Most businesses have property insurance, maybe even fire and flood insurance, but those protections only cover about 20 percent of a company's net worth and assets, according to Steve Gillen, partner at Wood, Herron & Evans, a Cincinnati-based law firm specializing in intellectual property law.

"Our economy has moved from a commodity- and goods-based economy, to an economy that's based more on technology and services, so more and more of the value of a business is in the intellectual property associated with that business and less in the hard assets," says Gillen. "And 80 or 90 percent of the (company) market value is going to be tied up in the intellectual property: the copyrights, the patent rights, the trade secret rights."

The fast pace of technology, digitization, and increasingly open access to online information have changed the landscape of intellectual property law and litigation. Businesses need to be proactive in protecting their trademarks, trade secrets, copyrights and patents, while simultaneously ensuring they avoid infringing on other people's intellectual property.


"Protect your intellectual property," says Patricia B. Hogan, who specializes in trademarks litigation as a partner with the law firm Keating Muething & Klekamp. "If you've put time and money into developing a good name or a good product, something that people value, that's a huge asset."

But managing intellectual property and protecting against infringement is only one side of the coin. Though the Midwest has long been a hub for the manufacturing industry, the traditional bricks and mortar storefront is being replaced by the digital storefront. Consumers can shop and purchase products or services online, without ever visiting a physical location.

"Everybody has access to everything," says Kate Smith, also a partner with Wood, Herron & Evans.


This means that even small, local businesses have to think globally about the information they share online, and how that information might make them vulnerable to lawsuits. The spread of the Internet and digitization opens the door for trademark theft from every corner of the world.

"Technology is really making the world a smaller place, actually," says Louis Ebling, a partner with Thompson Hine who specializes in international trademark portfolio management. A trademark portfolio includes a collection of trademark registrations and applications for a particular product, and is a tool to conduct global trademark acquisition, maintenance and enforcement.

"The trademark owner is obligated to police the misuse of the trademark," Ebling says. "We have to proactively police the marketplace."

If companies fail to enforce potential trademark infringements, the trademark is considered abandoned for legal purposes. Businesses owners need to maintain control over company trademarks and brands.

The Internet complicates matters because it is extremely easy to adopt and use a trademark or to discover other companies' usage of trademarks. "Clients really want to be proactive in terms of identifying third-party marks that might infringe on theirs and take steps quickly to address those issues, and they might want to do it themselves," Smith says.

Business owners who email perceived infringers might get a nasty surprise: They could be the ones stealing the trademark. A business that uses a trademark first is often entitled to the trademark for their geographic area, based on U.S. common law, while a first-to-register system is the standard outside the country.

While being proactive about policing a trademark is necessary, businesses should still consult with a legal adviser to fully understand the facts prior to taking action, Smith says.


Patent trolls don't live under bridges, but business owners should still be wary of crossing their paths.

"The amount of information that's out there about businesses is helpful to the business, but it can also be a liability from a business standpoint," says Thomas F. Hankinson, an associate with Keating Muething & Klekamp.

While businesses must be technologically savvy and maintain an online presence, the increased access to online information opens the doors to intellectual property lawsuits from patent trolls, according to Hankinson.

Patent trolls are companies or individuals who buy up intellectual property such as patents with no intention to ever produce or manufacture the product. They comb the Internet, looking for companies that might be using all or part of their patent, and then sue for patent infringement.

The minimum cost of most patent litigation is typically around $1 million, and costs can easily climb to more than $3 million, according to Steven Benintendi, a partner at Wood, Herron & Evans who specializes in patents. "Point is, patent litigation is expensive, and you have to really be committed to carry out a patent litigation," he asserts.

Because patent litigation is risky and "ungodly expensive," Hogan says, most companies might pay off the patent troll to avoid going to court.

"Now, patent trolls are not only performing stick-ups of legitimate businesses that are trying to put out a product, but they're also smearing the reputation of legitimate non-practicing entities, who are driving innovation and are helpful," Hankinson says.

Non-practicing entities (NPEs) are individuals or companies who hold patents without manufacturing them as well, but might license the patents out to others. This includes private inventors who might not have the means to manufacture an invention on a large scale.

Though patent trolls are technically considered NPEs, they profit from litigation using an opportunistic and antagonistic approach. "The terms are sometimes a matter of perspective," Hankinson says.

Regardless, "trolling" has become a "real industry," according to Ebling. More recently, copyright trolls have appeared on the scene, purchasing rights to written works, music and photos in order to sue website owners who reproduce or share these materials online.

"Everything you do is now public," Ebling says. "Online you feel like you're anonymous, but you're not, and you're becoming less anonymous all the time."

Businesses must be wary of information they share online, especially in company blogs, where copying portions of news stories or photos could be a potential litigation matter.

"There is an abundance of digital property that is easily accessible. It's easy to go out and find it, get it, have a copy and adapt it," Gillen says. "It's just as easy for you to get caught."

Also, businesses with websites that allow third-party posting can be vulnerable if someone else posts copyrighted material to their website, such as in a comments section. Before this type of infringement occurs, businesses should seek safe harbor protection though Section 512 of the Digital Millennium Copyright Act (DMCA).

Safe harbor offers protection for website owners or service providers when a third party posts copyrighted material to its website, as long as the provider does not profit from or know about the infringement, provides a copyright policy to third-party users, and employs an agent to deal with copyright complaints. This type of safeguard can protect a business from frivolous copyright litigation.

Fighting Back

Some defendants are fighting back against copyright trolls, citing fair use or implied license of copyrighted materials such as in the case of Righthaven v. Klerks, but many cases settle before going to court.

"I don't really like these guys (trolls), they're kind of scumbags, but what they're doing is brilliant," Ebling says.

Regardless of the legitimacy of NPEs versus trolls, businesses should ensure they own the intellectual property to the products they produce, the services they provide, and the information they share.

The bottom line: Don't use something if you don't own it. Patent trolls are not going to fall for, "The next billy goat is bigger, I swear."


Patent reform has resurfaced this year with the introduction of the America Invents Act, the newest link in a long chain of failed reform efforts, dating to the Patent Reform Act of 2005.

If the bill is signed into law, the biggest change will be the conversion from first-to-invent to first-to-file. Currently, the U.S. is the only major global power still operating on a first-to-invent system for awarding patents.

"First to invent is a neat system. It's nice to award to people who are first to invent, as opposed to shifting the award to people who are quick at doing paperwork," Hankinson says. "There is some fear that first-to-file will favor large companies with large resources in terms of innovations."

But with the cost of patent litigation skyrocketing, legislators want to put a "ceiling on the damages that are at stake in a patent litigation," Hankinson says. "Fighting about who invented something in the abstract is very expensive: Both sides will have a story."

Additionally, the America Invents Act looks to simplify the patent process in a global economy, "basically trying to harmonize our patent laws with other countries' patent laws," says attorney David Lafkas, who specializes in trademark and patents.

For businesses and entrepreneurs, the change will mean compressed timelines to file for a patent. "Essentially, whoever gets to the patent office first wins," Lafkas says.

Reform will need to address the excessively slow registration process at the U.S. Patent and Trademark Office (USPTO), which is buried under a mountain of more than 700,000 backlogged patents.

"If it takes you four years to get a patent, and technology is turning over ever four or five years, that's no good," Benintendi says.

While patent reform has yet to become a reality, businesses should be aware of the changes that might result if the bill becomes law. Rapid filing, or using a provisional application to obtain an early filing date, will be a viable course of action.

Though filing quickly will put a "stake in the ground," legal counsel should still be sought prior to production and commercialization of an invention to ensure no one else's patent rights are being infringed, Benintendi says.


Protecting intellectual property and avoiding expensive litigation will increasingly dominate the business terrain of the coming decade.

Benintendi recommends "due diligence" for businesses trying to manage and protect their intellectual currency in the marketplace. Businesses should be proactive and seek counsel, preferably before their work gets stolen or they receive a phone call from someone accusing them of infringement.

"Typically, there are multiple layers of protection, including copyright, trademark or trade secret, or some other combination," Gillen says. "The best practice is to employ a blend of approaches to protect the property rather than focusing on one."