Information wants to be free, or so goes the populist mantra of the Internet. But what if that information is one of your company’s primary assets? Just as a shop owner would lock the doors, set the alarm and carry a strong insurance policy, business owners in the digital era must guard and enforce their intellectual property rights in the online marketplace.
“It doesn’t matter how small or big you are. In the web, there are people trying to attack your infrastructure all the time,” says Peter Herz, CEO of irisnote, an electronic research and development software provider founded in Columbus and headquartered in the Silicon Valley region. “They don’t even know who you are, they’re just walking up and down IP addresses looking for vulnerabilities.”
Herz is well-versed in the challenges businesses face as digital technology evolves. Irisnote is an innovator in electronic laboratory notebook technology (think: a high-tech way for researchers to organize their findings). Originally known as Recentris, the company’s software was developed and commercialized in a business incubator that was a precursor to TechColumbus.
Irisnote’s clients include the Research Institute at Nationwide Children’s Hospital, government labs at the Centers for Disease Control and Prevention and the National Institutes of Health, and thousands of smaller users. Regardless of industry, organizational size or geographic location, Herz says Internet technology use endows businesses with “an exposure that people are trying to attack.”
According to a 2012 U.S. Department of Commerce study, “The entire US economy relies on some form of IP, because virtually every industry either produces or uses it.”
Almost every Central Ohio business has some interest in protecting its intellectual property online. Businesses must evaluate whether there’s a cost benefit to protecting those assets. Which trademarks and copyrights help define your online brand and are, therefore, worth registering and enforcing? Will patentable research and trade secrets remain confidential if they’re maintained in a cloud computing platform or accessed on mobile devices? Here’s a primer on some IP protection basics from those well-versed in the issues.
Local Biz, Global Threats
The real value of intellectual property is illuminated by the findings of the Commerce Department’s Intellectual Property and the U.S. Economy: Industries in Focus report. The study identified 75 IP-intensive industries that collectively accounted for 34.8 percent of the U.S. gross domestic product and 27.1 million American jobs in 2010.
The study found Ohio is among 16 states ranking above the national average for IP-industry employment. Ohio also ranks within the top 15 states for employment in trademark-intensive industries, and among the top 21 states for employment in patent-intensive industries. According to data compiled by Columbus 2020, the region’s top employers are in trademark- and patent-intensive industries, including Nationwide, Cardinal Health, Honda of America Manufacturing, Abercrombie & Fitch and Limited Brands.
Beyond these big players, every business with a website or a social media presence should actively police how company logos, slogans, products and data are used if they want to maintain copyrights, service- and trademark rights. Managers must also mitigate the security risks that cloud computing and digital data sharing pose to trade secrets and patent development.
“The importance of intellectual property is that it gives the owner a competitive edge. I think that’s particularly important in today’s economic environment,” says intellectual property attorney William Richards. Prior to founding the Richards Law Firm in New Albany, Richards advised high-tech startup companies as a staff attorney at Battelle and was a patent and trademark litigator in Barnes & Thornburg’s Indianapolis office.
“The Internet, I believe, makes it a lot easier to infringe on others’ intellectual property, particularly copyright,” says Richards. Before marketing online, sharing research electronically or posting original content, businesses should be prepared to defend company-held patents, trade secrets, copyrights and trademarks across state, national and international jurisdictions. With the Internet’s erasure of geographical boundaries, the complex work of protecting intellectual property becomes infinitely more complex.
Small and medium-sized businesses are particularly vulnerable because of limited resources. The International Trade Administration’s Office of Intellectual Property Protection administers STOPfakes.gov. This free online tool can be an excellent primer for organizations without large budgets as they navigate strategic IP development.
The Internet is full of trolls, imposters and hapless innocents who can damage a brand’s integrity. Registering trademarks and copyrighting content ensures protection in the event that valuable IP is stolen.
“If you have a trademark that you’ve registered that people look at and that gives brand recognition, that can give you an edge in the marketplace,” says Richards. In order to have a clear understanding of copyright and trademark claims, companies should work with an IP attorney to assess their rights before a challenge arises.
Richards warns marketers not to be deceived by the ease with which they can replicate texts, photos, films or music files found online. “Just because they’re in a digital form and appear on your screen does not give people the right to copy and use them. … With a simple cut-and-paste or the click of a mouse, you can use someone else’s photograph in a way that you have no right to use it. I have had clients that have picked [a copyrighted work] up and used it somewhere else.”
Internet users who infringe on copyrights can face penalties that Richards says “can be quite severe, particularly if it’s intentional.” Statutory damages awarded to registered copyright holders range from $750 to as much as $30,000 for each infringement, he says. “If it’s determined that the infringement was done willfully, the statutory damages can rise to $150,000 per infringement.”
Social media platforms present further opportunities for violations. Twitter and Facebook have user policies governing unauthorized use. Provided a user can prove a legitimate IP claim, it’s not hard to get offending content removed without litigation and at little to no cost.
Facebook prohibits users from posting copyrighted material unless authorized by the rightful holder. The site recommends IP owners contact infringers directly with a takedown request. If the personal approach fails, Facebook’s help center includes an electronic Digital Millennium Copyright Act (DCMA) complaint form, which includes all notice and takedown letter requirements.
Facebook also maintains user policies designed to prohibit “username squatting.” Usernames are not transferrable, preventing those with no legitimate interest in a brand’s profile from extorting IP rights holders. In reported instances of username squatting, Facebook will reclaim profiles for trademark holders.
Twitter is governed by a DCMA-based user policy. Twitter’s online help center specifies that administrators will investigate reported violations and may suspend user accounts in event of a “clear intent to mislead others” through unauthorized use. However, Twitter users may use brand names to “create news feed, commentary, and fan accounts,” provided the user makes clear there’s no affiliation to the trademarked entity.
Twitter’s trademark policies raise important considerations. Because trademarks are enforced concurrently between state and federal jurisdictions, businesses must balance the need for registration against the costs and logistics of registering and defending marks at both levels.
Businesses operating in Ohio may register words, names or symbols through the Ohio secretary of state’s office. According to the office, there were 6,265 service marks and trademarks registered in the state between 2001 and August 2012. Central Ohio registrants accounted for an average of 581 marks annually.
Federal registration is a strong defense against online IP theft and allows the mark holder to seek infringement relief in federal court, to apply for registration in international jurisdictions and to be listed in the federal TM/SM database.
Since businesses use web addresses to identify their brands in the crowded online marketplace, domain names are a valuable commodity. Disputes over their control are common. Conflicts arise when legitimate trademark owners square off over the same web address. Others scoop up web addresses with a more sinister intent. STOPfakes warns against cybersquatters—those who exploit the first-come nature of domain registration by claiming a web address in which they have no legitimate interest, intending to sell it for a profit.
Domain name disputes transcend geographic boundaries. The Internet Corporation for Assigned Names and Numbers provides resources and mediation services between opposing parties engaged in domain name disputes. The U.S. Commerce Department recommends the Geneva-based World Intellectual Property Organization (WIPO) as a resource for dispute resolution. According to WIPO data, the United States leads international domain name disputes, with 9,563 such disputes filed for mediation. France came in a distant second with 2,666 claims.
Original content on commercial websites is protected under federal copyright law. This includes graphics, photos, video and audio recordings, data, code and text. STOPfakes recommends registering copyrights and posting a copyright notice on the website. Certain aspects of websites, such as e-commerce systems, search utilities, confidential algorithms and database contents, may be eligible for patent or trade secret protection.
Businesses should keep in mind that enforcing intellectual property rights is an ongoing task. “It’s important when you have a trademark to vigorously protect it, because if the public starts to use your trademark as a noun or a verb, you can lose your trademark. It gets to the point where it no longer represents your [particular] good or service,” says Richards. Witness the predicament of the makers of Xerox copiers, whose product has entered the common vernacular as a verb, not to mention Popsicles, Band-Aids, Dumpsters and Kleenex.
“The landscape is littered with trademarks that have fallen into the public domain. Once the public uses it as a generic term,” Richards cautions, mark holders lose the right to protection. While Google seems happy to let its trademarked name supplant “web-searching” in popular parlance, few businesses operate on Google’s scale and should be less inclined to let their brand names slip away.
Patents and Trade Secrets
Privately held patent and trade secret protections ensure businesses’ financial interests in research and development. Today, R&D often involves online data sharing. “If you go back 100 years, a lot of the value of a company is in the plant and equipment. It’s become more and more contained in intellectual property,” says irisnote’s Herz. “The tension you have in any organization, you want to be able to collaborate but you also want to keep [IP] secure and proprietary.”
In R&D settings, research notebooks are a key to patentability. From email to tablets, developers have been faced with a conundrum: how to utilize the transformational powers of the Internet in scientific development without compromising the security of IP assets.
“It is actually a really big problem for intellectual property,” Herz says. “A lot of people are [still] paper-based, but there’s also a lot of users of ad hoc tools like Microsoft and email. These are all tools that don’t have tracking or audit control. It is an enormous exposure of IP if it’s not managed in a controlled fashion,” he says. “When you collaborate in our solution, it’s in a completely controlled way so that your IP is protected.”
Irisnote’s electronic laboratory notebook, or ELN, platforms allow for scientific collaboration and digital documentation of patentable R&D in cloud computing or closed enterprise editions, precluding employees from inadvertently disclosing confidential information online.
Careless online disclosure is tantamount to leaving a lab notebook lying on the copier for mass reproduction. The remote access provided by tablets and mobile devices presents yet another dimension to digital security threats, says Herz. “There is an exposure risk in the cloud. But more and more companies have a risk in their enterprise solutions as well,” he says. “The reason for that is that you have to offer remote access.”
Collaborative cloud-based and enterprise platforms are designed to safeguard sensitive assets. “We have a number of technologies deployed, a fair amount, to protect against those with malintent. It’s an ongoing battle,” says Herz.
From Seed to Scale
High-tech startups based on patent-intensive research face a particular set of challenges. The TechColumbus incubator currently houses nearly 30 pre-seed and startup tech companies. TechColumbus mentors guide startups through IP protection basics early in the entrepreneurial process.
“We assess opportunity on the business side first. Oftentimes, we provide early capital to help do patent and product searches,” says Tom Walker, TechColumbus’s new president and CEO. “Our philosophy is you do those kinds of things early on if you’re an entrepreneur starting a business.”
STOPfakes recommends entrepreneurs maintain secure research notebooks and file provisional patent applications prior to talking with licensees or investors. “Particularly in the patent area, there are activities that you can engage in that can either destroy or limit your right to a patent,” says Richards. “[If] you make an offer to sell it, or make a public demonstration or otherwise put it out into the public … you have one year from that disclosure until you lose your right to apply for a patent.”
Richards advises startups, midsize businesses and international corporations alike to follow the cardinal rule of online IP protection: “Earlier is always better.” As technology evolves, smart proprietors will be quick to adapt and give those assets the protection they deserve.
Kitty McConnell is a reporter for Columbus C.E.O.
Reprinted from the November 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.