Intellectual Property 101 for Wisconsin Small Businesses

Whether you run a bakery, a consulting firm, or another type of small business, you have intellectual property. This article discusses the four types of intellectual property and steps small businesses in Wisconsin can take to protect it.

Trademarks

What is a Trademark?

If you are selling goods or providing services under a brand—such as your business name—then you have a trademark. More broadly, a trademark is a word, phrase, symbol, or design that identifies and distinguishes the goods of one business from those of another and that indicates the source of the goods. (A “service mark” is the same thing but for services. For simplicity, this article uses “trademark” to refer to both trademarks and service marks.)

A business can have multiple trademarks. For example, Harley-Davidson, Inc. has registered trademarks for the words “Harley-Davidson,” its orange and black shield logo, and the slogan “Step Into A Legend” (for their footwear).

Trademark Distinctiveness

Trademarks generally fall into one of four categories: generic, descriptive, suggestive, or fanciful/arbitrary. The categories are on a continuum of distinctiveness, from less distinct to more distinct. For example:

  • Generic: MILK for “a dairy-based beverage”
  • Descriptive: CREAMY for “yogurt”
  • Suggestive: QUICK N’ NEAT for “pie crust”
  • Fanciful/arbitrary: BANANA for “tires”

Generic trademarks and descriptive trademarks are weak and generally hard to protect. Trademarks that are suggestive, or fanciful/arbitrary, are stronger and easier to protect.

A small business should generally aim to select a trademark that is strong and protectable, but there are exceptions, such as using an individual’s name or a geographic description of the origin of the goods or services. Trademark distinctiveness is a great topic for a discussion with a trademark attorney.

Trademark Search

Before selecting a trademark, it is very important for a business to do a search for businesses with similar names selling similar goods or services. Otherwise, the business risks rejection of a trademark application or a lawsuit for trademark infringement. The lowest-cost option is to search using an internet search engine and/or the U.S. Patent and Trademark Office’s trademark database.

Another option, which is recommended for many entrepreneurs, is to work with a legal clinic or trademark attorney who will conduct a more comprehensive trademark search and assist with registration.

Note that trademarks do not have to be identical for problems to arise. The key question is whether consumers would mistakenly believe goods or services come from the same source because the trademarks are so similar. If the answer is potentially “yes,” the business should likely opt for another trademark.

Common Law Trademarks

If a small business simply starts selling goods or providing services under its distinctive name or logo, it will likely have “common law” trademark rights. Common law trademarks provide owners some rights but are geographically limited (e.g., to Milwaukee, if that is the only location where a business’s goods are sold). Also, common law trademarks are generally harder to enforce than registered trademarks.

State Registration

Businesses in Wisconsin can register trademarks with the Wisconsin Department of Financial Institutions (DFI). The filing fee is $15, and the registration lasts 10 years. Registration with the DFI is not required, but it is a good way to notify the public and potentially deter others from using a trademark.

Federal Registration

A business also might pursue registration of a trademark with the with U.S. Patent and Trademark Office (USPTO). Federal registration is not required but offers many benefits. Among other things, it gives the trademark owner a legal presumption of ownership in all 50 states and the ability to bring a lawsuit in federal courts. Federal trademark registration costs a minimum of $250 per class of goods or services. Registration lasts 10 years, but the owner must take steps to maintain the trademark and registration.

Federal trademark registration requires actual use in interstate commerce, such as the sale of goods across state lines. The USPTO also offers “Intent to Use” registration, which allows a business essentially to reserve a trademark for future use.

Federal trademark registration is a lengthy process, and applications can be rejected for various reasons. Consequently, it is often beneficial for entrepreneurs seeking federal trademark registration to work with a legal clinic or trademark attorney.

Trade Secrets

What is a Trade Secret?

Trade secrets are information (i) with economic value from not being generally known and (ii) that are subject to reasonable efforts to maintain their secrecy.

Examples of trade secrets include recipes, business plans, pricing information, customer and supplier lists, sales plans, and web analytics. One particularly famous trade secret is the formula for Coca-Cola. Other additional examples of trade secrets are KFC’s secret blend of 11 herbs and spices, Google’s search algorithm, and the New York Times Bestseller List.

Protecting Trade Secrets

Unlike other forms of intellectual property, there is no state or federal registration process to protect trade secrets. Instead, businesses can employ internal measures to protect their trade secrets. These efforts to maintain secrecy are the most important element of a trade secret. A business’s trade secret protection program should vary based on the scope and nature of the trade secrets at issue.

Strategies for protecting trade secrets include:

  • Sharing the trade secrets with few people in an organization.
  • Training workers about which information or documents are trade secrets and how to protect them.
  • Having employees and contractors sign non-disclosure agreements (NDAs).
  • Limiting physical and electronic access to documents.
  • Marking documents as “CONFIDENTIAL.”
  • Conducting exit interviews with departing workers, reminding them about their legal obligations not to disclose trade secrets.

Copyrights

What is a Copyright?

Copyrights are a property right in a “work of authorship,” governed by federal law. The work of authorship must be both original and fixed in a tangible medium. Facts and ideas are not copyrightable. Examples include books, art, music, magazines, plays, software, websites, photographs, video games, and instruction manuals.

Under copyright law, a business owns works an employee creates in the employee’s scope of employment. A company does not, however, own works created by an independent contractor absent a written agreement with the contractor properly transferring ownership (typically by having both a “work made for hire” provision and an “intellectual property assignment” provision).

Federal Registration

Federal copyright registration is optional, but it offers many benefits, including creation of a public record of the copyright, the right to sue for copyright infringement, and the right to potentially stop copies of infringing works at the borders.

Registering with the U.S. Copyright Office is a relatively short and straight-forward process as compared to registering other forms of intellectual property. A company’s copyright generally lasts 120 years from creation or 95 years from first publication, whichever is shorter.

To register, the author must submit to the U.S. Copyright Office copies of their copyrightable work, the appropriate application, and filing fees (which begin at $45 and go up).

Patents

What is a Patent?

Patents are a type of intellectual property giving an owner the right to exclude others from making or selling an invention. The invention must be novel, useful, and non-obvious.

Types of Patents

There are three types of patents:

  1. Utility patents are the most common type of patent, covering new or improved articles of manufacture, processes, machines, or compositions of matter. An example of a simple utility patent is an umbrella with a unique opening feature.
  2. Design patents protect the exterior, ornamental appearance of an article. Notable examples of design patents include Coca-Cola’s curved glass bottle and the distinctive appearance of Apple’s iPhones.
  3. Plant patents protect new and unique plants.

Generally, utility and plant patents have a term of 20 years from the filing date, and design patents have a term of 15 years from the date of grant.

Ownership and First-to-File System

An inventor, not the employer, presumptively owns patent rights in an invention. A business with workers who might invent something should therefore have each employee or contractor sign an agreement that, among other things, makes a present transfer of ownership of inventions to the business.

Additionally, the United States has a “first-to-file” system, where priority is awarded to the first inventor to file a patent application. Thus, speed of filing a patent application is important as there are no common law rights in patents.

Public Use or Disclosure

Upon public use or disclosure or an invention, an inventor generally loses international patent rights and has a one-year grace period to file a patent application with the USPTO. Businesses therefore need to be careful not to publicly use or disclose an invention unless a patent application has been filed. This includes showing drawings of an invention at a startup pitch or demo event.

Patent Search

Before filing a patent application, it is important for a patent search to be conducted to determine if a similar patent has already been filed or granted.

Inventors are encouraged to work with a patent attorney to conduct a proper, thorough search, but they can conduct a preliminary search themselves. The USPTO offers free guidance for patent searching along with a free database of patent records. Inventors in Wisconsin can also contact a local Patent and Trademark Research Center or see if they qualify for services from the LegalCORPS Inventor Assistance Program or University of Wisconsin Law School’s Law & Entrepreneurship Clinic.

Patent Registration

Inventors are strongly encouraged to work with a patent attorney to register a patent. Filing fees can be as low as $65 for a provisional patent, and $400 for a nonprovisional utility patent application, for a qualifying micro entity. It can take two years or longer from filing an application until a final decision is reached by the USPTO with respect to a patent.

More significant costs arise from patent attorney fees, which can range from several thousand dollars for a simple design patent to many tens of thousands of dollars for complex utility patents. Because attorney fees can be so high, low-income inventors are encouraged to seek out pro bono assistance, such as from those resource providers noted above.