2023 IP Resolutions Start with a Review of IP Assets

The start of a new year is a good opportunity for companies to review and take stock of their intellectual property assets. Scott Hervey and Josh Escovedo talk about the importance of this review on this episode of The Briefing by the IP Law Blog.

Watch this episode on the Weintraub YouTube channel here.

Show Notes:

Scott:
As 2023 commences, it’s time for companies to take review and take stock of their intellectual property assets.  This applies to companies that have never taken serious steps to protect intellectual property, and those companies that understand the value of intellectual property and take active steps to secure and protect those assets.   We are going to talk about this on this next installment of the Briefing by the IP Law Blog

Scott:
Intellectual property is a company asset, just like inventory.  No CEO or CFO would think of running a company where they didn’t know the extent of company inventory.  Likewise, it makes no sense for a company not to have a firm understanding of all of its potential intellectual property assets.  Even companies that regularly take steps to protect intellectual property through, for example, registering trademarks, or registering copyrights, a yearly review can prove beneficial.

Josh:
Understanding the extent of a company’s IP holdings usually start with what’s known to the company, such as all registered copyrights, trademarks or patents, domestic and foreign.  After compiling a list of those IP assets, the next step would be to review what the company is using and compare that to the list of registered or pending IP.  For trademarks, a good place to start is the company’s marketing and promotional materials, website, mobile app, and social media.  If these materials show use of trademarks, logos, or slogans that are not already the subject of a trademark registration or application, then these marks should be cleared for use to prevent unintended liabilities, and they should be considered for possible registration.

Scott:
Don’t overlook company social media accounts, domain names, and toll-free numbers, which may also serve as potential trademarks.  And be sure to confirm that all domain names and social media accounts are registered to the company; you would be surprised at how many times a domain name or social media account is registered to an individual company employee and not the company itself.  Also, if the company has changed the graphic user interface to any of its technology products or has changed product packaging, point of sale displays, or product design, these may also be protectable trade dress.

Josh:
When looking into company assets protectable under the federal copyright laws, one should check the company’s website, marketing materials, manuals, YouTube videos, podcasts, posted content on Instagram, TikTok and the like, photos, software, blog posts, articles, white papers, etc.  Although the cost benefit analysis of securing protection may result in a conclusion that registration does not economically make sense for every single piece of content, the company should at least maintain inventory of its copyrightable works.

Scott:
A company should always be aware of any new inventions under development, and its good practice to investigate the status of any inventions developed by company employees during the past year.  Such inventions may be protectable under federal patent laws.  An inventor must secure a patent application within a very short period of time in order to prevent the work from falling into the public domain.  Companies that routinely produce new inventions should put into place a process which enables inventors to disclose a potential invention to a responsible executive well prior to the invention being disclosed to the general public.

Josh:
In addition, a company should take stock of those items that it considers proprietary trade secrets.  Trade secrets are items not generally known by the public but have economical value and are the subject of reasonable precautions to maintain their secrecy.  In general, trade secrets have no duration of protectability and there is not a method for registering a trade secret in the United States.

Scott:
Items that may be protected by state trade secret laws include software source code and related documentation; customer lists, employee knowledge, training and experience; proprietary terminologies, definitions and formulas; specially developed customer information; sales practices; negative information such as negative results from research and development projects; and customer and consumer surveys.  Each of the above could constitute proprietary trade secrets depending upon whether its owner took reasonable steps to maintain its trade secret status.

Scott:
A special note about customer data.  In addition to regularly reviewing IP assets, a company should regularly make sure that its privacy and data use policies comport with the manner in which it collects and uses customer and employee data.  In the US, privacy laws are generally driven by state law, but there may be applicable federal law depending on the nature of the information collected.  If a company conducts business internationally, it may have to adhere to the privacy laws of foreign countries.

Josh:
After looking at all known IP assets, look into what may be unknown.  Sometimes marketing departments and independent divisions spin out valuable intellectual property assets that, for one reason or another, never made it past the desk of general counsel or a responsible executive.

Scott:
Intellectual property rights acquired by way of contractual agreements may sometimes be overlooked.  Items that were developed or created through the use of independent contractors, such as consultants, photographers, website and application developers, software developers, advertising agencies, graphic artists, production companies, and the like may be company assets depending on contract terms.  If the company intends to own all of the rights, including any intellectual property rights, in the works created by these independent contractors then the agreements with these independent contractors should have proper intellectual property vesting language – such as work made for hire language and/or an assignment provision.  If the agreements with these independent contractors were only verbal or did not contain such language, then the company needs to make another resolution: make sure it actually owns the intellectual property it paid for.   Sticking to this resolution would include a review of standard independent contractor and employment agreements to confirm they have proper assignment language and confidentiality provisions.

Josh:
Unintended liabilities can also result from the company’s interaction with independent contractors that have been hired to create something for the company.  Whether it is a website designer hired to redesign a company website, a software developer hired to work on a company’s app, a graphic artist hired to create a new logo or artwork, or a copyrighter hired to write content, we have seen countless instances of these types of vendors taking shortcuts and “borrowing” assets from existing sources.  Unless a company executive is closely managing these vendors when they do their work, it would difficult to determine whether or not they engaged in acts that may be considered infringement until such time as the company receives a cease and desist letter.

Scott:
However, there are precautionary steps a company can take to prevent unintended liabilities.  A company should always have written agreements with vendors which unconditionally requires them to indemnify the company for any claims of infringement resulting from the works they were hired to create.  Additionally, a company should require these vendors to carry insurance that would provide coverage for such a claim (either E&O or professional liability insurance) and that the company be named an additional insured on such policies.

Josh:
Lastly and most important, the company should have a general understanding of who they are doing business with.   A little time spent researching whether the vendor has negative claims with the Better Business Bureau, has licensing issues, generally has satisfied customers, whether there are any lawsuits pending, etc., can tell a company quite a bit about the work habits and ethics of any potential vendor.

Scott:
After a working intellectual property inventory list has been created, the next step is to identify those items that are already the subject of active protection efforts (i.e. pending or issued registrations) and those that are not.  Then, the company executives, along with corporate counsel and if appropriate outside intellectual property counsel, should review the list of unprotected intellectual property assets and determine whether taking steps to secure protection makes economic sense.  Sometimes, a company might find that the cost to secure protection of an intellectual property asset outweighs the potential economic value of that asset or that protection would be duplicative.