Intellectual Property Protection – A Key to Growth

Globally, the United States is considered one of the healthiest open markets. This open market system allows entrepreneurs, small businesses, and large corporations to bring a vast variety of products and services into the American market. The spoils of success are returned to the share and stake holders of the business because the United States economy is not socialistic in nature. This economic atmosphere fosters an environment where innovation is encouraged and technology progresses daily. However, an issue that many of these businesses face as technology becomes more readily accessible to the average consumer is the protection of intellectual property. The intent of this article is to educate the reader of the importance of intellectual property and reveal the most common forms of protection.

Intellectual Property Issues

Rapid movements towards globalization have slowly transitioned from a domestic problem to an international problem as well. This is important considering “studies in the past decade have estimated that over 50 percent of U.S. exports now depend on some form of intellectual property protection, compared to less than 10 percent 50 years ago” (“Intellectual Property”, 2012, para. 6). These statistics reveal the fact that foreign customers want to learn the technology behind the product regardless of the ethical boundaries in doing so. It also indicates that these economies want to evolve from being an exporter to a competing producer adversely affecting market share of the host company. This action of infringing on other businesses intellectual property rights will often occur without being noticed until the information has already been compromised. The results from this can be detrimental once the safeguarded trade secrets are exposed.

Duffin and Watson (2009) indicated that, “Intellectual property may well be a franchise system’s most important asset” (p. 133). This may include “trademarks, service marks, trade dress, copyrights, patents, and trade secrets” (Duffin & Watson, 2009, p. 1). Dependant on the business function the intellectual property may be the sole means for survival within the market place. When considering expansion many businesses may not move critical portions of the operation into foreign economies. Some firms are so cautious that “some of these elements may have been deliberately withheld from the firm’s patents, in the United States and in the foreign country, in order to prevent other parties from being able to copy its technology” (Branstetter, Fisman, & Foley, 2006, p. 323). The purpose behind this approach is that once a business applies for a patent the business must disclose all the details. This patent then becomes a public record. David Leonhardt (2011) from the New York Times reveals to their readers, regarding such nations as China, that “the exchange rate is not the main problem for American companies hoping to sell more products” but the lack of protection to foreign investors (para. 3).

Newton (2008) stated, “The U.S. Constitution speaks of protecting the writings and discoveries of authors and inventors, and thus the importance of protecting intellectual property is fundamental to the American legal system” (p. 1). The United States has developed various means for entrepreneurs and businesses to protect what they consider as intellectual property. When property rights for businesses are strengthened it will in return “induce more innovation in the global economy, thereby fostering more rapid economic growth” (Branstetter et al., 2006, p. 321). As mentioned, many businesses will invest enormous amounts of resources or delay expansion in an effort to develop strategic plans that will ensure that their trade secrets are safeguarded.

Intellectual Property Protection

The first step for a business is to determine if any facet of the business qualifies to be considered intellectual property. For trade and service marks the “most basic vehicle” for protection is registration. (Duffin & Watson, 2009, p. 133). To register for this protection businesses apply to the U.S. Patent and Trademark Office. Duffin and Watson (2009) also alert readers to the fact that this action is the “prima facie evidence of a mark’s validity” (p. 133). However, a business that is considering international operations will also have to file “nationally through each local agent in each jurisdiction; filing an application for an International Registration under the Madrid Protocol” (Duffin & Watson, 2009, p. 134). Next, a company may determine that their company possesses material that qualifies for copyright protection such as “literature, music, drama, graphic design, sound recordings, and architecture” (Duffin & Watson, 2009, p. 135). This property right provides a great length of control for the author by providing exclusive rights “of reproduction, distribution, derivative works, right to create derivative works based on the… original work, public performance, and public display” (Duffin & Watson, 2009, p. 135). Copyrights can be applied for through the Copyright office in the Library of Congress. The final most common form of intellectual property protection comes through patents. However, many companies will prefer to retain trade secrets rather than disclose information that is required to apply for this protection. Generally, patents have life spans of fourteen to twenty years. Duffin and Watson (2009) explained that “there are three basic types of patents; plant, design, and utility” (p. 139). After a review of the application by the U.S. Patent and Trademark Office a business can be granted patent rights to their intellectual property.

Conclusion

Protecting intellectual property for businesses is crucial for both those who are just beginning and those who are already considered household names. The leadership element has a responsibility to the share and stake holders to ensure that all the necessary steps have been taken to protect the intellectual property within the business. In summary, protection occurs through registration, copyrights, patents, or the internal controls governed by the business. The first step begins by properly identifying the critical functions of the business.

How to Manage Intellectual Property to Create Wealth For Your Business

Establishing awareness of Intellectual Property amongst staff of your company is essential for early maximizing the value of your Intellectual Property and the wealth of your business and reducing the possibilities of accidental non-confidential disclosures, that could prejudice successful patent applications and negatively affect the value of your Intellectual Property and ultimately the wealth of your business.

Regular training sessions of staff on Intellectual Property are key and should include the following:
• How to Identify and Protect Intellectual Property;
• How to use Patents to Improvements of Technology;
• Understanding Patent Process,
• How to deal with Confidential Information (see some examples in the Scenarios below);
• Record keeping of Intellectual Property, including laboratory notebooks and Policy on Intellectual Property; and
• Who to contact in case of need.

The record keeping procedures and manuals will address the following questions:
• Has the inventor kept the idea confidential?
• Is there a written description of the idea? And has been kept safe and confidential?
• How the idea has been generated? If during a collaborative programme, then was it agreed beforehand who owns what?
• Is the idea a new product, a new material, a new process for making something? If so, is it patentable or protectable in any other way?
• Is the idea a variation in a product or material or process? If so, it is still likely to be patentable or protectable in any other way?
• Who generated the idea? The answer to this question is very important in the event self-employed or other third party consultants are involved in any research and development or collaborative project.

The main object of this record keeping is to track, protect and maintain all relevant Intellectual Property rights of the business so that Intellectual property can be licensed, assigned or exploited to the fullest extent and benefit of the company.

The record keeping procedures should also include a form upon which, potential inventions should be recorded identifying the following:
• Who: department and research area;
• Named individuals: inventors and authors.
• What: technical description;
• Why: perceived novelty;
• How to use the information: potential applications/markets;
• What else is needed: background or third party intellectual property and information; and

The correct use of laboratory notebooks by staff, is also essential. In the event of a dispute laboratory notebooks may be required to be presented as legal evidence.

It is therefore recommended that:
• permanent bindings are used on notebooks (loose leaf books should be avoided to prevent possible removal or substitution of pages);
• pages should be numbered and any additional drawings cards or computer printouts should be permanently attached to the notebook clearly identified and have reference made to them in the notebook;
• all projects related and other activities, such as breaks in research due to secondment or holiday should be recorded factually; and
• the notebook should be reviewed regularly by someone who understands the technology involved, each page should ideally be signed by a witness and again the choice of the witness is important and should not be someone who may be nominated as core inventor. The witness should also sign and date and graphs, chart, printouts, which are inserted into the laboratory notebook.

In addition, to the use of appropriate record keeping procedures and notebooks, an evaluation of IPR policy should be adopted. Such an evaluation should include factors, such as potential market, market, impact, competitive products, timing, Intellectual Property protection available and experience in the field concerned.

Finally, once relevant Intellectual Property rights have been identified, protected, exploited and enforced, it is advisable that, regular audit of such rights is undertaken to ensure that, the Intellectual Property rights reflect the current needs of the business and that expenditure is limited accordingly.

How to take care of Confidential Information:

Scenario 1 – What to do, if receiving confidential information (under a mutual confidentiality agreement).
• Have you been asked to sign a confidentiality undertaking? If so, please check that it is only confidentiality restriction and not a transfer of intellectual rights.
• Obtain express confirmation from the discloser, that the information is not confidential, where possible, before disclosure.
• Make a written record of what was disclosed, by whom and when.
• Please remember that, an obligation, to keep information confidential, includes the obligation of not disclosure or not use of the information, without the permission of the person to whom the obligation is owned.

Scenario 2 – What to do, if giving out confidential information.
• Put in writing or some other permanent form.
• Mark any documents with appropriate confidentiality and IPR disclaimers.
• Keep a copy of what is disclosed and a record of when and to whom.
• If an oral disclosure is made in confidence, confirm in writing what was disclosed and what was given in confidence.
• Have the recipient sign a confidentiality undertaking in advance of the disclosure.

Scenario 3 – If publishing or presenting technical papers:
• Consider whether anything in the paper describes a new device, chemical compound or manufacturing process or a significant improvement or modification to any such matters.
• Do not disclose anything, without first considering the possibility of the content of the papers being patentable in whole or in part
• Consider whether there are any restrains, under any relevant agreements (including research and development or collaboration agreements).
• Keep an eye on any relevant timetable for confirming publication.
• Request that, the publisher confirms confidentiality on receipt of paper pending decision on publication.
• Please, always remember that, any document exchanged, should be clearly marked as being confidential.

Scenario 4 – If starting discussions on a collaborative project:
• Consider what background IPR, if any, are free from obligations of confidentiality and may be introduced to the project.
• Prior to disclosing any information to third parties, have a confidentiality agreement signed. Such agreements, may take many forms and the terms should be adjusted in accordance with the particular circumstances

Safeguarding Intellectual Property in the Republic of Panama

Panamanian Intellectual Property Law No. 35 of May 10, 1996, replaced the obsolete legal provisions on Intellectual Property, which were in existence for more than sixty years. This law simplifies the process of registering trademarks and allows for renewal of a trademark for ten-year periods. The law’s most important feature is the granting of ex-officio authority to government agencies to conduct investigations and to seize materials suspected of being counterfeited.

This new legislation introduced modem concepts recommended by the World Intellectual Property Organization (WIPO), consistent with the policies of the World Trade Organization (WTO), thus bringing Panama into line with international developments on industrial property, which has reduced the infringement of foreign trademark rights in Panama.

In addition, Panama is party to the following international agreements:

(a) The Trade Related Intellectual Property Rights (TRIPS) contained in the Marrakech Treaty, approved by means of Law No. 23 of 1997;
(b) The Berna Convention approved by means of Law No. 3 of January 3 1996;
(c) World Intellectual Property Organisation (WIPO) Treaty approved by means of Law No. 93 of 15 December 1998;
(d) The General Inter-American Convention for Trademark and Commercial Protection approved by means of Law No. 64 of 1934; and
(e) The Paris Convention, approved by means of Law No. 41 of 1995.

In Panama, differing from other jurisdictions where cases of industrial property are of administrative nature, since 1997, the IP jurisdiction has been removed from the Ministry of Commerce and Industry and given to special courts with exclusive competence to handle IP conflicts (ie, oppositions, cancellations, infringement of trademarks and copyrights, etc). Also, the District Attorneys’ office is specialized in the prosecution of IP rights. Since the creation of this specialized jurisdiction within the court system, the proceedings regarding these subjects have been more expedite and owners are allowed to get a better protection of their IP rights in Panama.

The creation of specialized prosecutors for intellectual property-related cases has strengthened the protection and enforcement of intellectual property rights (IPR) in Panama.

Panamanian Intellectual Property Law also includes criminal enforcement and criminal penalties such as prison, which are the most effective methods and procedures in the fight against infringement of intellectual property rights.

Another major difference from foreign jurisdictions is that in Panama custom authorities and administrative authorities from the Colon Free Zone, which have their own special brand register, are empowered by law to retain, inspect and even seize counterfeit goods; in some cases, these institutions may proceed even without the need of a claim or process in case of suspicion of counterfeited goods.

On the other hand, Panama’s 1994 copyright law modernized copyright protection and its 2004 update created a special Copyright Office with anti-piracy enforcement powers.

The Republic of Panama is signatory to the WIPO Copyright Treaty and the WIPO Performances and Phonographs Treaty. The copyright office has enhanced border measures and established new punishable offenses, such as for Internet-based copyright violations which have significantly reduced the rate of VHS piracy.

Panama worked through the FTA negotiations with the United States of America to establish a legal regime to combat piracy of audiovisual products over the Internet, including notice and take down provisions and clearly defined Internet Service Provider (ISP) liabilities and copy protection measures.

At the international level, Panamanian government has reinforced the legal framework and institutional arrangements to comply with the existing international treaties, including more effective methods and procedures to all intellectual property matters, such as:

• Administrative enforcement, such as seizure of infringing goods by a customs office;

• Criminal enforcement against the infringer;

• Civil enforcement, in which the right holder, or someone in possession of valid rights, such as an assignee or licensee, takes prescribed legal action, such as in court by filing a civil action against an infringer, and perhaps seeking an injunction;

• Technological enforcement, in which producers of products and services employ technological means to protect IP rights against infringement (for example, encryption of digital copyright works).

• Border measures before the Customs Office and the Colon Free Zone Authority. In order to enforce IP rights, Panamanian Intellectual Property Law grants discretionary powers and faculties to Customs and The Colon Free Zone authorities to conduct investigations and retain any goods suspected of being imitations, including the confiscation of equipment used to manufacture fake goods.
The Attorney General’s Office and the Customs Bureau are officially empowered to initiate investigations on Intellectual Property matters.

The Customs Bureau and the Free Zone Administration are duly empowered to keep records of the Panamanian Intellectual Property Registrations for companies willing to protect their intellectual property through barrier measures. GALINDO, ARIAS & LOPEZ offers the service of registering a Panamanian Trademark Registration before the Customs Bureau and the Colon Free Zone.

With the information in the register, the authorities can control and even seize merchandise more effectively at the Colon Free Zone and Customs. These measures take importance because allowing an infringing product to remain on the market will hurt the right-holder’s sales and lead to a risk of market confusion.

Some complexities involved in establishing or enforcing IP rights on a cross border/international scale, are time factor and expertise on the part of the authorities. In view of the seriousness of the sanctions involved, which require that decisions be taken as quickly as possible, time is of the essence.

Demanding cessation of infringement only makes sense if a court order can be issued quickly. For this reason, preliminary injunctions play a major part in enforcing IP rights, since these measures are intended to prevent further infringement until the court has decided on the merits of the case.

On the other hand, the demand for a quick procedure, leading to a very tough sanction, requires expertise on the part of the judges. Only judges fully versed in intellectual property matters are prepared to make speedy use of this prohibitory instrument. It is also necessary to ensure the participation of well-trained legal practitioners and attorneys.

Finally, costs are an issue of major practical importance in establishing or enforcing IP rights on a cross border/international scale. With the complexity of these matters, retaining the services of experts, and of specialized legal practitioners in addition to attorneys, imposes a heavy financial burden on the parties. Measures such as taking evidence and carrying out tests and investigations on the infringing goods also involve further costs. In some cases, in Intellectual Property infringement proceedings, the financially weaker party is always in disadvantage.

The United States concluded free trade negotiations with Panama on 2006. This trade agreement will eliminate tariffs and other barriers to goods and services, promote economic growth, and enhance trade between the United States and Panama.

This trade agreement includes a chapter on Intellectual Property. Conventions such as the Madrid Arrangement concerning the International Registration of Marks, and the Patent Cooperation Treaty (PCT) will be mandatory in the Republic of Panama.

The agreement provides for improved standards for the protection and enforcement of a broad range of intellectual property rights, which are consistent with both U.S. standards of protection and enforcement, and with emerging international standards. Such improvements include protections for digital products such as U.S. software, music, text, and videos and; stronger protection for patents, trademarks and test data, including an electronic system for the registration and maintenance of trademarks.

Strengthening and improving Panama’s overall regime for the protection and enforcement of intellectual property rights in a broad range of areas was an important objective of the FTA negotiations.

In Panama’s climate, businesses are often looking for a way of putting themselves ahead of competitors; many companies lack a clear understanding of exactly what their intellectual property is or what it’s worth. Many businesses are unaware of the extent of their intellectual property and the consequences of failing to protect it properly.

Therefore, businesses are realizing the importance of an effective protection and use of intellectual property and companies are seeking expert legal advice to find out the best way to protect their intellectual property and also to understand how best to enforce it.

Some companies are tending to implement measures in order to have an inventory of their intellectual property to determine what the company’s intellectual property is, where it is, and what it is worth; and also to understand that managing the company’s intellectual property is more than just registering patents and trademarks.

Companies are starting to implement processes to identify intellectual property that belongs to others – such as knowledge and trade secrets of competitors that may accidentally come into their business with new personnel.

Between in-house resources and outside advisors, companies are making sure to cover intellectual property licensing, strategic alliance structuring, counterfeit and grey market tracking, due diligence on partners and employees, registration of patents, copyrights, trademarks and trade secrets, intellectual property valuation and royalty and revenue recovery.

REBECA HERRERA graduated in 1994 from Panama’s Universidad Santa María La Antigua (USMA) with a degree in Law and Political Sciences; she also holds a Master’s degree in Law with a focus on private law, earned from the University of Chile (with Honors, 1999).

Rebeca Herrera specializes in the areas of mercantile law, corporate law, mergers and acquisitions, unfair trade practices, public bids and contracts, intellectual and industrial property, and administrative law.

She has worked with a particular focus in the area of intellectual and industrial property, legally representing multinational companies-such as banks, commercial businesses, insurance companies-in judicial and administrative processes before the customs authority of Colon’s Free Zone, and legal representations regarding health where such matters have concerned violations of sanitary registry regulations. She has participated in the process of mergers and acquisitions involving the principal banking companies in Panama, as well as insurance companies, and also the execution of legal corporate audits. She is in charge of the firm’s intellectual property department.

Rebeca Herrera has held the position of Director of AFP Horizonte – Peru (1997 – 1998), Director and Secretary of Techolit, S.A. (1999 – 2001) and Director and secretary of Fibropan Inc. (1999 – 2001).

She has authored various publications, including “Judicial Intervention in Corporations”, “The Judicial and Administrative citation for shareholders’ meetings in corporations (comparative analysis of the Panamanian and Chilean legislation)”, “Modifications to the Code of Commerce”, “Important Issues Regarding Industrial Property in the Republic of Panama”, “Customs and Colon’s Free Zone Regime on Intellectual and Industrial Property Issues”, and “New Panamanian Legislation of Electronic Commerce”.

Managing Intellectual Property Rights and Contract Law

Intellectual property rights are by their nature restrictive rights. Rights owners are granted the power to prevent third parties using their intellectual property without their consent. When it comes time for materials in which IP rights subsist to be exploited, it is the law of contract that is called upon to do permit to use the materials, subject to the conditions of contract.

Contract Law

A contract is simply a legally binding agreement. Parties to contract are at liberty to agree to what may take their fancy and the terms that may please them. The law imposes limitations on what may be contracted for when the courts find that an agreement is contrary to public policy or otherwise restricted by statute. With this background, owners of intellectual property are free to agree to deal with intellectual property in any way that they see fit.

Contractual Dealings with Intellectual Property

Dealings with intellectual property take two basic forms. Firstly, intellectual property rights are personal property, which means that they may be assigned to another person, subject to very limited exceptions. An assignment of intellectual this property rights conveys the title to the rights to another person. Far more frequently however these personal rights are licensed to other businesses for a limited purpose or a limited period, in accordance with the particular terms of contract. Amongst many others, movies, music, software, architectural plans, trade marks, designs, patents may be licensed to businesses or the public at large to use them subject to specified conditions and limitations. These licenses, which are in essence permissions, allow the licensee to perform some act in respect to the intellectual property that would otherwise amount to in infringement of the owner’s intellectual property rights.

In the commercial environment contracts allow such dealings to happen.

Copyright Law

Copyright is the palladium of product of the arts, such as manuals, computer programs, commercial documents, leaflets, articles, song lyrics, sound recordings, photographs, film, sound recordings and many others. Businesses that trade using copyright works such as these are entirely reliant granting licenses to their customers on specified terms to trade using their stock in trade.

Contract law allows these companies to restrict and limit use of these copyright works to a fine degree. For instance a photograph might be licensed for use in print media for a set price and electronic media for an entirely different price, or indeed prohibit these uses in their entirety.

Patent Rights

Of all the different types of intellectual property rights, it is patent rights that provide the most extensive and complete monopoly over inventions. Products and processes which are inventive may be patented. As the monopoly rights granted are so extensive, so the bar to surpass for registration is higher than any other form of IP protection. Use of patent rights may be managed in the same way as other intellectual property rights.

Confidential Information and Know-how

A common form of license is that granted by non-disclosure agreements. Non-disclosure agreements are legally binding contracts designed to impose restrictions upon information released to another person, pursuant to the terms recorded by the agreement. In the absence of a non-disclosure agreement, the discloser of information would be left with their rights under the general law to protect the information released from unauthorised disclosure or use. The general law requires a claimant must show that the circumstances of the case justify the court finding that the information (1) retained the requisite quality of confidence, (2) was imparted in circumstances importing an obligation of confidence, and (3) that the information has been misused. Establishing such circumstances requires meticulous preparation of evidence. Thus in the vast majority of cases proving to the satisfaction of a court that trade secrets have been misused is an onerous exercise.

Contract law simplifies this. If it were the case that a contract has imposed obligations of confidence between the parties, the discloser is not simply left with his rights at general law. The non-disclosure agreement imposes separate and independent rights to the general law, and indeed when properly drafted, may far exceed the rights that a claimant would otherwise be left with under the general law. As with other types of contracts, non-disclosure agreements may be framed to allow different types of uses of the information released – what those terms are rely upon what the parties intend to achieve.

Trade Mark Rights

The law of registered trade marks and unregistered trade marks protect brands, business names, logos, slogans, packaging and shapes in many instances. In industry, service marks and collective are also able to be registered, creating a device to set a standard of service and recognition that becomes associated with a particular standard of quality. Again, use of contracts allow businesses to license use of trade marks to other businesses; it may be that a licensor wishes to impose particular restrictions on the size, colour, geographical location or even the place on a website that a trade mark will be used. Provided these requirements may be reduced to writing with sufficient clarity they may form part of the contractual relations and effectively restrict use of the trade mark. For example, franchises depend on trade marks to create a common branding, as do businesses authorising others to manufacture packaging.

Commercial Environment

When it comes time to make commercial decisions as to the types of uses and licences that will be granted in respect to intellectual property, companies would be well advised to ensure that that contract accurately reflects the commercial intentions of the business. Failures to do so may have dire commercial and indeed legal consequences. Problems may arise by a variety of different courses.

For example, a company may inadvertently accept terms and conditions of the other business printed on the back of a purchase order authorising the payment. In such cases, the licensor’s own terms of business may be found not to apply. The consequences of this are that the business contracts on unforeseen terms of contract that may well be contrary to its own intentions, and result in foreseen consequences. In one case that the author has advised on, the author of a University course inadvertently transferred the intellectual property rights to a company rather than license its use. This placed it in a position whereby it had divested itself of the assets in which had invested significant capital expenditure, that it intended to use and re-use for years to generate income. It had assigned the ownership of the course to the other party inadvertently.

A company may wish to license a company to “use” certain intellectual property rights on restrictive terms. Difficulties may arise in the contractual meaning of the word “use” when it is not defined in the contract, and thus introduces ambiguity and uncertainty in the contractual arrangements between the parties. Where a licensor asserts narrow and restrictive rights for “use” and the licensee asserts broad liberal rights to “use” the work, unless there are other material in the contract indicating what the parties intended by “use”, it is extremely difficult to ascertain what the parties actually intended to agree to. In situations such as these where intransigence sets in, litigation is required to resolve the dispute causing distraction and expenses that is otherwise perfectly avoidable.

Conclusion

Fundamentally management of intellectual property rights takes place with contracts. Licences and assignment of owners’ rights may be coupled other objectives of the parties, for instance:

research grants and consequent dealings with the fruit of such research;
funding arrangements and contractual commitments for exploitation;
clinical trials and use of consequent results of the trials;
fixing royalties for exploitation of intellectual property rights;
commercialisation of intellectual property and revenue sharing arrangements
granting of options over intellectual property
grants for licences for evaluation of relevant materials, and onward licenses
cross-licensing different intellectual property rights for mutual research or exploitation; and
software licensing.

The Intellectual Property Audit – Finding What You Have

Focus of an Intellectual Property Audit

Each intellectual property audit should focus on four key areas. First, the attorney performing the audit needs to identify all the intellectual property assets within the organization being audited. Second, the attorney must identify any problems that exist with the intellectual property ownership. Third, the attorney must identify any defects in title or enforceability of the organization’s intellectual property. Finally, the attorney must identify any unprotected intellectual property assets.

Identification of Intellectual Property Assets

In identifying all of the intellectual property assets of a organization, an attorney focuses on “…identifying the intellectual property subject matter, how it works, and how it is manifested in the organization.” Different types of organizations stress different types of intellectual property, depending on the organization’s purpose. An artistically based organization should have copyright protection in place, but may have very few, if any, patentable inventions or trade secrets. A technology-based or manufacturing organization, on the other hand, should rely heavily on patent and trade secret protection and less on copyright protection. Most organizations are likely to have logos and other trademark items.

Identification of Intellectual Property Problems

To identify any problems that may exist with the organization’s intellectual property ownership, the attorney performing the intellectual property audit attempts to trace the chain of ownership of intellectual property back to its creation. The attorney looks for assignment agreements from employees, former employees, contractors, strategic partners, acquired companies, and others who may have rights in the intellectual property if not assigned. This is especially true for patents, where, in the United States, the inventor owns all rights to “… exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States, and, if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States, or importing into the United States, products made by that process, referring to the specification for the particulars thereof.” It is possible in some other countries for an organization to be named as the inventor on a patent; in the United States, the inventor must be one or more human beings who may then assign rights in the patent to an organization. It is also true in copyrights, where independent contractors and consultants retain copyright to materials fixed in a tangible medium unless otherwise agreed.

The attorney performing the intellectual property audit also looks at the agreements that exist between the organization’s employees and the employees’ former employers. New hires can present a problem with intellectual property ownership if they would violate a previous employer’s noncompete/ nondisclosure contracts by assigning the rights to any new inventions to their current employer. Hence, the intellectual property attorney must investigate the employees’ prior noncompete/nondisclosure agreements.

Identification of Defect in Intellectual Property Title or Protection

The attorney performing the intellectual property audit should identify any asset that is entitled to more protection than the asset currently enjoys. In some cases, such as in patents, key protection can be lost forever if the organization postpones the decision to pursue the registration for too long. This is often a problem in that the invention, while it should be perfectly patentable, has hit the statutory bar in the patent law because the inventor disclosed or used the invention in public more than one year before the organization applied for the patent. Or, an inventor may regard her invention as perfectly obvious when it is actually patentable. The attorney can also identify valuable trade secrets that the organization should protect more carefully than it does.

Identification of Unprotected Intellectual Property Assets

Often, copyright and trademark protection may be based only on common law because the owner fails to register the intellectual property with the appropriate agency. Or, an inventor may invoke a statutory bar of the patent law inadvertently and render his invention unpatentable. This can cause problems down the road for the organization when it tries to enforce its intellectual property rights because certain intellectual property rights (patent rights especially) are unenforceable unless the asset is registered with the proper governmental agency or agencies. Ultimately, lack of registration of a piece of intellectual property can lessen the value of the intellectual property itself. The attorney must identify any of these problems and bring them to the organization’s attention. The organization then may wish to remedy a problem if it can (in the case of patent registration, the organization may be unable to obtain registration due to the one-year statutory bar). The attorney should also identify any issues with recording of licensing or change in ownership of intellectual property. An organization’s failure to record such changes can result in a second licensee taking priority over the organization as first licensee if the organization fails to provide notice via registration. In US patent law, this notice has a 90-day look-back period. Proper registration also ensures that full remedies are available for infringement.