Part I: Are Your Business’s Intellectual Property Rights Protected?
January 31, 2022
At a glance
- The main takeaway: Business owners need to be more vigilant about protecting their intellectual property (IP) in today’s digitally driven world, in which infringement can be harder to detect.
- Impact on your business: In part one of our two-part series on IP infringement, we provide a baseline introduction to some of the most common IP claims.
- Next steps: Contact Aprio’s Litigation Support and Forensic Accounting team and your legal counsel for help with understanding your IP classification, which is critical to identifying and remedying violations.
The full story:
What exactly constitutes a violation of personal property?
“Traditional” property violations are relatively easy to understand. Some examples of the violations we typically hear about include yard trespassing, the desecration of a personal item or a home invasion.
Intellectual property (IP), on the other hand, can be harder to parse out. The World Intellectual Property Organization defines IP as “creations of the mind,” including inventions, artistic and literary works, and designs. IP may also include images, names and symbols used in media or commerce.
Over the course of a two-part series, we’ll be introducing the most common IP claims and how to calculate damages if you have been a victim of IP infringement. Keep reading the rest of part one to see what IP category applies to your business — and most importantly, keep in mind that it’s critical to enlist the help of qualified legal counsel to understand the complexities of specific types of IP.
Understanding the Lanham Act
Before we dive into the most common types of IP, it’s important to have a baseline understanding of the Lanham Act (also known as the Trademark Act of 1946). Essentially, the Lanham Act is the federal law that governs infringements on trademarks or service marks, as well as illegal business practices and unfair business competition related to IP.
The law regulates the registration and use of trademarks throughout the United States. With its national registration system, the Act safeguards trademarks and aims to protect trademark owners against other businesses that use similar marks, which would result in customer confusion over a particular brand, product or service, as well as disintegration of the credibility or integrity behind trademarks.
Remember that it’s important to consult with your legal team when it comes to interpreting the Act in the context of your own IP case.
Copyright infringement is one of the most prevalent issues in the IP sphere. Section 102 of the Copyright Act of 1976 lists eight protected copyright categories:
- Literary works
- Musical works, including any accompanying words
- Dramatic works, including any accompanying music
- Pantomimes and choreographic works
- Pictorial, graphic and sculptural works
- Motion pictures and other audiovisual works
- Sound recordings
- Architectural works
Rights under copyright endure for a limited period of time. For works created after December 31, 1977, a copyright will continue for 70 years after the death of the work’s only or last surviving author. For anonymous works, pseudonymous works or works made for hire, a copyright lasts for 95 years after the work’s first publication, or 120 years from its original creation — whichever comes first. When a copyright expires, the public can exploit the formerly protected property freely.
A trademark is any word, name, symbol, device or any combination thereof that a business uses to distinguish its goods or services from those of others.
Whereas patent and copyright law aims to encourage innovation, trademark law aims to avoid deception and customers’ confusion; it also aims to protect an organization’s investment in reputation and goodwill.
Trademarks must have distinctive characteristics — the more distinctive the word, the more likely the trademark protection. To decide which marks, symbols and names qualify for protection, the law uses a distinctiveness scale with four categories, ranging from least to most distinctive: Generic, Descriptive, Suggestive, and Arbitrary or Fanciful.
In terms of the time frame, a trademark will last as long as the company holding the mark continues to use it. Should the trademark owner cease using the trademark, it will lapse. The licensee must renew a registered trademark every 10 years, with no limit on the number of renewals. Although you can register a mark with the U.S. Patent and Trademark Office and with other state regulatory bodies, you don’t need to do so unless you want to receive the advantage of “a nationwide right of priority, even in areas where the work has not been used.” If an owner registers a trademark and an infringer violates those rights, the owner can recover damages through the Trademark Act.
Although various common law provisions and state statutes address trademarks, the Lanham Act has become the primary source of law for trademark infringement. Section 43(a) of the act prohibits unfair competition, and trademark infringement represents a type of unfair competition.
Whereas a trademark can refer to a symbol, name, word or device, trade dress refers to the look and feel of a product in the commercial marketplace. Trade dress includes the components that a company may use to package a product or service, which is why it is often thought of as product design. An example of this is Coca-Cola’s classic, curved bottle design.
Although trade dress can be safeguarded through common law, the Lanham Act also protects it and enables it to be registered with the U.S. Patent and Trademark Office. A company can only claim trade dress infringement by proving that its product design is “inherently distinctive, or has acquired secondary meaning, and that junior use is likely to cause consumer confusion.” For instance, Coca-Cola could protect the trade dress of its bottle design by showing that a customer would be confused by the origin of another product if it came packaged in a design that was identical to the famous bottle.
The bottom line
In today’s digitally driven world — in which technology, the internet and modes of communication have become more vast — IP infringement is becoming harder to detect. It’s important to first consult with legal counsel, as well as a professional firm like Aprio that can help identify strategies for recovering damages.
 “Definition: Trade Dress,” Justia, updated October 2021, https://www.justia.com/intellectual-property/trademarks/trade-dress/, accessed January 2022.
About the Author
Haley Beatty is a forensic accounting, financial crime reporting expert. Her specialties include Anti-Money Laundering (AML), Know Your Client (KYC) investigation and regulatory compliance. She has advised some of the largest financial institutions in the world and led teams of 500 investigators. Haley works closely with clients to establish and advance AML compliance, monitoring and reporting programs that exceed regulatory requirements. She has experience advising a broad spectrum of financial industry clients from FinTech companies to MSBs and transaction processors.