I.P. BUSINESS SURVEY

CHECKLIST FOR INTELLECTUAL PROPERTY ASSETS

(Trade Secrets, Patents, Trademarks and Copyrights)

Patents, trademarks, copyrights, and trade secrets, known as intellectual property (I.P.), are the heart of any established or new business. This I.P. Business Survey will help you identify intellectual property assets, gather information and help you decide whether you should secure patent, trademark, copyright or trade secret protection for such assets.

TRADE SECRETS

A trade secret is anything that (a) is a secret, that is, not generally known in your industry; (b) has some value to your business; and (c) is maintained by you as a secret. Commonly recognized trade secrets are customer lists, supplier lists, design and manufacturing specifications (e.g., drawings), and all aspects of R & D (research and development) projects. Additionally, business plans, marketing plans and internally distributed operating and procedural manuals (especially production manuals) may be classified as trade secrets.

This package contains a Trade Secret Checklist which will help you organize your business trade secrets. Use the attached Employment, Consultant and Confidentiality Agreements to protect your trade secrets. The Checklist has a Manager's Trade Secret Summary Table to help you identify and monitor your trade secrets.

PATENTS

Important discoveries relating to machines, methods of manufacturing, computer programs which transform or monitor a physical element, or chemical compositions may be protectable with a patent. Prior to patenting an invention, you should protect your invention as a trade secret. There are many business factors which affect your decision to obtain patent protection on your inventions and discoveries. Some of these factors are:

(1) Is it worth attempting to patent the results of the project in view of the total cost of the project? (2) How much money will your company make on the sale of the new product? (3) Will your competitor copy the product? (4) In your industry, is it important to patent all new developments? (5) Do your investors think patents are important to your business? (6) Is it patentable? (A preliminary patent search from a patent attorney will answer this question)

The decision whether to file a patent application should be made early in the life of your product. If you are only interested in securing a U.S. patent, the U.S. patent application must be filed within one (1) year from the first sale of the product, offer to sell the product or first public disclosure of the product. A "public disclosure" occurs when you show or display a product or process to others without imposing an obligation of secrecy on them. The enclosed Confidentiality Agreement imposes an obligation of secrecy. Experimental use of a product or process is permitted and does not trigger the one year time clock within which to file your patent application. If you are interested in securing foreign patents on a product or process, you must file your patent application in the U.S. before the first public disclosure of the invention anywhere. The enclosed Patent Disclosure Document will assist you in monitoring this asset.

TRADEMARKS

Trademarks and tradenames are used by every business to distinguish their goods and services from the goods and services of competitors in the marketplace. Consumers recognize trademarks and tradenames as showing a common source, quality control or standard. Trademark registrations protect names and logos used in your business. With a trademark search, you can select a name or logo that is distinctive and different. If you use a trademark or tradename that confuses consumers, you may be violating another company's trademark rights. Ultimately, trademark registration will result in greater consumer recognition of your goods and services.

Anything that distinguishes your goods and services from the goods or services of others functions as a trademark. For example:

words and phrases (KODAK®) designs and logos (the NIKE shoe air-foil shape)

container shapes (the PINCH scotch bottle) sounds (the CNN chimes)

color (the color pink for home fiberglass insulation)

The trademark "protectablity spectrum" (1 = best and 7 = worst): inherently distinctive marks are (1) arbitrary, (2) fanciful, (3) merely suggestive; non-inherently distinctive marks require secondary meaning (long usage, high advertising $, or significant sales) (4) descriptive, (5)geographic, (6) personal name; and marks which have no trademark significance are (7) generic.

Trademark rights arise when you use the mark in your business to sell your goods or services. Generally, the first one to use the mark in a certain geographic region in a particular business owns the mark unless another party has previously registered the mark on the federal or state level. The owners of a federally registered mark can stop you from selling your products if the registration pre-dates your first use. A trademark clearance search is recommended before using a new mark. A federal registration protects your business' good will and advertising efforts. The enclosed Trademark Questionnaire will assist you in identifying your trademarks.

COPYRIGHTS

Copyrights protect your brochures, books, pamphlets, machine drawings, illustrations, operating procedures manual, and particularly computer programs developed for your business. Historically, copyrights protect films, books, musical scores and works of art. Copyrights are relatively inexpensive to register and yet provide substantial benefits.

If any of these works are created by your employees in the scope of their employment, your business automatically owns the copyright. If a work was created by someone other than an employee (anyone who does not receive a W-2 tax employee tax report), the law requires that the non-employee sign a document assigning the copyright to your business. A simple copyright assignment is:

"I, name of non-employee, hereby sell and assign the copyright to the Company."

All items should be marked "© Company Name, [year of publication]" whether the work is registered or not. The enclosed Copyright Checklist will help you monitor your copyrights.

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