Intellectual Property for New Jersey Small Businesses, Part 2: Trade Secrets and More

Chosen Group Light Bulbs Success Light BulbFor many businesses, intellectual property rights are their most important and valuable assets. Intellectual property refers to the legal right to use creative works, from a company name and logo to a new invention. The owner or holder of most types of legally protected intellectual property has the exclusive right to use the material in their business, or for any other purpose. This includes the right to license its use to other people or businesses, or to keep it for their own use.

Trade Secrets

Businesses often rely on information that has value primarily because of its confidentiality, also known as “trade secrets.” They might include client lists, internal business procedures, and business plans or strategies. Since their value depends on remaining confidential, businesses are not required to register them with a government office like a trademark, copyright, or patent. Instead, trade secret laws give businesses tools to prevent disclosure by employees and other insiders.

In order for information to qualify for trade secret protection under state law, it must meet three criteria: (1) it must “[d]erive[] independent economic value, actual or potential,” from being secret; (2) it must “not be[] readily ascertainable” by others who stand to benefit from it; and (3) it must be “the subject of [reasonable] efforts…to maintain its secrecy.” N.J. Rev. Stat. § 56:15-2. Individuals who misappropriate trade secrets may be liable to the business for damages. Theft of trade secrets may also be subject to federal criminal jurisdiction, under a law enacted last year. Pub. L. 114-153, 130 Stat. 376 (May. 11, 2016).

Industrial Design

In addition to patents for new inventions and processes, the U.S. Patent and Trademark Office (USPTO) can issue patents for “any new, original and ornamental design for an article of manufacture.” 35 U.S.C. § 171(a). These are commonly known as “design patents.”

A design patent protects a business’ interest in the physical appearance of a product. In 2012, the technology company Apple won a jury verdict in a design patent lawsuit against Samsung. The jury concluded that Samsung had copied many visual design elements of Apple’s signature smartphones and tablets, and awarded more than $1 billion in damages.

Trade Dress

Another way to protect a business’ right to a product’s visual appearance is through trade dress. The federal Lanham Act, which governs trademarks, prohibits any “false or misleading representation of fact” on “any container for goods,” if it “is likely…to deceive…as to the origin, sponsorship, or approval of…goods.” 15 U.S.C. § 1125(a).

This applies to products with visually distinctive designs on their packaging. The lawsuit between Apple and Samsung also involved allegations of trade dress infringement.

Plant Breeders’ Rights

The issue of intellectual property for biological materials will probably not be of much concern for most businesses, but has been the source of much legal controversy. Human genes are not patentable under U.S. law. Assoc. for Molecular Pathology v. Myriad Genetics, Inc., 569 US ___ (2013). The Plant Patent Act of 1930, on the other hand, allows the USPTO to issue patents for almost any “distinct and new variety of plant,” whether it is invented or discovered by the person seeking patent protection. 35 U.S.C. § 161.

Samuel C. Berger is a business attorney who practices in New York and Northern New Jersey. We offer fixed-fee legal-service packages that cover a wide range of legal needs for businesses and business owners. To schedule a confidential consultation, please contact us today online, at (201) 587-1500, or at (212) 380-8117.

More Blog Posts:

Intellectual Property for New Jersey Small Businesses, Part 1: Trademarks, Copyrights, and Patents, New York & New Jersey Business Lawyer Blog, May 18, 2017

Jury Verdict Could Have Major Impact on Digital Technology and Copyright Law for Businesses in New Jersey and Around the Country, New York & New Jersey Business Lawyer Blog, June 2, 2016

Congress Passes Federal Trade Secret Protection Law, New York & New Jersey Business Lawyer Blog, May 19, 2016

Photo credit: Max Pixel [CC0 1.0].