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November 27, 2006

Cover me | Intellectual property protection is a growing concern for Maine businesses, which makes it a growing business for attorneys

By Jeffrey Bouley

There are certain folks you expect to see filing applications for patents. University-based researchers? Sure. Software developers? Of course. Pharmaceutical and biomedical companies? Absolutely.

Grocery store chains? Not often.

Yet it's not often that grocery chains create offerings like Scarborough-based Hannaford Bros. Co.'s in-store nutrition navigation system, Guiding Stars. Created to help shoppers choose more nutritious foods, Guiding Stars is believed to be the nations' first such effort. So it's no surprise Hannaford would pursue protections to make sure competitors don't copy the program. In addition to securing trademarks and copyrights to cover the Guiding Stars logos, taglines, written materials and so on, Hannaford is pursuing a patent for the formula it uses to analyze products and give them a one- to three-star ranking.

That food-rating algorithm at the heart of the nutrition assessment program was developed by a scientific advisory panel. With the grocery retailer garnering national attention for Guiding Stars — including coverage by CNN and The New York Times — the assumption was that another retailer would try to mimic the idea and perhaps copy the algorithm itself. "We dedicated significant resources — and that means dollars and the time of our medical experts — to develop this program," says Hannaford spokeswoman Caren Epstein. "This program is a differentiator for us, and having invested all this time and energy in it we are not interested in making this available for our competitors."

As a result, Hannaford has turned to Portland-based law firm Verrill Dana to pursue intellectual property protections for Guiding Stars. And while it is an intriguing intellectual property case, Hannaford's effort is not unique. Across Maine, say lawyers in the field, the desire to learn more about, and protect, intellectual property is growing for businesses large and small. That's kept it a dynamic practice area for Maine's legal community.

Verrill Dana, for example, also has banking and health care clients that want to use IP law to protect their online banking and patient record systems from other firms that may copy those products. The firm also has helped Maine colleges figure out how to offer online courses without violating existing copyright law. "Generally, it's the more tech-oriented companies that have thought about patents, because they are innovating and creating original products," says Chris Caseiro, a partner in Verrill Dana's intellectual property group. "But there has been a slowly growing awareness over maybe the past 10 years that you don't necessarily need to make a widget; it may simply be that you have an innovative mechanism for doing business that sets you apart from others."

The value of ideas
Companies in the information technology, communications and biotech sectors are more likely to seek out patents. Yet because intellectual property is a concept encompassing copyrights, trademarks and trade secrets, many other companies can benefit from IP protections. As those companies realize they have something to protect, they need IP lawyers to figure out which protections will give them a leg up on their competition.

The field of IP law in Maine is "absolutely growing," says Fred Frawley, chair of the IP practice group at Portland-based PretiFlaherty. When he joined PretiFlaherty's IP department at the end of 1998 he spent about 30% of his time on IP matters, he says. Now, his work is almost exclusively IP, and the firm had to hire two attorneys who are virtually devoted to little else.

As recently as 10 years ago, Frawley says, IP law was still a curiosity in Maine, but the growth of high-tech and communications companies in the state gave it a boost. Then other companies started to realize that their businesses were "built on ideas, and that executing those ideas properly also meant protecting them," says Frawley.

Consulting and training firms, for example, may need IP protections even more than manufacturing and design companies, because the product those companies offer to clients is intellectual property itself. They sell ideas — and ideas, Frawley says, are easy to copy.

One of Frawley's clients is the Camden-based Institute for Global Ethics, a nonprofit that has worked with PretiFlaherty to determine how to protect its bread-and-butter revenue generator: training programs. The organization faces a dilemma, says President Rushworth M. Kidder, because it is in the business of making its ideas widely accessible, yet it needs those ideas to generate revenue that will pay its bills and workers.

Kidder compares much of what his institute does to open-source software. The organization's ideas and concepts are presented so the public can use them and even build on them. But even open-source software often comes with limits on how it can be used by a customer. "There needs to be revenue coming in, and we do that through trainings," says Kidder. "Once we're done, though, how do we know people will use our materials as intended and not adulterate them or mix them with other stuff or get it wrong or use it themselves to make money?"

PretiFlaherty helped the institute answer that question by identifying nearly 20 key ideas that were unique to the institute and needed legal protection. In some cases, simple copyright protections or trademarks sufficed. For example, the institute trademarked the term "ethical fitness."

But for other aspects of the organization, such as training materials, the institute needed to tighten its contractual language to ensure that people who received training and materials didn't maliciously or unintentionally steal — or improperly share with others — the ideas therein. "We have become more careful about understanding the value of the ideas we have in our particular shop and more careful about the way we approve their use," Kidder says. "Doing this, we've also become more courageous about saying there is a fee for this or a royalty for using that — and we've been surprised at how many people, once we tell them that, pretty much just say, 'Okay.'"

A shrinking world
Part of the reason that organizations like Kidder's are becoming more aware of IP law is that the world keeps shrinking, says Jim Keenan, a shareholder at the Bernstein Shur law firm in Portland. "Before the Internet, geography played a big role in keeping people apart, but now the Web connects you with everyone, everywhere, including competition you didn't know you had before," he says.

Keenan says his firm has seen cases in which the Web presence of a small Maine company not only opened up new business but also brought discussions with competitors about who rightfully owns product or business names. And the issue isn't just outright theft of images, products or other IP, Keenan says, but the importance of differentiating one company from another to improve a competitive position. "Companies that before the Internet would have never bumped head-to-head now routinely do so, and that will continue to accelerate," Keenan says.

So for many businesses, the key question is: What can be protected? Intellectual property legal protections fall into three main categories, notes Charlie Bacall, chair of the IP and technology practice group at Verrill Dana. Those categories are copyrights, trademarks and patents — three areas with which most businesses are at least somewhat familiar. (For details, see "The big three," below.)

A fourth area of IP protection, Bacall says, is one that many businesses might overlook: trade secrets. As the name implies, a trade secret is something that is crucial to a business that could conceivably be stolen or misused (the recipe for Coca-Cola is one example). Because several people inside and outside a company may need to access a trade secret, having proper internal procedures and non-disclosure agreements in place, as well as written agreements that limit use by outsiders who need access, is critical, Bacall and Keenan note.

Shipyard Brewing Co. in Portland, for example, relies primarily on trademark protections for its labels, brand names, logo, taglines and other aspects of the business, says Fred Forsley, company president. At the same time, the brewery has proprietary recipes, which it only shares with brewers and others who need access. In its early years, Forsley made brewers sign a non-disclosure agreement, but admits that these days he doesn't have controls as rigid as a company like Coca-Cola. That change is in large part because the company began using proprietary yeast — which helps give Shipyard beers a distinct flavor — that other brewers can't buy, and also because brewers tend to take pride in making their own brews, he says.

Yet he isn't eager to make the recipe public knowledge. "Other than your real estate, your ideas are one of your biggest assets," Forsley says. "And whether you are making sure that no one hundreds of miles away is copying your T-shirts or logo — a problem we have had to deal with — or just securing your secrets, you have to protect your brand at every point in its life cycle."

No matter how serious the company is, though, trying to tackle IP matters without professional help can be tricky, say attorneys. "When I first meet with a client, I go over all four areas of IP to see which 'bin' each intellectual asset falls into," Keenan says. "In some cases, more than one protection may apply. In other cases, a piece of IP may not fit nicely into any compartment and we may need to turn to contracts as a way to ensure that the IP is protected in some way."

Caseiro of Verrill Dana adds that having a combination of IP protections — as Hannaford is doing with Guiding Stars or Shipyard has done with its recipes, labels and marketing materials — often is the best way for a company to call IP violators to task and take action if necessary. "This isn't a game in which you simply build an impenetrable wall to keep everyone out," he says. "It's more like fencing, where you use a variety of moves and stances to keep your opponents at bay."

The big three

Copyright
• Copyrights protect "original works of authorship," including artwork, books and computer software.
• Technically, from the moment a company "authors" a work, it is copyrighted, although a copyright can be formally sought from the government for additional protection.
• Copyrights defend against unauthorized copying, even if the copier doesn't profit directly from the copying.

Trademark
• Trademarks protect forms of IP that distinguish one business from another, such as logos, taglines and jingles.
• Like copyrights, trademarks don't have to be registered, but Bacall says there are advantages to doing so at the state and federal level. For example, filing for a trademark can help establish which entity started using a company name or logo first in case of a dispute.

Patents
• Patents must be obtained from the federal government and always require an application process, which can be expensive and time-consuming. But the protections are much stronger than those with copyrights and trademarks, giving a business exclusive rights to exploit an invention and prevent others from using it.
• Once a company receives a patent, though, an invention becomes public knowledge and competitors can try to emulate the design, say attorneys.

Finding answers

Intellectual property attorneys recommend several sources for more information or guidance about IP matters.

Maine Patent Program
www.mainepatent.org
874-6521
Funded by the state legislature, this program supports the commercialization and manufacturing of innovations in the state by providing education and assistance with the patent process of the United States Patent and Trademark Office.

Center for Law and Innovation
www.lawandinnovation.org
874-6521
The center, which is part of the University of Maine School of Law, studies the role of intellectual property law in economic development and regularly sponsors forums and lectures on law and innovation.

Maine Technology Institute
www.mainetechnology.org
582-4790
This state-funded, private nonprofit organization offers early-stage capital and commercialization assistance for the research and development of technology based projects in seven targeted technology sectors.

StopFakes
www.stopfakes.gov
866-999-HALT
A program created to educate the public about piracy and counterfeit goods and help protect U.S. businesses from fake goods.

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