Brian D. Kaider, Esq.
Having worked in intellectual property for nearly 20 years, I often take for granted that people have a working knowledge of the different types of IP rights. That misconception is frequently revealed when a friend or family member (with whom I’ve had many conversations about IP) asks, “didn’t you patent that company’s logo?” “Well, no,” I explain, “but, I did get it federally registered as a trademark.” Taking a step back, I realize that it can be quite confusing. So, this article is meant to introduce the four main types of intellectual property and how they apply to the wine industry.
Patents Protect Ideas – Sort Of
Most people have a general understanding that a patent protects an “invention” or idea. In a very general sense, that’s true. But, while Congressional authority to grant patent rights comes directly from the U.S. Constitution (Article 1, Section 8, Clause 8), exactly what is patentable is the subject of tremendous confusion even among federal judges; sometimes requiring clarification from the U.S. Supreme Court. The purpose behind patents is to encourage innovation by granting exclusive rights to one’s discoveries for a limited time. In other words, it gives the patent holder a limited-term monopoly on his invention. Generally, new machines, chemicals, electronics, methods of production, and in some cases, methods of doing business, are eligible for patent protection.
Ideas alone, however, are not patentable. They must first be “reduced to practice,” meaning that either the inventor must have actually created the invention or have described it in sufficient detail that someone skilled in that area could follow the disclosure and create it themselves. So, one can’t get a patent on a time machine, because (at least for now) no one has figured out how to defy the time-space continuum. In addition, to be patentable, ideas must be novel, meaning that no one else has ever disclosed that idea before, and non-obvious, meaning that the idea cannot be an obvious variant on someone else’s invention.
Given that humans have been making wine for thousands of years, one might think that coming up with something novel in the winemaking process would be impossible. Not so. In preparation for this article, I ran a quick search of patents containing the word “wine” in the title and got 1184 hits. Some recent examples include U.S. Patent No. 10,124,305 – “Agitation device for red wine production,” U.S. Patent No. 10,113,979 – “Systems, probes, and methods for dielectric testing of wine in bottle,” and U.S. Patent No. 10,005,993 – “Combined wine fermenter and press.” Improvements in any area of the wine industry may be patentable including: new types of bottles, decanters, closures, and caps; improved methods of separating grapes from stems; new processing equipment; improved testing procedures; improved packaging; etc. Essentially, anything that lowers costs between the vine and the consumer, improves the quality of the wine, or enhances the consumer experience is worth considering for patent protection.
One word of caution, however; time is of the essence. The America Invents Act of 2011, brought the U.S. in line with most other countries in being a “first to file” system, meaning if two people develop the same invention, the first to file for patent protection wins, regardless of who first came up with the idea. Also, any public disclosure of your idea (such as a trade show) starts a 1-year clock to file or you may lose your eligibility for patent protection.
Copyrights Protect Creative Works
The authority for copyright protection stems from the same section of the U.S. Constitution as patent protection, discussed above. Our founding fathers recognized the valuable contribution made to society by authors and artists and, therefore, sought to encourage creative expression by providing protection for artistic works. Examples of copyrightable materials include, books, paintings, sculptures, musical compositions, and photographs.
Unlike inventive ideas, which are only protected when the government issues a patent to the inventor, copyrights attach at the moment the artistic work is “fixed” in a tangible medium. So, for example, if a composer develops a new musical score in her head it isn’t protected, but the moment she translates that tune to notes on a page or computer screen, it becomes protected by copyright. In order to enforce that copyright in court, however, it must be registered with the U.S. Copyright Office. While it is possible to wait until an infringer comes along before filing for registration, doing so can severely limit the damages that may be available to the author of the creative work. So, early registration is the better course.
In the wine industry, copyright issues often crop up with regard to who owns the artwork contained within a label or marketing material. Generally, the author of a work owns the copyright. But, if an employee of the winery, acting within the scope of their employment, creates an image that the winery owner incorporates into its labels, that picture is considered a “work made for hire” and is owned by the winery. Where disputes often arise, however, is if the winery hires an outside artist or a branding agency to develop the artwork. In that case, the winery should include language in its contract requiring assignment of all copyrights to the winery for the created artistic works.
Trademarks Protect “Source Identifiers”
People generally associate trademarks with the protection of a brand. In more technical terms, what a trademark protects is a “source identifier.” The purpose of trademark law is to protect consumers from being misled or mistaken as to the source of a product. So, for example, if a consumer sees a pair of shoes with a certain famous “swoosh” image on the side, they should be reasonably able to assume that pair of shoes was manufactured by Nike, Inc. and was made with the same degree of workmanship and quality that they have come to expect from that company. That “swoosh” symbol, therefore, acts as a source identifier to tell the public that the product was made by Nike, Inc.
What may function as a trademark can be quite broad, including: the name of the business (e.g., Sterling Vineyards®), a logo (e.g., the “swoosh”), a color (e.g., the Home Depot orange or the UPS brown), even a scent (e.g., Verizon owns a trademark on a “flowery musk scent” it pumps into its stores to help distinguish them from competitors’ environments). However, slogans, words, and images that appear merely as decoration will not qualify for protection unless the applicant can demonstrate that the item has achieved “secondary meaning,” i.e., that the public has come to associate that item with the manufacturer. For example, in the 1970’s McDonalds used the slogan, “You deserve a break today” in its commercials and other advertising. People came to associate this phrase with McDonalds and in 1973 they were granted a trademark registration.
In general, marks also cannot be descriptive of the product or geographically descriptive of the source in order to be registered as a trademark. For example, one could not obtain a registration for just the words “Red Wine.,” because it simply describes the product and does nothing to differentiate it from every other red wine on the market. Similarly, an attempt in the year 2000 to register the name “Napa Valley Winery” was refused, because the applicant could not demonstrate that people had come to associate that name with its business as opposed to the hundreds of other wineries in Napa Valley.
Trade Secrets Protect Valuable Confidential Business Information
Unlike other forms of intellectual property, there is no registration system for trade secrets, because, by their very nature, they must be protected from all unnecessary disclosure. Trade secrets can be just about anything that is confidential to your business and gives you a competitive advantage. Some examples, include recipes, client lists, manufacturing processes, marketing plans, and client lists.
One of the most famous trade secrets is the formula for Coca-Cola, which has been kept secret for more than 130 years, sometimes through extraordinary measures. In 1977, The Coca Cola Company withdrew its product from India, because in order to sell there, they would have had to disclose the formula to the government. They decided it was more prudent to forego sales to one of the biggest populations on earth rather than risk disclosure of their secret recipe.
Protecting trade secrets requires constant vigilance in two ways. First, the information should only be disseminated to people within the company, or outside consultants, who need the information in order to perform their duties for the company. Second, those few people who are given access, should sign non-disclosure agreements with harsh penalties for breach of their duty of confidentiality. Once the information gets out, it’s nearly impossible to un-ring that bell, so there must be severe financial consequences to someone who leaks the information.
While patents, copyrights, trademarks, and trade secrets are four distinct forms of intellectual property and serve different functions, sometimes more than one form of IP can apply to the same item. The business advantages and disadvantages of each form of IP should be weighed to determine the best course of action. For example, a product’s life-cycle may have a lot to do with whether a company chooses to protect how the product works through patent or trade secret. If the innovative feature relates to a cellular telephone device, patent protection is probably the best course, because by the time the patent expires and a competitor could use the technology, it will likely be obsolete. Conversely, a novel process in fermenting wine may have value long after a patent would expire and would, therefore, be better suited to trade secret protection. A knowledgeable intellectual property attorney, engaged early in the process, can help develop the most effective strategy to protect your valuable intangible assets.
Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry. He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.