Primary navigation:

QFINANCE Quick Links
QFINANCE Topics
QFINANCE Reference
Add the QFINANCE search widget to your website

Home > Human and Intellectual Capital Best Practice > Protecting Your Intellectual Property—Nonregistered Rights

Human and Intellectual Capital Best Practice

Protecting Your Intellectual Property—Nonregistered Rights

by Jeremy Phillips

Executive Summary

  • Copyright, database rights, and some countries’ design rights—as well as rights covering confidential information, know-how, trade names, and get-up—are intellectual property rights that do not depend on an application process that results in registration.

  • If a right is not registered, third parties may find it impossible to identify either the ownership and/or the extent to which the unregistered right is protected.

  • Statutory unregistered rights are generally vested with the characteristics of property and may be assigned, licensed, and used as collateral, whereas nonstatutory rights may not possess these qualities.

  • The most legally and commercially significant nonregistered intellectual property right is copyright, a broad term that encompasses many different types of right. Some unregistered designs are also accorded protection.

  • Rights involving confidential information and trade secrets are generally recognized, although the manner in which the law protects them may differ substantially between different jurisdictions.

  • Unregistered rights in trade names and get-up, variously protected by laws of unfair competition and passing-off, serve to reinforce the registered protection provided by trademark and registered design law.

Introduction

While patents, trademarks, and some other intellectual property rights require registration following a process of application and examination or deposit, other rights (such as copyright or some design rights) automatically come into being either when a work is created or as a consequence of a relationship. Examples of the latter are the rights in confidential information that arise from the relationship of a person who communicates information to a specific person or persons, and rights in the goodwill in a trading name that result from the relationship between a trader and his customers.

Nonregistered intellectual property rights are just as important as registered rights. Examples of extremely valuable nonregistered rights include J. K. Rowling’s copyright in the Harry Potter books and the formula for the Coca-Cola syrup. Both nonregistered and registered rights may exist together in the same object, whether serially or simultaneously. Thus an invention, which is vulnerable until the patent right is granted, is protected as a trade secret until it is disclosed to the public. Equally, a computer program that satisfies the appropriate criteria for patentability is also protected by copyright.

Problems Arising from Nonregistered Rights

Without registration, it is not easy to identify the rights holder of, in particular, a copyright work. It is dangerous to rely on information contained in a copyright notice in a published work or on a web page, since title to the copyright may have passed on more than once since the notice was originally published. Often a work is considered to be an “orphan work” if the author or copyright owner cannot be identified or traced at all. Some businesses are prepared to take the risk of using an orphan work without permission on the assumption that, if no author or copyright owner can be found, that use will remain undetected.

For practical reasons, it is not possible to provide a registration system for confidential information and technical know-how. A licensee of the use of such information may therefore unwittingly be paying for the right to use information that is already available in the public domain and which, with effort, the licensee could have found and used without payment. The party possessing such information will be reluctant to warrant its secret nature since it too has no means of verifying whether this is so.

As for trade dress (the visual appearance of a product), trade names, and logos, internet search engines have now facilitated identification of their existence and the extent and geographical scope of their use. Instances of accidental use of a trade name or trade dress that closely resembles that of a competitor have therefore fallen sharply. The same applies to unregistered designs of products whose shape is distinctive.

Nonregistered Rights As Property

Although details vary between different countries, copyright, database rights, and designs are generally protected by statute that specifically accords them the status of property that can be assigned, licensed, mortgaged, or left to someone in a will or on death. Rights in respect of confidential information, know-how, trade dress, get-up and the like are generally said to be in personam. This means that those rights can only be enforced against others when they are infringed in certain circumstances, but they do not constitute property as such. Commercial practice in most countries, however, is to treat the latter category of rights as though they were property when assigning them (whether together with the business from which they originated or separately).

Because of its variety and longevity, copyright in a single work may be simultaneously the subject of many separate property transactions. For example, the right to publish a work of fiction in book form may be assigned to A for 20 years, the right to serialize it in a newspaper may be exclusively licensed to B for six months, and the right to reproduce it in cartoon form for the full copyright term may be nonexclusively licensed to D. An option to purchase the movie rights, exercisable for 10 years, may be bought by E, and the right to produce a computer game based on it may be pledged to F as collateral for a loan which enables the copyright owner to pay for its translation into French so that it may be published in that language by G for 50 years. Since assigned rights may themselves be disposed of by the assignee, and many licenses permit the grant of sublicenses, a party that is not aware of all these transactions may struggle to establish precisely who controls which rights to a given work.

In principle, the owner of copyright, database right, or design right is the party that initially creates it. Rules which vary from country to country regulate issues relating to ownership where the creator is employed by another or is commissioned by another as an independent contractor.

Back to Table of contents

Further reading

Books:

  • Derclaye, Estelle. The Legal Protection of Databases: A Comparative Analysis. Cheltenham, UK: Edward Elgar Publishing, 2008.
  • Milgrim, Roger M. Milgrim on Trade Secrets. New York: Matthew Bender, 1967. Current copies looseleaf to order with additions and revisions.
  • Wadlow, Christopher. The Law of Passing Off: Unfair Competition by Misrepresentation. 3rd ed. London: Sweet & Maxwell, 2004.

Website:

Back to top

Share this page

  • Facebook
  • Twitter
  • LinkedIn
  • Bookmark and Share

Editor's Choice