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AVOIDING PATENT, TRADEMARK AND COPYRIGHT PROBLEMS
INTRODUCTION
Patents, copyrights and trademarks, as well as know-how or trade
secrets, are often collectively referred to as intellectual
property. Many firms have such property without even being aware
of it or of the need to take measures to protect it.
Many people's notions of intellectual property are unrealistic.
Some believe, for example, that having a patent on a product will
enable one to succeed in the marketplace. Consequently, they may
spend thousands of dollars to obtain the exclusive rights to
market something that no one wants or can afford to buy. Others
may conclude that intellectual property protection is not worth
the expense and bother.
People who may not be interested in protecting their own rights
still must take precautions to avoid infringing on the rights of
others. This calls for more than the avoidance of copying.
Copying is unavoidable; it is a way of life and one way in which
we learn. But, one can easily infringe on the rights of others
without deliberately imitating specific features of goods or
services.
This publication addresses the steps newcomers to a market should
take to avoid infringement and when they should take them.
PATENTS
Most people have heard variations on a remark attributed to Ralph
Waldo Emerson: If a man can make a better mousetrap than his
neighbor, though he builds his house in the woods the world will
beat a path to his door. To keep the discussion concrete, let's
imagine a present day inventor of a new mousetrap who not only
invents a better mousetrap but is also successful in marketing
it. The higher the inventor's profit margin, the more others will
want to copy his invention. Let's assume that the inventor
selects Figaro as the brand name and actively promotes the
product. However, he does not legally protect his invention, but
relies on the consumers' loyalty, goodwill and brand
identification to ensure future sales.
Taking measures to develop loyalty and goodwill may be sufficient
until a larger and better known competitor turns up. For example,
what if economies of scale and lack of development costs mean
that the competitor can sell the same mousetrap for 20 percent
less? Goodwill may not be enough to ensure customer loyalty at a
higher price. A patent would be much more helpful, because it
would prevent the competitor from selling the new trap until well
after the original firm had a chance to get on its feet. This
situation illustrates that it is the smaller firm that often has
the most to gain from protecting intellectual property.
As bad as the situation is without patent protection, it could be
worse. Let's assume that customers are so taken by the Figaro
promotion that they are willing to pay the 25 percent premium the
firm charges in order to stay in business. Imagine what would
happen if the company had to stop using that name or had to face
an expensive lawsuit. Imagine what would happen if it turns out
that someone else actually has a current patent on one or more
features of the better mousetrap. By failing to consider the
intellectual property of others, the new firm would not only be
forced to stop selling under the name Figaro, but might be forced
to stop selling the mousetrap altogether.
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