Intellectual Property: How to Cover Your Assets

Those of us with BlackBerry wireless devices can now sleep easily thanks to Research in Motion Ltd.’s $612.5 million settlement of a patent infringement suit. But the resolution of that banner case hardly closes an era in intellectual property litigation.

To the contrary, IP law is booming in and out of court—and affecting all of our lives in the process. We brush up against somebody’s intellectual property rights when our kids download music. People trespass on IP rights when they use trademarked names as verbs. Big-time brands are encroached if you photocopy documents and use a verb that starts and ends with an X to describe the activity—or if you describe an Internet search for old boyfriends with a verb that rhymes with “frugal.”

Today, patent, copyright, and trademark law is galaxies removed from old caricatures of dour patent examiners squinting at smudged blueprints in spidery back offices. We’re in a brave new world of monster litigation, supersized settlements, and Supreme Court cases that consumers follow like Super Bowl scores.

Thanks to some well-publicized and substantial patent wins, “nowadays, everyone knows about patents,” observes William Speranza, head of the Intellectual Property Litigation Group at Wiggin and Dana in Stamford, Conn. Patents protect inventions, while copyrights protect “authored” works such as books, movies, and music. The system itself seems to drive much of the litigation defining the field. “The patent office has no enforcement authority,” says Pasquale Razzano, a partner in the New York City office of Fitzpatrick, Cella, Harper & Scinto. With no government enforcer, individuals are left to protect themselves, and that translates into lawsuits.

A fight over patent rights, however, may never be litigated if an employee contracted away all rights earlier on. While the general rule is that a patent on a product is owned by the individual who invented it, companies typically have employees sign contracts giving those patent rights to the employer, explains William Tanenbaum, chair of the Intellectual Property & Outsourcing Group at Kaye Scholer in New York City.

Of course, a lone inventor working outside the corporate sphere can obtain a patent and then license or sell it. Getting a patent, however, is not for the cash poor. “A software patent of medium complexity is probably $20,000 to $30,000,” Tanenbaum estimates.

We’re in a brave new world of monster litigation, supersized settlements, and Supreme Court cases.

Artists and musicians might have an easier time. While employers own copyrights to works created by full-time employees during the course of their employment, creative sorts, who don’t often engage in a 9-to-5 corporate grind, tend to be independent contractors with some negotiating power. An independent contractor would generally own the copyright to any work unless she assigned it to an entity that hired her to produce the work, explains Robert Bernstein, a New York City-based sole practitioner. Companies do tend to want rights to works created for them, but both sides can hammer out their deal in a contract.

The solitary artist creating a work is automatically the owner of its copyright, Bernstein explains. Registering that copyright is a relatively painless process that provides extra protection should someone infringe that copyright later on.

Companies as well as individuals “get into intellectual property problems if they don’t do their homework before embarking on a business venture or manufacturing a product,” observes David Francescani, managing partner of the New York City office of Fish & Richardson.

At bottom, companies and individuals should undertake appropriate due diligence early on. Such prophylaxis usually requires lawyers, and lawyers require legal fees—but, as the old saw goes, you can pay now or pay later.

Intellectual Property: How to Cover Your Assets