Legal Strategy Roadmap Part 4: Build Competitive Advantage

This is part four in the strategic legal road map series. In this note we will look at how you can use Intellectual property law to build competitive advantage.

In the United States, intellectual property law means four or five different types of legal systems, including patent, trademark, copyright, and trade secret. In addition, we will look at ways to use contracts to compete in your business vertical and geography.

  • Patents protect new, useful, and non-obvious inventions and compositions of matter. Patents give the inventor the exclusive right to make, use, and sell the invention for a period of 20 years from the date the patent was first filed.  Obtaining a patent can be an expensive proposition, but the rights gained are extraordinarily powerful and prevent competitors from using or selling the same technology, whether or not they intended to do so. Although investors will typically insist on securing a patent as a barrier to entry, patents can be and exercise in “gilding the lily.”  The current latency period between filing and issuance is just over two years. It is not at all unusual for a patent to take three years or more to finally issue. In a fast-moving field like software development, biotech, and other modern technologically competitive industries, the real value of an invention is realized when it is first introduced and before the technology competitors move on.  Most often, the decisive factor in bringing a new product to market is not patents, but rather marketing and sales execution and product excellence.
  • Copyright protects original works of authorship from being copied, distributed, performed, displayed, or modified by anyone other than the author. Works of authorship include traditional literary works, but also photographs, videos and paintings, sculpture and designs, music and sound recordings, as well as software.  Protection lasts for 75 years after the death of the author.  Copyright protects against not only literal copying but also against works that are “substantially similar” to the author’s work.  However, it is vital to understand that copyright protection is rather “thin.”  That is, copyright does not protect ideas, algorithms, recipes, formulas, or the functions implemented in software code. Therefore, a technology company whose asset is its algorithm or computer code, or architecture is well advised to look elsewhere to protect its intellectual assets.
  • Trade secret law in the United States is primarily governed by state law, with a patchwork of different state statutes in place. However, the Defend Trade Secrets Act of 2016 (DTSA) provides a federal cause of action for trade secret misappropriation. A trade secret is any information that provides a competitive advantage to a business and is kept confidential to maintain that advantage.  This is why confidentiality agreements are so important and so ubiquitous.  Trade secrets include things like customer lists, manufacturing processes, or formulas for a product. In order to be considered a trade secret, the owner of the information must take reasonable steps to keep it confidential and protect it from unauthorized use or disclosure.  Under both state and federal law, the owner of a trade secret has the right to take legal action against anyone who misappropriates or misuses their trade secret, including through unauthorized use, disclosure, or theft. Injunctions, damages, and other remedies may be available to the trade secret owner in the event of misappropriation.  Trade secrets do not have the same level of protection as patents, and the owner must continuously take steps to maintain the confidentiality of the information. Additionally, trade secret protection can be difficult to enforce in the event of a breach, particularly if the information is widely disseminated or becomes widely known.
  • A trademark is a word, phrase, symbol, or design that identifies and distinguishes the source of goods of one party from those of others. Trademarks are used to protect the brand identity of a product or service. In the United States, trademark is primarily federal law and applies to all 50 states and internationally. Many states have their own trademark laws, but these are, at best enforceable only in the states governed by those laws. It is not difficult or expensive to obtain a trademark, but you want to make certain that a thorough search is done- not only of the federal trademark database but of any appearance of a “confusingly similar” mark in state databases or on the internet at large.  The search is important for both offensive and defensive reasons; offensively, you want to preempt the potential competition from using a name that is similar to your own. Defensively, you want to be sure that no one is going to come after you for using a certain product name after you have invested thousands or even millions of dollars in developing the brand.
  • Finally, contracts can be used as a way of building a defensive wall around your business. This can take the form of exclusivity, noncompete, or non-circumvention (In addition to the already mentioned confidentiality contracts.)  Exclusivity provisions are typically used in either upstream or downstream contractual relationships. Upstream, the exclusivity might relate to a supplier’s promise to supply only your business with a particular good or service, at least for a limited time and or limited geography. Downstream, an exclusivity provision might bar a distributor or seller of your merchandise from distributing or selling goods that are substantially like your own. Noncompete agreements are typically used To ensure that a business partner, like a manufacturer, does not decide to go into the same business you are in with respect to the same set of customers. Finally, non-circumvention agreements prevent business partners from going around your business to speak with or sell directly to your customers.  Exclusivity, noncompete, and non-circumvention clauses are the exception rather than the norm. Each one of them limits the freedom of action for a party to the contract and consequently may cost them opportunity or revenue for the period in which the covenant is in force. Finally, unless they are carefully written, these kinds of clauses can give rise to disputes down the road.

Each of these forms of intellectual property law it is an effort to make intangible information or ideas behave as if it were concrete, physical property. It is, in that sense, an artificial boundary around valuable business assets which, were it not for the law, would have no value. If your company is involved in technology of almost any kind, intellectual property law is an essential part of your product sales and marketing strategy.

A big company might employ a “General Counsel” for strategic guidance concerning intellectual property.  But if you don’t have such a General Counsel, this email series should provide a strategic roadmap for you to consider in your decision-making. Look forward to our next installment, Constructing Defensive Moats, in our next email.

A Guide to Open-Source Software Licenses

In this 8-minute Lawgorithm, we analyze the series of decisions you will face in adopting open source software in your business or your published work. We look at permissive and ‘copyleft’ licenses, to help you determine whether and how to incorporate open source code in your own.

From what began as a collegial protest against proprietary software among programmers in the 1990s, open-source software (“OSS”) has emerged as ubiquitous in the software engineering business.  According to one source, OSS is used in 99% of all commercial codebases across all major industries and makes up over 70% of all the code in these codebases.[i]  Although its principal uses are in operating systems, databases and development tools, OSS has also become an integral part of everyday technologies like web sites and apps, smart phones, cars, appliances and the internet of things.  OSS is a key asset of even companies whose business does not involve software development per se.

UML diagram of OSS decision flow.
Diagram: OSS Decision Flow

Consider Business Requirements and Benefits. Adopting OSS is an alternative to building or buying software. It should be considered after you have developed business requirements for the system you are designing, and it should be assessed for its suitability to these requirements.  Thereafter its benefits and detriments should be considered in the context of your business model.

    • BENEFITS.  OSS is easy and cheap (or free) to obtain, usually via the internet.  It is typically the product of hundreds or thousands of developers and millions of code hours – resources and creativity that would be difficult or impossible for the typical business to marshal.  Resources for bug-fixing and augmentation are plentiful and relatively inexpensive to acquire.  Because it is typically accompanied by source code, it is easier to maintain, extend and adapt than proprietary software, which is typically supplied as machine executable without source.  It is arguably more secure and reliable than proprietary systems, having been vetted and used by many people.
    • DETRIMENTS.  OSS may be vulnerable to malicious developer bugs and exploits.  It may also be obscure, have poor usability and require lots of configuration and supporting software libraries.  Support may be uncertain.

If the OSS fails to meet business requirements (even with anticipated modifications), or if it is of negligible business and technical value, you can exit the analysis now.  No matter how cheap or easy it may be to comply with OSS license conditions, there is little business value in adopting software that does not serve business objectives.

  1. Distributed? OSS software license conditions are triggered by distribution.  If the OSS is not distributed, there is no requirement to adhere to the license conditions, and you can exit the analysis.  Although distribution is given different definitions by different OSS license variants, distribution is generally synonymous with publication, dissemination or propagation of copies of the code to third parties.  Conveyance of the code to limited groups for limited purposes and without rights to further use or distribute is not distribution.
    • SaaS Software. As so much of software migrates online to a SaaS model based on browser or app user interfaces to run applications that reside in the cloud, it is interesting to think that using OSS in support of a SaaS application probably does not constitute distribution since copies of the running code are (in most cases[ii]) not changing hands.
    • Employees. Copying code among a company’s employees is not distribution since the copies reside with the same licensee (the company for whom the employees work).  Intra-company use of OSS for backend and other internal systems is not distribution.
    • Contractors. For analogous reasons, conveyance to individual independent contractors is probably not distribution, so long as the code is treated as confidential, limited to company machines, and required to be returned or deleted at the end of the commercial arrangement.  However, conveyance of the code to consulting and outsourcing firms probably is distribution and therefore requires further analysis below.
    • Networks. Cloud storage of the code is probably not distribution, so long as the company maintains control over the account and the virtual space in which the code resides.
    • Subsidiaries. Conveyance to a wholly owned subsidiary is probably not distribution, whereas conveyance to minority owned subsidiaries or affiliates is more likely to constitute distribution.
    • Mergers & Acquisition. Although contracts (like an OSS license) may be assigned in the course of an acquisition, and therefore not distributed according the terms of the OSS license, non-exclusive intellectual property licenses are generally not assignable, raising the possibility that an acquisition or merger might constitute distribution and therefore trigger the OSS license terms with respect to the acquiring company.

If OSS is not distributed (and will not ever be distributed), the analysis can end there because the terms of the OSS license have not been triggered.

  1. Permissive or Copyleft?  Although there are literally hundreds of different and often idiosyncratic OSS licenses, they bifurcate into Permissive licenses (notice only) and the so-called Copyleft license (source + notice).
    • Permissive.[iii] If OSS is acquired under a permissive license, license conditions are straightforward and easy to accommodate: include a notice with the downstream binary or source code you distribute.  For the contemporary software development and publishing world, to “distribute” often means to put on GitHub or a similar versioning system.  The license will typically reside in source comments or in a “LICENSE” or “COPYING” file in the root of the repository and should exist for every version and every publicly available build.  The notice is short and includes the OSS author name, copyright notice, and disclaimer on liabilities and warranties.[iv]  Having included notice with the distribution, you’ve complied with your obligation and can exit this Lawgorithm.
    • Copyleft.[v] Copyleft licenses are more complex.  Notice is required, as with Permissive licenses, but Copyleft adds conditions: 1) the program and any derivative works must be made available free of charge under the same license under which the program was originally acquired; 2) if a binary is distributed, source of the program and any derivative works must also be made available; and 3) the distributor of the program (you) can impose no restrictions on the exercise of the license conveyed with the OSS program.
  1. Distribute Derivative Code. In cases where you make modifications to the Copyleft open-source program, your modifications are “derivative works”[vi] which are subject to the Copyleft notice and source distribution requirements (in 3 (b) above).
  2. Distribute Aggregated Code. Aggregated code is separate and distinct programs that remain separate and distinct in distribution and use.  They are, for purposes of distribution, merely packaged together in the same container.  For example, suppose your proprietary interface Program X opens a connection to an unmodified open-source database program and fetches the results of queries made by the user of the interface.  Program X then renders the results.  Under these circumstances, each program will be distributed subject to its own license terms and Program X users may have a proprietary license from you and a separate Copyleft license from the Copyleft author with respect to the database program.
  3. Distribute Integrated Code. However, many Copyleft licenses will view the integration of OSS programs with proprietary programs as conferring derivative work status on both the original OSS code and on any proprietary code that integrates with the OSS code, and can therefore cause the integrated code to be subject to the Copyleft license terms.  Whether integrated code constitutes a single derivative work program depends on some controversial distinctions among the way integration might happen.  On the one hand, it is fairly clear that a plug-in is not a derivative work of the OSS code but that the wholesale incorporation of OSS modules into another program is.

It is in the “boundary” cases that there is considerable uncertainty whether the relationship between two programs is such that a derivative work has been created and that, therefore, a requirement to publish as the resultant source code, for free and subject to the same non-proprietary license.  For example, it is unknown whether there is a distinction between static linking (the import of libraries into memory at program load) is distinguishable from dynamic linking (loading libraries at runtime) for purposes of discerning whether a derivative work has been created.

Perhaps it is useful to think of these different kinds of integrations as being on a continuum, as pictured above, from a Composition (a mixture in which members have a part-of kind of association to one another, as a hand or foot is a part-of a person) to Aggregation (a collection without an association among the members).  Thus, the closer the two codebases get to being a Composition, the more likely they are to be regarded as a derivative work and the entirety of the now singular program subject to Copyleft.  The Free Software Foundation, the source of the GNU operating system and the original open-source software consortium, draws the line at linking – integration occurring through communications protocols, remote procedure calls and the like are not considered derivative works.

Compliance with OSS licenses can be of extreme importance to your business.  If a licensor believes that you have breached the conditions of their license, they can bring a copyright action for damages (for unlicensed use) or to enjoin you from distributing or using their (and potentially your) software.

[i] Synopsys 2020 OPEN SOURCE SECURITY AND RISK ANALYSIS REPORT, https://www.synopsys.com/software-integrity/resources/analyst-reports/2020-open-source-security-risk-analysis.html?cmp=pr-sig.  According to this study, 67% of all codebases have licensing conflicts, which is an interesting finding in light of the topic of this article.

[ii] Even the SaaS line is blurring.  Angular, Node and other JavaScript based constructs run in and are distributed to the user’s browser in response to server messages.

[iii] The principal examples of permissive licenses include the MIT and BSD licenses.  The Blue Oak Council (blueoakcouncil.org) counts over 150 permissive licenses currently in use.

[iv] Here is a copy of the MIT license (permissive): MIT License

Copyright (c) 2021

Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the “Software”), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions:

The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software.

THE SOFTWARE IS PROVIDED “AS IS”, WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. IN NO EVENT SHALL THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM, DAMAGES OR OTHER LIABILITY, WHETHER IN AN ACTION OF CONTRACT, TORT OR OTHERWISE, ARISING FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE USE OR OTHER DEALINGS IN THE SOFTWARE.

[v] Copyleft licenses include the AGPL (Affero General Public License), the GPL (General Public License), the LGPL (Lesser General Public License), and the Eclipse, Mozilla and Common Development and Distribution licenses.  See: https://blueoakcouncil.org/copyleft.

[vi] Copyleft licenses generally adopt the Copyright Law’s definition of “derivative work”: “a work based on one or more pre-existing works … in which a work may be recast, transformed or adapted.”  17 USC §101.

Whether and How to Register a Federal Trademark

This Lawgorithm will help you decide whether and when to register a trademark with the federal government.  It will help you think about the business and legal advantages of a federal trademark, and help you decide whether, when and how to obtain the fabled “® “.

Here’s a common scenario.  After weeks of brainstorming, you’ve come up with just the right name for your product or service.  It is a clever name, and distinguishes you from other competitors in the market.  Once your product is “out there,” you are committed to the name, and you know that — eventually — it may become an essential business asset.   Now what?  Should you register it?  Can you register it?  What are the benefits of doing so?

 

Should your business pursue trademark protection for a brand name, logo, or other way of uniquely identifying your product or service?

A trademark is “any word, name, symbol, or device, or any combination used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is a brand name.”[1]  The question is, should your business file to obtain a federal trademark?

  1. Assess the Business Value. Brands enable a company to distinguish a product or service from those of the competitors, and to create a lasting impression in the minds of consumers.  They are also business assets.
    1. Although a brand serves as a proper name for a product or service (and is therefore “denotative”), its value is often connotative: it signifies or betokens quality, dependability, price and other positive mental associations between the name or symbol and the product.  You may want to use this connotation to drive adoption and repeat sales.
    2. The primary purpose of trademark is to distinguish your goods or services from others’.  In crowded or commodity markets, differentiation may be essential to get through the ‘noise’ and clutter.  In a long list of products on the internet, for example, it may be to your great advantage if you have a visually interesting and appealing logo.
    3. Asset Value. A trademark is an intangible asset of the business, forming part of goodwill on the balance sheet.  Brand equity can often exceed the capital value of the underlying physical plant or contracts.  By one estimate, 70% of the $13 billion acquisition price for Whole Foods by Amazon was attributable to goodwill.[2]  A trademark can be licensed, sold and hypothecated (as a security).

If the brand you are considering trademark for has a strong business value under one or more of the above criteria, you should then assess the benefits of trademark to your business.

  1. Consider the Legal Benefits. The legal benefits of trademark are significant and include exclusivity (only you can use the mark), notice (would-be infringers are on notice of your ownership), priority (you own the trademark from the time it is first used in commerce) and import protection (a trademark owner can invoke the power of the US Customs and Border Patrol to prevent goods from entering the United States.   NOTE that, even if you decide that the business value and legal benefits of registering a trademark are not warranted, if you nevertheless intend to use the mark, it may behoove you to determine whether you are risking a trademark infringement lawsuit by using the mark – if you run afoul of another with trademark rights, you could be forced to stop selling your product, impound or destroy products that use the mark, or pay the owner money damages.  Therefore, it advisable that you conduct a defensive search (indicated in the diagram by the dashed line).
  1. Product or Service? Is the brand the name of a product or service?  If it is only the name of your business – i.e., your tradename – then it is not eligible for federal trademark protection.  Instead, you should seek to register it in your state as a ‘fictitious name’ – a name used to identify your business (something you may wish to do regardless of, and in addition to, trademark considerations). ä   Note, however, that it is not difficult to make the case that your company’s name is also the name of its product or service.  “Coca Cola” is the brand of a soft drink as well as the name of the company that makes it.
  1. Interstate Commerce?  The federal government gains its power to issue and enforce trademarks from the Commerce Clause of the US Constitution, which requires that commerce affect interstate commerce in order for the federal government to regulate or otherwise legislate concerning it.   Your product or service must be offered in interstate commerce.  “For goods, ‘Interstate commerce’ involves sending the goods across state lines with the mark displayed on the goods or the packaging for the goods. With services, ‘Interstate commerce’ involves offering a service to those in another state or rendering a service that affects interstate commerce (e.g. restaurants, gas stations, hotels, etc.).”[3]
    1. Intent to Use. However, even if your product is not yet in interstate commerce (or perhaps even available to the public), you may nevertheless file for a trademark under an “intent to use” basis, provided that you subsequently actually offer the good in commerce and prove it with the US Patent & Trademark Office (“USPTO”).
    2. State Trademark. If your product or service is likely never to be in interstate commerce, you may nevertheless seek State trademark protection.  In Pennsylvania, a simple filing detailing the mark provides 5 years of protections against others using the mark in-State.
  1. Assess Strength and Eligibility of the Mark. Not all names and symbols are good trademarks, or for that matter, trademark-able.
    1. Arbitrary? The strongest trademarks – from both a legal and (I would venture) a business and marketing perspective – are arbitrary with respect to the thing signified (“Apple” for computers, “Gap” for clothing, “Ford” for cars). If your mark is arbitrary, you can confidently move to the next step of the analysis and investigate whether it is a unique mark, or confusingly similar to another.
    2. Fanciful? Fanciful marks are strong and likely to be approved by the Trademark Office (all things equal).  Often, these are neologisms – words that have never before existed – XEROX, Intel, Kleenex, Tylenol, etc.
    3. Suggestive? Suggestive marks, such as “At-a-Glance” for calendars, “Nice ‘n Easy” for hair products, or “Redi-Whip” for foods, are registrable, but their scope may be limited (you may find your mark alongside other permitted variations or the same mark alongside many other classifications).
    4. Descriptive. Descriptive marks, as the name suggests, portray some attribute of the product – “Speedy Repair” or “Reliable Aviation.”  Descriptive marks are generally not registrable, without showing that a mark has, through long use, become a well-known moniker for the product (indicated by the dashed line running from the “Descriptive?” decision). ä
    5. None of the Above? If your mark is not arbitrary, fanciful or suggestive, then it is likely to be not  Generic names (names for the thing being named) are not registrable; “Bicycle” may work as the name of a card deck, but not as the name of a two-wheeled, pedaled transportation vehicle.  Nor are surnames trademark-able, absent a showing that they have acquired distinctiveness (such as “McDonalds”, “Ford”, and “Dell”). ä
  1.  Every mark is classified according to one or more of 45 classes of goods and services (1 to 34 for goods; 35 to 45 for services).  You will choose which class(es) your mark belongs to and which coordinate classes might also apply (a mark might, for online learning for example, be for both “computer, scientific and legal services” and “education and entertainment services”).  The same trademark can exist in different categories (“Apple” computers can co-exist with “Apple” hotels), and classification serves to both limit the scope of a given mark and limit the search for relevant variations on the word.
  1. Both the applicant and the USPTO will conduct a search of the federal Trademark Electronic Search System (“TESS”) database, looking for marks for which there is a “likelihood of confusion” with your own in the class(es) in which you are registering.[4]  It is advisable to also search other databases, including Google/Bing and internet domain name registrars to determine if there are perhaps unregistered, but nevertheless temporally prior uses of similar marks.
  1. Assess: is there a Likelihood of Confusion? As the last step before filing for a federal trademark (and spending $225 to $275 and more), you and your lawyer should make a determination of a likelihood of confusion and therefore a likelihood that the application will be rejected.  If you decide to file, it makes sense to do so as soon as practicable – perhaps even filing an “intent to use” application if you’ve just developed the mark and haven’t yet used it in commerce.  If, only the other hand, your mark is too similar to another in your class, you may want to avoid the USPTO and attorney fees and go back to the drawing board with the mark.
  2. The actual registration process is quite simple and done entirely online (except in limited cases).  The registration fee is non-refundable.  It will take about 3 months before an examining attorney is assigned by the US Patent & Trademark Office.  It will take another 2 to 3 months before there is an Office Action.  Changes to the application will have to take place through amendments, which are subject to their own processes and fees.

[1] https://www.uspto.gov/learning-and-resources/trademark-faqs#type-browse-faqs_1223  Although this definition speaks in terms of “goods,” trademark also applies to services – a “service mark” is a trademark for services.

[2] https://www.cnbc.com/2018/02/06/amazon-10-billion-goodwill-balance-shows-whole-foods-strategy.html

[3] https://www.uspto.gov/learning-and-resources/trademark-faqs#type-browse-faqs_1223

[4] “Likelihood of confusion” is Based on criteria developed in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir. 1961).

When and How Should Your Business Register a Copyright?



Almost every business these days produces information that may be a copyrightable work of authorship.  The question is: when and how should the business register a copyright?  This becomes a question of the value of information product the business has produced and how copyright registration supports that value.

This Lawgorithm looks at the question from a business-oriented perspective, asking:

    • is copyright protection available for the work?
    • what role does the work perform in the business?
    • what kind of protection might be most appropriate to its role?
    • what benefits does copyright registration offer?
    • how do I register?

This Lawgorithm is designed to help businesses decide whether to register a copyrighted work with the US Copyright Office.

Registering a copyright is a relatively simple and inexpensive process that creates a record of copyright ownership with the Copyright Office, a part of the federal Library of Congress.

You do not need to register a copyright in order to own it.  You own a copyright in a work of authorship[1] the moment you create it and record it in “a tangible medium of expression” – i.e., write it on paper or on a computer, photograph it, audio or video record it, etcetera.  And, because of this claim to ownership, you can bring a lawsuit in federal court to enforce your copyright, even if you had never previously registered the work (you will ultimately have to register to bring suit).

However, there are some very compelling benefits to registration.  Whether registration is right for you will depend on a number of factors: a) whether the item is copyrightable in the first place, b) what role it plays and what value it has in the business and c) on whether the benefits are worth it to you.

1.     What is Copyrightable?

If an item is not copyrightable, you cannot register it.  Most original expression is copyrightable, but there are certain types that are not:

    1. Ideas are abstract concepts that have not been reduced to particular, concrete expression.  A general ‘rags to riches’ storyline is not protectable; a biography of Andrew Carnegie is.
    2. Methods, algorithms, processes, procedures and systems.  Of particular note for software authors: copyright does not protect the algorithm (patent might, if the algorithm enacts a patentable process) any more than it does a recipe.
    3. Unoriginal works.  Customer lists, white pages telephone listings, log files and other works lacking a “modicum of creativity” are not copyrightable.  Compilations of facts may be copyrightable if they introduce original sequence, structure or organization, but the underlying facts are not.
    4. Personal and business names, titles (including book and song titles), fonts (except as part of a logo, design, etc.), fashion design, blank forms, short phrases or slogans.  In some cases, the item does not rise to the level of ‘de minimus’ originality; in other cases, trademark or patent law is the appropriate form of protection.

If the work is not copyrightable, consider whether it is nevertheless valuable and protectable by trade secrets law or patent law.  ä

2.     How to Evaluate Business Value?

The value and importance of a work is a function of its role in the business.  In general, an information product can perform 4 different kinds of roles in business.

    1. Secret.  The information derives its principal value from its being secret.  If this is the case, and the business has been and will be diligent in keeping the information secret, copyright registration should not be pursued.  Instead, a separate inquiry into the creation and maintenance of trade secret rights should be explored, and we exit the analysis. ä
    2. Product.  The work is the item for sale.  It alone or in combination with other resources (like labor) is what the business has to sell.  The business is typically an author or publisher of a Work.  It is selling a book, a movie, a computer program, a newspaper, a game, a song, etc.   These businesses comprise the “intellectual property industry,” generate over $6 trillion in gross sales, and make up over 38% of the US Gross Domestic Product.[2]
    3. Asset.  The work provides the business with a competitive advantage of some sort.  It may even be counted ‘on the books’ as an intangible asset of the business.  Advertising is perhaps the preeminent example, but other copyright assets might include studies, reports, surveys, software tools and infrastructure, and knowledge in the form of employee presentations and publications.
    4. Ancillary.  The work plays a ‘supporting’ role internal to the operation of the business.  Employee manuals, procedures manuals, memoranda, company signage and internal publications are examples of these kinds of works.

The business importance of a work, and the benefit of registering a copyright, is in general greatest with Products, followed by Assets and then Ancillary works.

There are some works that of relatively little business value of any kind – ephemeral meeting minutes, emails, voicemails, etc.  In this case, there is little need to consider copyright registration, and you can exit the analysis.

3.     What are the Business Benefits of Copyright Registration?

Copyright registration offers key advantages to the copyright owner, which are of greatest importance when the business value of the Work is the greatest.

    1. Statutory Damages.  If your Work is infringed, you’ll have to prove actual damages, which is most often measured in terms of lost profits.  These can be very speculative and difficult to prove.  Registering your copyright, on the other hand, may entitle you to instead seek statutory damages.  These damages are fixed by statue and range from $750 to $30,000 for all infringements of a single work.  In the case of willful infringement, statutory damages may be as much as $150,000.  Statutory damages require registration within 3 months of publication, or before infringement occurs.
    2. Presumption of Valid Ownership.  Registration also serves as prima facie evidence of the validity and date of the copyright, meaning that the burden is on the defendant to prove the works do not belong to you.  Ordinarily, this burden would be on the copyright owner.  You may not have time for these legal measures if you are seeking an injunction to stop harm that is occurring now or imminently. If the work registered within five years of publication, the copyright ownership is also presumed valid.
    3. Import Protection.  The copyright registration can be recorded with U.S. Customs and Border Protection, which will seize and detain infringing copies of a work being imported into the US.  The copyright owner can also petition the International Trade Commission to exclude infringing goods from import in the first place.
    4. Record and Notice.  Registration creates a searchable public record.  Not only are potential infringers on notice (and therefore potentially liable for willful infringement), but parties seeking to contact the copyright owner (for licensing) are able to contact them.
    5. Pre-Requisite to Suit.  As previously mentioned, the work must be registered with the Copyright Office before suit can be brought in federal court.  Because registration may take 3 to 12 months, this delay could be decisive if you are seeking to address imminent harm to your business.

4.     What if a Copyrighted Work also has Utility Value?

In addition to their value as products, assets or ancillary material, certain works may have utilitarian value.  They perform a useful function.  This is particularly true of computer software, where the written code is not only an original “literary work” (as described by the Copyright Office), but embodies a new “process, machine, manufacture, or composition of matter.”  The software may solve problems in the field of computer and data science that are independently worthy of protection by US Patent Law.  In this case, you should consider filing a patent on the software in addition to registering it with the Copyright Office.  Bear in mind that an inventor has one year from the date that an invention is publicly used, sold or described, and that registering a Work with the Copyright office will set this clock ticking.

5.     How to Register a Copyright?

Registering the copyright is not difficult and can be done online or through the mail.  Registration requires that complete an application, pay a fee and deposit two copies of the “best edition” of the work with the Copyright Office.  If a work is digital-only, the two-copy rule obviously does not apply.  “Best edition” refers to criteria that the Library of Congress determines for the deposit to be suitable for its purposes. Generally, if a work exists in digital and also in physical form, the best edition is the physical version.

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[1] “Work of Authorship” or just “work” is the term of art that copyright law uses for a particular original, creative or communicative expression.  It can be a literary, artistic, educational, musical, software, etc.

[2] US Department of Commerce, Intellectual Property and the US Economy, 2016.  https://www.uspto.gov/sites/default/files/documents/IPandtheUSEconomySept2016.pdf