In his State of the union address on February 2, 2005, George Bush said,

“To make our economy stronger and more competitive, America must reward, not punish, the efforts and dreams of entrepreneurs. Small business is the path of advancement, especially for women and minorities. So we must free small businesses from needless regulation and protect honest job creators from junk lawsuits.”

    The payments industry that we are all collectively involved in is a hotbed of innovation and entrepreneurship. One only needs to scan the myriad of trade publications at any given moment to be apprised of the most current rash of lawsuits and litigation between companies that claim one infringed upon the patent or Intellectual property of another.
    In this first of two articles, we’ll put forth a quick overview of patents, service marks, copyrights forms of Intellectual property, the second article will talk about specific suits that have been waged in our industry. Think of these pieces as cautionary tales for budding entrepreneurs in our competitive and cuthroat industry.
    Let’s start with a little interesting history about Intellectual property here and abroad. As early as 500 years ago, European sovereigns made special arrangements for their favorite inventors; routinely providing “letters patent” to these individuals. There are numerous letters patent to some families in Italy in the mid 16th century for the techniques used in the manufacture of stained glass for example.
    In this country, prior to our passing of our Constitution, all Intellectual property was owned by the King of England. Upon the passing of the Constitution, the first laws covering patents were passed and citizens were allowed to patent or copyright assets created from one’s intellect, or Intellectual property. Our first president signed the first U.S. patent to a Sam Hopkins of Vermont for a new method of making potash, an industrial chemical used in the manufacture of many items. The patent examiner was none other than Thomas Jefferson. As an aside; there is one president that holds a patent, this we will answer in the next article. Until 1836 patents did not have numbers, but rather names and dates. The passing of the Patent Act of July 4, 1836 changed this methodology to a numbering system and patent number one was issued July 13, 1836 for an improved wagon wheel. Approximately six years later, the first design patents emerged.
    Since its inception, the role of the U.S. patent and Trademark Office has been relatively unchanged—to foster progress in both science and art by rewarding inventors the exclusive right to their discoveries or Intellectual property for a period of time. Exclusive is the key word, patents are rights of exclusion and holders of these rights can extract licensing fees and royalties to confer the right of inclusion. What is granted is not the right to make, use, offer for sale, sell, but the right to exclude others from making, using, offering for sale, selling the asset. The United States Patent and Trademark Office examines applications and grants patents on inventions when applicants are entitled to them; it publishes the patent information, records assignments of patents, and maintains the database of U.S. and foreign patents. Herewith below is a brief discussion of the forms of Intellectual property.
    A Patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office. The term of a new patent is 20 years from the date on which the application for the patent was filed or in special cases, from the date an earlier related application was filed. U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. Utilizing the Madrid Protocol filings exclusionary protection can be created for areas around the world in many countries. There are three different types of Patents: a Utility Patent may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or compositions of matters. A Design Patent may be granted to anyone who invents a new, original and ornamental design for an article of manufacture. Finally, a Plant Patent may be granted to anyone who invents or discovers and asexually reproduces a distinct and new variety of plants.
    Another form of Intellectual property is a Trademark or a Servicemark; a trademark is a word, name, symbol or device which is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others. A servicemark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. Trademarks are used by their owners to identify goods, which may be natural, manufactured, or produced, and which are sold or otherwise transported. Servicemarks are used to prevent others from creating a similar mark, but not to prevent others from making the same goods or from selling the same goods or services under a different mark. There are other types of marks such as collective, certification, or collective membership marks, but they are filed infrequently and are not of consequence here. Trademarks protect words, names, symbols, sounds, or colors that distinguish goods and services. Trademarks, unlike patents, can be renewed forever as long as they are being used in business.
    Copyrights protect works of authorship, such as writings, music, and works of art that have been tangibly expressed. The Library of Congress registers copyrights, which last for the life of the author plus 70 years. Mickey Mouse movies, songs like White Christmas, and even video games are all works that are copyrighted. Only the copyright holder can reproduce or profit from his/her works or transfer those rights.
    Intellectual property is imagination made tangible. Intellectual property is an asset just like your office’s furniture or computers. Just like property needs protection, Intellectual property requires protection from theft and abuse, and there are plenty of attorneys and companies that are extremely aggressive and protective of their perceived Intellectual property. In our next article we’ll touch on some of the issues at hand in our marketplace and the ways a wise ISO can steer clear of trouble.