Patent Basics:

What is Intellectual Property


February 2005

Ingham County Bar Association - Briefs

What is Intellectual Property

Not sure what intellectual property is? Well, you’re not alone. When I inform someone of the type of law I practice, inevitably I get the response, “IP, … what’s that?” Therefore, let’s start at the beginning. Dictionary.com defines intellectual property (IP) as:

A product of the intellect that has commercial value, including copyrighted property such as literary or artistic works, and ideational property, such as patents, business methods, and industrial processes.

In the broadest sense, intellectual property can be divided into four main categories or types. Each category of IP is governed by its own particular, and sometimes peculiar system, and each offers protection against different and specific types of infringement. The four main types of IP comprise: patents, trademarks, copyrights, and trade secrets.

Protection of intellectual property is accomplished by various systems that are specific to the type of property being protected. For example, in patent cases it is not possible to obtain a patent, and thereby protect the IP, unless an application is made to, and is granted by, the proper governmental authority (i.e. the United States Patent and Trademark office (USPTO)). However, in other cases, these protections can arise automatically without the need for registration: for example, in trademarks and copyrights. Nonetheless, even though protection can arise by common law, Federal registration offers numerous advantages. As such, it is imperative that when you consult your clients on IP and IP related matters, you have at least a basic understanding of the various laws, rules, and procedures that are utilized to gain and enforce your clients intellectual property rights.

As it is impossible in such a short article to comprehensively cover a topic as broad as IP, any attempt to do so would miserably fail. As such, this article will provide an overview of patents, discuss what is patentable, the rights that are obtained by a grant of patent, and the advantages that patenting can have for your clients.

What Is Patentable

A patent application can be made by anyone who invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof . Frankly, this is where the law degree comes in handy. The term process means a process or method (i.e. business method) and includes a new use of a known process, machine, manufacture, composition of matter or material, and primarily includes industrial or technical processes . The term “machine” as used in the statute is used in its common form and needs no explanation. The term “manufacture” refers to articles which are man-made and includes all manufactured articles. Finally, the term “composition of matter” relates to chemical compositions and compounds. Did you get all that? If you did, you’re already well apprised and need not read further. However, if it sounds like a multiple choice question on the Bar exam, then read on. Simply put, anything under the sun that is made by man can be the subject of a patent. Hence, patents can be received on subject matter that includes practically everything which is man-made, and includes processes, methods, designs, as well as “things.” Consequently, laws of nature, physical phenomena and abstract ideas are not patentable subject matter.

What Rights Do Patents Provide

Once issued, a patent gives its owner protection which may remain in force for a period of 20 years from the date of application. The rights conferred by the patent grant are “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States, or importing the invention into the United States.” It is important to emphasize that a patent does not give your clients the right to make, use, offer for sale, etc., but only the right to exclude others from making, using, offering for sale, etc. This is because a patent holder is still subject to the rights of all other patent holders. Hence, an inventor, for example your client, may be able to obtain a patent on an improvement to an already patented (existing) product. As such, in this scenario your client would not be able to make the improved product without infringing the existing (earlier filed) patent. However, your client may keep the existing (earlier filed) patent holder from making, using, etc., the improved version. It is also important to note that a U.S. patent is valid only within the United States. Therefore, if protection is required in foreign countries (i.e. Canada), an application must be filed in the respective foreign country wherein protection is sought.

Why Are Patents an Important Part of My Business Strategy

Now that we have covered what a patent is and the rights it confers, it behooves us to spend some time on why patent protection should be sought on your client’s patentable inventions. We have not discussed the costs that are associated with the patent process. However, seeking patent protection is typically an expensive proposition, and the costs associated with obtaining and maintaining a patent, even for a single country, are generally high. Nevertheless, the rewards can be even higher. For example, PricewaterhouseCoopers stated that “the value of intellectual assets has grown so rapidly that in 1998 they accounted for more than 78% of the total value of the S&P 500.” 

Generally speaking, patent protection is the only vehicle by which one can exclude others from making, using, selling, or importing what is the subject matter of the invention. It is precisely this ability to exclude others which gives your business clients, what can be, a significant commercial advantage: as the business organization may be able to keep their competitors from making, using, offering for sale, or selling the patented products and/or services. In addition, patents are a business asset. As such, they can add substantial book value to the overall business. Patents can also help the organization, regardless of size, obtain an advantage during negotiations (licensing, joint development, etc.), by providing leverage that the organization may not have had otherwise. This is especially true when small and medium sized business clients are negotiating with larger organizations. A patent can be the great equalizer. Further, a patent can provide your clients with a substantial income via numerous revenue streams including, increased product sales and licensing. As a final point, if patent protection is not sought, your client’s competitors may be able to duplicate your client’s products and/or services that would otherwise have been off-limits to them. Worse yet, under certain circumstances these competitors may be able to utilize the patent system themselves, and deny your clients the use of improved business products, processes, and other significant improvements, thereby having deleterious consequences on your clients business.

Seeking and gaining patent protection for your clients is an extremely complicated matter. This article is intended as a primer only and should NOT be used solely to determine if, when, and how a patent application is to be filed. If a patent is sought, it is strongly recommended that a qualified patent attorney be retained.


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