Understanding Intellectual Property Rights

Intellectual property rights provide parties with legal protection over intangible ideas with commercial or artistic value. A party that holds IP rights can exclude others from using their intellectual property unless they license the right to use that IP from the rightsholder.

Types of Intellectual Property

State and federal law protects various kinds of intellectual property. The type of intellectual property protection you may need for an asset will depend on its nature and the specific legal protection you need. The most common forms of intellectual property rights include:

Patents

A patent gives a party the right to exclude others from making, selling, or using a product or process. A party may obtain a patent from the U.S. Patent and Trademark Office after demonstrating they have developed a new, practical, and innovative invention, such as a device, substance, method, or process. Patents last for a specific period, after which others may begin making, using, or selling the patented product, method, or process. However, in exchange for disclosing how to make or use the product, method, or process, the patent holder gains exclusive commercial rights over the product or possess, such as the right to prevent others from commercializing it or the ability to license to others the right to make, sell, or use the product/process.

The Patent Office issues three types of patents:

  • Utility patents: A utility patent protects the process of making or using a product, method, or process. To qualify for a utility patent, an inventor must demonstrate that they have created a new and useful process, product, or composition of matter or have improved an existing product, process, or composition of matter. Utility patents cannot cover abstract ideas or natural phenomena. 
  • Design patents: A design patent covers a product’s appearance, such as its shape, configuration, color, or ornamentation. Unlike utility patents, design patents do not protect a product’s functional features. 
  • Plant patents: A person who invents and asexually reproduces a new and distinct plant variety may obtain a patent protecting their right to commercialize that plant. Asexual reproduction means that the inventor has reproduced the plant by means other than from seeks, including rooting of cuttings, layering, budding, or grafting. 

Copyrights

A copyright grants an author of a creative work the right to preclude others from reproducing, selling, or performing the work without the author’s authorization. Copyrights protect creative works like books/novels, plays, poems, paintings, sculptures, songs/lyrics, architecture, and computer software. An author automatically gains copyright over a work if the work contains some modicum of creativity and the author has fixed the work in a tangible medium (including in electronic format) – the work cannot exist solely in the author’s mind. However, authors can file for additional legal protection by registering their copyright with the U.S. Copyright Office. Copyrights last for the author’s lifetime plus an additional term of years thereafter. 

Trademarks

A trademark protects a word, phrase, symbol, or design (or some combination thereof) used to identify the source of goods or services. For example, a brand name or a logo serves as a trademark to help consumers identify that a product or service has come from a specific company. Parties can develop trademark rights by using a mark in commerce. However, trademark holders can gain additional legal rights and protection by registering their mark with the U.S. Patent and Trademark Office or their state’s trademark office. Registering a trademark puts other parties on notice of the trademark holder’s rights. 

Trade Secrets

A trade secret can include any confidential business information that derives its value from its confidentiality. Trade secrets typically give businesses some degree of competitive advantage over others. Common examples of trade secrets include product formulas/recipes, preliminary product designs, customer lists, marketing strategies, and pricing information. 

A party can gain and maintain trade secret protection under state and federal law by undertaking reasonable efforts to keep the information secret, such as using physical or electronic safeguards to prevent unauthorized access and requiring parties with access to the information to sign confidentiality agreements. 

Importance of Protecting Your IP Assets

Although parties may automatically gain some IP rights by creating or using the intellectual property, failing to formally register intellectual property may result in the loss of critical legal rights and protections, such as the ability to more easily exclude others from using or selling the IP and the right to seek statutory damages from parties who do infringe upon IP rights. 

Recognizing Intellectual Property Infringement

Once a party gains intellectual property rights, it can pursue infringement claims against other parties who use those IP rights without the rightsholder’s authorization. However, IP holders should understand when IP infringement occurs to swiftly recognize cases and take prompt action. Letting IP infringement go unchallenged can have significant legal consequences, including, potentially, the diminution or loss of IP rights. 

What Constitutes Infringement for Each IP Type?

Various types of activity may infringe on the different kinds of IP protection:

  • Patents: Patent infringement occurs when a party makes, sells, or uses a patented product, composition, method, process, or design or causes others to use a patented product, composition, method, or process.
  • Copyrights: A party infringes on a copyright when they reproduce, sell, or perform a copyrighted work without the copyright holder’s permission. 
  • Trademarks: Trademark infringement occurs when a party uses an identical or similar mark in commerce that could confuse consumers regarding the source of goods or services. 
  • Trade secrets: Trade secret infringement/misappropriation may occur when a party copies, uses, or distributes a trade secret without the rightsholder’s authorization. 

Common Examples of IP Infringement

Common examples of actions that may constitute intellectual property infringement include:

  • Downloading music, movies, or software without paying for it
  • Using a company’s brand name or logo to sell products
  • Selling counterfeit or “grey market” products
  • Making a patented product without the patentholder’s authorization
  • Making a product or process that uses a patented invention and selling it to others to use
  • Making a product that mimics the design of a patented product
  • Accessing and copying protected trade secrets without authorization
patented AI Image

When to Pursue IP Litigation

When another party infringes upon your intellectual property rights, you may need to pursue litigation to seek legal relief from that party, such as an injunction that prohibits further infringement and compensation for financial losses caused by the infringement. However, IP holders can pursue other avenues to resolve disputes over suspected infringement. 

Situations Where Litigation Is Necessary

Filing litigation may become necessary following intellectual property infringement when the infringing party refuses to cease their infringing activities or rejects the IP holder’s claim to legal rights (such as by contesting the validity of the intellectual property). Litigation may also become necessary when negotiations or mediation fails to reach a mutually agreeable settlement. 

Licensing and Settlement Considerations

Because IP litigation has various risks, such as the risk of losing an infringement lawsuit or having patent, trademark, or trade secret rights invalidated by the PTO or court, IP holders may consider alternatives to litigation to resolve alleged infringement. First, an IP holder may offer to license the intellectual property to the party using the IP, thereby resolving the infringement. An IP holder may also seek to negotiate a settlement of an infringement claim to avoid going to court to resolve the issue. A settlement may include a licensing deal and compensation for financial losses caused by the infringement. 

Strategic Benefits of IP Litigation

When IP litigation succeeds in resolving an infringement claim, it can have various strategic benefits for IP holders, such as:

  • Stopping infringing behavior, which can cost an IP holder lost sales/profits and goodwill
  • Strengthening the IP by confirming its validity as a court has enforced the IP rights
  • Deterring other parties from engaging in infringing behavior, as the IP holder’s rights may gain notoriety through litigation, and litigation demonstrates the rightsholder’s willingness to protect their interests. 

The IP Litigation Process Explained

Understanding what to expect in IP litigation can help a rightsholder pursue a favorable resolution to an infringement dispute. 

Key Phases in IP Litigation

The main phases of an IP litigation case include:

  • Investigation
  • Demand
  • Filing the lawsuit and the defendant’s responsive pleadings
  • Discovery
  • Pre-trial proceedings, including evidentiary motions or motions for summary judgment
  • Trial
  • Post-trial proceedings and appeals

Expected Costs and Timelines

Unfortunately, IP litigation can quickly become costly and time-consuming, depending on the complexity of the issues involved in the case and how hard the parties fight. Parties must retain IP litigation attorneys. In addition, many IP cases involve expert witness testimony, such as testimony during claim construction in a patent case or financial experts to calculate an IP holder’s losses. IP litigation can also take months or years to resolve. 

Building and Managing an Effective Case

Succeeding in IP litigation requires thorough planning and strategy development. 

Pre-Litigation Assessment and IP Audits

First, parties may undertake a pre-litigation assessment or audit to determine the strength and validity of the asserted IP rights. Parties may adjust their litigation strategy based on the potential for a court to invalidate IP or the strength of the evidence proving or disproving the infringing nature of the other party’s conduct. 

Gathering Evidence and Engaging Experts

An effective case in IP litigation requires compelling evidence to prove infringement and the extent of the IP holder’s financial losses. In many cases, parties may require expert testimony to inform the court or jury on technical matters, such as claim construction for a patent or calculating an IP holder’s losses from infringement. 

Hand stacking blocks labeled intellectual property

Exploring Settlement Options and Alternatives

In many cases, IP litigation ends in a settlement rather than a court judgment. Parties in an IP dispute may explore settlement and alternatives to litigation, which can offer various advantages. 

Negotiation Tactics and Creative Settlements

Negotiating a settlement in an IP case may require creative settlement strategies due to the complex legal issues that can arise in a case. For example, IP settlements frequently involve licensing deals instead of compensating the IP holder for losses caused by alleged infringement. Licensing deals may provide a better alternative in cases where an infringing party used a patent to create a new invention, allowing the infringing party to commercialize their invention by paying licensing fees to the original patent holder. 

Mediation and Arbitration Options

Many parties agree to resolve an IP dispute through alternative dispute resolution mechanisms like mediation or arbitration. Mediation involves a formal negotiation facilitated by a neutral third party called a mediator, who can help parties evaluate the strengths and weaknesses of their cases and suggest settlement solutions. Arbitration involves a trial-like process where parties submit their dispute to one or more neutral parties called arbitrators for resolution. 

Benefits of Settling vs. Proceeding to Trial

Negotiating a settlement may prove more advantageous for parties in an IP infringement case than letting the case proceed to trial. Some of the benefits of a settlement include:

  • Control over the outcome: A settlement allows the parties to determine the resolution of their legal dispute, whereas going to trial risks a potentially unexpected outcome in a jury verdict. 
  • Confidentiality: With a settlement, parties can keep the resolution of their dispute confidential, unlike a court judgment that becomes part of the public record. 
  • Quicker, less expensive resolution: Settlement allows parties to resolve an infringement dispute more quickly while avoiding the higher legal costs of taking a case to trial.  

Post-Litigation Strategies to Strengthen IP Protection

After IP litigation ends, an IP holder can pursue further activities to bolster the strength of their IP rights. The following are some essential post-litigation strategies to follow after a case ends.

Conducting Post-Mortem Analysis of the Case

First, IP holders can analyze the litigation to understand the specific strengths and weaknesses of their IP rights as determined by the court. For example, patent litigation may involve claim construction that helps define the patent’s scope, allowing patent holders to understand better what future conduct may constitute infringement. IP holders can also address the court’s criticisms of how they have previously managed or enforced their IP rights

Monitoring Competitors and the Market for Future Infringements

Post-litigation strategies should also include continuing to monitor the market for future acts of infringement. A better understanding of the scope of one’s IP rights can help rightsholders identify infringing behavior more easily. 

Strengthening IP Portfolio Through Additional Protections

Finally, IP holders may pursue various avenues to strengthen the legal protections of their IP portfolio, such as obtaining additional registrations to make it easier for parties to find the holder’s IP rights. IP holders can also create processes for facilitating licensing deals to allow parties to use the holder’s IP rights in an authorized manner.