventor the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention.  

While registration is not necessary for the protection of a trademark, a copyright, or a trade secret (trade secrets by their very nature cannot be registered), registration is absolutely necessary for there to be patent protection. The term of a patent registration is for a fixed period of time and, upon the expiration of that time, others are free to make, use, offer for sale or import the invention. In the U.S., the term is usually 20 years from the date of the application for registration.  

4. Trade Secret

A trade secret is defined as a “formula, process, device, or item of information used by a business that has economic value because it is not generally known or easily discoverable by observation or examination and for which reasonable efforts to maintain secrecy have been made.” As a result, the proprietor of a useful trade secret has an advantage over his or her competition.

Some trade secrets may be suitable candidates for patent protection. It is common, however, for the proprietors of such information to choose not to seek patent protection because doing so would result in disclosure of the formula, process, device or information, and the proprietor of that information would lose the exclusive right to it upon expiration of the patent.

Coming Up

Now that we have covered the covered the basics of intellectual property, check this site for future articles discussing each type of intellectual property in a little more detail. Also, these future articles will discuss how the owner of an item of intellectual property can protect these important and invaluable assets.

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