Local News
March 28, 2008
Business: Securing Ideas, Products
Barbara Pash
Associate Editor
The client who stands out in Len Bloom’s memory is a woman who made a killing on her invention, but almost didn’t.
“She’d invented a female hygiene product, and a big manufacturer heard about it and wanted to buy the rights to her patent. They gave her a figure and said, ‘Take it or leave it.’ She wasn’t sure what to do,” said Mr. Bloom, who chairs the intellectual property group at the law firm Hodes, Pessin & Katz.
Mr. Bloom urged her to take the money rather than wait for a better offer that might or might not surface. She took his advice, receiving a hefty enough sum to pay off debts, buy a house and send her kids to college.
Intellectual property covers five legal subspecialties: patents, copyrights, trademarks, trade secrets and rights of publicity. Each has its own rules and applications.
Patents
Acquiring a patent is costly and time-consuming, and requires a search of previous patents to determine if the item fits the U.S. Patent Office’s criteria for being “novel and new, useful for the purpose intended, and non-obvious,” said Mr. Bloom.
Because of the backlog of applications, it can take years for a patent to be granted, although there’s some protection during this period. The patent is good in the United States only, expires 20 years from the original filing date and costs $5,000 to $15,000 for application fee, required drawings/renderings and legal fees. (An international patent is a separate process.)
Since the people who invent/discover items are rarely prepared to produce them, the goal is either to sell the patent rights or license them and get a royalty from the manufacturer. That’s where a savvy lawyer like Mr. Bloom comes in. He has seen arrangements from 5 percent of gross sales on a machine to 25 percent of sales of a federally approved drug to a pharmaceutical company.
Copyrights
Copyrights are not difficult to get. There’s a two-page form, filed with the registrar of copyrights at the U.S. Library of Congress, and a small fee. Within four months, you have a copyright that generally lasts for the life of the originator plus 70 years.
“Copyright law protects expression,” said Jim Astrachan, a principal in the law firm of Astrachan Gunst Thomas and the former and founding chair of the intellectual property committee of the Maryland Bar Association.
A recent brouhaha illustrates the point. A cookbook author accused Jessica Seinfeld, wife of comedian Jerry Seinfeld, of copying her recipes in her best-selling cookbook for kids.
“If you find someone is using your material—an infringement of copyright—you need to take steps. But you may not get a judgment,” said Mr. Astrachan. “People may steal it but it’s not necessarily actionable. Recipes are not copyrighted.”
Trademarks
The filing process for trademarks is complicated, but the reason is simple.
“You are trying to get the most expansive category of rights. You have to search that there aren’t prior uses to the trademark,” said Mr. Astrachan.
Trademarks do not expire as long as they are in continuous use. There is generally a product behind them. Mr. Astrachan cited the Calvin Klein brand. The designer sold the right to his name to a corporation, which manufactures a variety of items under that “brand” and for which royalties are paid.
Watch services can be hired to protect your trademark. “They’re on the lookout for trademark filings that are similar to yours and for uses that are similar to your product,” said Mr. Astrachan.
Dead celebrities come under trademark law. These are people like Elvis Presley and Marilyn Monroe whose images live on—on T-shirts, coffee mugs and the like—long after they have passed away. Their estates receive royalties for licensing their images, figures that may amount to several million dollars annually.
Trade Secrets
The most widely cited example of a trade secret is the recipe for Coca-Cola, which was created in 1895. Had the creators of the recipe patented it, the patent would have expired long ago and the recipe would have gone into the public domain.
“Reasonable steps” must be taken to protect the trade secret, according to Mr. Astrachan.
“Basically, it’s a non-disclosure agreement for employees. If you leave a top-secret manual for building a better widget on your desk and the cleaning crew sees it and sells it, the case could be made that you didn’t take reasonable steps,” he said.
Mr. Astrachan had a situation like that. A boat designer accused his client, a boat maker, of stealing his secret for a 75-foot yacht.
“We replied the [designer] had taken his plans to five or six international boatyards and the blueprints to a builder, and he hadn’t had them sign a confidentiality agreement,” said Mr. Astrachan, who won the case.
Hot Field
It’s only been in the past 15 to 20 years that intellectual property has become an important legal specialty, according to Professor Lawrence Sung, director of the intellectual property law program at the University of Maryland School of Law.
Back then, law schools rarely had such programs. Now, almost all do.
“The field is hot,” said Dr. Sung. “Demand is high, so are salaries. Whether it’s a recession or a boom, you always have intellectual property demand. When times are bad, people try to protect their intellectual property. When times are good, they’re out selling their intellectual property.”
Lawyers who specialize in intellectual property may have additional degrees. “These are complex cases that often involve technical matter. It’s not uncommon to require additional expertise in a scientific subject,” said Dr. Sung, who has a doctorate in microbiology.
In certain circumstances, said Dr. Sung, a person or company will seek more than one form of legal protection.
A software developer may go for both a patent, to protect the process, and a copyright, to protect the expression. Or the software could be protected under both a copyright and a trademark. In biotechnology, you might apply for a patent and a trade secret. Businesses often rely on all forms of the law to protect themselves.
In intellectual property, “generalities are common because there are so many ways to go about it,” said Dr. Sung. “It depends on what you have.”
• Patents—For a product, industrial process or a chemical/biomedical/pharmaceutical discovery or design. Falls under federal law;
• Copyrights—For artistic endeavors, articles and books, music, software. Falls under federal law;
• Trademarks—For a name, logo or symbol of a product. Falls under federal and state laws;
• Trade Secrets—For information that has value because it is not generally known; for example, a manufacturing process. Falls under state law.
Check out the “patent library” at 1420 N. Charles St. to find out if a patent is pending.
Want to get the best deal on your invention/discovery? Check out an interview with Mark Rapson of KAWG&F below.
How to get the most for your invention
Mark Rapson sees intellectual property from the other end of the spectrum. As chair of the health and life sciences department of the certified public accounting and consulting firm Katz, Abosch, Windesheim, Gershman & Freedman, his goal is to help clients get the best deal for their invention/discovery.
“We get into the question of royalties, of licensing the patent, and how fees are structured,” said Mr. Rapson, whose clients include universities and private biotechnology companies.
Often, the contract of researchers who work in a laboratory of a university or private company stipulates that their discoveries are owned by that entity.
“It’s the same as companies like IBM,” said Mr. Rapson. “Whatever you discover [while working for IBM] is part of the company’s intellectual property.”
However, in the case of universities, they have neither the money nor the mandate to “commercialize” discoveries made in their laboratories. For private companies, it may take 8-10 years before they see a profit on the discovery, if at all.
So instead of developing the discovery into a product and taking it to market by themselves, they seek a licensing deal. “They look for the highest bidder,” said Mr. Rapson.
“When universities talk about ramping up commercialization, this is what they’re talking about,” said Mr. Rapson.
Private companies may seek additional financing to take the discovery to market. “Fund-raising is a big headache,” said Mr. Rapson. “Do you get individual investors? Or do you go to a venture capitalist firm?”
Mr. Rapson said that biotech discoveries require a lot of time and money to turn a profit, “and some never do.”
Even after you do have a product on the market, “someone can come along and make a generic product,” he said. “That’s why it is very important to have patent protection.”