The 10 Biggest Legal Mistakes Physicians Make Regarding Intellectual Property

Excerpted from The Biggest Legal Mistakes Physicians Make: And How to Avoid Them
Edited by Steven Babitsky, Esq. and James J. Mangraviti, Esq. (©2005 SEAK, Inc.)

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Executive Summary

Many small business people, including physicians, often forget about protecting their intellectual property rights until it is too late. Intellectual property is the generic phrase relating to copyrights, patents, trademarks, and trade secrets. With a myriad of other legal issues to address in running a medical practice, physicians do not often consider their intellectual property rights until someone has infringed or is trading on those rights.

Mistake 1 Seeking Assistance of Counsel Too Late

Many physicians are engaged in research and development at hospitals, universities, and corporations. Often, the results of such research and development are copyrightable articles and research reports, patentable processes and inventions, and goods that can be trademarked. For example, although a patent application can be filed only in the name of the individual who has created the invention, in most cases the physician’s employment agreement or contract contains provisions that assign patent and other intellectual property rights to the employer. With respect to copyright ownership, there can be complex factual situations regarding employees and employers, joint contributions to works, and works made for hire. Even if there is nothing specific in a physician’s employment contract, his or her employer may nevertheless have certain rights to the physician’s intellectual property.

Action Step Physicians should consult with an experienced attorney before they negotiate or sign any employment contracts. Specifically, the rights to any copyrights, patents, and trademarks should be clearly defined in the employment agreement.

Mistake 2 Failing to Take Full Advantage of the Internet

As the Internet has flourished in recent years, many of the best “.com” web addresses already are in use and are no longer available. For these and other reasons, the Internet Corporation for Assigned Numbers and Names (ICANN) has developed several new web address suffixes, known as top-level domain names (TLD). Among the newly developed TLD suffixes is “.pro,” which has been exclusively reserved for certain professions, including the medical profession. The .pro domain extension is available only for certain self-certified professionals. Doctors and other health care professionals must undergo a verification process to validate their eligibility to use a .pro name extension. Registration of a .pro domain requires the registrant to supply professional and personal information, which will be used to authenticate the registrant’s professional membership and identity.

RegistryPro, the company responsible for .pro, expects to launch the .pro domain in 2004 and is currently taking registrations. Initially, there will be only three profession-specific domain names available, one of which is “.med.pro” for medical and health-related services. For example, a physician’s Internet address could be www.johnsmithmd.med.pro. Physicians who already have a .com Internet address can keep it and forward it to their new .med.pro address.

Internet domain names also raise unique trademark issues. One is “cybersquatting,” when someone registers a federal trademark as a domain name for the purpose of selling the domain name to the trademark owner for a profit. In this situation, a physician may file a claim seeking to prevent the domain name registrant from continuing to use the mark as a domain name and to have the domain name registration transferred. The Uniform Domain Name Dispute Resolution Policy (UDRP) defines how disputes over domain-name registrations are resolved, which includes a mandatory, nonbinding, low-cost administrative procedure to resolve claims of abusive, bad-faith registration.

Action Step Physicians should register their website address as a .med.pro early before someone else does. If a physician has a federal trademark and someone else already has registered the mark as a domain name, the physician should file a claim under the UDRP. Although attorney assistance is not necessary to institute a UDRP proceeding, a physician should nonetheless consult with an experienced attorney.

Mistake 3 Failing to Obtain a Registration for Copyrighted Materials

Physicians who write articles or research reports, or create their own marketing materials (e.g., brochures, pamphlets, or newsletters; television, radio, or print advertisements; and Internet websites) automatically have copyright protection in those materials. A copyright exists when original works of authorship—including literary, dramatic, musical, artistic, and certain other works—are fixed in a tangible medium of expression from which the work can be perceived. The term of a copyright, whether or not registered, is the life of the author(s) (if identified) plus 70 years.

Although the law does not require registration of copyrighted work, there are significant benefits to registering copyrighted works with the U.S. Copyright Office in the Library of Congress. The sooner a work is registered, the more protection the owner will receive. Before a person can file a lawsuit to protect his or her copyright from infringement, that person must obtain a copyright registration. If the work is registered within five years of its publication, registration will be prima facie evidence in court of the validity of the copyright and of the facts stated in the registration certificate. Statutory damages (e.g., a fixed amount) and attorney’s fees will be available to the copyright owner in court actions only if registration was made within three months after publication of the work and prior to an infringement of the work. Otherwise, only actual damages and profits are available. These damages can be difficult to prove and are often less than the statutory damages.

Action Step Physicians should register their original works of authorship either before publication or within three months of publication to place themselves in the strongest position to enforce their rights in the event of infringement, establish the validity of their copyright, and obtain statutory damages. Copyright registration is relatively simple and inexpensive. Although the advice of an attorney is often helpful, it is not a prerequisite to registration.

Mistake 4 Failing to Place Copyright Notice on Publicly Distributed Copies

Although a copyright notice is not absolutely necessary, the failure to place a notice of copyright on publicly distributed copies can have dire consequences. Without the copyright notice, an infringer has an “innocent infringement” defense that can potentially reduce any damage award. Copyright automatically exists when an original work of authorship is fixed in a tangible medium of expression from which the work can be perceived. However, physicians should nonetheless place a copyright notice on any copy that is distributed to the public. The notice should indicate a copyright, the year of first publication, and the identity of the copyright owner. Notice can take any of the following forms: “© 2004 John Smith, M.D.,” “copyright 2004 John Smith, M.D.,” or “copr. 2004 John Smith, M.D.”

A different notice is required for a sound recording, such as a radio commercial, that is on a phonorecord (e.g., a CD-RW or a compact digital disk). Notice on a phonorecord must consist of (the letter P in a circle), the year of first publication, and the name of the copyright owner. An example of an acceptable form of notice on a phonorecord is 1999 John Smith, M.D.”

Action Step Physicians should place a copyright notice on any copy that is distributed to the public, regardless of whether the copyright is registered. Notice should be placed on each copy such that it gives reasonable notice of the claim of copyright.

Mistake 5 Failing to Obtain a Federal Trademark or Service Mark Registration

Physicians who use symbols, logos, or slogans in advertising or promotional materials to identify their practice may have a “trademark” or “service mark.” Although these terms are often used interchangeably, they have different legal meanings. A trademark identifies the source or sponsorship of goods; a service mark identifies the source or sponsorship of certain services, including medical services. Like the copyright, it is not absolutely necessary to federally register the mark. However, there are significant benefits to federal registration, including:

Providing constructive notice to others of one’s prior right in the mark;
Preventing others from using or registering confusingly similar marks in connection with similar goods or services;
The right to bring suit in federal court;
Establishing prima facie evidence in court of the validity of the mark;
Establishing prima facie evidence in court of the registrant’s ownership of the mark;
Establishing prima facie evidence in court of the registrant’s exclusive right to use the mark in commerce on or in connection with the goods or services specified in the registration certificate; and
Allowing a prevailing plaintiff to recover certain damages in court, not otherwise available.

To obtain a federal registration, the applicant must demonstrate actual use of the mark in connection with the sale of goods and services “in commerce,” meaning commerce that is regulated by Congress, such as interstate commerce. If the physician’s practice is not in “commerce,” and the physician is unable to obtain a federal registration, he or she may still be able to apply for a state registration, usually through the secretary of state’s office. However, the rights granted by one state will provide protection of the mark only in that state. Physicians who are unable to or choose not to obtain a federal registration for their mark may still seek to enforce their rights under federal law. However, it is more difficult to obtain monetary damages if the mark is not federally registered.

Action Step Although anyone can conduct a trademark search, it may be desirable to employ an attorney who is familiar with trademark matters. An attorney can conduct or obtain a clearance search and provide an opinion as to the registerability of the mark. Such a search may reveal a similar mark for similar goods or services, which would potentially be infringed by the proposed mark. The clearance search will help minimize the possibility that physicians will not be able to register their mark or that they will have to change their mark after having expended resources to build goodwill in it.

Mistake 6 Failing to Make the Mark “Incontestable”

A trademark or service mark owner may be able to make the mark incontestable under certain conditions. If a physician uses a registered mark in commerce or in connection with goods or services continuously and exclusively for five consecutive years after registration, he or she may file an affidavit and establish certain “incontestable” rights to the mark. Filing a Section 15 affidavit makes the registration conclusive evidence of the registrant’s ownership and provides exclusive right to use the mark. Incontestability also makes the mark immune from attack on the basis of a prior use of the same mark by a third party, and immune from attack by a third party on the basis that the mark is merely descriptive. Currently, the registrant must pay a $200 filing fee along with the Section 15 affidavit.

Action Step Although the assistance of an attorney is not necessary for this procedure, a physician should nonetheless consult with an experienced trademark attorney. The Section 15 affidavit must meet certain conditions set forth under federal law and must be filed within one year after the fifth year of exclusive and continuous use of the registered mark. As always, the physician or his or her attorney should consult the most current fee schedule published by the U.S. Patent and Trademark Office.

Mistake 7 Not Seeking to Patent an Innovative Business Method

With the increased complexity of running a medical practice, including complying with insurance reporting requirements and patient confidentiality regulations, physicians routinely seek new ways to simplify and implement new procedures to ease compliance. A business process or method, such as an information management method, can be patented. Generally, the basic requirements for a patentable process or method (not just the idea) are that the process be new, useful, and not obvious. For example, patents have been issued for e-commerce transactions, such as ordering products through a single click of a mouse and opening a consumer bank account. A physician who has created a new and unique method of implementing his or her idea may be able to obtain a patent. However, Congress has explicitly excluded medical or surgical procedures from patent protection.

Action Step Physicians should consult with an experienced patent attorney to determine if their innovative business method meets the requirements to be patented.

Mistake 8 Preparing and Filing One’s Own Patent Application

Applying for a patent is a complex process. The application itself is a complex document, and its preparation is governed by a series of complicated laws, rules, and customs. The inventor may believe that he or she is the most knowledgeable person to prepare the application, or that he or she can save money by preparing it. However, independently preparing and filing the patent application may eventually be more costly than simply having an attorney prepare it.

Once a patent application is filed, it must be “prosecuted” in the U.S. Patent and Trademark Office. Prosecution usually involves several correspondences known as “office actions,” which state the reasons for any adverse action, any objection, or additional requirements. Office actions also assist the applicant in determining whether he or she should continue the prosecution of the patent application. It is not uncommon for some or all of the applicant’s claims to be rejected by the examiner on the first office action, and relatively few applications are allowed as initially filed.

It is therefore likely that an applicant who initially declined to hire a patent attorney to save money will need one to repair the self-prepared patent application in response to an office action. If the application cannot be fixed, the inventor may lose the “priority” of his or her filing date or, in a worst-case scenario, the ability to patent the invention altogether. The second office action is usually the final determination of whether the patent will be granted and if unfavorable to the patent applicant is generally appealable to a court of law.

Action Step Physicians should obtain an experienced patent attorney or a nonattorney known as a patent agent to draft their patent application and prosecute it through the U.S. Patent and Trademark Office. It should be noted, however, that patent agents cannot conduct patent litigation in the courts if a physician needs to appeal a patent denial in a court of law.

Mistake 9 Failing to Protect Trade Secrets

In addition to the patent, trademark, and copyright laws, the law of trade secrets also may provide protection for intellectual property. One substantial benefit of trade secrets is that a trade secret can last forever, as long as its confidentiality is properly maintained. In most states, a trade secret is defined as any formula, pattern, machine, compilation of information, program, device, method, technique, or process that both provides the owner of the information with a competitive advantage in the marketplace and is treated in a way that can reasonably be expected to prevent the public or competitors from learning about it, absent improper acquisition or theft.

To maintain protection for trade secret information, one must use reasonable efforts to keep it confidential. Sensible precautions include marking documents containing trade secrets as “Confidential,” locking trade secret materials away after business hours, installing a security system, maintaining computer security and allowing access to secrets only to those with a need to know. Additionally, it is imperative to require everyone who has access to the secret materials, particularly employees, to sign an appropriate confidentiality and nondisclosure agreement.

A trade secret owner can enforce rights against someone who steals confidential information by asking a court to issue an order (an injunction) preventing further disclosure. To prevail in a trade secret infringement suit, a trade secret owner must show that the trade secret information provides a competitive advantage and that the information is maintained in secrecy. In addition, the trade secret owner must show that the information was either improperly acquired or improperly disclosed by the defendant. Once a trade secret is disclosed, whether intentional or through improper means, it is no longer protectable as a trade secret.

Action Step Physicians should develop procedures and safeguards to keep their trade secrets confidential, allowing access to secrets only to those with a need to know. Most important, physicians should consult with an experienced attorney to assist with the preparation of a confidentiality and nondisclosure agreement before granting anyone access to trade secret information.

Mistake 10 Failing to Enforce Intellectual Property Rights in a Timely Manner

Obtaining a copyright, patent, or federal trademark registration is only the first step in protecting intellectual property rights. The intellectual property owner must be vigilant in protecting intellectual property from infringement by others. The law requires affirmative acts to protect intellectual property rights.

Failure to take affirmative action to protect intellectual property rights within a reasonable period of time may result in a tremendous loss to the owner. For example, third-party use of one’s trademark may cause dilution to one’s mark, which weakens the mark’s secondary meaning, or its source identifying features. A trademark also can become generic and lose its trademark protection altogether. Physicians who wait too long to enforce their exclusive intellectual property rights may be barred by a statute of limitations, and infringers may be able to raise equitable defenses (e.g., waiver, laches, estoppel, ratification, and abandonment).

Action Step Physicians should establish procedures to watch for infringement and to take appropriate action to stop such infringement. They should employ a professional “watch” organization or an attorney to monitor filings at the U.S. Patent and Trademark Office and be notified of potential infringement. Physicians should ask their employees and patients to maintain records of confusion about trademarks and other instances of infringement. Also, physicians should ask their friends to report any similar trademarks, articles, commercials, and “knock-off” inventions. Upon discovery of infringement, physicians should have an experienced attorney immediately issue cease-and-desist letters to the infringer. If the demand letter is ineffective, they should initiate an infringement lawsuit to protect their rights.

Conclusion

Physicians make many costly mistakes with regard to intellectual property (such as copyrights, patents, trademarks, and trade secrets), and many of these mistakes can be avoided by consulting with counsel and taking advantage of resources to protect their rights.

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