Saturday, February 21, 2009

A Basic Framework for Understanding Intellectual Property

As I prepare for my presentation on basic intellectual property  issues this coming Friday with the Creative Connections group here in South Denver (the group and meetings are also listed at Meetup.com), I thought it would be appropriate to also post a blog on the topic. 

Foundations

Cloud Idea Bulb on WhiteThe first thing to realize about intellectual property law is that it is mostly a fabrication.  It is a bundle of legal rights regarding intangible property.  Intangible property is property that derives value from what is represented rather than an intrinsic physical nature.  See "property" at Dictionary.com.  In addition to this, intellectual property relates to products of the mind or intellect.  See again "property" at Dictionary.com

For example, a book is a tangible item.  But copyright law does not protect the book itself.  The book is personal property which can be stolen out of your car.  Instead, intellectual property law identifies and then protects something underlying the book: in the case of copyright, the original work of authorship which is contained within the book.  As a result, the person who steals the book has committed theft against the owner of the book, but the person who photocopies the book and sells it on the street corner violates the author’s copyright.

Not Everything is Protected

The creation of protection for mental products is not normal.  It requires the application of power and control by an authority to restrict unauthorized uses.  As a result, not everything is Bright Ideaprotected, and not all uses are restricted.  In fact, many uses are encouraged.

Ideas, for example, are not protected.  They are extremely valuable mental products, but they are so valuable that we don’t want to give anyone monopoly control over them.  We want everyone to use ideas.  Facts are also not protected because we want everyone to have access to facts, no matter the source.

Basics Categories of Protection

So what is protected?

Copyright law – this protects original works of authorship.  It gives authors the exclusive right to control how their work is used.  Specifically, and depending on the type of work, these rights include control over reproduction, creating derivative works, distribution, public performance, display, and transmission.

Trademark law – this protects consumers from being deceived about the source of goods or services.  The mark or trade dress is protected from being used by others so consumers will not be confused.  It is also protected so trademark owners can create a reputation for their mark that communicates with the public.

Patent law – patent law protects inventions.  They must be non-obvious, new and useful and can extend from a new molecule to a business method or process.  The protection is exclusive right to control the invention for a limited period of time.

Confidential Information, Trade Secrets – this protects information which is actually confidential or a secret, like a client list or a secret ingredient.  The protection can include noncompetition , nondisclosure , and non-solicitation requirements, as well as other procedures for keeping the information confidential or restricting the use of the information.

Enforcement is Key

Finally, protection for intellectual property is only as good as the enforcement of the rights available.  A good example is the music industry.  Club small

The music labels and artists have copyright rights over the distribution and performance of their songs.  But with the internet, many customers started to share songs with each other over their computers.  Arguably, because the rights holders had established a business model and protection system using widespread public distribution of physical storage devices like records, tapes, and CDs, the sudden proliferation of electronic media undermined their ability to protect the asset.

The Recording Industry Association of America (RIAA) tried to force internet service providers and software providers to stop facilitating the distribution of the songs, but they did not get very far, in part, because it is not the providers responsibility to enforce the copyright laws for the RIAA.  As a result, the RIAA started suing customers who might have participated in downloading songs.  Clearly, this is not a good situation.

The point is that intellectual property is an asset created by law, and its protection and use must be managed in the context of the legal rights and enforcement mechanisms available. 

Sunday, February 8, 2009

Contracts as Value Adding Business Tools

More often then not, people appear to view contracts as adversarial weapons rather than value adding business tools.  This is unfortunate.

Contracts can be a great tool for building business relationships and marketing, as well as risk management.  The key is communication and transparency.  In short, contracts provide parties a unique opportunity to discuss their respective expectations and interests to come to a mutually beneficial arrangement.  This allows the development of trust and loyalty between parties.  It also allows a business to distinguish itself from competitors.  The parties have to write out their understanding in a document a third-party will understand so that clarity and understanding are key to the accomplishment of the goals.  Finally, a contract encourages the parties to engage with each other and think about what is really important to them so they can work together. 

Contracts can also serve many purposes other than simply being a last resort document to force another party to do what a business wants.  A well reasoned and stated contract can be a source document for cooperation.  When a party knows it had the opportunity to negotiate, think about, and engage in the formation of the contract as a collaborative effort, the contract can provide guidance and clarity to the continuous interactions.  The parties can avoid costly management debacles, or wasted activities, because the contract is there to keep the parties on track.

Contracts can be marketing tools because they can provide prospective partners and businesses with an opportunity to become a part of the business’s operation.  A contract that is collaborative gives each party a stake in the success of the other side, not simply because they have to, but because they want to help each other in order to do more together than they coudl do apart.  Contracts can further reassure parties that they will be cared for, and to engage outside parties in a dialogue about the goals, vision, and hopes of the businesses.

But, perhaps most importantly, use of a contact as a value adding tool for a business, places the contract negotiation and activities in the broader context of the business’s greater mission.  A contract is not just about getting a deal with the best terms in a particular subset of the business’s operations.  It can be about promoting the goals and values of the business as a whole.