Types of Intellectual Property & Related Costs – Triangle IP

Everything about you IP cost in US

A Quick Overview: Types of IP

Type of Intellectual Property (IP) protection needed for an invention depends on the nature of invention. Each of 4 main types of IPR – Patents, Trade Secrets, Copyrights & Trademarks has their own use cases. Patents are best suited for inventions that revolve around a product – process of manufacturing, its layout or appearance etc. If you wish to protect a recipe or a formula, keeping it as a trade secret shall be the best choice. Copyrights protection is well suited for artistic works like music. Trademarks are the best way to protect the visuals that represent a brand.

Each type of IPR protection costs different, this post shares great insights on costs related to each type of IP protection.

To Patent or Not To Patent: Inventor’s Choice

In August  2010, two MIT alums filed a patent for an application that helps multiple clients share and access files over a network. There are high chances that you’ve used this file-sharing app. You must have used “Dropbox”, Haven’t you? Today, it has more than 14 million users and is a billion-dollar enterprise.

Dropbox patent drawing - Intellectual Property related costs

Not every founder, inventor or developer is as generous as  Linus Torvalds, who gave his masterpiece (LINUX) to the world for free? 

If the founders (Drew Houston & Arash Ferdowsi) of Dropbox Inc. hadn’t protected their asset by patent, Dropbox might have even had 10 times its user base today, but they wouldn’t benefit from it. This is why individuals and organizations should safeguard their intellectual property. 

Most organizations are wary about the costs involved in protecting their intellectual assets.There is an assumption that it costs a bomb to get it secured. While there is no easy answer on how much it costs to safeguard your intellectual property, the safest answer is – “it depends on a lot of factors”. In this article, we will help you traverse the difficult terrain of intellectual property and your IP related costs. 

What Is Intellectual Property? 

The intangible creations of the human mind are called intellectual property. It refers to inventions such as literary work, artistic work, designs, symbols, names, product recipes, images, and so on. To ensure that others do not steal your intellectual property, you need to secure them.

There are four different types of intellectual property (IP) rights.  

  • Trademark
  • Patent
  • Copyright
  • Trade Secret

4 Types Of Intellectual Property : Patents, Trade Secrets, Trademarks, Copyrights

Trademark:

An American conglomerate filed a lawsuit against a Chinese company for using a brand name that was eerily similar to theirs. Even though the courts found that there were dissimilarities in products, since the latter was able to acquire clients and capture significant market share using the brand name, they had to pay up the American company. 

What Is A Trademark?

It protects brands. Under the law, a trademark is anything by which customers recognize a brand or the source of a product. A trademark offers legal protection for logo, design, symbol, phrase, wordmarks, or a combination of those that represents a source of goods or services. 

Example:

Trademark Example - Intellectual Property related costs
Credits: Legalwiz

Costs For Securing Trademark Rights in USA:

According to USPTO, the initial application fee for electronic filing for a trademark is $225 per class of goods/services. There are 45 classes of goods and services. 

  1. Your attorney will file a trademark application for you and the charges for it will be anywhere between $300 and $1000.
  2. Once the application is filed, it will be examined by a Trademark Examiner. 
  3. If the examiner issues an Office Action refusing the application, then the attorney’s fees to respond to that would be between $200 and $2000. 
  4. The application needs to be filed based on having used the mark already for sales or with an intent to do so in the future. A Statement of Use is filed if nothing has been sold using the mark. The government’s fee to file it is $100 for each class of goods. Attorney fees to prepare it is between $250 and $700. 
  5. After your application has matured to registration, you must fill the required maintenance documents. Between the 5th and 6th year of registration, Section 8 declaration has to be filed. 

i.) A Section 8 declaration is a signed statement saying that the trademark is in use in commerce and if not, then it should come with an excuse explaining the reasons. 

ii.) Between the 9th and 10th year after registration, a combined declaration of use/non-use and application for renewal under Sections 8 and 9 should be filed together. The fee for combined filing is $425 per class of goods or services. 

For a detailed account of the trademark fee, you can use this link here

How Long Does The Trademark Protection Last?

While the terms of trademark registration can differ, the duration is usually ten years. Also, the USPTO requires that between the fifth and sixth year after the date of registration, the trademark owner should file an affidavit stating that the mark is still being used commercially. If the affidavit is not filed, the registration is cancelled. The USPTO will not send any reminders requesting you to send the affidavit. 

Note: The trademark can be renewed indefinitely by paying additional fees. 

Patent:

One of the most famous patented inventions is the electric lightbulb. Another significant one is the telephone (Transmitter and Receiver for Electric-Telegraphs) which was patented by Alexander Graham Bell in 1876. Each of these made the patent owners significantly wealthy. 

What Is A Patent?

Patents protect the innovative ideas of processes. There are two types of patents:

  1. Utility patent – It protects a process, manufacture, composition of matter, and a useful machine. Example: Fully convertible high heel-to-flat shoe

Utility Patent: Convertible High Heel Shoe: Types of Intellectual Property

  1. Design patent – It protects the shape, appearance, pattern design, layout, and looks of a product. Example: Car or similar article by Warner Bros. (BatMobile)

Patent D311882 Bat Mobile - Intellectual Property related costs

Costs For Filing A Patent in USA:

For filing a patent, the costs vary not only based on the country, but also on the complexity of the invention. It could be $1000 if you plan to do most of the filing work or can be upwards of $40,000+ if your invention is complex. 

  1. The basic cost to file a patent application at the USPTO is $300. If you are an individual, and it is $75 and $150, if you are a small entity. 
  2. For professional attorney patent searches, it would cost anywhere between $800 and $3000. Find the best tips to hire a patent attorney here.
  3. Expect to pay anywhere between $3000 and $5000 on average plus the USPTO fees to an attorney to prepare a new patent application. 
  4. The costs for the patent depends on the type of patent you apply for. 
  1. Provisional Patent: $1500 – $3500
  2. Utility Patent: $5000 – $15000
  3. Design Patent: $2000 – $3500
  4. Plant Patent: $4500 – $8000
  5. International Patent- $100000+

Here is the USPTO link where you can find more information about the fees for filing a patent. 

If you want a cheaper route, then you can do all of this by yourself, but you need to be meticulous in terms of recording everything about your invention. You might have to spend hours filing everything correctly. 

Choosing Inventions For Patenting

While every innovation of your invention deserves a patent, it might not be feasible to patent everything as the prices are a bit steep. Not everyone has huge budgets so corporations may have to pick and choose on what to patent (according to the strategy that they might have). You need to evaluate your ideas before you decide. The company should take the call on which part of your invention to pursue for patenting. The most important part in this process is to keep a track of all ideas so that nothing is missed. You can use a simple spreadsheet but that tends to get corrupted with time along with having security issues. TriangleIP provides a free tool which helps you in maintaining and tracking your ideas. It provides you with 4 different workflow stages till the filing process – through which you can navigate and track your ideas. 

Maintenance Costs:

Patent maintenance fee is paid to the USPTO to keep up a granted patent and is sometimes applicable for pending patent applications. Note: Design and Plant patents do not require maintenance fees. Maintenance fees are to be paid at the fourth, eighth and twelfth year anniversary from the time the patent is granted. To calculate the maintenance fees for your patents, you can use this link from the USPTO website

Maintenance Fees of patents - Intellectual Property related costs

How Long Does Patent Protection Last?

A utility patent is granted for 20 years from the date the patent application is filed. A design patent is protected for 14 years from the date the patent is granted. To enforce the protection of the patent, there are fees involved. 

Copyright:

Vanilla Ice’s song Ice Ice Baby used parts of music from the song Under Pressure by David Bowie and Queen.

When they faced a lawsuit, Vanilla Ice confessed to sampling the work, and the case was settled out of court for an undeclared sum of money and crediting Bowie/Queen for the track. 

What is Copyright?

It protects the original work of authorship. It helps the copyright owner to control reproduction, performance, adaptations, and distribution of the work. Examples of such works are- literature, drawings, paintings, songs, music, computer software, films, photos, web content, etc. 

Copyright is generally attached to the work when the original work is available in a fixed medium. It means that the work has been written down on a piece of paper, saved in a storage device, or in some tangible format. 

Costs for copyright protection in USA:

Filing a copyright application involves a lot of forms and each of them has different fees. Here is a breakdown of the costs involved to copyright your work.

  1. The copyright registration fees for one work by one author costs about $45 if you are filing online. The fee is $125 for paper filing. 
  2. For all the other filings, it will put you back by $65. 
  3. There are special fees for registering an application claim in a group or obtaining additional certificates of registration. 
  4. The USPTO does special services that have a different fee format too. 

How Long Does A Copyright Last?

The terms of a copyright for a work depends on a variety of factors, including whether it has been published and if yes, then the date of publication. 

  1. Copyright protection lasts for the author’s entire life plus an additional 70 years, for works created after January 1, 1978. 
  2. For anonymous works, or a work made for hire or a pseudonymous work, the copyright is for a period of 95 years from the year of its first publication or 120 years, whichever expires first. 
  3. For works published after 1923, but before 1978 are protected for 95 years from the date of its publication. 
  4. If the work was created but not published before 1978, then the copyright lasts for the life of the author plus 70 years. 

Renewal:

For works that are created after January 1, 1978, the copyright is not subject to renewal registration. 

Trade Secret:

In 1953, inventors at Rocket Chemical company came up with a formula at the 40th attempt and called it WD-40 – “Water Displacement, 40th Formula”. The company never patented it because trade secret seemed like a better protection and wisely so. And the company managed to keep it a secret for 50+ years. By the fiscal year 2017, gross revenue for the company, including sales of the familiar WD-40 Multi-Use as well as other products, totaled $381 million in annual revenue. It was only in 2009, that “Wired” with advanced processes like gas chromatography and mass spectroscopy managed to find out what’s inside WD-40.

WD 40- Tradesecret - Intellectual Property related costs
Credits: Wikipedia

What is a Trade Secret?

A trade secret is any valuable information that is not publicly known and of which the owner has taken reasonable steps to maintain secrecy. It could be ingredients used in their dishes, business methods, customer data, ideas related to your business, marketing strategy, experimental technology, etc. 

Costs To Guard Trade Secrets in USA:

Since you don’t have to register with a government body for qualifying your product/business as a trade secret, there are no costs associated with it. Guarding the secret requires security measures, and these might accrue some costs.

As trade secrets costs feel nominal compared to patenting expenses, you might get tempted to opt for trade secrets. This may or may not be a good idea. Thomas Franklin, the founder of Triangle IP has shared great insights in the following video to choose between patents and trade secrets.

How Long Does Trade Secret Protection Last?

Indefinite protection to the trade secret as long as the secret is commercially viable. It will continue as long as the secret is not available to the public. Also, unlike patents or copyrights, trade secrets are protected without registration. 

How To Protect Your Intellectual Property?

We have discussed the major four types of intellectual property and how they can safeguard your business from infringers. It is the onus of the business to protect its assets. Losing one of your assets can result in significant damages to your business. Getting the right advice from professionals will make it easy for you to protect the interests of your business.

For starters, you could write down a list of ideas, discuss them with your lawyer and decide which are the ones that are worth going after. TriangleIP helps companies with a free tool using which ideas can be managed till the filing process.

Conclusion:

In summary, below is the list of the 4 forms of intellectual property related costs discussed in this article:

IP FormProtects Life (in yrs) Prosecution & filing costsMaintenance Cost
TrademarkInfringement/Damage of reputation by another company10 (can be renewed indefinitely)$225-$400 per class of goods/services depending on the type of application $425 per class of goods/services
PatentIt protects the commercial use of the invention without the consent of the patent owner20$75-$300 based on the size of your company$1,600 for large entity | $800 for small businesses | $400 for micro businesses
CopyrightIt protects the original work of an author70-120 yrsStarts at $45 for e-filingNo maintenance fees
Trade SecretIt protects information that is crucial to a business, using which the entity has a strong competitive advantageLasts as long as the trade secret is viable commerciallyThere is no need to register with a government body to guard your trade secretNo maintenance fees

A report from the Commission on the Theft of American Intellectual Property pegs the loss from IP theft between $225 billion and $600 billion annually. If you fail to protect your intellectual property because of the costs involved, you might end up losing a major chunk of revenue as competitors might copy it. You will lose your competitive advantage too when others claim to provide the same features that you do. 

It is normal to feel overwhelmed with the rigmarole of the lengthy procedures involved in filing applications for each intellectual property, which is exactly why you should delegate it to the experts, depending on the situation.

Protect Your IP Before Your Co-Founder Leaves Your Startup

5 STEPS TO TAKE BEFORE YOUR CO-FOUNDER LEAVES

Remember co-founders are also employees who are privy to confidential information. A leaving co-founder may pose a significant threat to your IP. We bring to you five ways to protect your IP when your co-founder leaves.”

The team that starts a company is often not the one that stays on till the end of it.

Co-founders leave.

A co-founder who is leaving the company may pose a significant risk to the company. He/She may claim the company’s intellectual property rights as his/her own.

A leaving co-founder can start their own rival entity and may end up using the company’s intellectual property.

Typically, when co-founders start a company, they brainstorm, develop an IP, and then start with the business.

This makes the co-founders privy to all kinds of proprietary information. They have seen the growth of the IP from a nascent stage. And they may think that they have a right to use it, independent of their association with the company, as well.

So, what to do when a co-founder leaves? How to protect the company’s IP against a leaving co-founder?

We highlight below five ways by which you can protect your company’s IP. And contractually bind the co-founder to not use or treat the company’s IP as his own:

Assign IP to the company rather than co-founders/Invention Agreement 

Intellectual Property enhances the valuation of companies. Hence, its protection becomes important. IP Rights need to be assigned to the company rather than the founders. In the event, the founders decide to walk away from the company, it is important that the IP rights still remain with the company.

How can IP rights be assigned to the company?

This is where a proprietary inventions agreement comes into the picture.

Such an agreement mandates that all the intellectual property developed, conceived, formulated, and generated by a company would be the sole property of the company.

While drafting this agreement, care should be taken that the intellectual property rights of the co-founders are assigned to the company and that they do not remain the property of an individual. It is not uncommon for companies to obtain trademarks, patents, and domain names in the name of one or more of the co-founders initially.

Later on, these should be transferred in the name of the company.  Any patents which are filed should be filed in the name of the company and not the co-founders. 

Employment Agreement

A co-founder is not only associated with a company in the capacity of a co-founder but also as an employee. He/she may develop intellectual property during their employment with the company.

Rights in such intellectual property should also be vested in the company.

The co-founder’s employment agreement which would be separate from the inventions agreement should contain such a clause. 

Non-Disclosure Agreement

A Non-Disclosure Agreement should be mandatorily signed with the co-founder. Such an agreement would prevent the co-founder from disclosing the trade secrets of the company. 

For example, if you have a restaurant business and there is a unique recipe that has the capability of attracting more customers to your restaurant; the recipe is your restaurant’s trade secret.

If your co-founder leaves and opens a competing business and uses this recipe, your restaurant would lose its edge. A non-disclosure agreement would contractually prohibit him from engaging in such an act. 

Confidentiality Clause

Business ideas form the very base of successful functioning and continuance. Hence, it is prudent to bind all current and even former partners by the clause of confidentiality.

Confidentiality should protect the business ideas, trade secrets, any operations/procedures which have been adopted to give finality to these ideas and finally the end-product itself.

A confidentiality clause can be built in the employment agreement of each co-founder, in the Founders’ Agreement, and in the NDA which the co-founder signs.

Remember to make the confidentiality clause applicable even post the termination of the aforesaid agreements.

Typically, a confidential clause should survive 6-12 months after the agreements have ended. 

Non-Compete Clause

A non-compete clause prohibits the co-founders to engage in competing business for a reasonable period of time after they leave the company.

It is essential to have a non-compete clause in the Founders’ Agreement and the employment agreement of the co-founder. 

One hurdle that one may face with regard to non-compete clauses is its enforceability.

The enforceability of non-compete clauses varies across states.

In California, such clauses are void and unenforceable.

In other states such as North Dakota and Oklahoma, the use of non-compete provisions outside the sale of a business is limited. Other states such as Illinois prohibit the use of non-compete with regards to low wage workers.

Hence, having a non-compete clause can be one of the ways in which you can prevent your co-founder from stealing your confidential information and use it for the benefit of a rival/competing entity.

However, it may not be fool-proof and hence should be coupled with other protections such as assigning of IP to the company, NDA, confidentiality obligations, etc. 

Our co-founder recently talked about this in a detailed video. You can watch the video below:

Conclusion

To conclude, while it is understandable that a co-founder leaving a start-up that they helped build may be a devastating blow for the management, it does not necessarily have to be a fatal one.

By doing small exercises to protect the larger interests of the company over the individual interests of the founders, the company can have a strong foundation on which it can be built.

If organizations take steps like including IP ownership by the company, along with NDA and non-compete clauses as part of a founders’ agreement, then any future fallout resulting in the founders splitting ways, will not tear the company apart.

These steps will provide stability to the company and protect its IP.

Everything You Should Know About USPTO Patent Center

Everything about USPTO patent center

USPTO Patent Center – A Great Initiative!

The patent community has long been short-changed by the issues marred by missing or inconsistent patent data.

The companies and their respective patent attorneys have been on the receiving end of a system. The system, that was not user-friendly and involved multiple levels of cyber-bureaucracy. This led to inordinate delays and, on occasions, even missing deadlines. 

The drawbacks were so cumbersome that certain industry thought leaders came together to build a platform to fulfill their requirements. And this is how the Open Pair Initiative (OPI) was formed.

The OPI aimed to address the issue of the unavailability of Image File Wrappers (IFWs) in the short-term. The OPI is simultaneously working on a feasible long-term solution for IFW extraction.

Considering the pertinent issues raised by OPI, the USPTO recently unveiled the Patent Center. The aim behind the creation of the Patent Center is to rationalize the patent application procedure. This shall be done by allowing seamless management of documents and communication channels.

However, to better understand the importance of the Patent Center, it is imperative to take a walk through the memory lane. And understand the evolution of the USPTO tools.

Timeline of USPTO Tools

Public Patent Application Information Retrieval (PAIR)

This system is the de facto source of IFWs as of date. However, it is besieged with numerous issues such as slow loading of the website and erroneous verification process. 

Global Dossier

Global Dossier is another source of IFWs which is relatively free from verification issues. But is heavily dependent on the Public PAIR, which may not always be up to date. Another pesky problem with Global Dossier is that each office action is required to be downloaded separately. There is no functionality to download all IFWs in a single click.

Reed Tech

This is the USPTO’s answer to make available outsourcing of IFWs. But it has been flagged for serious speed issues. Due to which many companies had to resort to building their own patent repository.

As can be observed above, each of the above tools had shortcomings that needed to be addressed.

The beta version of the Patent Center aims to negate these shortcomings by providing for complete and seamless open access to Public PAIR records without the demand for continuous verification. 

Key Highlights of the USPTO Patent Center

Following are the key highlights of the Patent Center:

  • Integrated interface for e-filing and management of patent applications.
  • Use of existing USPTO.gov accounts and sponsorships. 
  • Submission of a joint .docx file involving specifications, claims, and abstract without the need to separate these sections manually.
  • Elimination of the need to convert .docx file into a .pdf document for e-filing.
  • Same authentication and sponsorship process as EFS-Web and PAIR.

The entire list of the features alongside proposed features (and any known issues) can be found here.

Given that the current version of the Patent Center is in the beta stage, the feedback from various stakeholders is being collated by USPTO to make further changes.

Here is a timeline of the Patent Center shared by the USPTO:

USPTO Patent Center

Credits: USPTO

TIP Tool – Feedback Incorporated

Although the information provided through Patent Center is a welcome step, the Patent Center is still, nevertheless, just an API which provides for information in a form that a user cannot comprehend/read – this is where tools like TIP comes into the picture. 

With multiple years of product experience behind it, Triangle IP has developed the TIP tool (currently in beta phase). It analyzes the patent data to offer powerful insights. These insights can assist IP professionals in monetizing their patents with enhanced quality and lower cost of patent protection.

Another critical feature of the Patent Center is the availability of rejection files. Through the diligence of the TIP tool, the acknowledgment and rejection data surrounding patents are used to define the extent of the rejection or prosecution histories, i.e., the intensity of the rejection and the number of claims impacted by the rejection. 

Through the Patent Center, access to the full transaction history of a patent is made available. This is relatively crucial as it enables tracking of patents during the prosecution cycle. But with the TIP tool, companies and attorneys can ensure end-to-end tracking of innovation from idea capture to the publication of patent by leveraging the patent data to manage the entire lifecycle for each patent.

Conclusion

The introduction of the Patent Center is a major boon to the patent industry as it addresses issues of missing and inconsistent patent data.

Furthermore, the release of the IFWs and rejection data has enabled the development of the tools like TIP to provide for powerful data-based insights that can go a long way in the effective monetization of a patent.

As more data become available, the insights offered by these tools are only going to become more penetrative and customized – exciting times beckon.