What are the four types of IP in the United States?

Property, which can be loosely defined as “things we can own,” can be tangible or intangible. Tangible property includes things like land, buildings, and personal property such as cars, clothes, toys, and other physical objects. Intangible property refers to things that have no physical manifestation, but can still be owned. It includes stocks, bitcoin, and a person’s business reputation.

Intellectual property, or IP, is a category of intangible property. It’s often thought of as economically valuable ideas. There are four types of IP generally recognized by US law: trade secrets, patents, copyrights, and trademarks. They have economic value because:

·         they contain useful new technical information (trade secrets and patents)

·         they have cultural or artistic value (copyrights)

·         they symbolize a brand that itself has value (trademarks).

One characteristic of ideas is that they can be freely copied. As soon as a poet publishes a poem, anyone else could theoretically re-publish the same poem. And those copies would have the same economic value as the original. Inventions are similar: even when they’re tangible, physical widgets, the inventive idea behind the widget can be freely copied to make identical widgets.

Because IP can be so easily copied, it can be hard for creators to derive a competitive advantage from all their inventiveness and hard work. That’s why IP law exists—to give creators extra ownership rights, so they have greater ability to monetize their IP. This incentivizes people to keep developing new ideas that benefit our economy and culture.

Patents

A patent describes a new and non-obvious technical invention. In the patent, the owners “give away” their invention to the public: to be legally valid, the patent must teach a reasonably skilled person to fully make and use the invention.

In return, the patent owner receives a 20-year legal right to exclude anyone else from making, using, or selling the invention inside the US. The owner can use this imposed monopoly to derive substantial profits. After the 20 years are up, everyone is free to make, use and sell the invention.

Trade secrets

A trade secret is basically any information that derives economic value from being kept secret. For example, many inventions could be kept as a trade secret instead of being patented, and the decision—whether to patent or keep secret—can be an important business decision for companies.

As long as reasonable measures are taken to keep the trade secret a secret (limiting the number of people who have access it, using NDAs with third parties, etc.), trade secret law protects the owner from illegal “theft” of the invention. For example, if a competitor steals documents marked “Confidential” that describe the trade secret, they could be liable and have to pay back any profits they made.

However, it’s critical to note that buying a product and reverse-engineering the secret from the product (such as by taking it apart or doing a chemical analysis) does not constitute “theft” and is perfectly legal. Thus, trade secrets are most valuable to the extent they can’t be practically reverse-engineered. Two famous trade secrets are the chemical formula of Coca-Cola, and Google’s search algorithm.

Copyrights

Copyrights have the same policy goal as patents—to protect creators of economically valuable ideas. However, copyrights protect expressive works of authorship, not improved technology. Books, movies, music, and art are things typically protected by copyright law.

Like patents, copyrights also have a finite lifetime, but it’s much longer—the life of the author plus seventy years after death. Winnie the Pooh was under copyright until just a few years ago. Today, everybody is free to publish and profit from stories containing the Winnie the Pooh characters and world. In fact, within a year of the copyright expiring, somebody made a Winnie the Pooh horror movie.

Note that copyrights only protect expressive component of works. Thus, for those of us who remember phone books, copyright law might protect the yellow page color and the specific arrangement of text on the pages. But the underlying factual data—the names and phone numbers themselves—are not protected. Anybody could create a new phone book using the same names and numbers without violating the copyright, as long as the expressive format was sufficiently different.

Technology companies sometimes copyright software code, which can block competitors from using the exact same code. However, the underlying algorithms are not protected by the copyright. Rewriting the code in a different form (such as in a different programing language) could evade the copyright. To protect the underlying technical structure, the owners would have to seek patent protection of that structure.

Trademarks

Trademarks are unique among the IP categories in that the ideas they protect aren’t valuable by themselves. Instead, trademarks are the names and logos that represent a brand. The word “Nike” applied to sports products is a trademark. The Nike swoosh is another trademark. The famous golden arches are a McDonald’s trademark. Trademarks can be almost any symbol that identifies a brand to a consumer. For example, the characteristic blue of a Tiffany box is a trademark. If somebody else sold jewelry in a blue box that confused consumers that it could be from Tiffany, that would likely be trademark infringement.

The main purpose of trademarks is to inform consumers by protecting companies rights to their reputation. Consumers generally aren’t equipped to carefully examine products before they buy them. Think about buying a car—having it thoroughly examined to ensure it’s not a lemon would require taking the car apart. Unscrupulous companies might be tempted to sell inferior cars that looked good upon initial inspection, but broke down shortly after purchase.

In the early 1900s, companies such as Mercedes began to put the same logo on every individual car they sold. Over time, customers began to associate the Mercedes logo with a certain quality, and trusted this company to produce solid cars. Trademark law developed so that competitors couldn’t produce inferior cars and deceive consumers by copying the same logo.

Conclusion

Like other types of law, IP law has evolved over the decades to protect the owners and creators of these four types of intellectual property. For scientists and technical companies, patent and trademark law are usually the most relevant. Copyright law is important for creative authors and organizations, and sometimes for software protections. Trademarks are important for virtually all business owners, since they’re tied to the brand and not its underlying business.