Part Two: Law of the 'knowledge economy'

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  • | 12:00 p.m. May 31, 2010
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by JBA Intellectual Property Law Section Chair Howard Caplan

Ed. Note - This is the second of a two-part column that discusses the main components of intellectual property law. This column discusses patents, trade secrets and litigation.

Having delved into two of the more well-known areas of intellectual property law, copyright and trademark, in the previous column, the second will discuss another familiar component in patents and another that is less commonly recognized, trade secrets. Each of these areas involves the right of ownership of the type of property. At its most basic level, intellectual property is information.


Patent law is handled exclusively in federal courts. A patent is a grant from the government that gives the inventor rights to exclude others from using, making, or selling an invention. This includes the right to grant exclusive or non-exclusive license to others to use the invention. A patent can be granted for any useful process, method of manufacture, machine, physical item or material or compound. The invention or invented process must be new or a new and useful improvement of something within the categories of patentable matter. The invention must also not be obvious or an obvious modification to a person skilled in the particular field of the invention. Patents will not be granted for abstract ideas, laws of nature, natural phenomena, or printed matter.

A inventor must file a patent application within one year after the inventor or anyone else publishes a written description of the invention, offers to sell the invention or a product that includes the invention, or uses the invention publicly (other than for experimental purposes). Few other countries have a “grace period.” Thus any public disclosure could result in the inability to obtain foreign patent rights. Patents, like copyrights require applying for registration to obtain protection and enforcement rights. Also like copyright law, patent law provides for a limited period of protection. But unlike copyright, the duration of protection is generally no more than 20 years from the date the application is filed. The invention becomes part of the public domain after the expiration of the patent. Anyone can then make use of the patent. Improvements to the no longer protected invention can be, and often are, subject to new patents.

The patent application process is by far the most expensive of the statutory application processes. For this reason, conducting a search for potential existing similar patents or pending patents is strongly recommended. The application processing timeframe is also substantially longer than for copyright or trademark.

Trade Secrets

Trade Secrets include a party’s method of doing business, certain types of business records and the information contained in the records, and any proprietary information developed within the business entity. All proprietary information is confidential information if appropriate steps are taken to prevent public disclosure of the information. Certain confidential information rises to the nature of trade secrets, which are expressly protected by law. Trade secrets are protected by both federal and state laws. Perhaps the two most famous trade secrets are the recipes for Coca-Cola and the 11 herbs and spices used by KFC.

Confidential information must have a unique value to its owner. This is sometimes known as a protectable business interest. An owner of confidential information must take appropriate steps to maintain the confidentiality of the information. Confidential information and trade secrets are often protected by confidentiality and non-disclosure agreements. These agreements are regularly used when a party is investigating the purchase of a business, and are often included in employment contracts.


As stated above, copyright and patent only exist under federal law. Thus only federal courts have jurisdiction over these matters. Trademarks and trade secrets, having both federal and state statutory protection, can be brought in either federal or state court. In the case of trademarks, matters involving federal rights or registrations must be brought in federal court. The earlier user of an unregistered trademark owner can file a claim in either federal or state court depending upon the geographic scope of the earlier user’s use of the mark and the location of the later claimed infringer.

Intellectual property litigation can be quite expensive. It is often heavily dependent on documentary evidence of ownership and use. The copyright and trademark laws contain statutory defenses to infringement. These are specifically stated in the laws. The most common is the defense of “fair use”.

In copyright, fair use includes using portions of a work for purposes of critiquing, news reporting and teaching. One additional defense is the “first sale doctrine.” The copyright owner can exercise the exclusive right of sale to the first buyers of, for example, a book. But then the first buyer has the right to sell or give the book to another. Sound recordings, unlike books, can be retained on a computer or copied onto a CD. If the first buyer retains a copy the first sale doctrine is not available as a defense. In trademark, fair use, includes critiquing, news reporting and certain uses in comparative advertising.

All areas of intellectual property provide that the owner has the right (subject to registration for copyright and patent) to seek injunctive relief from a court that orders the defendant to cease infringing. Additional remedies include the awarding of monetary damages for the infringement, and the awarding of attorneys’ fees and certain costs incurred in the successful litigation.