Intellectual property: copyrights & trade secrets
Copyrights
Definition and purpose
A copyright is a form of protection provided to the authors of “original works of authorship” including literary, dramatic, musical, artistic, and certain other intellectual works, both published and unpublished.
Copyright protects the expression of ideas, not the ideas themselves. This is a fundamental principle known as the idea-expression dichotomy. For example:
- The idea of a love story between members of feuding families is not protectable
- Shakespeare’s specific expression of that idea in “Romeo and Juliet” is protected
Works protected by copyright
Copyright protection extends to original works of authorship fixed in a tangible medium of expression. Categories include:
- Literary works: Books, articles, blog posts, computer programs, and other written works.
- Musical works: Songs, compositions, and accompanying lyrics.
- Dramatic works: Plays, screenplays, and scripts.
- Pantomimes and choreographic works: Dance compositions and mime performances (when fixed in notation or video).
- Pictorial, graphic, and sculptural works: Paintings, drawings, photographs, sculptures, and architectural works.
- Motion pictures and audiovisual works: Films, videos, and multimedia presentations.
- Sound recordings: Recorded performances of musical or other sounds.
- Architectural works: Building designs as embodied in plans or constructed buildings.
Rights granted by copyright
The 1976 Copyright Act generally gives the owner of copyright the exclusive right to do and to authorize others to do the following:
- Reproduce the work: Make copies of the copyrighted work in any medium.
- Prepare derivative works: Create new works based on the copyrighted work, such as translations, adaptations, or sequels.
- Distribute copies: Sell, rent, lease, or lend copies of the work to the public.
- Perform the work publicly: For literary, musical, dramatic, choreographic, and audiovisual works, perform the work in public or transmit it to the public.
- Display the work publicly: For literary, musical, dramatic, choreographic, pictorial, graphic, and sculptural works, display the work in public.
- Perform sound recordings by digital audio transmission: For sound recordings, perform the work publicly by means of digital audio transmission.
Copyright duration
Copyright duration depends on when the work was created and other factors:
Works created on or after January 1, 1978
- Individual authors: Life of the author plus 70 years
- Joint works: Life of the last surviving author plus 70 years
- Works for hire, anonymous, and pseudonymous works: 95 years from publication or 120 years from creation, whichever is shorter
Works created before 1978
Complex rules apply based on publication date, registration, and renewal. Many older works have entered the public domain.
Copyright registration
Copyright protection exists automatically from the moment a work is created and fixed in a tangible medium. Registration with the U.S. Copyright Office is not required for protection but provides important benefits:
Benefits of registration
- Public record of the copyright claim
- Required before filing an infringement suit (for U.S. works)
- Prima facie evidence of validity if registered within 5 years of publication
- Eligibility for statutory damages and attorney fees if registered before infringement or within 3 months of publication
- Ability to record with U.S. Customs to block infringing imports
Fair use
The fair use doctrine permits limited use of copyrighted material without permission for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. Courts consider four factors:
- Purpose and character of the use: Commercial vs. nonprofit educational; transformative vs. copying
- Nature of the copyrighted work: Factual vs. creative; published vs. unpublished
- Amount and substantiality: How much was taken relative to the whole work
- Effect on the market: Impact on the potential market for the original work
Fair use is determined on a case-by-case basis, and there are no bright-line rules.
Copyright infringement
Copyright infringement occurs when someone violates any of the exclusive rights of the copyright owner without authorization or a valid defense such as fair use.
Elements of Infringement
- Ownership of a valid copyright
- Copying of original elements of the work
Remedies
- Injunctions
- Actual damages and profits
- Statutory damages ($750-$30,000 per work; up to $150,000 for willful infringement)
- Impoundment and destruction of infringing copies
- Attorney fees and costs
Trade secrets
A trade secret is information that derives economic value from not being generally known and is the subject of reasonable efforts to maintain its secrecy.
Trade secrets can include:
- Formulas (e.g., Coca-Cola’s recipe)
- Patterns
- Compilations of information
- Programs and algorithms
- Devices
- Methods and techniques
- Processes
- Customer lists
- Business strategies
Requirements for trade secret protection
To qualify as a trade secret, information must meet three requirements:
- Economic value from secrecy: The information must derive 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.
- Not generally known: The information must not be generally known or readily ascertainable by others in the industry.
- Reasonable secrecy measures: The owner must take reasonable measures to maintain the secrecy of the information. These measures may include:
- Physical security (locked facilities, restricted access)
- Electronic security (passwords, encryption)
- Confidentiality agreements with employees and business partners
- Need-to-know access policies
- Employee training on confidentiality
- Exit interviews and reminders for departing employees
Advantages of trade secret protection
Trade secrets offer several advantages over other forms of intellectual property protection:
- No registration required: Trade secret protection arises automatically when the requirements are met. There is no application process, examination, or fees.
- Potentially unlimited duration: Unlike patents (20 years) and copyrights (limited term), trade secrets can last indefinitely as long as the information remains secret. The Coca-Cola formula has been protected as a trade secret for over 130 years.
- No disclosure required: Patents require public disclosure of the invention. Trade secrets, by definition, remain confidential.
- Immediate protection: Trade secret protection begins immediately, while patent applications can take years to process.
- Broad subject matter: Trade secrets can protect information that may not qualify for patent protection, such as customer lists, business strategies, and negative know-how (knowledge of what doesn’t work).
Disadvantages of trade secret protection
Trade secrets also have significant limitations:
- Vulnerability to disclosure: Once a trade secret is disclosed—whether through reverse engineering, independent discovery, or breach of confidence—protection is lost forever.
- No protection against independent discovery: If a competitor independently develops the same information, the trade secret owner has no recourse. Unlike patents, trade secrets do not provide exclusive rights.
- No protection against reverse engineering: If a competitor can discover the secret by examining a publicly available product, trade secret protection is lost.
- Difficulty of enforcement: Proving misappropriation can be challenging, especially when the alleged misappropriator claims independent development.
- Requires ongoing effort: Maintaining trade secret protection requires continuous vigilance and investment in security measures.
Trade secret misappropriation
Trade secret misappropriation occurs when someone acquires, discloses, or uses a trade secret through improper means or in breach of a duty of confidence.
Improper means:
- Theft
- Bribery
- Misrepresentation
- Breach of a duty to maintain secrecy
- Espionage through electronic or other means
Proper means (not misappropriation):
- Independent development
- Reverse engineering of a lawfully obtained product
- Observation of publicly available information
- Published literature
Legal framework
Trade secrets are protected under both state and federal law:
- Uniform Trade Secrets Act (UTSA): Adopted by most states, the UTSA provides a uniform framework for trade secret protection at the state level.
- Defend Trade Secrets Act (DTSA): Enacted in 2016, the DTSA creates a federal civil cause of action for trade secret misappropriation, allowing trade secret owners to sue in federal court.
- Economic Espionage Act: Provides criminal penalties for trade secret theft, particularly when it benefits a foreign government or agent.
Remedies for misappropriation
Remedies for misappropriation include:
- Injunctive relief: Courts can order the misappropriator to stop using or disclosing the trade secret.
- Damages:
- Actual damages (lost profits)
- Unjust enrichment (defendant’s profits)
- Reasonable royalty
- Exemplary damages (up to double actual damages for willful and malicious misappropriation)
- Attorney fees: Available in cases of willful and malicious misappropriation or bad faith claims.
Trade secrets vs. patents
The choice between trade secret and patent protection involves strategic considerations:
| Factor | Trade Secret | Patent |
|---|---|---|
| Duration | Potentially unlimited | 20 years (utility) |
| Disclosure | None required | Full disclosure required |
| Independent discovery | No protection | Full protection |
| Reverse engineering | No protection | Full protection |
| Cost | Low (security measures) | High (filing, prosecution, maintenance) |
| Time to protection | Immediate | 2-4 years |
| Enforcement | Difficult | Easier (clear boundaries) |
When to choose trade secrets:
- Information cannot be reverse engineered
- The secret can be maintained indefinitely
- Patent protection is unavailable or uncertain
- Speed to market is critical
- The innovation has a short commercial life
When to choose patents:
- The invention can be reverse engineered
- Competitors are likely to independently develop the same technology
- Licensing revenue is anticipated
- The invention has long-term commercial value
- Deterrence of competitors is important
Comparison of intellectual property types
| Aspect | Patents | Trademarks | Copyrights | Trade Secrets |
|---|---|---|---|---|
| What is protected | Inventions | Brand identifiers | Creative expression | Confidential information |
| Requirements | Novel, non-obvious, useful | Distinctive, used in commerce | Original, fixed in tangible medium | Secret, valuable, protected |
| Registration | Required | Optional but recommended | Optional but recommended | Not applicable |
| Duration | 20 years (utility) | Indefinite (with use) | Life + 70 years | Indefinite (if secret) |
| Examination | Yes | Yes | No | No |
| Public disclosure | Required | Public use | Optional | Prohibited |
| Protection against independent creation | Yes | N/A | No | No |
| Cost | High | Moderate | Low | Variable |
Overlapping protection
Different forms of intellectual property can protect different aspects of the same product:
Example: A New Smartphone
- Utility patent: Novel technical features (processor architecture, antenna design)
- Design patent: Ornamental appearance of the phone
- Trademark: Brand name and logo
- Copyright: User interface design, software code, user manual
- Trade secret: Manufacturing processes, supplier relationships, future product plans
Effective intellectual property strategy requires understanding how different forms of protection work together. In particular, using multiple forms of IP protection creates stronger overall protection. If one form fails, others may still provide coverage.
Intellectual property in the engineering context
Engineers employed by companies often create inventions as part of their job duties. Understanding the ownership of these inventions is crucial. Most engineering employers require employees to sign agreements assigning all inventions and other IP to the company. These agreements typically cover:
- Inventions made during employment
- Inventions using company resources
- Inventions related to company business
Shop rights
Even without an assignment agreement, employers may have shop rights, a non-exclusive, royalty-free license to use inventions created by employees using company resources.
Confidentiality obligations
Engineers often have access to confidential information belonging to employers, clients, or third parties. Professional ethics and legal obligations require:
- Maintaining confidentiality of proprietary information
- Not using confidential information for personal benefit
- Not disclosing confidential information to competitors
- Returning confidential materials upon termination of employment
Documentation
Proper documentation is essential for intellectual property protection:
Invention records
- Keep detailed laboratory notebooks
- Date and sign all entries
- Have entries witnessed by someone who understands the invention
- Document conception, reduction to practice, and development
Trade secret records
- Mark confidential documents appropriately
- Maintain access logs
- Document security measures
Conclusion
Intellectual property law provides essential tools for protecting the fruits of human creativity and innovation. Each form of protection (patents, trademarks, copyrights, and trade secrets) serves a distinct purpose and offers different advantages and limitations.
For engineers and other technical professionals, understanding intellectual property is not merely an academic exercise. It has practical implications for:
- Protecting innovations and maintaining competitive advantage
- Avoiding infringement of others’ intellectual property rights
- Fulfilling professional and ethical obligations
- Making informed business decisions about research and development
- Negotiating employment agreements and consulting contracts
The intellectual property landscape continues to evolve with technological change and legal developments. Professionals should stay informed about changes in the law and seek qualified legal counsel when making important intellectual property decisions.
By understanding and effectively utilizing intellectual property protection, engineers can ensure that their innovations receive appropriate recognition and protection while contributing to the advancement of technology and society.