Editor’s Note: Gregg Sultan is a lawyer in Snell & Wilmer’s downtown Los Angeles office. He focuses his practice in the areas of intellectual property and corporate law, including trademark, copyright, entertainment, licensing, franchising, mergers and acquisitions, business transactions, and new media and technology transactions. (This article also ran in Beverage Spectrum Magazine’s March 2011 issue)
It is critical that entrepreneurs and business people have at least a basic understanding of the different forms of intellectual property protection that might apply to their products. There is, however, an enormous amount of confusion about the differences. For example, it is a common occurrence for clients to ask whether they can “copyright our brand” or “get a patent on our logo.” The first step for me as an attorney is to respond to those questions by rephrasing them in a way that addresses the actual concern. Then, I explain in a clear and concise manner what the clients might really be interested in doing and then guide them through the process of developing, protecting, and eventually exploiting the proprietary rights in their products. It is particularly important to get this process right with beverages, since every area of intellectual property law theoretically could apply to them. In this article, I will briefly explain the main forms of intellectual property and the theory behind each one. Then I will examine ahypothetical soft drink product and discuss how it can best be protected by intellectual property laws.
There are different types of patents, but for our purposes I will discuss what most people think about when they bring up patents in conversation – the utility p atent. A utility patent can protect the functional features of a process, machine, manufactured item or composition of matter, if that feature is new, useful and non-obvious. All patents are granted by the federal government (i.e., the U.S. Patent and Trademark Office). Since patent law is designed to encourage investment in new technology and invention and to reward the effort and expense involved in developing such new technology or invention, a patent grants the owner the exclusive right to stop anyone else from making, using or selling any devices that embody the patented technology or invention for a certain, limited period of time.
Copyright law is designed to encourage original and creative expression of ideas and information in a tangible form, such as literary, musical, pictorial, sculptural, motion picture, and other artistic works. To qualify for copyright protection, a work must possess at least some minimal degree of originality and creativity (and that threshold is fairly low). As soon as a work is created and the idea or information is fixed in a tangible medium of expression, federal copyright law protects the work from infringement – that is, from another person copying or publishing all or a substantial portion of the work or creating or publishing a very similar work (which implies that the copyrighted work was likely copied) – for a period of the life of the author plus 70 years or 95 years from the date of publication or 120 years from the date of creation (whichever is shorter) in the case of companies. To maximize one’s rights, a proper copyright notice should be used on the work. Registration of the copyright with the U.S. Copyright Office, while not required for copyright protection, is normally recommended to enforce the copyright and qualify for certain types of enhanced damages in the case of infringement claims.
In the U.S., trademark rights derive from commercial use of distinctive names, words, symbols, logos (and, in certain limited cases, sounds, smells, colors and shapes) on or in connection with goods or services to identify and distinguish the source of those goods or services. Unlike patent and copyright law, trademark law is not designed to encourage the development of brands by granting a monopoly or property right in those brands, but instead it is designed to prevent consumer confusion, mistake or deception as to the source, affiliation or sponsorship of goods and services. For example, when consumers buy a brand name product, they know it comes from a certain source even if they may not know the name of that source, and they may have come to expect a certain quality associated with that brand. If another party later begins using a similar name for similar goods, consumers could be confused as to the source of the product or whether the source of the brand name they like may sponsor or somehow be affiliated or connected with this other similarly named product. In such a case, the trademark owner could sue for trademark infringement. Federal registration of a trademark (with the U.S. Patent and Trademark Office) is not required to have valid rights in the mark since appropriate commercial use of that mark confers those rights, which will persist as long as such commercial use continues. As with federal copyright registration, however, federal registration of trademarks offers a number of additional legal benefits and advantages.
In most states in the U.S., a trade secret is defined as “information, including a formula, pattern, compilation, program, device, method, technique or process that derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, another person who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Some states have their own definition which may differ somewhat from this one.) Patents and trade secrets cover much of the same subject matter, but they are very different in practice, since patent applications require full disclosure of the invention, while trade secret law requires secrecy, and patents normally last for 20 years from the date of filing, while trade secrets can last indefinitely.
Now let’s imagine that we have a new soft drink product with some unique features. The product has a distinctive brand name and logo associated with it. It comes in a unique bottle housed in creative packaging. The bottle features a new technology to maintain the temperature of the beverage. And the drink itself is the product of a proprietary formula. From reading above, you may be able to predict which areas of intellectual property law apply to the different aspects of the product. Nevertheless, a further analysis may reveal some surprises.
First, let’s take the brand name and the logo. Assuming these items have been properly cleared for use (i.e., it does not appear that anyone else has prior rights to them), if they are used to identify and distinguish the source of the product, they can be protected by trademark law. If the logo has a sufficiently original and creative design aspect to it, it could also qualify for copyright protection once it is on the bottle or a label or packaging associated with the product.
Second, the packaging of the product likely contains the brand name and the logo, but it also might have some art or design elements associated with it. If these aspects are sufficiently original and creative, copyright protection would apply. Moreover, if and when these aspects are sufficiently distinctive to the extent that the public has come to see them as identifying the source of the product, they also could be protected by trademark law as “trade dress,” a branch of trademark law that protects the look and feel of a product or its packaging.
Third, the technology that enables the bottle to maintain the temperature of the beverage could be patented if it is new, useful and non-obvious and there are no prior patent claims on such a technology. Filing a patent application, however, is a public record and normally a patent expires 20 years after the date it was filed. It rewards the investment of time and money in the invention, but only for that limited period of time. That may be the right way to go depending on the business plan, but if the need to maintain the confidentiality of the invention or the desire to try to exploit it for a longer period of time is paramount, then filing a patent application may not be the rightstrategy. Another possibility is to treat the technology as a trade secret. If that path is taken, then it is necessary to maintain a program to keep the technology secret and make sure anyone who must know about it is bound to keep that knowledge in strict confidence and not disclose it to anyone else. The use of appropriate non-disclosure or confidentiality agreements is essential.
Fourth, while probably unlikely, the shape of the bottle itself could qualify for utility patent protection if it is considered new, useful and non-obvious. There is another type of patent called a design patent for which an application could be filed to protect the ornamental features of the bottle, but those features have to be new and non-obvious, and to the extent that such features are primarily utilitarian or functional in nature, a design patent would not be granted for them. If the bottle shape is sufficiently distinctive such that it is able to and has become associated in the mind of the public as a source identifier, it can also be protected as “trade dress” under trademark law. If the shape of the bottle qualifies for a utility patent, however, it is unlikely to be protectable as “trade dress” since functionality prohibits trademark rights.
Finally, we come to the proprietary soft drink formula. In this case, the real life examples of Coca-Cola and Pepsi are useful. While Coke and Pepsi could have filed for patents on their formulas, that would have required full disclosure of the formulas and the patents would only have lasted for a few years. After that, the formulas would become publicly available. Instead, Coke and Pepsi (and almost all other soft drink brands) have never disclosed their formulas and they keep them a closely guarded trade secret. By treating their formulas as trade secrets, Coke and Pepsi will continue to retain sole ownership and control over them until another partyindependently discovers them (which may never happen). Accordingly, the decision by Coke and Pepsi to treat their formulas as trade secrets turned out to be the right choice, but in doing so, they each took a calculated risk that no one else would discover and publicly disseminate their formulas anytime soon. If that had happened, their respective monopolies would not have lasted very long.
After reading this article, I hope that you can now answer the two questions posed in the introductory paragraph above. No, you may not “copyright your brand,” but you could make sure that your brand is protected as a valid and enforceable trademark. And no, you may not “patent your logo,” but you could take steps to protect your logo as a trademark and, if it is sufficiently creative and original, under copyright law as well.
As you may now realize, determining how best to protect the various intangible assets that comprise your product through use of intellectual property laws can be like navigating a complicated maze. Finding an attorney with experience in these matters who can advise and guide you through that maze is essential and can be the difference between business success or failure.