Intellectual Property: Overview and Key Issues for Tax-Exempt Organizations

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INTRODUCTION

“Intellectual property” refers to a category of intangible property that derives from the work of the mind or intellect, such as an idea, process, creative work, symbol or name used in commerce. Even though intellectual property is intangible, it can still be owned like tangible property such as homes, cars and consumer goods. Non-profit organizations produce and own intellectual property in many forms, including organization names and logos, inventions, instructional materials, websites and brochures. Understanding the various categories of intellectual property is important for any non-profit organization to both (1) protect and benefit from its intellectual property, and (2) ensure that it is not infringing on the intellectual property rights of others. The first step in protecting a non-profit organization’s intellectual property and avoiding infringing on other’s intellectual property is to identify the intellectual property owned by the organization and understand what protections are available. This article provides an overview of three different categories of intellectual property — copyright, trademark and patent — and the various ways that laws in the United States protect each category of intellectual property for varying lengths of time.

COPYRIGHT

COPYRIGHT OVERVIEW

Copyright protects original works of authorship fixed in a tangible form of expression from unauthorized copying and distribution. Original works of authorship include the particular manner of an author’s expression in literary, dramatic, musical and artistic works, as well as poetry, novels, movies, songs, computer software and architectural drawings. The work itself must be captured in a sufficiently permanent medium so that it can be perceived, reproduced or communicated for more than a short time. For example, a presenter giving offhand remarks at a conference would not have copyright protection for those remarks until they are recorded in a sufficiently permanent medium such as an audio recording or a written document.

Although copyright protects the particular expression of an original work, it does not protect the idea or principle behind an original work. For example, although copyright may protect the particular string of words and sentences used in a handbook or blog post providing guidance on how a non-profit organization can integrate diversity, equity and inclusion into its mission, it would not prevent others from writing handbooks or blog posts about diversity, equity and inclusion efforts at non-profit organizations.[1]

Copyright protection in the United States exists automatically from the moment an original work of authorship is fixed in a sufficiently permanent medium, and the term of the copyright is the life of the author plus seventy years after the author’s death. Registration of the copyright is not necessary, although there are benefits to copyright registration as discussed below. As a general rule, the author or creator of the work automatically owns the copyright. A copyright owner can transfer rights, but the transfer must be in writing and signed by the owner of the rights.

Work made for hire (or “work for hire”) is an exception to the general rule that the author or creator of the work automatically owns the copyright in the work created. Work for hire falls into one of two categories: (1) work made by an employee as part of the employee’s regular duties for his or her employer, or (2) one of nine categories of work specially ordered or commissioned for use if the parties expressly agree in a written agreement that the work shall be “made for hire.”[2] The nine categories of “work for hire” are (1) a contribution to a collective work, (2) part of a motion picture or other audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, and (9) an atlas.[3] In situations where the “work for hire” doctrine applies, the organization that employs or engages the employee or contractor will be deemed the author and owner of the copyright in the underlying work from the moment of creation.

However, copyright works that are created by independent contractors (as opposed to employees), and that are not within the nine categories of “work for hire” listed above, will not be owned by the organization commissioning such work unless the contract between the independent contractor and organization specifically assigns to the organization ownership of the rights in the works created by the independent contractor. As a result, when non-profit organizations engage independent contractors to perform services and create work product that the organization expects to own, the contract must include appropriate language transferring ownership of any intellectual property created to the organization. It is best practice to include similar language in all employment agreements as well.

BENEFITS OF COPYRIGHT REGISTRATION

As noted above, copyright protection exists automatically from the moment an original work of authorship is fixed in a sufficiently permanent medium. However, copyright registration with the U.S. Copyright Office provides several benefits to the copyright owner in enforcing a copyright claim. For example, registration is necessary to file a copyright infringement suit, and it establishes prima facie evidence of the validity of the copyright when registration is made before or within five years of publication. When registration is made prior to infringement or within three months of publication, a copyright owner is generally eligible to recover statutory damages, attorneys’ fees and costs. This may be helpful because proving damages in a copyright infringement case can be difficult and having a statutory right to damages and recovery of attorneys’ fees can make a copyright infringement action more feasible.

Additional information about copyrights and copyright registration is available on the U.S. Copyright Office website. The U.S. Copyright Office also publishes up-to-date circulars providing additional background on fundamental concepts of copyright law and its application to various forms of copyright material, which can be found here.

TRADEMARK

TRADEMARK OVERVIEW

A trademark is a type of intellectual property which identifies and distinguishes the products or services of a particular source from the products or services of others. A trademark can be a word or group of words, name, symbol or other designation, or a combination of such designations. Trademark rights accrue upon use of the trademark in commerce even if the trademark is not registered, although (similar to copyrights) there are benefits to seeking trademark registration.

Trademark protection serves two primary purposes. First, trademark law protects consumers from confusion as to the source of goods or services. For example, donors and program beneficiaries associate the picture of a circle containing a sun-like rainbow growing out of a hand with services or programs associated with United Way. A person who sees the United Way logo on a website or handbook knows that the materials are associated with United Way without having to read anything further. Therefore, trademark law prevents other non-profit organizations from using the United Way logo on their materials without United Way’s permission as such use would misguide consumers as to the producer of those materials. Second, trademark law protects the owner of the mark and the value of their brand. Trademark law is based on the principle that one cannot “reap where they have not sown” and use confusingly similar marks to benefit from another’s goodwill.

There are some marks that can never be registered as trademarks because they must be available for anyone to use. These include trademarks that are generic, merely descriptive or functional. For example, marks such as “relieving poverty” or “beautifying the community” merely designate the type of services provided rather than providing the source of the services. As a result, such marks may be considered generic and generally cannot be registered because they do not tell consumers who provides the services but rather indicate the type of services provided.

To avoid a trademark infringement claim, it may also be helpful (and sometimes necessary) for an organization to ensure that use of the mark will not create a likelihood of confusion among consumers. For a mark to be likely to cause confusion, it does not have to be identical to the other mark, it just has to be similar in sight, sound, meaning or overall consumer impression. For example, if a competitor non-profit organization operated under the slogan “We Do The Most Good,” it may be considered confusingly similar to The Salvation Army’s “Doing The Most Good” slogan, even though it is visually and literally distinct.

It is also worth pointing out that different organizations can use similar or even identical trademarks if they are used in connection with different good or services. For example, an airline and a faucet manufacturer can both use the trademark “Delta” without risking consumer confusion.

BENEFITS OF TRADEMARK REGISTRATION

A trademark generally does not belong to the person who creates the mark, but rather to the person or organization who uses the mark in commerce. The first person or organization to use the mark in commerce in such a way that the public can identify the goods or services associated with the mark has priority and exclusive rights in the mark.

While trademark rights are acquired not by registering the mark but by using the mark, there are still many benefits to registration. Trademark protection can be secured at three different levels: state, federal, and international. Trademark protection is country-specific and area-specific so an organization may need to register a mark in many places in order to have full protection. State registration generally is not given much weight in infringement actions because it only grants exclusive rights within all or part of the state and does not protect use of the mark outside the state of registration.

The most common form of trademark registration is at the federal level with the U.S. Patent and Trademark Office. While an organization does not need federal registration to sue for trademark infringement, there are many benefits to registering at this level. First, registration provides proof that the registering party owns the mark and provides the registering party with a nationwide right to exclusive use of the mark. This is important because common law trademark rights adhere to the first user of the mark and only exist in the geographic region where such marks are used, meaning others could legally use the same mark in another geographic area. Registration with the U.S. Patent and Trademark Office also prevents confusion and costly litigation by protecting against the situation referenced above and giving the owner the right to use the mark nationwide even in geographic regions where the mark is not yet in use. Second, after the mark has been registered for five years, it becomes incontestable and the U.S. Patent and Trademark Office can generally only cancel the mark if it is found to be generic or abandoned. Third, registration provides for federal jurisdiction in federal trademark claims. Fourth, registration with the U.S. Patent and Trademark Office can be used to obtain registration in foreign countries. And finally, registration with the U.S. Patent and Trademark Office permits the registering party to use the ® symbol next to the mark to indicate the trademark is registered when the mark is used for goods and services listed in the registration. The presence of the ® symbol next to an organization’s trademark can act as a strong deterrent to would-be infringers.

In addition, it may be possible to register a trademark in other countries, using either the European Community trade mark scheme (for European countries) or the Madrid Protocol (for numerous other countries). Notably, the Madrid Protocol may allow an organization to file in the United States first and then have the mark sent to other countries where it can be registered.

Seeking federal trademark protection can confer many benefits for a non-profit organization without prohibitive cost. Additional information about trademarks and federal trademark registration can be found at the U.S. Patent and Trademark Office website.

PATENTS

PATENTS OVERVIEW

A U.S. patent is a privilege granted to an inventor to exclude others from making, using or selling an invention, or improvement to a process, for a set number of years (20 years after filing a patent application for the most common type of patent, under U.S. patent law). An invention must be new, useful and “not obvious” to be eligible for patent protection.

Similar to authors of creative works under copyright law, the inventor of an invention has the authority to file a patent application and own the resulting patent under U.S. patent law, as the default rule. Unlike copyright law, however, there is no “work for hire” doctrine.[4] As such, an organization will not own its employees’ inventions (nor any patents covering such inventions), even if invented within the scope of the employee’s duties for the organization, unless that employee has signed a written agreement (typically an employment agreement) containing appropriate language that transfers the employee’s rights in such inventions to the organization. Therefore, it is critical that organizations cause their employees to sign employment agreements that have been prepared or reviewed by a lawyer who is familiar with such matters.

BENEFITS OF PATENT REGISTRATION

Unlike copyrights or trademarks, a creator of an invention does not have patent rights under U.S. law unless the U.S. Patent and Trade Office issues a patent with respect to such invention. The U.S. Patent and Trademark Office requires a complete description of the actual machine or other subject matter for which a patent is issued, and this description will be made available to the public. A patent issued by the U.S. Patent and Trademark office is generally only effective in the United States, U.S. territories and U.S. possessions, although patent protection can be sought in countries outside the United States by filing an application with the appropriate patent office in the desired country. Registering a patent gives its owner a legal monopoly over the use and production of the patented product in return for a full disclosure of the product to the public. It is worth noting that, given the strict requirements for an invention to be eligible for patent protection, filing a patent application and navigating the patent prosecution process in order to receive an issued patent can be a lengthy and expensive endeavor.

Additional information about patents is available at the U.S. Patent and Trademark Office website.

CONCLUSION

Intellectual property can be a valuable asset for non-profit organizations, but the laws protecting intellectual property can also present many traps for the unwary. Understanding the different categories of intellectual property and how each category can be protected is the first step towards protecting the intellectual property owned by your non-profit organization and ensuring that your organization is not infringing on the intellectual property of others.


[1] Another example comes from the world of music: although copyright protects the lyrics, melody and recording of the Beatles’ song “All You Need Is Love,” it does not prevent others from writing songs about love.
[2] 17 U.S.C. § 101 (1976); see https://www.copyright.gov/circs/circ30.pdf.
[3] Id.
[4] Patent law does recognize a “hired to invent” doctrine, but it is significantly more limited than copyright’s “work for hire” doctrine.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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