Intellectual property (patent + trade secrets)

Patent

A federal right to exclude others from making, using, selling, or importing your invention

patent duration

20 years—> then falls into public domain (becomes part of the building blocks for future innovation)

Patent policy goals

promotes scientific and technological process

provides financial security and market protection after high costs spent on research and development

Patentable subject matter

• A method or process

• Any device, machine, or apparatus

• any article of manufacture

• composition of matter

method or process

a series of actions performed to transform something into a different state or produce a certain result

machine

A device consisting of parts or certain devices, that fulfills some function or produces some result

Article of Manufacture

A product made by turning raw or prepared materials into something new (post-it notes)

Composition of matter

the composition of 2 or more substances whether combined by chemical union or mechanical mixture (white out)

Types of patents

Utility: processes, machines 20 years

Plant: new plant varieties produced asexually 20 years

Design: new, original designs 15 years

Standards of Patentability

Novelty, Utility, Non-obviousness

new, function, and is non-obvious

What cannot be patented?

• laws of nature

• abstract ideas

• physical phenomena

Cost & Upkeep

• Takes about 3 years and costs $10,000-$50,000 (mostly attorney fees).

• Maintenance fees due at 3.5, 7.5, and 11.5 years after issuance. Skip them and the patent falls into the public domain.

• Only about half of patents get all three fees paid.

• Copyrights and trade secrets have no maintenance fees, and trademark renewal is much cheaper.

exceptions to patent rights

• No fair use equivalent like copyright has.

• Independent invention is not a defense. You can be liable even if you never knew about the patent.

• Government use: The government can use (or authorize others to use) a patented invention with compensation (like eminent domain). It is rarely used.

Patent trolls

A business that makes no products and just owns patents to sue or license to others

Injunctions

products must pass these 4 in order to be exclusive:

1. Irreparable injury

2. Money damages are inadequate

3. Balance of hardships favors the owner

4. Public interest isn’t harmed

Trade Secrets

Any valuable information that isn’t generally known and is used commercially

Subject matter of trade secrets

• Customer list

• Formulas and recipes

• manufacturing techniques

• algorithm

• investment strategy

• technique process for organizing search data

• business information'

• manufacturing techniques

• layout for a manufacturing plant

Trade secret perks

no registration

no expiration

no disclosure

immediate protection

Uniform Trade Secrets Act

Adopted in 49 states (all but New York) plus D.C. Allows damages and injunctions, and can block a former employee from joining a competitor if they’d inevitably use secrets.

reasonable steps to keep secret

utilizing network passwords or limiting physical access to sensitive areas

Trade secrets + economic value

gives a business a competitive advantage, higher efficiency, or lower costs that rivals cannot easily replicate