At Gunner Technology, we deal a lot with patents.
In fact, we deal with a lot of Intellectual Property protection, including patents, copyrights, trademarks and non-disclosure agreements.
There’s often confusion around what each of these do, so it’s probably best to start there.
A patent is a right granted to an inventor by the federal government that permits the inventor to exclude others from making, selling or using the invention for a period of time.
Patents are further broken down into three categories:
Utility Patents: The most common type of patent, these are granted to new machines, chemicals, and processes.
Design Patents: Granted to protect the unique appearance or design of manufactured objects, such as the surface ornamentation or overall design of the object.
Plant Patents: Granted for the invention and asexual reproduction of new and distinct plant varieties, including hybrids.
Design patents expire 15 years from issuance while Plant and Utility patents expire 20 years from the date on which the application for the patent was filed.
We’ll be focusing primarily on utility patents.
A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.
A service mark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods.
Some examples include: brand names, slogans, and logos. The term “trademark” is often used in a general sense to refer to both trademarks and service marks.
Unlike patents and copyrights, trademarks do not expire after a set term of years.
Trademark rights come from actual “use.”
Therefore, a trademark can last forever – so long as you continue to use the mark in commerce to indicate the source of goods and services. A trademark registration can also last forever – so long as you file specific documents and pay fees at regular intervals.
A copyright protects original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software and architecture.
The duration of copyright protection depends on several factors.
For works created by an individual, protection lasts for the life of the author, plus 70 years.
For works created anonymously, pseudonymously, and for hire, protection lasts 95 years from the date of publication or 120 years from the date of creation, whichever is shorter.
NDAs are just contracts and are not standardized, so what they actually do depends on the language in the contract.
But most outline confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties.
It is a contract through which the parties agree not to disclose information covered by the agreement.
An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects non-public business information
NDAs are commonly signed when two companies, individuals, or other entities (such as partnerships, societies, etc.) are considering doing business and need to understand the processes used in each other’s business for the purpose of evaluating the potential business relationship.
NDAs can be “mutual”, meaning both parties are restricted in their use of the materials provided, or they can restrict the use of material by a single party.
It is also possible for an employee to sign an NDA or NDA-like agreement with an employer.
In fact, some employment agreements will include a clause restricting employees’ use and dissemination of company-owned confidential information.
So, what are they good for?
All of these are designed to protect the holder from other parties stealing ideas or products.
For example, as an inventor, you want protection against for your new cold-fusion engine so a giant company like Google can’t come in and steal it from you and profit from your idea.
You don’t want to create a great company name only to have your competitor steal it from you.
You don’t want to contact a vendor and ask them if they can help you bring your idea to life and have them take the idea and build it themselves.
We deal primarily in software so most of our dealings are in patents and NDAs.
Copyright does come into play, especially with open source technology, but it’s usually not a big deal.
Copyright protects against almost literally “copying.”
Let’s take an example.
Let’s say Google had a copyright for it’s PageRank formula and not a patent.
This would only protect Google from someone literally copying and pasting the code Google uses to implement the formula.
Microsoft could take the code / idea and reverse engineer it and not be in violation of the law.
A patent would prevent this and it covers the idea behind the formula not just the code used to implement it.
A patent is far more comprehensive.
NDAs are like personal patent protection.
Let’s continue with the Google example – keeping in mind this is when Google is very young.
They have this idea for a PageRank Formula, but they haven’t patented it yet because they need to demonstrate they understand the means to implement the formula.
So they start looking for engineers to help them build it out.
They don’t want to bring engineers in for interviews and give them their idea because the engineer may take that idea and go build it themselves or sell it to a competitor.
So Google asks the interviewers (and employees) to sign and NDA so they can’t do just that.
So, perfect, right?
Patents protect, but there are also problems.
In our industry, we see a lot of Patent Trolls.
A Patent Troll is a person or company that attempts to enforce patent rights against accused infringers far beyond the patent’s actual value or contribution to the prior art, often through hardball legal tactics.
Patent trolls often do not manufacture products or supply services based upon the patents in question.
However, some entities which do not practice their asserted patent may not be considered “patent trolls” when they license their patented technologies on reasonable terms in advance.
Essentially, these trolls obtain patents through purchase or other means and then use them to extort money from other companies who want to use them.
Again, going back to Google, someone may have patented this idea before Google. Google may not have even known about this patent and arrived at the idea independently, but can’t act upon it because it’s already patented.
The troll may have no designs on ever implementing that idea; they’re just waiting for someone to come along with a similar idea.
When that happens, three things can happen:
- Google can ignore the patent and go forward with their idea and fight the troll in court
- Pay the troll to use the patent under a licensing agreement
- Buy the patent from the troll
This is akin to domain squatting where someone purchases a prominent domain like widgets.com and does nothing with it as they wait for a company to come along and pay them for ownership of the domain.
The other problem with patents falls into extortion and is usually found in the medical industry.
Jonas Salk invented the Polio vaccine, which saved countless lives.
Salk elected not to patent the vaccine and when asked who owned it, he relied:
“Well, the people, I would say. There is no patent. Could you patent the sun?”
Not everyone is as altruistic as Salk and a system that was designed to protect the little guy has begun to be abused by billion dollar corporations.
Let’s take cancer for example.
If a corporation were to find a vaccine for cancer, that company could sell it for pretty much whatever they wanted if they had a patent on it because they have no competition until the patent runs out and someone else can copy it.
This would make a life-saving drug unavailable to many people.
On the flip side, is a company going to spend millions of dollars researching a vaccine if it can’t protect their investment?
It’s not an easy answer.
As we enter a global economy, patents present another problem, especially in the technology world.
China may not acknowledge a US patent, but other US companies must.
So while a certain idea is a monopoly in the US and is protected from further innovation, it’s possible several companies in China are building and improving on the same idea.
Twenty years is a long time for technology to grow stale.
If Google didn’t improve their search algorithm for 20 years, they would be surpassed by international companies in no time.
Finally, patents are really only as good as the legal team behind them.
They’re not cheap to obtain and if you ever go to war with another company over a patent, expect to shell out a lot of money – money you probably don’t have if you’re the little guy just trying to protect your idea.
So what is the answer to these huge expenses, trolls, extortionists and international threats?
Unfortunately, there is no good answer.
What we tell our clients is that the clock is ticking, so if you’re not ready to constantly iterate and improve your idea to keep it ahead of the competition, try to sell it to a big company as soon as possible – least you get Zuckerberged.