IP Council Trade Secret & Patent Protect By Content Creators
An IP attorney works to protect intellectual properties and their responsibilities includes advising clients on legal rights and actions involving intellectual property. Representing clients in the courtroom and also consulting legal clients and advising them on certain IP documents, such as patents or licenses. Contrary to patents, trade secrets are protected without registration, that is, trade secrets require no procedural formalities for their protection. A trade secret can be protected for an unlimited period of time, unless it is discovered or legally acquired by others and disclosed to the public. In our recent article on trade secrets, we indicated that virtually anything that adds value to a business could be regarded as a trade secret, and this may include any method, formula, device, process or information (technical or business, e.g., a list of suppliers) that gives the owner a competitive advantage. In this article, we focus on the factors to consider when determining how to protect technological innovation, and particularly whether to patent or keep as a trade secret. In our first piece article of the series, we also mentioned possibly the world's most famous trade secret - whose recipe or "chemical composition" has been kept secret since the 1880s. This "product and method" fades into insignificance compared to the "secret" method of making Chartreuse liqueur. This was first "invented" in 1605 and has been in commercial production since 1737. So, it can be done provided protection strategies are well-planned and implemented. When it comes to technical innovations, we start by considering patentability criteria. Most jurisdictions have five main requirements for patentability. These are:
The patentable subject matter,
Whether the innovation involves an inventive step (the obviousness test), and finally
Whether the innovation has had prior commercial use (e.g., A key test: has the product been sold already?).
Because trade secrets have no specified criteria, they also can be considered to fit these patentability requirements – except, unlike patents, there is no Patent Office examination process to test them. The last criterion is always an area where organizational awareness is frequently lacking and can have a detrimental impact. Often innovative companies may prevent themselves (inadvertently or otherwise) from obtaining patent protection by commercially using (such as selling) their innovation before filing a patent application. In such circumstances, the only protection remaining is a trade secret, provided that the company can retain that status and manage the secret- now and in the future! We strongly recommend the training of commercial and technology team members to increase awareness of these criteria to manage this commercialization risk. Given the background outlined above, we can now look at several questions that should be raised when making a conscious decision.
The first issue is the subject matter. All jurisdictions have limitations on the patentable subject matter, whereas a trade secret can relate to anything, provided the owner considers the secret offers some competitive advantage and is valuable. Patentability criteria have been mentioned above, and again there is no test for a trade secret to satisfy, only this subjective competitive advantage assessment. Claims made by the patentee ultimately determine patent protection, and again there is no requirement for a trade secret to satisfy particular drafting needs. An underlying requirement and cornerstone of the patent system is for the patentee to disclose the invention in the patent application, which, of course, is the exact opposite of trade secret protection. One approach to managing this aspect is to prepare the "secret" as though you were going to file a patent application – this will help the understanding of the potential uniqueness / differentiation (and thus value) of the secret. One approach to deciding whether to patent an invention or keep it a secret is to prepare as though you were going to file a patent application– this will help the understanding of the potential uniqueness / differentiation of the secret. As indicated by the earlier examples, the duration of trade secret protection is potentially infinite, assuming it can be kept secret. You can compare this with the 20 years virtually universal period of protection for patents. The question of duration will often depend on the type of invention. For example, a software type development may only have a product life cycle of five years and this would tend to favor the trade secret option. On the surface, the cost of protection would seem to support seeking trade secret protection. Typically a reasonably broad geographic patent filing, examination and grant strategy might cost over USD200,000 and the costs of policing possible infringers can raise this significantly. However, to protect a trade secret against unauthorized use may not be as simple as a "one size fits all" non-disclosure agreement.
How the technology might be copied / stolen
Who might copy / steal the technology
Can the technology be easily reverse engineered by someone skilled in this technology and
How the technology may develop in the future (e.g., future new generations of the technology).
These considerations might not simply involve just legal protection (such as agreements), but also physical security means. The various issues to examine when preparing confidential disclosure agreements and when to use them will be discussed in a future article in this series. The patent claims referred to earlier are the basis upon which the patentee is protected. Even if an infringing party independently developed the patented invention, this will not form a defense for patent infringement. This issue, of course, is not applicable for trade secrets. It is worth stressing that independent development does not offer the trade secret owner any protection, nor does reverse engineering. The owner of a trade secret is powerless to prevent a competitor who chooses to reproduce a product or copy a process that is protected by a trade secret, assuming there has been no theft or illegal activity involved. The concept of reverse engineering can be a critical one in the decision process for chemical compositions as it is often the "secret" production method (such as a unique combination of chemistry and process parameters including temperature, pressure, time, etc.) that really characterizes the invention and provides the commercial advantage. In short, trade secret protection is only useful against "unfair"or"illegal"users, whereas enforcing patent protection is based on clearly defined principles of claim infringement, irrespective of how such infringement came about. Trade secret is potentially infinite, but the question of duration depend on the type of invention. For example, a software type development may only have a product life cycle of five years and this would tend to favor the trade secret option. Both protection approaches involve risk. The patent system centers on invention disclosure, and while examination procedures in major jurisdictions are very thorough, it is possible, for example, to miss relevant prior art during the examination process. This has the potential to lead to patent invalidity. The alternative protection method, a trade secret, is not risk-free either. While the owner may believe they have taken all necessary steps to protect the secret, the risk of disclosure (either inadvertent or deliberate) is always present. Again, independent development by a third party lurks as a potential reason not to protect as a trade secret. In some jurisdictions such as the U.S., the law is becoming stronger to protect the trade secret holder, but there is considerable variation throughout the world.
The foregoing discussion centers largely on protecting an invention for internal commercial use and application. However, where the owner intends to commercially exploit and market the invention to external parties (for example, through licensing), other factors in this protection decision emerge. The licensing of patented technology is easier to implement. The technology being licensed is precisely defined and license terms relating to patent validity and infringement in a license agreement can be clearly set out. Trade secret licensing (and sometimes "hybrid" licenses of patents and trade secrets) is still possible. An underlying benefit of trade secret protection is the lack of a specific definition. However, any licensee needs to be satisfied that it is receiving a genuine trade secret and not something already in the public domain, and thus clear definition is required in the agreement. From a licensor's perspective, any license involves disclosure and the licensee might become a competitor or the licensee's employees may become a source of "leakage" of the trade secret. In any event, the licensing of a trade secret puts significant pressure on both the licensor and licensee to ensure robust confidentiality provisions are in place. An admirable, but not always an easily achievable objective. Other factors emerge when the owner intends to commercially exploit and market the invention to external parties. In any event, the licensing of a trade secret puts significant pressure on both the licensor and licensee to ensure robust confidentiality provisions are in place. The purpose of this article is not to favor one protection mechanism over the other. Rather it is intended to identify several factors and issues the owner of a technological innovation should consider. As can be seen, there are many competing possibilities across these options. Factors such as the nature of the invention, nature of the industry (size, location / geography, competitors, product lifecycles, etc.), anticipated technology lifespan, value of the invention (price point, profit margin, addressable market size etc.), supplier requirements, employee issues and the owner's business objectives are likely to shape the ultimate decision. We trust that this article provides a useful framework upon which to assess these options. Safeguarding one’s invention from being stolen or copied is an instinctive step taken by a business. But one is often confused in choosing between trade secrets and patents as the best step to move forward for IP protection. Each has its own pros and cons that if clearly understood may help you find a way out of this dilemma and make an informed decision. This article aims to offer a comprehensive view of the trade secret vs patent debate so that you can make the right choice.
Patents are used to protect any invention that is novel, non-obvious, and commercially applicable. Under patent laws, an invention is novel if it is new, and non-obvious if it is creative and unique. It must be commercially applicable or useful for it to qualify for a patent. Utility, Plant, and Design patents constitute the categories under which the United States Patent and Trademark Office (USPTO) awards patents. Thus, patents may be used to protect new designs, machines, processes, and plants. Bluetooth, GPS etc are some examples of patented technologies. Trade Secrets give you IP Rights over a piece of confidential information. The eligibility criteria for trade secrets are that the information must be commercially valuable, it must be known to a select few, and steps must be taken by the holder to prevent it from leaking. There are two categories of trade secrets- technical information and customer information. The former includes business & financial details, product designs and formulas, unique computer codes, and manufacturing processes. Lists of clients, their consumption behaviour, marketing and business plans, and pricing information are covered under the latter category. The secret formula for making Coca-Cola, stored in a vault at their facility in Atlanta is a popular example of a trade secret.
Filing for and registering a patent is a long and tedious process. It entails submitting an initial application, publication, and a thorough and substantive examination by experts before the grant of a patent. The patent drafting process must follow stringent requisite guidelines for it to be considered by the patent office. A fee is associated with each step of the filing process and is mostly a considerable amount. Once approved, a yearly renewal fee is applicable in order to maintain the patent for its validity of 20 years. In contrast, in patent vs trade secret, the requirements and fees involved in trade secrets are minimal. Protecting a trade secret only involves the signing of confidentiality agreements or NDAs that are fairly inexpensive to draft. There is no authority where one must register the trade secret unlike patents or pay any associated fee. There is no time limit to the validity of trade secrets which stay in force so long as there are no confidentiality breaches.
Both patents and trade secrets are IP Rights that protect your invention and give you an exclusive monopoly over its usage. Both can be used to protect manufacturing processes and other similar categories. But that is where the similarities end in patent and trade secret. Below we enlist the difference between the two:
1. In the case of independent development, patent protection emerges stronger than trade secrets. A patented invention cannot be replicated or reproduced under any circumstances without infringing upon the patent. The patent owner is eligible to demand damages in case a competitor is found using or selling their invention in any manner without prior permission. For trade secrets, the protection is only extended to an unlawful breach of information. If a competitor recreates the product/formula/process and independently develops their own version then trade secrets offer no legal security unless a breach is proved. The rival company could also patent the invention thereby shutting out the original inventor!
2. For companies looking to earn revenue from their invention by licensing, patents again emerge as the stronger candidate in offering suitable protection. The licensing agreement clearly defines the terms and conditions related to validity and infringement.
When licensing trade secrets there is always the fear of loss of exclusive control over the information and a disregard of contract by employees to leak the secret. Also, for the licensee, it is difficult to trust that the information is truly confidential and hence commercially valuable.
3. Cost is easily the biggest advantage trade secrets have over patents. Patent documents and filing is a very technical process that demands expenses right from inception. Drafting the patent, and filing it are complicated tasks that are usually outsourced to hired professional firms. Then there is the patent maintenance fee that must be paid till the patent protection lasts. Trade secrets on the contrary are free from the registration or approval process. Any confidential information that meets the eligibility criteria may be declared as a trade secret with immediate effect. There is no additional fee of any kind involved in declaring or maintaining trade secrets.
4. The time period is another important distinguishing factor. If your invention is immune to technological innovations and you want to retain it in the long-term then trade secrets offer better protection as they last forever (unless breached), unlike patents which are valid only for a period of 20 years.
5. The level of disclosure in patent vs trade secret is a crucial factor to consider. Trade secrets rest heavily on the non-disclosure aspect. This keeps their information secret and unavailable to competitors. Patents on the other hand require full disclosures to be published as part of the filing process. While a business rival cannot copy this disclosure and create a product, it does offer strategic insights as well as a creative inspiration to improve on the patented product or develop a better one.
Are all content creators influencers? No, content creators are the magic behind the content you see on your favourite brand's social channels. Whereas influencers are the ones promoting products with their online personalities. Though, some influencers can be content creators if they carry both attributes. Influencers can not only register but also enforce their IP. Online aliases, logos, slogans, marks, series names, and even hashtags may be protectable as trademarks. Original videos, photographs, written text, artwork, sound recordings, films, and other creative works may be protectable under copyright. The past 3-4 years of social media have witnessed a lot of change. Currently, most famous brands are establishing themselves more in the market with the help of social media. With the help of influencers, brands reach out to more audiences. There were studies done on users of Instagram and other famous social media sites that, on average, every user spends 2 hours on these sites. Hence, social media influencers are proved as a great asset in the marketing industry and play a significant role in the growth of brands by helping them reach out to more audiences. According to a media buyer company Groupm, the social media influencer market has become a market of INR 900 Crores by the end of 2021. Also, this industry is expected to grow by a rate of 25% per year, and by the end of 2025, this industry would, in totality, be valued at more than INR 2,200 crores.Before the pandemic happened, India had 400 million users using social media, but these numbers upsurged by a huge 18% during the pandemic. The report categorized the influencer market into four, based on the percentage of niches of the influencers: Personal care- 25%; Food & Beverages – 20%; Fashion and Jewellery- 15%; Mobile and Electronics- 10%. Together, these constitute 70% of the influencer market. The interesting fact here is that in this market only 27% are celebrities rest are the influencers’.But with this growth of the social media market, the artists/influencers on these social media platforms are at risk of their IPR. Since they take hours to make the unique content and years to gain a real audience, their IP Rights need to be protected, so their efforts don't go into vain.
· It is easier to get compensation when one infringes on your registered Copyright or Trademark/Domain name.
· Registered IP is more legit; people tend to avoid using the content once they know it is legally protected.
· When your unregistered content is copied and used somewhere else, it is hard to take it down because you need to prove it first; how do you own that content, which can be complicated. In contrast, the protected work is easier to protect.
· Registered Trademarks increase the chances of your brand being more recognized.
Copyright is a type of intellectual property (IP) that preserves creative work like images, video files, textual content, artwork, audio recordings, motion picture films, and other unique creations. It allows copyright holders to distribute, reproduce, exhibit, and perform their creative work.While using the artistic works of others in films, photos, or the texts of social media posts, social media influencers must obtain formal permission (or are allowed for a copyright exception, such as 'fair use’). Fair usage is only allowed for non-commercial purposes, such as spreading valuable knowledge, criticizing, and so on. Many social media sites have developed tools to detect IP rights violations; for example, YouTube has adopted a "Content ID" mechanism to aid rights holders in identifying, managing, and protecting their content. Every content is posted to YouTube; the Content ID system examines it for similarities to previously uploaded copyrighted content in the Content ID collection.
Trademarks are used to recognize, differentiate, and signify the origin of a seller's goods and services from that of the other. The first step is to obtain written consent from each firm whose identity, trademark, logo, or goods are displayed in a social media post, article, video, or picture. It's possible that uploading content that contains someone's trademark, company logo, or logo infringes on their intellectual property rights. It's known as branded content when an influencer makes explicit references to a company's goods or services, and the influencer should seek specific authorization to use the brand's name in their material. Trademark laws protect trademark owners against two types of infringement: the probability of misunderstanding and dilution. Creators should prevent using intellectual property in a way that confuses consumers about the origin of products or services or harms a company's image.
Users on the internet use domain names to find any site since they are simple and quick to memorize. Simply said, a domain name is the 'internet identification' of a company. Each website has a domain name that serves as an URL for accessing the site. Business names are generally adopted by .com, .org, .gov, .net.in, and other domain extensions.
If a domain name meets all of the requirements for trademark registration, it is frequently registered as a trademark. The registered owner of a domain name will get all of the same legal powers as the proprietors of trademarks. Therefore, never forget to ask for the permission of the original creator before you use these contents:
2. Logos or symbols
3. Goods/products or services of a brand for criticism
4. Name of any brand
5. Artistic work, drawings, or portraits
6. Slogans or phrases used explicitly by certain brands
Petunia Products was approved to conduct its trademark infringement suit over Molly Sims, a model and social media influencer, by the US District Court on August 6, 2021. The ruling implies that influencers could be held accountable for trademark infringement in terms of the products they support. Rodan & Fields was sued by Petunia Products, the proprietor of the Brow Boost TM, for purportedly generating a probability of misunderstanding and violating Petunia's mark using Rodan's BROW DEFINING product. Petunia also filed suit against Sims alleging direct infringement, contributing violation of Trademark, misleading advertising, and deceptive practices when she advertised the infringed goods on her blogs.Sims filed a motion to dismiss her charges. She stated that third-party sponsors of an item must not be held liable for trademark infringement until the usage of the goods is confirmed to be infringing on trademarks. The court rejected Sims' allegations of contributory infringement and misleading advertising, but Petunia was given leave to modify them. But the court did not dismiss the charges of blatant trademark infringement and unfair competition. Sims' article was judged to be a paid ad that "passed from restricted consumer criticism to commercial use”. Sims' blog praised Rodan for a sponsored post, mentioned the product's pricing, and linked to the page in which the item could be ordered. The court's failure to reject Sims' allegations should serve as reminders to Instagram influencers that they may be held accountable for infringement of trademark linked to goods they promote. · The Bombay High Court recently discussed the obligations and responsibilities of social media influencers in Marico Limited vs. Abhijeet Bhansali. Marico Limited, the owner of the famous coconut oil brand 'Parachute,' had filed a lawsuit against Abhijeet, aYouTuber owner of channel "Bearded Chokra," had published a video titled "Is Parachute Coconut Oil 100% Genuine?”. He said things like, "It’s just not as great AS YOU THINK, I'M GOING TO SHOW IT. It smells like a dead or decaying coconut," says the Vlogger. Marico argued that Vlogger made false claims by doing tests that were not accurate to prove anything and misled their consumers by doing so. his actions were classified as "commercial operations" rather than an overview of the item by an average consumer. Social media influencers have a certain level of trust among their followers, and they take their comments as truths without question.The Courtemphasized that a social media influencer does not have the same liberty as a regular person when making claims. The comments were made carelessly, with no regard for if they were genuine or not. Defendant's improper use of Plaintiff's registered trademarks in a harmful way to its unique character or reputation cannot be consistent with genuine industrial or commercial activities.
Social media users accept the terms and conditions of a social media network as soon as they register or sign up for an account. Accepting the terms here entails offering the site a transferrable, royalty-free, global right to use any content you upload. Here are some more ways through which you can avoid others using your content over these platforms:
· Let everyone know that you're the author/ owner of specific artwork by using the copyright symbol ‘©’ next to your work along with your name and the year in which you created the particular work. This lets people know that this work is copyrighted.
· One can also use the digital watermark in their pictures and videos.
· Always keep track of all your uploaded works over a particular place or link them to your personal website, which can be used as evidence in the case at a point of time you need to prove that you're the owner of a specific work.
Many influencers have registered their names as trademarks. For example, Lele Pons, a well-known YouTuber, has filed a trademark registration with the USPTO under Class 41 (entertainment services). Kylie Jenner also has a TM registration for "Marketing services, marketing the businesses, products, and endorsement services, including marketing the products and services of others" under Class 35.