This newsletter is the second part of a three-part series of articles intended to provide information to general practitioners concerning intellectual property audits. |
IP Audits: Uncovering the Dirty Little Secrets - Part 2
Under U.S. copyright laws, employers automatically own the copyrights to works generated by their employees within the scope of their employment; thus, no written copyright assignment is necessary for employees. The rule for independent contractors, however, is different. Even if the client pays to have an independent contractor write a manuscript, prepare an illustration, generate artwork, participate in a sound recording, etc., the client does not own the copyright to the work unless there is a written copyright assignment between the author/artist and the client.
This issue often arises with respect to software and website content. Clients often hire outside firms to write software for them and to develop content for their websites. The services agreement between the client and the outside firm should include a copyright assignment provision so that the client will own the copyright to any works generated as a result of the engagement.
The term "work for hire" (or "work made for hire") is often used in connection with intellectual property, and more often than not, it is used incorrectly. First, the term "work for hire" has no relevance to patent law; instead, it is a term that has meaning only under copyright law. Clients often assume that something is a "work for hire" if they pay for it, but that is no longer the case (it was under pre-1976 copyright laws). Today, the term "work for hire" applies only to works generated by employees or to a very limited body of works (such as atlases, test material, answer material for a test, etc.) for which there exists a written "work for hire" agreement between the client and the author.
As part of the IP audit, we work with clients to identify works (like software, manuals, press releases, website content, photographs, etc.) that are potentially copyrightable. We then determine whether the client owns the copyright to those works, and if so, we develop a schedule for filing federal copyright applications. For something that is updated regularly, like software or a website, I recommend to clients that they file a federal copyright application at least once a year.
Trademarks may be registered on the state or federal level. For clients whose business occurs solely within the state of Montana, a state registration is the only option. For those clients, however, who conduct business across state lines, a federal trademark registration is highly recommended. Particularly for clients who are considering undergoing a rebranding process, it is imperative that trademark searches be performed to ensure that the new trademark will not pose any conflicts with trademarks owned by other parties.
One issue that arises frequently in my practice involves state assumed business name registrations. Clients often assume that a state assumed business name registration affords them trademark rights, but it does not. A state assumed business name registration is not a
trademark registration, and it does not confer the benefits obtained by registering a trademark. Clients also sometimes confuse company names (i.e., assumed business names) with trademarks. A company name may also be used as a trademark, but the requirements for trademark usage go beyond use as a company name.
The rules for registration of a trademark relating to goods (i.e., physical products) differ from the rules for registration of a trademark relating to services. In order for a trademark relating to goods to be registrable, the trademark must be physically affixed to the product itself (as in a product label) or packaging. Use of the trademark on business cards, stationery, invoices, purchase orders, or in contracts or other legal documents does not constitute trademark usage. In order for a trademark relating to services to be registrable, the trademark must be used in connection with some form of advertising (like a website, brochure, print advertisement, etc.) that mentions those services.
The United States require proof of actual use of a trademark before it can be registered; however, most foreign countries do not. Instead, most foreign countries are "first-to-file," which means that if your client owns a trademark and is doing business overseas, it may be prevented from using that trademark in a foreign country if it is not registered. Although registrations can be obtained in foreign countries without proof of use, registrations are subject to cancellation proceedings based on non-use.
The trademark must also appear as a trademark, which means that if it used as a noun in a sentence, as in "We are here to help you achieve your Preferred Future," that usage will not meet trademark office requirements. Instead, the mark must be physically segregated from the rest of the text, and it should be used as an adjective rather than as a noun. For example, proper use of the "Preferred Future" trademark would be a web page with the phrase "Preferred Future" at the top, the words "career counseling services" beneath it, and then a description of the services below.
During the IP audit, we work with clients to identify trademarks that need protection and to ensure that trademarks are being used properly. For those clients interested in international trademark protection, we develop a schedule for filing of international trademark applications. In order to claim priority back to a U.S. trademark application, an international trademark application must be filed within six months of the U.S. filing date.
Once the client’s trademarks have been identified and protected (registered), for some clients, we initiate a regular trademark monitoring program pursuant to which we search for other applications (filed by third parties) for the same or similar marks. We do this so that we can oppose registration of those marks if the trademark examiner approves them for publication. If the client prefers to conduct the monitoring process in-house, we work with clients to train them on proper search procedures.
From time to time, clients are concerned about goods being imported into the United States bearing their trademarks and without their authorization. In those cases, the client may choose to record its trademarks with U.S. Customs and Border Patrol, which has an electronic registration process for the recordation of trademarks.