Intellectual property?

New Mexico Business Journal, Sept, 2000 by Todd E. Landis

Does your company have valuable intellectual assets?

Businesses have both tangible and intangible assets. The assets of a business directly relate to its value, and therefore, understanding and identifying assets becomes extremely important. Intellectual property can be a valuable asset. It can give your business an advantage over your competitors. For instance, if your business has a trademark that becomes recognized with its product or service, the mere mentioning of the term will allow consumers to associate it with your business. Likewise, a competitive advantage can be gained by your business by holding in secret such things as customer lists. Moreover, if you want to sell your business, a strong intellectual-property position can increase the value of your business. Intellectual property consists of patents, trademarks, copyrights, trade secrets and other less obvious things like "know-how."

A patent protects inventions and ideas. Patent protection can be obtained for things like mechanical devices, such as a bicycle, electric devices, computer programs and Internet business models. Patents last for 20 years from the time of the filing of the patent application. If your business develops products for sale, patent protection may be something to consider.

Trademarks protect a term or logo under which a company markets its products or services. Trademarks exist under both federal and state law. Federal trademarks afford the owner nationwide protection and are typically obtained when a company is doing business in more than one state or over the Internet. Federal trademark protection lasts as long as the owner of the trademark continues to use the mark and pays the renewal fees. Trademarks also exist at the state level. In New Mexico, an entity can apply for trademark protection. A trademark registered with the State of New Mexico protects the owner's interest in the mark within the state, but not outside of it. It is important to note that trademarks exist once a business uses a term as a reference for its particular product or service. If your business uses a term without registering the term, it may still use the "TM" symbol next to the term to indicate that the term is a trademark of the business.

Copyrights protect original works of authorship, such as the layout of a restaurant menu, an architectural drawing or a web page. Copyrights exist at the moment an original work of authorship is created and written down. In other words, as soon as the author puts pen to paper or the computer programmer types his code, a copyright exists. Federal registration is not required. One must remember that copyrights do not protect ideas, but rather protect the expression of ideas. Thus, it is how you convey an idea that is protected, not the thoughts behind it.

A trade secret can be virtually anything that a company desires to keep secret and which gives the company a competitive advantage. Under the New Mexico Trade Secret Act, a trade secret means "information, including a formula, pattern, compilation, program, device, method, technique or process, that: (1) derives independent economic value, actual or potential, 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 (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." (Section 57-3A-3 NMSA 1978.) Information such as recipes and customer lists can be trade secrets.

What should you be aware of when considering your business' intellectual property? For most businesses, it is important that they know that only individuals can obtain patents and copyrights. Companies do not invent things or create original works of authorship -- people do. Thus, having proper employment agreements is essential to protecting your company's assets. Employment agreements should contain the proper assignment provisions so that employees are required to assign their copyrightable or patentable material to the company.

Another issue business should understand is that if you want something to be a trade secret, you must keep it secret. This means that a company must take appropriate steps to limit access to information which it considers confidential. Thus, the recipe at the restaurant should only be known to those preparing the dish. Likewise, the customer list should only be known by those individuals needing access. If a business allows too much access to confidential information, that information will probably not be afforded trade-secret protection.

Remember, protecting your company's intellectual property can mean future rewards for your business. Intellectual property can benefit your business through public recognition and a strong competitive advantage. All companies have intellectual property, but the strongest companies take measures to protect it.

TODD E. LANDIS IS AN ATTORNEY WITH THE LAW FIRM OF SUTIN, THAYER & BROWNE, ALBUQUERQUE