What Is “Intellectual Property” And What Does It Have To Do With The Construction Industry?

by Ellen T. Mathews, Burr & Forman LLP

Black’s Law Dictionary defines intellectual property as “a category of intangible rights protecting commercially valuable products of the human intellect,” (9th ed. 2009). What exactly does that mean? In layman’s terms, intellectual property is almost any creation of the human mind that has commercial value. This article will provide a brief description of each of the most common types of intellectual property (IP), focusing on where IP might be found in the construction industry and how you should go about protecting IP once you have identified it. Businesses in more traditional industries, such as the construction industry, and in the service sector may not realize the critical importance of IP to their businesses.  Too often, the value of a company’s IP is not recognized until it is too late to adequately protect it.

Before going into the “what” of the frequently encountered types of IP, however, it is important to understand how IP rights are created. IP rights are created by state and federal law, and by common law (i.e. principles of law arising out of judicial decisions as they have evolved over time). Generally, the various types of law allow IP rights to co-exist, providing different levels of protection and serving different purposes. For instance, some IP rights arise automatically and protect IP from the moment of its creation while other IP rights require the IP owner to take affirmative steps, such as federal registration, before they can be enforced.

Trademarks are a very well-known type of intellectual property and include business names, words, slogans and phrases. The purpose of a trademark is to identify the source of goods or services. Trademarks arise through use, and the trademark owner does not need to take any further steps to gain common law protection for its trademarks (as long as the owner continues to use the mark on its goods or in connection with its services). Common law rights are limited to the geographical region in which the trademark owner uses the mark, however, so it may be in the owner’s interest to seek further protection of its marks. A trademark owner may apply for a federal trademark registration, for instance, which grants the owner of the registration nationwide protection against infringement from others trying to use confusingly similar marks. If you have a trademark, such as a catchy slogan you use in connection with your services, it is important for you to police the mark and to prevent others in the same business from using confusingly similar marks. Trademark rights, if not adequately protected, can easily be lost.

A patent is an IP right that is a creature of federal law. A patent provides protection for new and novel technologies, often described as inventions. In exchange for a limited monopoly to practice the invention, the inventor of the patent must fully disclose the subject invention to the public. If the government grants patent rights to the inventor, no one else can practice the invention for twenty years from the date the patent application is filed. The government does not grant patents to just anyone and the patentability process can be long and expensive. One requirement for patentability is that the invention has to be manmade. For instance, you would not be able to obtain patent protection for a new and unique metal that you discovered deep in the earth at a build site because that metal is a product of nature, not of man.

Other patent requirements include novelty and non-obviousness. A novel invention is one that has not been created by anyone previously. A non-obvious invention is one that cannot easily be created by combining two existing inventions. Whether or not an invention is capable of being patented is a complex analysis that likely requires legal assistance. If you have a unique product or process, or a novel way of performing a routine task, consider whether you want to seek patent protection for the invention. One example of an invention that has been patented in the construction industry is an underground pipe-monitoring system designed to sense displacement of utility pipes and to provide aboveground indication of the displacement. Another relatively simple invention consists of a rubber boot with a pocket melded to it where a cement worker can store his float tool while laying cement.

For a less expensive option for the protection of technological innovations or novel ways of doing business, the owner of the innovation or information may opt for trade secret protection. Trade secrets are created by state law, and almost every state has specific laws defining what a trade secret is and what constitutes misappropriation of trade secrets. Typically, information must meet several elements to be entitled to trade secret protection. For instance, the information must provide economic value to the owner and must be subject to reasonable efforts to maintain its secrecy. A variety of valuable information can be afforded trade secret protection, including information about customers, suppliers, pricing, or competitive bidding. A method of performing a build that gives one company an economic edge over other companies might also be a trade secret. Unlike patents, trade secrets have the potential to last indefinitely, but only if the owner continues to take reasonable steps to maintain their secrecy. Perhaps the most well-known trade secret is the top-secret formula for Coca-Cola. As long as the makers of Coca-Cola continue to keep the formula secret and free from public dissemination, it will remain a trade secret.

Because trade secrets must be subject to continuing efforts to maintain their secrecy, it is critical to recognize potential trade secrets as soon as they come into existence and to determine the best way to keep them known to as few people as possible. If the trade secrets must be shared with others, it is important to protect them through the use of non-disclosure or confidentiality agreements. Every employee, business partner, customer, or supplier that is exposed to your trade secret should be required to execute an agreement that it will not disclose your confidential business information to anyone else. Non-compete and non-solicitation agreements provide yet another form of protection for trade secrets. These agreements prohibit former employees from putting your company’s confidential information to immediate use if the employee goes to work for a competitor.

Like trademarks, copyrights arise at common law but may also be the subject of a federal registration. A copyright prevents the reproduction or copying of several forms of expression, including books, manuals, songs, and even television broadcasts. Additionally, computer code has long been afforded copyright protection. A copyright does not protect an idea but protects the expression of that idea. Copyrights frequently encountered in the construction industry include plans, designs, and drawings. Even buildings, also known as “architectural works,” are protectable as copyrights. The copyright in a work automatically belongs to the author of the work unless the author has contractually agreed otherwise. For instance, any copyright created by your employees will belong to them, and not your business, unless you have an agreement with them specifying otherwise. So, it may be wise to add a provision to your employment agreements providing that ownership of any copyrightable works belongs to you.

Similarly, the ownership of copyrightable material can become especially contentious between you and your business partners. For instance, if you hire an independent contractor to design and build one small part of a project and the independent contractor creates detailed drawings representing the build, the drawings belong to him, even if you paid him to come up with them (although you have an implied right to use the drawings for the duration of the business relationship). If he walks off site with his drawings, you cannot recreate those drawings without violating his copyright and this could affect your entire project. Therefore, any time you do business with a third party, you should specify beforehand who owns any copyrights created and how those copyrights will be treated in the event of a disagreement between the parties.

Now that you know the parameters of the basic types of IP, take a close look at your business and its practices and methods, and try to identify your company’s valuable intellectual property. Once you have identified it, consider what you must do to protect and preserve that value, bearing in mind that many aspects of IP rights are time-sensitive and require advanced planning. Remember that if you wait until it’s too late, you may lose valuable rights.

 

This article appeared in the June 2012 issue of Dixie Contractor.

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