Focus IP/Science & Technology Law

BY ROBERT JOHNSTON AND JANÉE REEDER

At times, non-intellectual-property attorneys stumble into IP traps. This article presents some of the most likely traps for the unwary.

Trap #1: Entity Name Clearance by the Secretary of State ≠ Trademark Clearance

A common trap is when attorneys check the availability of an entity name with the Texas Secretary of State (SoS) and then believe or allow their client to believe that it is the same as doing a trademark clearance. It is not.

Under the Texas Business Organizations Code, the name of a filing entity or a registered series of a Texas LLC or the name under which a foreign filing entity registers to transact business in this state must be distinguishable in the records of the SoS from others. This includes any existing name reservation or name registration filed with the SoS. Two names are distinguishable if a comparison of the names reveals sufficient differences. The relevant portion of the Texas Administrative Code gives an example of how “Sunshine Community Development” is distinguishable from “Sunshine Community Properties”. That is not the same as clearing based on the trademark standard of likelihood of confusion. With that example, one may see the trap. The SoS might have no issue with a name, but the owner of the valuable trademark will analyze the issue under a different standard. Depending on the circumstances, a trademark clearance search should be considered. For now, just know that clearing a name with the SoS is not the same as a trademark clearance.

Trap #2: Copyright Ownership by Contractors

Under U.S. copyright law, the author owns the copyright by default. In general terms, if it is part of the author’s job responsibilities or the conditions for a work for hire are satisfied, then the company will own it. A common issue arises when a company has a freelancer do something that does not qualify for either of those. Then, the company owns the delivered product that embodies the copyright, but not the copyright itself.

As a quick example of how this trap can come up, consider a client who hires a freelancer to develop a website for the company. All is good until the client sees another website by the freelancer that looks like what was delivered to the client, and the client raises an issue with the freelancer. The freelancer responds by saying, “You own what I delivered, but I own the copyright and can use the design with other projects.” That can be avoided with a written copyright assignment included in the project contract.

Trap #3: Moving Too Quickly

For clients who come up with an invention, you may know that you need to advise the client to get a patent attorney in due time, but the timing can be crucial. If a client starts showing the invention to consultants or potential investors without a confidentiality agreement or starts selling product or engaging in other commercial activities, the client may immediately compromise their patent rights in the United States or with respect to other countries in which the client might want protection. Do not let them move so quickly without getting a patent application filed.

At the same time, one has to be concerned now about moving too slowly to file a patent even if the invention has not been disclosed. After the law changed about 10 years ago, the first to file—by a true inventor—wins at the Patent Office. Clients need to move with deliberate speed to file and that can be tricky in the start-up phase for some.

Trap #4: Post-ProvisionalPatent-Filing Issues

Sometimes a start-up will file its own provisional patent application and the business attorney or generalist will say, “Okay we have that covered.” Yet, there are at least three issues to keep in mind. First, a non-provisional patent application must be filed within one year of the provisional patent application to take advantage of the provisional filing date. Second, any foreign applications must be filed within that same year or at least a Patent Cooperation Treaty (PCT) application. The PCT basically gives the client an option for about 30 months from the original filing to pursue national patents in member countries. These deadlines are hard. Finally, the word “provisional” is a trap itself. Many inventors think “provisional” means that “half-baked” is okay. While it is true that the provisional patent application can be informal and does not need all the aspects of a regular utility patent application, the application still must fully disclose the invention. Moreover, it needs to set things up for the non-provisional application that is to be filed later. Many inventors and their initial attorneys have fallen into some of these traps or caused great distress for the patent attorney who is eventually hired.

Trap #5: Unlicensed Images on Website

There are entire law firms that exist solely to seek settlements for copyright infringement on websites and social media. In most instances, the law firm itself or a related company will use an internet bot with a sophisticated algorithm to look for exact copies of stock photographs used on websites without rights. Attorneys need to know that just because a photograph is on the web somewhere does not mean the photograph is in the public domain. Selfstarter entrepreneurs and marketing personnel often do not know. It’s a trap. HN

Robert Johnston is a Partner at Johnston IP Law, PLLC. He can be reached at rjohnston@johnstonip.com. Janée Reeder is also with the firm and can be reached at janee@janeereeder.com.