First, the fair use we most often hear about concerns copyright law. Copyright law protects the artistic expression of ideas, such as in music or images. The fair use of corporate logos or slogans (such as Apple Computer’s logo or Nike’s “Just do it” slogan) falls under Trademark Law, and this area functions a little differently.

Now that we know we’re focusing on copyright law, we should understand what copyright law fair use protects, and how it affects copyright law generally. The most important thing to understand—and which sometimes comes as a surprise—is that there is no such thing as “automatic” or “guaranteed” fair use protection. While there are some commonly respected “fair use” areas (which we will get to a little later), fair use is decided on a case-by-case basis. The ultimate decision rests with the judge each time. It is also important to understand that fair use is often spoken of as a defense. This means that it can only be asserted once a case has been brought by a plaintiff. One cannot bring suit under fair use.

Lawyers disagree over whether the fact that fair use is often asserted as a defense goes so far as to mean that it is not a right. It is perhaps best to think of fair use as an exception to or a limitation on copyright protection– that may or may not be applied, depending on the case.

So, how do judges decide whether or not a given use of copyrighted material is permissible? The first thing to know is that they make use of a four-factor “test” listed in 17 U.S.C. § 107 (Section 107 of the Copyright Law). Judges are not limited to these factors in their analysis, and no single factor can decide the outcome on its own. Judges will also compare the possibly infringing use in the case before them to that in similar cases that have come up in the past.

The four factors are:

• How and why the copyrighted material was used and it what way (if at all) it was altered.
• The nature of the original copyrighted work itself.
• How much of the original work was used.
• The effect of the use on the market for the original work.

Furthermore, the law lists several traditionally recognized areas of fair use: “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.”

Where does this leave us? While the above framework will yield different results in different cases, we can draw some general guidelines from it.

As we might expect, the smaller the amount used of the copyrighted material, the more apt the use is to be construed as fair use. If a small amount was used, and it was just enough to get the idea of the new author across, this will weigh very favorably in the direction of fair use. If large tracts of it were used for no specific reason, the analysis will tend to go the other way.

Was the material used for commercial purposes? This is critical. A commercial purpose doesn’t rule out fair use protection, but does tend to weigh against it. If the user of the copyrighted material is profiting financially from the use, this will be looked at quite carefully.  Is the unauthorized user simply taking advantage of someone else’s creation, adding little or nothing to it of their own? How is the market for the original work affected?  Will consumers no longer feel the need to buy the original work because of the way it is now being used? On the other hand, if the new work serves a completely different function from the original, this will certainly weigh in the direction of fair use.

Judges talk about whether the use was “transformative.” This again refers to whether the material was used in a novel way, or has been changed to such a degree that it might be considered something altogether new. This is a very fact-specific sort of analysis and is difficult to determine objectively. It borders on outright determinations of artistic merit. The more novel and creative the new use is found to be, the more this will weigh toward fair use protection.

On the other hand, the creativity of the original work can affect the analysis. If the original is closer to a listing of facts (such as a specific type of telephone directory), this will weigh in the direction of fair use. The facts or ideas themselves in the original work cannot be protected, as facts and ideas must be free to be used by others. Only the creative expression of facts and ideas is protectable. If on the other hand, the original work being used is highly creative or artistic, it may be more difficult to obtain fair use protection for its re-use by someone who does not own rights to it.

Also, the use of copyrighted material for parody is often also protected. In the past, most uses involving these areas have been considered to pass the four-factor test, and are generally protected. Fair use takes into account the social effect of such uses. In general, we want the law to be conducive to things like teaching and news reporting, parody and social criticism because these are seen to benefit society.

Lastly, it is of course safest, whenever possible, to obtain a license to the work one intends to use. Many comedians and parodists whose satires would most likely be protected under fair use nonetheless opt to secure licenses every time. Given the factual and subjective basis of fair use evaluation, obtaining a license if often the wisest choice and will eliminate worries later on.

A cease and desist letter details the rights claimed by the sender, as well as the actions taken by the recipient that are allegedly infringing these rights. Normally, cease and desist letters are drafted by attorneys, and demand for certain actions to be taken. For instance, such a letter may claim that the recipient’s products infringe a trademark or patent, and demand that sales of these allegedly infringing products stop. Cease and desist letters usually threaten a lawsuit if these demanded actions are not promptly taken.

Upon receiving such a letter, a business can basically do three things. It can take the actions demanded by the sender to avoid a lawsuit. Or it can challenge the rights claimed by the sender. Lastly, a business may request that the supplier of allegedly-infringing products guarantee that they do not infringe the rights claimed in the cease and desist letter.

Complying with the cease and desist letter may be the least costly alternative. If sales of the allegedly-infringing products are low, then dropping that product to avoid a lawsuit may make sense. However, the recipient that chooses to comply with the cease and desist letter must have the sender promise in writing not to sue. Otherwise, the sender may conceivably sue for past damages even if the complained-of actions cease.

Challenging the rights being asserted in the cease and desist letter is probably the most expensive approach. An experienced attorney’s analysis detailing deficiencies in the claimed rights may be sufficient to stop the sender. However, this can lead to a very expensive lawsuit. Furthermore, even if the claim to the intellectual property is weak or tangential, proving that in court will be very expensive and time-consuming. It might be a Pyrrhic victory. As that legal aphorism goes, winning a lawsuit is the worst way to go bankrupt.

Lastly, a business may receive a cease and desist letter regarding products bought from a supplier. In such a case, the recipient should forward the letter to the supplier, who may insist that the sender’s assertions are frivolous. In that case, the recipient should ask the supplier to warranty that its products are not infringing, and to indemnify and defend the recipient against any action brought by the sender. Without these protections from the supplier, the recipient of a cease and desist letter should not take the supplier’s reassurances to heart.

Companies are becoming aware of the need to protect their intellectual properties. Cease and desist letters are the first step in asserting these rights, and they should not be ignored or taken lightly. A business has a few options in responding to the letters, but whatever choices are made has to be put down in writing to head off costly litigation.

Please keep in mind that this article should not be taken as legal advice. Only your attorney can give you legal advice.

By filing a provisional patent application, a small business may delay the expense of a regular, non-provisional application for up to a year. During that period, the small business may mark his invention with “patent pending” and shop it around without fear of theft by prospective business partners. If it is commercially worthwhile to patent the invention, the small business may choose to file a non-provisional patent application within twelve months of filing the provisional application and claim the earlier filing date of the non-provisional patent application. This would help establish superior rights to a patent over a competitor who filed during that twelve-month period.

For example, pretend that Jon files a provisional patent application for an improved parachute on April 1, 2000. He shops it to the military. The SEALs express interest in buying that parachute, so Jon files a non-provisional patent application on March 31, 2001. He can claim priority to the April 1, 2000 filing date of the provisional patent application.

The provisional patent application is much cheaper to file for many reasons. The application does not require formal oaths or declarations. It need not include any claims, which are difficult to draft properly. Most importantly, there is no need to have an information disclosure statement discussing the state of the art, which requires a prior art search.

However, Jon cannot patent a glider and claim the earlier priority date of his parachute application. The idea behind the provisional patent application is that a small business has a year to decide whether or not to patent the invention, but it cannot use that time to come up with the invention. The provisional patent application must disclose sufficient material to meet the patentability requirements of any inventions claimed in a later non-provisional patent application. The provisional application must include the names of all the inventors, a written description of the invention, and any drawings necessary to understand the invention.

After the twelve-month period has expired, the inventor cannot claim the benefit of the earlier filing date in a non-provisional patent application. It is very important to note that if the invention is found to be “in use” or “on sale” within the United States during the twelve month period without the filing of a corresponding non-provisional patent in that time, the inventor may lose the right to ever patent the invention. Thus, if Jon starts selling parachutes on March 1, 2001, but never gets around to filing a non-provisional patent application, he may lose the right to ever patent his parachute.

A provisional patent application may be very useful to a small business that is shopping its inventions. However, care must be taken so that full patent rights may be obtained in the future.

Trade secrets are confidential information that gives rise to a competitive advantage. Unlike other forms of intellectual property such as patents, which require public disclosure of confidential information in a government filing, trade secret protection keeps vital confidential information private. Another difference is that trade secrets do not expire. The prototypical trade secret is the formula for Coke, which has been a secret for over a century, and has given the company a strong advantage over its competitors. That said, a competitor who independently conceives of the trade secret is free to use it. A company that reverse engineers the composition of Coke, for example, is free to sell it without limitation by Coca-Cola

The law protects trade secrets against misappropriation, which is the use or disclosure of a trade secret that was obtained by abusing a relationship of trust, or by theft or bribery. Competitors are free to come up with the trade secret themselves, but they are not allowed to steal it. For example, an employee may quit and take the customer list to start his own competing firm. The customer list may be a trade secret if his former employer took the necessary steps to protect it.  In that case, the employee may be liable for damages, or even criminal penalties.

A business must take affirmative steps to protect its trade secrets. It must be able to demonstrate in court that the trade secrets were in fact secrets, and that it took reasonable steps to protect them from the public. If a business did not put much effort into protecting a trade secret, a court may not, either.

Primarily, a business has to treat its trade secrets as confidential materials. This includes limiting the number of employees privy to the trade secret and marking all copies of the trade secrets confidential. (But one should not mark all documents confidential as a matter of course, without regard to whether it is confidential or not.) Businesses should also require employees, especially those likely to access the trade secret, to sign employment contracts with confidentiality and non-compete clauses. Lastly, when sharing trade secrets with an outside party, a business must enter into a non-disclosure agreement whereby the recipient recognizes that the trade secret is confidential information, and agrees to maintain the confidence.

A business whose trade secrets are misappropriated can seek monetary damages for the lost business. It may also seek injunctive relief to force the misappropriating party to stop making use of the trade secrets.

Trade secrets are a valuable asset of any business. Establishing proper protection for the most confidential material is much less expensive than being left without a remedy when trade secrets are misappropriated.