Before entering the U.S. market with a new product, every company should carefully consider protecting the technology and creativity in their products under U.S. law. The company should be sure that patent and trademark applications have been filed in the U.S. Patent & Trademark Office ("USPTO") as soon as possible, but certainly before it sends its first products to the United States.
Protecting the intellectual property ("IP") surrounding new products is a critical step to a successful product launch. Further, knowing what IP your competitors own and how your products avoid infringing their IP will keep your products on the market long after their launch. This article will set out important steps every company should take before entering the U.S. market to protect the IP surrounding their products and to prevent infringing third-party IP in the U.S.
1 Recognize the Intellectual Property in Your Product
Take an audit of your product and your company to identify its IP. Intellectual property is often referred to as "creations of the mind" and may take the form of a name, design, original work or invention.
For example, IP may be new technology that goes into a product, it may be originally-written materials, or it may be creative names for products or services. Such IP can be protected under U.S. laws through patents, copyrights, trademarks or trade secrets.
Consider your product: What technology is in it? Is it a mechanical device with custom-designed parts? Is it an electronic device containing software you coded? Does your product have a creative name you developed? In any of these scenarios, you have IP which may be protectable under U.S. laws.
In the U.S., patent protection may be obtained for a new and useful process, machine, article of manufacture or composition of matter if it is novel, non-obvious and patent-eligible. Companies planning to sell products containing technology in the U.S. should consider filing patent applications in the USPTO before making any public disclosure of that technology to reap the greatest benefits under U.S. patent law. Certain technologies, such as computer software and biological materials, may not be patent-eligible, so consulting with a patent specialist is particularly important in these areas of technology. For example, software programs are not patent-eligible when they are merely abstract ideas, algorithms or methods of doing business. As a result, software code is often kept as a trade secret. This strategy can be particularly effective where the software is not directly provided to customers, such as with "software-as-a-service"/ SAAS-related products. In the medical field, biological materials and methods of treating conditions may not be patent-eligible when they are laws of nature or identical to molecules occurring in nature: It instead must be man-made to be patent-eligible. In the pharmaceutical field, this barrier to patent protection can be particularly problematic because tight competition requires companies to obtain patent protection due to regulatory disclosure requirements.
Copyright protection is intended to protect original works of authorship and art. Although filing in the U.S. Copyright Office is not required for protection, federal registration provides a public record and can serve as useful evidence of ownership rights in copyright disputes. Copyright protection may be a valuable tool to protect software programs that may not be considered eligible for patent protection. U.S. federal copyright protection provides an advantage for companies interested in protecting computer software because U.S. law requires only partial disclosure of the software itself and allows redaction of confidential information contained in the source code. In this manner, a copyright registration can be obtained without disclosure of the trade secret information in the code.
Companies should register with the USPTO the names and logos for every product they intend to use with their products. In the U.S., trademark applications may be filed even if the trademark is not yet in use, so long as the applicant can certify it intends to use the mark. This mechanism is helpful for protecting names even before they are in the marketplace and can protect your company from copycats who could try to pass their inferior goods off as yours.
D. Trade Secrets
Until recently, trade secrets were governed by state law in the United States. However, as of June 2019, a federal trade secret law called the Uniform Trade Secrets Act ("UTSA") has been adopted by all states except New York and North Carolina. The UTSA attempts to create uniformity among the various state trade secret law schemes. The UTSA defines a trade secret as "information ... that (i) derives independent economic value ... from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."1
For certain technologies, trade secret protection may be the best option. For example, because software is updated frequently it may have only short-term value (e.g., 1-3 years) to a company. In contrast, simply obtaining a U.S. patent may require 2-5 years, making patent protection impractical for a software program. In addition, many software programs may not be "patent-eligible" subject matter. These factors weigh against seeking patent protection for software inventions but in favor of trade secret protection. Also, certain manufacturing processes may be better kept as trade secrets because of the difficulty in determining how a product is manufactured.
Consider What FRAND Obligations You May Have
Modern technology, especially in the field of digital telecommunications, is increasingly reliant on the interoperability of systems and devices. For example, the Institute of Electrical and Electronics Engineers ("IEEE") standard 802.11 governs the WiFi networks that our cellphones, computers, TVs, and countless other devices rely on to connect to the internet. 2 The IEEE is just one example of a standard-setting organization ("SSO") that adopts guidelines and technical standards critical for the interoperability and compatibility of modern technology. 3 However, this technology is typically covered by patents, commonly referred to as standard-essential patents ("SEP" or "SEPs"). Owners of SEPs enjoy considerable leverage in licensing negotiations because their patents are directed to technology which is necessarily implicated when designing products to comply with a standard set by an SSO. 4 Licensees are left with little to no recourse – either they have to pay the license fee being requested by the patent owner or they run the risk of infringement litigation.
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1 UTSA § 1(4)(i)-(ii) (Unif. Law Comm'n 1979 & 1985 Amend.).
2 The Evolution of WiFi Standards: A Look at 802.11a/b/g/n/ac, Actiontec Blog (June 22, 2017), https://www.actiontec.com/wifihelp/evolution-wi-fi-standards-look-802-11abgnac/.
3 "Cellular standards enable interoperability, i.e., the ability of devices and equipment made by different manufacturers to communicate and work together in a cellular network. In order for mobile devices and telecommunications infrastructure equipment to be commercially viable in the United States and most of the world, it is essential that such devices and equipment comply with 3GPP standards." Complaint ¶ 22, Huawei Techs. Co. v. Samsung Elecs. Co., No. 16-cv-02787-WHO (N.D. Cal. May 24, 2016).
4 Jeffrey I.D. Lewis, What Is FRAND All About? The Licensing of Patents Essential to an Accepted Standard, Cardozo Intell. Prop. L. Alumni Newsletter (Spring 2014), https://cardozo.yu.edu/what-%E2%80%9Cfrand%E2%80%9D-all-about-licensing-patents-essential-accepted-standard#footnote11; https://sites.nationalacademies.org/cs/groups/pgasite/documents/webpage/pga_072485.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.