Imagine that you have started a business to produce a new type of smoke alarm that is specifically designed for kitchens. It is similar to other smoke alarms but is more capable of detecting a kitchen fire than any alarm on the market. You’ve named it “Kitchen Sentry.” Your tagline is “We Protect Cooks and Kitchens.” You just acquired the Internet domain name www.kitchensentryfirmalarm.com.
Fortunately, during the time you were developing your product, you attended a seminar on intellectual property sponsored by your local Small Business Development Center (SBDC). You immediately went to an attorney who specializes in helping small businesses secure their intellectual property to talk about your device. Since that time, you have applied for a patent; trademarked the “Kitchen Sentry” name, your tagline, and your logo; and copyrighted key portions of your printed material. You have also designated certain portions of what you do as trade secrets. For example, the software code that helps the Kitchen Sentry detect a kitchen fire earlier than any other firm alarm is not protected by a patent. It’s nearly impossible for a competitor to learn the code by reverse-engineering one of your devices. As a result, rather than disclosing this information, which would be necessary if you patented it, you have decided to keep it secret and protect it internally.
Intellectual property is any product of human intellect that is intangible but has value in the marketplace.
Like Kitchen Sentry, many new businesses have valuable intellectual property. Intellectual property is any product of human intellect that is intangible but has value in the marketplace. Traditionally, businesses have thought of their physical assets—such as land, buildings, and equipment—as their most important assets. Increasingly, however, a business’s intellectual assets are the most valuable. Think of the value of the Starbuck’s trademark, the Nike “swoosh” logo, or the Microsoft Windows operating system. All of these are examples of intellectual property that provide their respective businesses with a competitive advantage in the marketplace. A business like Nike would be hurt much more by the loss of its “swoosh” logo than by the loss of a physical asset such as a building or piece of equipment.
A business like Nike would be hurt much more by the loss of its “swoosh” logo than by the loss of a physical asset such as a building or piece of equipment.
The four forms of intellectual property protection are patents, trademarks, copyrights, and trade secrets. They are described in Truths 34 to 37. Intellectual property laws exist to encourage individuals and businesses to be innovative and to take risks by granting them exclusive rights to the fruits of their labors for a period of time. There would be no financial incentive for an individual to invent a device, like the Kitchen Sentry firm alarm, if it could be immediately copied by someone else. Intellectual property laws also help individuals make well-informed choices. For example, when consumers see a Panera Bread restaurant, they know exactly what to expect because only Panera Bread is permitted to use the Panera Bread trademark for soups, signature sandwiches, and bakery products.
One special note about intellectual property laws is that it’s up to business owners to take advantage of them and to safeguard their intellectual property once it is legally protected. Police forces and fire departments are available to quickly respond if a business owner’s buildings or physical assets are threatened, but there are no intellectual property police forces or fire departments in existence. The courts prosecute individuals and companies that break intellectual property laws. However, it is up to the individual business owner to understand intellectual property laws, safeguard intellectual property assets, and initiate litigation if intellectual property rights are infringed upon or violated.