E-Business 101, Part 5: Intellectual Property

You don’t need to be a lawyer to have some understanding of intellectual property law–but you do need to have some understanding of intellectual property law to have a thriving e-business. Myles Alderman discusses the legal ins and outs of the three kinds of intellectual property you’ll encounter most: copyrights, trademarks, and patents.


Most companies have more intellectual property assets than they, or their competitors realize. Increasingly, disputes regarding copyrights, trademarks, patented technology and domain names are appearing in courts and gathering media attention, especially those disputes involving one or more E-businesses. In some cases litigation is merely one of many tools used to maximize the value of a client’s intellectual property. In other cases litigation is the result of uncertainty caused by either underdeveloped law or a misunderstanding of how the law applies to the facts.

To maximize the value of the intellectual property, we need to recognize the intellectual property owned by our clients and that to which our clients do not have a right. With this information we can explore licensing, marketing and standard setting avenues

Intellectual property law attempts to balance two appearantly conflicting interests. On one side, the law is designed to stimulate creativity and innovation by granting property rights as an incentive to authors and inventors. On the other side, the law attempts to protect the public interests by limiting the duration of an intellectual property right. Because of the rapid rate of change in the world of E-Business a World Wide Web site (“Web site”) provides furtile ground for misunderstanding and disputes related to copyright, trademark or patent asset.

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Copyright law provides protection for original works of authorship, including literary works and audiovisual works. Computer software is classified as a literary work for purposes of U.S. copyright law. Copyright law prevents unauthorized direct copying or distribution. Unfortunately, copyright law protects only particular expression of an idea as opposed to the idea itself. A copyright in an original work of authorship is created automatically when the work is fixed in a tangible medium of expression.

There are many aspects of an E-business’ Web site that might be protected by copyright. The Web site might include elements such as textual content, still images, photographs, animations, and sounds. An element included on a Web page might be protected individually by copyright if the element is sufficiently original and creative. For example, the Web site of the USA Today newspaper (www.usatoday.com) includes many separate and distinct articles, each of which may be protected by copyright. Similarly, legal articles on a law firm’s Web Site, such as www.alderman.com may each be protected by copyright. The multi-colored top bar of the home page Web site of iWon, Inc., the sweepstakes based portal found at www.iwon.com, may be protected by copyright.

Even if some or all of the elements of a Web page are not protected by copyright individually, the selection, arrangement, layout of the elements on the Web page or the so-called “look and feel” of the Web page might be protected by copyright. For example, the selection and layout of buttons, icons, badges, banners, hyperlinks, text material may, in some cases, may be sufficiently original and creative to warrant copyright protection.

A Web page typically is programmed using a standard coding language called HTML (Hypertext Markup Language). When a user downloads the Web page, browser software operating on the user’s computer interprets the HTML code to determine how to display the Web page on the user’s computer. The HTML code underlying the Web page may be protected by copyright. For some Web sites, sophisticated software based on CGI or other programming techniques may be used to build all or part of a Web page dynamically when a user accesses the Web page or uses a feature of the Web site. In addition, such software may provide features and capabilities to the Web site, some of which may be transparent to a visitor to the Web site. For example, software might be used to prepare emails for distribution, target or select advertisements for display on a Web site, provide customer service or request information from a visitor to a Web site. While such “back end” software may not be part of the HTML programming for a Web page, the software may be protected by copyright separately from the copyright, if any, protecting the HTML coding of the Web site.

The ownership of a copyright should not be confused with ownership of a physical copy embodying the copyright. For example, a person may own a copy of a book without owning the copyrights to the story told in the book. Put another way, owning the book does not give the book owner permission to make copies of the book. The ownership rights to the tangible book may be sold and transferred independently of the intangible copyrights to the story. Thus, while a Web site may give limited permission to a visitor to download and use content displayed on the Web site, the Web site has not necessarily given permission for the visitor to make or distribute copies of the content.

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Trademark law protects words, designs, color, sound and packaging that identify and distinguish the source of a product. While trademark law can provide strong name recognition and consumer awareness for an E-business, it provides limited protection of technology underlying the E-business. While traditional trademark law is based primarily on geographic usage of a trademark, an E-business is not constrained by geography, except for those limitations imposed by governments or practicality.

An E-business can create many different trademark rights. The name of the E-business is one obvious example. However, the names, logos, depictions, etc. of products and services offered by the E-business or advertised on the E-business’ Web site may also have trademark rights. Moreover, the use of attention getting graphics, animations and other elements on Web sites may result in trademark rights of such elements. For example, the multi-colored top bar of the home page of the Web site found at www.iwon.com might satisfy the requirements to be a trademark. Even though their use is recommended, rights can be developed even if the standard designators “TM” and “SM” are not used for a trademark or service mark. In some cases, federal trademark protection even can be obtained for a domain name.

Another avenue for an E-business is to register the trade dress of a Web site with the U.S. Patent and Trademark Office. Under current U.S. trademark law, a company can bring a claim against the use of “any word, term, name, symbol, or device” that is likely to cause confusion. The inclusion of “device” in this definition includes trade dress, which typically covers the overall image or impression of a product and may include elements “such as size, shape, color or color combinations, texture [or] graphics.”

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Patent law provides rights in new and useful articles of manufacture, compositions or improvements thereof. In general, a utility patent may provide a limited right for up to twenty years to prevent others from making, using, offering for sale or selling an invention covered by the patent. Recent decisions of the U.S. Court of Appeals for the Federal Circuit have opened the floodgates for patents covering software implemented processes and business methods of the nature frequently developed and implemented by an E-business.

Unlike copyrights, which are generated automatically upon fixation of an original work of authorship in a tangible medium of expression, or trademark rights, which are generated upon use of a trademark, no U.S. patent right exists until the U.S. Patent and Trademark Office grants it. Thus, an e-Business must decide whether or not to pursue patent protection. Currently many E-businesses are obtaining patent rights in many aspects of their Web based operations, including those directed to order processing, Web site interfaces, financial management and transactions, advertising, and digital product delivery. Unfortunately, it is very easy for an E-business to jeopardize its ability to file for a patent, particularly in foreign countries.

Optimally, the patent review process is an integral part of the E-business’ research and development efforts and, perhaps, even a key part of determining how to allocate resources for market and product development. Of course, before an E-business can patent an invention, it must first recognize the invention prior to losing its rights to file a patent application for the invention. Regular intellectual property audits can help the discovery process. In addition, an E-business should routinely ask itself many questions designed to uncover potentially patentable inventions, such as: (1) what bottlenecks or problems are the E-business trying to solve and how is the E-business overcoming these bottlenecks or problems?; (2) what is the “holy grail” in the E-business’ industry and how is the E-business trying to find or implement it; (3) what pioneering work is the E-business doing?; (4) where is the E-business trying to cut costs or waste and how is it doing so?; (5) what enhancements or features are the E-business’ customer’s asking for?; and (6) what work is the E-business doing in its core competency and how is it different from what has been done before?

Considerations that might be taken into account when an E-business decides whether or not to file a patent application on a particular invention include: (1) is the invention patentable?; (2) can be invention be protected as a trade secret?; (3) will a patent provide marketing appeal of help raise venture capital?; (4) can potential patent infringers be discovered and pursued?; (4) is filing a patent application the best use of the E-business’ time, financial and employee resources?; (5) is the invention part of the E-business’ core technology or is it fringe technology?; and (6) would a defensive publication be more effective or practical?

While intellectual property assets can provide many benefits to an E-business, patents and other forms of intellectual property by themselves will not solve many of the problems facing an E-business. For example, ownership of a patent will not improve a Web site’s conversion of mere visitors into people taking action (e.g., making purchases) on the Web site, increase the transaction capabilities of the Web site, enable the Web site to fulfill and deliver orders better, or reduce credit card fraud. However, such intellectual property assets provide significant opportunities for an E-business to leverage the work already being done by the E-business and to obtain a return on resources already expended by the E-business.

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