Entrepreneurs constantly confuse the terms "patent", "patent pending", "trademark", and "copyright". They also have misconceptions regarding patents for software. To keep your competitive edge and to ward off potential new competitors, it is crucial that you apply for the widest ranging intellectual property protection that you can, at the earliest possible stage. Today’s Enable will help you by defining the various types of intellectual property protection available, including patents for business models and software.
A caveat: Although I practiced Intellectual Property Law in the US in the past, the following is not to be construed as legal advice. It is intended only to give you enough background to ask your intellectual property attorney intelligent questions. In fact, it is highly recommended that you meet with an intellectual property lawyer as early as possible, even before you have completely defined your latest innovation or breakthrough.
What Is a Patent?
A patent for an invention is the grant of a property right to the inventor, issued by the Patent and Trademark Office. The term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees. US patent grants are effective only within the US, US territories, and US possessions. In very simple terms, if you have a patent, you have the right to exclude others from making, using, offering for sale, or selling" the invention.
Entrepreneurs constantly misuse the word "patent pending". Patent pending simply means that you have officially filed for a patent. It does not provide you with any other rights.
What Is a Trademark or Servicemark?
A trademark is a word, name, symbol or device, which is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others. A servicemark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. The terms "trademark" and "mark" are commonly used to refer to both trademarks and servicemarks.
Trademark rights may be used to prevent others from using a confusingly similar mark, but not to prevent others from making the same goods or from selling the same goods or services under a clearly different mark.
What Is a Copyright?
Copyright is a form of protection provided to the authors of "original works of authorship" including literary, dramatic, musical, artistic, and certain other intellectual works, both published and unpublished. The copyright protects the form of expression rather than the subject matter of the writing. For example, a description of a machine could be copyrighted, but this would only prevent others from copying the description; it would not prevent others from writing a description of their own or from making and using the machine.
What about Patents For Software?
Patents for software is an area of the law which has evolved over the last few years. Older references may state baldly that "software is not patentable." This is only partly correct. Inventions which are software based are patentable, if they meet the other requirements for patentability. The distinction is not a clear one, but basically can be summed up as "if the program does something in the real world, you can patent how it does what it does."
Methods of operating a computer, in the abstract, may or may not be patentable - patent applications on pure software are often rejected as being "mathematical algorithms" or "purely mental steps" - but methods of data compression and transmission have been patented, and the rules have become more friendly toward computer-implemented methods as the technology has become more mature. This protection is more akin to method patents than product patents - one does not patent the program code (that's a copyright matter), but rather the steps the program performs.
Copyright is still the most common way to protect program code as such, since it protects against copying, without reference to the novelty or non-obviousness of the code. Often the key parts of the program code are maintained as trade secrets. You will want to have agreements with users and (especially) with anyone who has access to source code protecting your trade secret status. Also, there are ways to avoid providing source code for those parts of the code which you consider secret when you register your copyright.
Computer software protection is complicated - please consult an experienced attorney.
What about Patents for Business Models?
In recent years, the "doing something in the real world" mentioned above has extended into what would previously have been considered business methods. The best example is the "PriceLine" patent (patent number 5,794,207) on the airline-fare bidding system.
Priceline's patent covers not only its technology but also its business model. The company lets online shoppers specify the terms of purchase for either airline tickets or new cars, then finds a seller who will match the terms. A buyer must back up the request with a credit card so the seller is assured of making the sale.
As soon as the Priceline patent was issued, critics were already stating that it would be revoked if it was ever challenged in court. Priceline is now suing Microsoft for infringement of its patent, and because both sides have the money to fight it out, we will soon (relatively) find out.
Next week we will cover non-disclosure agreements and provisional patent applications, while Tally Eitan Esq. will provide insights into frequently overlooked legal issues that start-ups must deal with from the "get go."
Published by Israel's Business Arena on November 2, 1999