Intellectual Property Protection – A Key to Growth

Globally, the United States is considered one of the healthiest open markets. This open market system allows entrepreneurs, small businesses, and large corporations to bring a vast variety of products and services into the American market. The spoils of success are returned to the share and stake holders of the business because the United States economy is not socialistic in nature. This economic atmosphere fosters an environment where innovation is encouraged and technology progresses daily. However, an issue that many of these businesses face as technology becomes more readily accessible to the average consumer is the protection of intellectual property. The intent of this article is to educate the reader of the importance of intellectual property and reveal the most common forms of protection.

Intellectual Property Issues

Rapid movements towards globalization have slowly transitioned from a domestic problem to an international problem as well. This is important considering “studies in the past decade have estimated that over 50 percent of U.S. exports now depend on some form of intellectual property protection, compared to less than 10 percent 50 years ago” (“Intellectual Property”, 2012, para. 6). These statistics reveal the fact that foreign customers want to learn the technology behind the product regardless of the ethical boundaries in doing so. It also indicates that these economies want to evolve from being an exporter to a competing producer adversely affecting market share of the host company. This action of infringing on other businesses intellectual property rights will often occur without being noticed until the information has already been compromised. The results from this can be detrimental once the safeguarded trade secrets are exposed.

Duffin and Watson (2009) indicated that, “Intellectual property may well be a franchise system’s most important asset” (p. 133). This may include “trademarks, service marks, trade dress, copyrights, patents, and trade secrets” (Duffin & Watson, 2009, p. 1). Dependant on the business function the intellectual property may be the sole means for survival within the market place. When considering expansion many businesses may not move critical portions of the operation into foreign economies. Some firms are so cautious that “some of these elements may have been deliberately withheld from the firm’s patents, in the United States and in the foreign country, in order to prevent other parties from being able to copy its technology” (Branstetter, Fisman, & Foley, 2006, p. 323). The purpose behind this approach is that once a business applies for a patent the business must disclose all the details. This patent then becomes a public record. David Leonhardt (2011) from the New York Times reveals to their readers, regarding such nations as China, that “the exchange rate is not the main problem for American companies hoping to sell more products” but the lack of protection to foreign investors (para. 3).

Newton (2008) stated, “The U.S. Constitution speaks of protecting the writings and discoveries of authors and inventors, and thus the importance of protecting intellectual property is fundamental to the American legal system” (p. 1). The United States has developed various means for entrepreneurs and businesses to protect what they consider as intellectual property. When property rights for businesses are strengthened it will in return “induce more innovation in the global economy, thereby fostering more rapid economic growth” (Branstetter et al., 2006, p. 321). As mentioned, many businesses will invest enormous amounts of resources or delay expansion in an effort to develop strategic plans that will ensure that their trade secrets are safeguarded.

Intellectual Property Protection

The first step for a business is to determine if any facet of the business qualifies to be considered intellectual property. For trade and service marks the “most basic vehicle” for protection is registration. (Duffin & Watson, 2009, p. 133). To register for this protection businesses apply to the U.S. Patent and Trademark Office. Duffin and Watson (2009) also alert readers to the fact that this action is the “prima facie evidence of a mark’s validity” (p. 133). However, a business that is considering international operations will also have to file “nationally through each local agent in each jurisdiction; filing an application for an International Registration under the Madrid Protocol” (Duffin & Watson, 2009, p. 134). Next, a company may determine that their company possesses material that qualifies for copyright protection such as “literature, music, drama, graphic design, sound recordings, and architecture” (Duffin & Watson, 2009, p. 135). This property right provides a great length of control for the author by providing exclusive rights “of reproduction, distribution, derivative works, right to create derivative works based on the… original work, public performance, and public display” (Duffin & Watson, 2009, p. 135). Copyrights can be applied for through the Copyright office in the Library of Congress. The final most common form of intellectual property protection comes through patents. However, many companies will prefer to retain trade secrets rather than disclose information that is required to apply for this protection. Generally, patents have life spans of fourteen to twenty years. Duffin and Watson (2009) explained that “there are three basic types of patents; plant, design, and utility” (p. 139). After a review of the application by the U.S. Patent and Trademark Office a business can be granted patent rights to their intellectual property.