Protecting Intellectual Property
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protection of intellectual property should be a significant concern to all
Information Technology organizations. Without protection, commercial
hardware/software vendors would quickly evaporate as others would inevitably
steal their designs and programs. Corporate developers would also suffer if
their ideas, inventions, and programs were misappropriated thereby causing
them to lose their competitive advantage. In fact, our corporate landscape and
standard of living would be radically different if we had no such protection.
Fortunately, the framers of the U.S. Constitution were wise enough to
implement legislation safeguarding the authorship and ownership of literature,
art, and inventions, thus causing the United States to flourish in the arts
and sciences. But the advent of the computer caused us to reconsider how we
safeguard such property. For example, the concept of a computer program has
been a bit nebulous to some people; should the source code be protected by
copyright? What about the object code (executable)? Attorneys have been
debating this subject over the last thirty years and there is still general
confusion in the field.
In 1974, MBA embarked on our own lawsuit to protect the
"PRIDE" methodology. This was a lengthy legal battle which took the courts
into unchartered waters. At the time, "PRIDE" was nothing more than a
methodology implemented with printed manuals and forms (no software support at
the time). To safeguard our product, our lawyers drafted a standard
nondisclosure agreement which all prospective buyers would sign prior to our
sales presentation. Further, our contracts included similar verbiage
instructing the customer to safeguard the physical embodiment of the product
and not to divulge it to unauthorized third parties.
We were contacted by Arthur Young & Company in 1974 to
conduct a "PRIDE" sales presentation for one of their consulting clients in
Milwaukee, Wisconsin; the Harley Davidson Motorcycle Company (then a division
of AMF). The attendees signed the nondisclosure agreement and the presentation
was conducted as usual. Following the presentation, MBA was informed that
Harley wouldn't be purchasing our product, and that Arthur Young would be
developing a similar methodology for Harley instead. This made MBA suspicious,
particularly since one of Young's consultants was a former "PRIDE" user.
Consequently, MBA initiated a lawsuit over misappropriation of trade secrets.
This turned into a long and ugly legal battle which lasted
eight years. Basically, the lawyers for the opposition contended that since
the "PRIDE" materials had copyright notation printed on them, they were in the
public domain. In contrast, it was our contention that "PRIDE" was a trade
secret. In the end, we won the lawsuit and "PRIDE" was proven to be a trade
secret in a court of law. This litigation established many precedents and is
often referenced in similar cases; for additional information, see:
Chicago-Kent College of Law
Many years have gone by since the verdict was passed. In
1989, Arthur Young & Company merged with Ernst and Ernst (now called Ernst &
Young), the principals of the case have moved on and we no longer bear any
ill-will towards the company. Further, "PRIDE" was placed on the Internet in
2004 (with copyright notation).
As a result of the lawsuit, MBA learned a lot about the
protection of intellectual property. I may not be an attorney, but you may
look upon this as a convenient primer to protect yourself.
Copyrights are primarily concerned with the authorized
reproduction of such things as text, graphics, music, and audio/video
recordings. As such, it protects publishers, authors, artists, and designers
from unauthorized republication or redistribution of their work. Not too long
ago, in order for a copyright to be enforceable, it had to be registered with
the copyright office.
However, the laws were somewhat loosened in 1976 whereby copyright protection
is now effective from the moment the work is first created in fixed form.
Although the use of copyright notation is no longer mandatory, it is highly
beneficial to include it whenever possible to indicate your work is protected
by copyright. Notation typically appears as:
"Copyright © 2007 ABC Company"
Since computer program source code is written as text, it
is a wise idea to add such notation in the source code. But understand this,
copyright only protects the work from unauthorized reproduction, it does not
protect the author's ideas (which is how the lawyers of Arthur Young argued
against us). Although the exact source code cannot be reused, it does not
protect the logic of the program. To illustrate, suppose a new employee brings
with him some source code from his last place of employment. Copyright
protection would prohibit him from reusing the source code, but it wouldn't
stop him from using the ideas contained in the program. Unfortunately, most
programmers do not like to reinvent the wheel and, as such, frequently reuse
source code over and over again. From this perspective, probably every company
with an I.T. department is guilty of some form of copyright infringement.
A trade secret is much different than a copyright.
Basically, it represents some unique formula, design or idea. Perhaps the best
known example of a trade secret is the Coca-Cola syrup formula which is
strictly protected in a vault. There are essentially two elements for
establishing a trade secret; first, that it is a "unique" idea or formula,
that it has distinguishable characteristics or properties to differentiate it
from others, and; second, that you can demonstrate you are taking effective
safeguards to protect it from unauthorized use (hence, making it a "secret").
In the lawsuit over "PRIDE", we were able to successfully demonstrate that
"PRIDE" was unique and that we had taken adequate steps to safeguard
unauthorized use (our nondisclosure agreement).
A patent is similar to a trade secret in that the inventor
has a unique idea or device he wishes to prevent others from producing. To
implement a patent, the idea or device must be registered with the
U.S. Patent and Trademark
Office. A registration process is required which includes a fee. For an
invention to be patented, it must be proven to be unique, useful, and not of
an obvious nature. If a patent is granted, the inventor is protected from
others producing a similar invention for a limited period of time (20 years).
The patent is renewable at the end of this period.
The computer field makes active use of patents to establish
unique inventions and protect them from others For example, IBM typically
registers the most patents each year, both hardware and software.
TRADE MARKS/SERVICE MARKS
A trademark is an arbitrary word, name, symbol, or device
used to distinguish a particular product. A service mark is similar except it
is used to distinguish a particular service. For example, "PRIDE" is the
registered trademark of M&JB Investment Company.
Like a patent, the trade/service mark has to be registered
with the U.S. Patent and
Trademark Office. And, Yes, a registration fee is required. Notation
normally accompanies the trademark to indicate it is registered ®. Use of such
notation should be encouraged so that others know your product or service is a
A trade/service mark means no other company can use it to
offer a competing product or service unless authorized by the company holding
its title. As such, it is closely related to the integrity of the title
company. If a competitor uses it, the public will assume they are somehow
aligned with your business and, as customers of your competitor, are entitled
to the same level of service or quality your business offers. If the
competitor fails in this regards, it is a reflection of both your
product/service and your company which could damage your business.
When MBA was founded, we were very lucky to get good, sound
legal advice for protecting our intellectual property. Because of this, I
encourage anyone concerned in this regard to seek such advice from a qualified
Another way to assist in the protection of your
intellectual property is to enact some form of employee agreement, whereby the
employee agrees not to misappropriate your products (such as designs and
software), or use other intellectual property without expressed authorization.
This puts your employees on notice.
Devices such as copyrights, trade secrets, patents,
trade/service marks are very helpful for preventing the unauthorized use or
distribution of your products. However, if someone really wants to pirate your
products, they will. When you catch someone in the act though, try to give
them a way out. I always recommend that you try to avoid litigation whenever
possible. I find such lawsuits primarily benefit the attorneys and nobody
else. But if your livelihood is genuinely threatened, as ours was, then you
have no alternative but to use the full force of the law.
Keep the Faith!
Note: All trademarks both marked and unmarked belong to their
Copyright © 2010 by Tim Bryce. All rights reserved.
About the Author
Tim Bryce is the Managing Director of
M. Bryce & Associates
(MBA) of Palm Harbor, Florida and has over 30 years of experience in the
management consulting field. He can be reached at firstname.lastname@example.org
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Article Published/Sorted/Amended on Scopulus 2010-07-14 16:39:57 in Business Articles