Chapter 3 part 2

Intellectual Property for Entrepreneurs

08/22/23 1
by Derebe A.
 The Importance of Intellectual Property

Intellectual Property
◦ Is any product of human intellect that is intangible but has
value in the marketplace.
◦ It is called “intellectual” property because it is the product
of human imagination, creativity, and innovativeness.
Importance
◦ Traditionally, businesses have thought of their physical
assets, such as land, buildings, and equipment as the most
important.
◦ Increasingly, however, a company’s intellectual assets are
the most important.

08/22/23 by Derebe A. 2
 Determining What “Intellectual
Property” to Protect

Criteria 1 Criteria 2

Determine whether the Decide whether the

intellectual property in intellectual property in
question is directly question has value in the
related to the firm’s marketplace
competitive advantage

08/22/23 by Derebe A. 3
 Common Mistakes Firms Make in Regard to
Protecting Their Intellectual Property

Not properly identifying Not fully recognizing

all of their the value of their
intellectual property intellectual property

Not using their

Not legally protecting
intellectual property as
the intellectual property
part of their overall
that needs protecting
plan for success

08/22/23 by Derebe A. 4
 The Four Key Forms of
Intellectual Property

Patents Trademarks

Copyrights Trade Secrets

08/22/23 by Derebe A. 5
 Patents

• Patents
– A patent is a grant from the federal government conferring
the rights to exclude others from making, selling, or using
an invention for the term of the patent.

– A patent is only allow you to exclude others from

practicing it but it does not provide freedom to operate to
the patent owner unless he provides a license.

08/22/23 by Derebe A. 6
 Categories of patentable subject
mater
1. Process: a method or series of steps for
producing a product
2. Original design of Machine& product: an
operable apparatus comprising a combination
of elements
3. Improvements on machine &products
4. Composition of matter: a compound or
mixture of ingredients
5. Article of manufacture: an object, a
manufactured object

08/22/23 by Derebe A. 7
 Types of patents
1. Utility patent: covers a new process or
protects the functions of a product.

1. Design patent: covers the appearance of a

product and everything that is inseparable
part of the product.

08/22/23 by Derebe A. 8
 Utility patent

08/22/23 by Derebe A. 9
 Design patent

08/22/23 by Derebe A. 10
 Three Basic Requirements for
Obtaining a Patent

08/22/23 by Derebe A. 11
 The Process of Obtaining a Patent

08/22/23 by Derebe A. 12
 Patent Infringement

• Patent Infringement
– Takes place when one party engages in the unauthorized
use of another party’s patent.
– The tough part (particularly from a small entrepreneurial
firm’s point of view) is that patent infringement cases are
costly to litigate.
• A typical patent infringement case costs each side at least $500,000
to litigate.

08/22/23 by Derebe A. 13
 Trademarks

• Trademark
– A trademark is any word, name, phrase, symbol, device, or
a combination there of used to identify and distinguish
those products or services of a company from
others(primary purpose of trademark) and identify the
source or origin of products or services
– Trademark: a brand or part of a brand that has been given
legal protection so that the owner has exclusive rights to its
use. After companies identify their trademark, they entail a
term “™” or “®”
 Trade Name: Trade name is the name of the business
organization. E.g Wikimedia Foundation, Inc.

08/22/23 by Derebe A. 14
 Illustration of the Multifaceted Nature of
Trademark Protection

Name is trademarked

Symbol is trademarked

Slogan is trademarked

08/22/23 by Derebe A. 15
08/22/23 by Derebe A. 16
 Types of marks

Type of mark Types of Marks Covered

Any word, name, symbol, or

Trademark device used to identify and
distinguish one company’s goods
from another.
Examples: Dell, Nokia, Oracle,
3M, Palapa Azul, Flavorx

Similar to trademarks; are used

Service mark to identify the services or
intangible activities of a business,
rather than a business’s physical
products.
Examples: Amazon.com, Orbitz,
eBay, Overstock.com, Pandora

08/22/23 by Derebe A. 17
 Types of Trademarks

Type of Trademark Types of Marks Covered

Trademarks or service marks used

Collective mark by the members of a cooperative,
association, or other collective
group.
Examples: Rotary International,
International Franchise Association

Marks, words, names, symbols,

or devices used by a person other
than its owner to certify a
Certification mark
particular quality about a good
or service.
Examples: Florida Oranges, ISO
9000, Underwriters Laboratories

08/22/23 by Derebe A. 18
 What is Protected Under Trademark Law?

Words Fragrances

Numbers and letters Shapes

Designs or logos Colors

Sounds

08/22/23 by Derebe A. 19
 The Process of Obtaining a Trademark

08/22/23 by Derebe A. 20
Copyrights (duration for creator’s life +50 years)

• Copyrights
– A copyright is a form of intellectual property protection
that grants to the creator or owner of a work of
authorship(author, composer, designer, or artist) the legal
right to determine how the work is used and to obtain the
economic benefits from the work.
– In other words it establishes a person’s right to an original
work of authorship.

08/22/23 by Derebe A. 21
 Copyright…
– It exclude others from the following acts on original work:
• Reproducing/duplicating it
• Modifying it ( creating a derivative work)
• Publishing
• Distributing it to the public
• selling
• Publicly performing the work
• Publicly displaying the work
– It gives the right to use images or sounds in its
advertisements

08/22/23 by Derebe A. 22
08/22/23 by Derebe A. 23
 What is Protected By a Copyright?

Musical compositions &

Literary works
Video

Computer software Dramatic works

Pantomimes and Pictorial, graphic, and

choreographic works sculptural works

08/22/23 by Derebe A. 24
 Obtaining a Copyright

• How to Obtain a Copyright

– Copyright law protects any work of authorship the moment
it assumes a tangible form. The following steps can be
taken, however, to enhance copyright protection.
 Copyright protection can be enhanced by attaching the copyright notice,
the notice consists of 3 elements:
– Copyright symbol
– The year the work was published
– The copyright owner’s name

Further protection can be obtained by registering

the work with the Copyright Office.
08/22/23 by Derebe A. 25
 Copyright Infringement

• Copyright Infringement
– Copyright infringement occurs when one work derives
from another or is an exact copy or shows substantial
similarity to the original work.
– To prove infringement, a copyright owner is required to
show that the alleged infringer had prior access to the
copyrighted work and that the work is substantially similar
to the owner’s.
– Copyright infringement costs the owners of copywritten
material an estimated $20 billion per year.

08/22/23 by Derebe A. 26
 Trade Secrets

• Trade Secrets
– A trade secret is any formula, pattern, physical device,
idea, process, or other information that is not generally
known to the public which provides the owner of the
information with a competitive advantage in the
marketplace.
– The owner has a responsibility to keep the secret
confidentially.
– Trade secrets include marketing plans, product formulas,
financial forecasts, employee rosters, logs of sales calls,
and similar types of proprietary information.

08/22/23 by Derebe A. 27
What Qualifies For Trade Secret Protection?

• Trade Secret Protection

– Not all information qualifies for trade secret protection.
• In general, information that is known to the public or that
competitors can discover through legal means doesn’t qualify for
trade secret protection.
– The strongest case for trade secret protection is information
that is characterized by the following:
• Is not known outside the company.
• Is known inside the company on a “need-to-know” basis only.
• Is safeguarded by stringent efforts to keep the information secret.
• Is valuable and provides the company a competitive edge.
• Was developed at great cost, time, and effort.

08/22/23 by Derebe A. 28
 Trade Secret Protection Methods

• Physical Measures For Protecting Trade Secrets

– Restricting access to confidential material.
– Labeling documents “proprietary,” “restrictive,” or
“secret.”
– Password protecting confidential computer files.
– Maintaining log books for visitors.
– Maintaining log books for access to sensitive material.
– Maintaining adequate overall security measures.

08/22/23 by Derebe A. 29
 Conducting an Intellectual Property Audit

• Intellectual Property Audit

– The first step a firm should take to protect its intellectual
property is to complete an intellectual property audit.
– An intellectual property audit is conducted to determine the
intellectual property a firm owns.
– There are two reasons for conducting an intellectual
property audit:
• First, it is prudent for a company to periodically determine whether
its intellectual property is being properly protected.
• Second, it is important for a firm to remain prepared to justify its
valuation in the event of a merger or acquisition.

08/22/23 by Derebe A. 30
 Conducting an Intellectual Property Audit

• The Process of Conducting an Intellectual Property

Audit
– The first step is to develop an inventory of a firm’s existing
intellectual property. The inventory should include the
firm’s present registrations of patents, trademarks, and
copyrights.
– The second step is to identify works in progress to ensure
that they are being documented and protected in a
systematic, orderly manner.

08/22/23 by Derebe A. 31
 Thank you !!

08/22/23 by Derebe A. 32