Intellectual property (IP) has traditionally been thought of as the primary business driver of industries that rely on complex technology. So it should come as no surprise that companies in such industries have established policies and strategies for developing and procuring strong IP rights. Likewise, many in the gaming industry have recently recognized that future growth and success may also depend on developing and protecting their own unique IP. Indeed, today many gaming companies routinely procure IP rights for their products, brands, themes and processes much in the same way that traditionally IP-driven companies have in the past.
However, the question remains as to whether these gaming companies have also adopted the strategies and policies that have proven successful for others, and/or have they customized these techniques to suit their particular business. For many gaming companies that have limited experience developing and protecting IP rights, assessing and protecting their portfolios of IP assets to maximize their competitive advantage and increase revenue is a challenging task.
Following is an overview of the various types of IP and the role that each type plays in a gaming business. It explores how a gaming company’s careful planning and process implementation can be used to protect its own valuable IP assets and maintain or even increase its competitive edge in the industry
What is Intellectual Property?
Intellectual property is a creative idea that is treated under the law as a property. The various forms of IP include patents, trademarks, trade dress, copyrights and trade secrets.
Patents
Patents are on inventions, methods or designs that can be particularly and specifically described and must be registered with and issued by an authorized foreign or domestic agency such as the United States Patent and Trademark Office (USPTO). There are two main types of patent registrations available: utility patents and design patents.
Utility patents are the type of patents typically associated with protected inventions. To receive protection, the invention must be unique, novel and useful. Once issued, the utility patent is enforceable for 20 years from the date of filing.
Business method patents are a type of utility patent that are often of unique significance to gaming companies, particularly those companies involved in software and game development. A business method patent includes a claim to rights in the application of an algorithm that results in a useful, concrete and tangible result. While the business method patent covers the system and methods of the process or algorithm, the patent does not extend to the algorithm itself.
A design patent protects the non-functional aspects of an ornamental design as a whole and as illustrated within the patent. A design patent is only enforceable for 14 years from its issuance.
Trademarks
Trademarks are registered words, phrases, and designs or symbols that reveal the source of the particular good or service. Like patents, trademarks must be registered with the USPTO or a comparable foreign authority in order to receive protection. In the United States, trademarks are also protected under state law.
Trade Dress
Trade dress is similar to a design patent in that its protection covers designs that are inherently distinctive or that acquire distinctiveness that distinguishes a merchant’s or manufacturer’s goods or services from those of another. Trade dress applies to the visual appearance of a product or its packaging and can include the color of the packaging, the configuration of goods, or even its design theme. A product protected under trade dress may also be protected under a design patent, trademark and copyright.
While trademarks are typically directed to specific words, phrases or logos, trade dress frequently involves a combination of many features, including elements such as size, shape, color and graphics. Trade dress can also include the décor, theme or style of a restaurant, store or other place of business so long as the totality of the features identifies the owner as its source.
If trade dress can qualify as a trademark or service mark, it can be registered with the USPTO.1 A trade dress that is unregistered can also be protected under Section 43 (a) of the Lanham Act.2
Copyrights
Copyright protection is available for original works of authorship that can include the following categories:
• Literary works
• Musical works and lyrics
• Dramatic works, including any accompanying music
• Pantomimes and choreographic works
• Pictorial, graphic and sculptural works
• Motion pictures and other audiovisual works
• Sound recordings
• Architectural works
• Furniture and fabric designs
• All aspects of interior design
Several types of material are generally not eligible for copyright protection. These include subject matters that are:
• functional—procedures, methods, systems, processes, concepts, principles, discoveries or devices that are not reduced to a description, explanation, or illustration;
• already within the Public Domain;
• factual compilations—works consisting entirely of information that is common property;
• non-original works; or
• works that have not been fixed in a tangible form of expression (for example, choreographic works that have not been notated or recorded, or improvisational speeches or performances that have not been written or recorded).
A copyright contains several exclusive rights that allow the holder to prohibit others from:
• producing copies or reproductions of the work and to sell those copies (including, typically, electronic copies);
• importing or exporting the work;
• creating derivatives (works that adapt the original work);
• performing or displaying the work publicly;
• selling or otherwise assigning the work to others; and
• transmitting or displaying by means of digital audio
transmission (e.g., Internet, digital cable or satellite).
For an original work of authorship published today, copyright protection in the United States generally is for a term equal to the life of the author plus 70 years.3
Trade Secrets
Trade secrets are confidential business information that gives the business a competitive advantage. Trade secrets have some advantages over other IP in that trade secrets arise automatically and can protect a business process that might not otherwise be protected through patents, trademarks or copyrights. The information cannot be a trade secret unless it is kept secret by the business. Thus, trade secrets are lost if they are disclosed to parties outside the business without any confidentiality restrictions placed on those parties. Trade secrets are also lost if third parties independently develop this information without violating a confidentiality agreement or applicable law. Lastly, trade secrets are also lost once a business is granted a patent or upon publishing of the patent application. Trade secrets do not apply to information that is:
• generally known in the industry;
• published in trade journals, reference books or similar materials; or
• readily duplicated from products on the market.4
In Confold Pacific Inc. v. Polaris Industries Inc.,5 the court discussed the various differences of IP:
Confold believes mistakenly that a trade secret is a property right in the same sense in which a person has a property in his mattress. A property right in the latter sense is a right good against the whole world, which a trade secret is not, because it is perfectly lawful to “steal” a firm’s trade secret by reverse engineering. In contrast, a patent right is good against the whole world. A copyright is not because independent discovery is a defense to a copyright or a trade secret-claim; it is not a defense to a patent claim. But a copyright is a fuller property right than a tradesecret because copying is infringement; copying a trade secret, which is what reverse engineering does, is not.6
Confused yet? Let’s take a look at how each IP right can arise within the various sectors of the gaming industry.
Identifying Your Gaming Intellectual Property
Each segment of the gaming industry has the opportunity to identify certain IP rights that may overlap across the various segments. For example, see Charts 1, 2 and 3.7
Know What You’ve Got
A gaming company should never find out what kind of IP it has after it’s no longer protectable. Instead, the gaming company should be proactive in its quest to identify its gaming IP by first conducting an independent audit of its existing IP. Few companies have in-house counsel that is expert in all the disciplines of IP, and it therefore generally makes sense to seek assistance from outside IP counsel to perform this audit and to ensure all IP has been identified and evaluated.
Next, the gaming company should establish a process whereby the marketing, research and development, sales, and legal departments continually communicate with each another about new products or developments as they are considered by the company. While business people often are reluctant to involve lawyers, including an IP lawyer, in strategic and product development meetings, doing so makes it more likely that valuable IP will be identified and protected before a product is introduced to the marketplace.
Protecting Your Gaming Intellectual Property
Intellectual property protection needs to be made a corporate-wide management responsibility, not merely the responsibility and function of the research and development department, legal department or outside IP counsel. An appreciation of the value of IP needs to be infused throughout the corporate culture. The IP protection strategy should be communicated and enforced throughout the organization. Best practices should be developed, and the company should strive to maintain a focused and coordinated effort between the human resources, business development, research and development, finance, and legal departments to identify, protect, maintain and support IP assets.
Companies should also play an educational role with regard to IP and communicate the importance of protecting IP to all employees through visual reminders of the company’s policy. The goal of these initiatives should not be to reproach but rather to instill a sense of the importance of the company’s IP to all employees. Employees who assist in the identification, protection, exploitation or enforcement of IP should be rewarded, and employees who violate IP policies should be admonished (or even dismissed in egregious cases) to ensure full compliance with the company policy.
Employee Safeguards
Changing the corporate culture is the first step in protecting gaming IP. The next step is to develop a human resource policy that addresses protections and requirements commensurate with the position or security level of the company employee. For instance, your policy can define minimum requirements for all employees and then increase the requirements at each higher security level. A sample human resource policy may require the following of its employees:
All Employees: Prior to their employment, all employees must execute a written confidentiality agreement.
Software and Hardware Engineers: The employees who work to create new IP should execute a prior invention disclosure and IP agreement that discloses all IP that the individual created prior to the start of his or her employment and that affirmatively states that the company will retain the ownership of all IP created by the employee during his or her employment.
Senior Management: Employment agreements should be selectively given to the appropriate senior executives. In addition to incorporating the protections above, the employment agreement would contain non-disclosure, non-competition and non-solicitation clauses. Because state laws on these subjects vary, it is important to assure that knowledgeable counsel has reviewed the specific provisions of each agreement.
To effectively implement this human resource policy, the company needs to establish reporting processes that coordinate the efforts between the human resource and the legal departments, thereby ensuring that the employee receives and executes the appropriate IP agreement. By defining and implementing such a policy, your company would be better equipped to identity and protect your company’s ownership rights in the IP created by your employees.
Third-Party Safeguards
Gaming companies can no longer be isolated and rely on their vertical integration of their marketing, electrical engineering, software development and production teams to maintain a competitive edge in this ever-changing, technology-driven gaming industry. Instead, companies have realized that by focusing their core competencies in key gaming areas—like software development, for example—they can work with third-party companies that have focused their resources in other key areas, resulting in a final product that is better designed and faster to market. This synergistic approach requires, however, that certain safeguards be taken to protect the company’s gaming IP.
Maintaining Company Secrecy
Revealing valuable company information to third parties defeats the protection afforded to trade secrets. Remember, before an invention or an idea becomes a patent or a trademark, it is first a trade secret. Besides utilizing contractual agreements to maintain their confidential nature, a company must employ certain efforts to maintain company secrecy. The efforts to maintain secrecy, at minimum, should include advising employees of the existence of the trade secret, marking all documents attributable to the trade secret as “proprietary” or “confidential information,” limiting access or knowledge of the trade secret to a “need to know” basis, and finally, tightly controlling access to the area where the trade secret is being developed.
Non-Disclosure and License Agreements
As stated, contractual agreements with third parties play an important role in protecting valuable IP rights from being lost. Where trade secrets are to be disclosed, a non-disclosure agreement can require the third party to maintain the confidential nature of the trade secret. Patents and trademarks, on the other hand, are already disclosed to the public in exchange for exclusive rights given to the patent and trademark holder. Still, a non-disclosure agreement can require the third party to treat as confidential the discussions and negotiations regarding the potential license of the patent and trademark between the parties.
A license agreement can limit the rights granted to the IP to ensure that the company granting the license retains certain rights, such as ownership, territory, quality control, transferability and ownership of derivative works. The earlier that you involve your IP counsel in the negotiation process, the more value your attorney can provide your gaming company in protecting these rights.
Final Thoughts
Failing to recognize the importance, creation and protection of a gaming company’s IP can eliminate a possible competitive advantage and potentially threaten a company’s survival in this increasingly competitive industry. Regardless in which sector of the gaming industry the company competes, the stronger the IP rights, the stronger the gaming company and the larger the market share the company will ultimately control.
All views expressed herein are solely those of the authors and should not be attributed to Greenberg Traurig. Mistakes and omissions remain the sole responsibility of the authors. ©2008 Greenberg Traurig LLP.
Footnotes
1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition,§ 8:7 at 8-32 (West 4th Ed. 2005) citing Aromatique Inc. v. Gold Seal, 28 F.3d 863, 31 U.S.P.Q.2d 1481, 1483 (8th Cir. 1994).
2 15 U.S.C. § 1125(a).
3 Note that the term of a copyright can vary in certain circumstances, including its year of creation, and is quite complex. Consult a knowledgeable copyright lawyer to under-stand the copyright term of any particular work.
4 Henry H. Perritt Jr., Trade Secrets: A Practitioner’s Guide § 4:1 at 4-2 (PLI 2nd Ed. 2008).
5 433 F.3D 952(7th Cir. 2006).
6 Id. at 958-59 (citations omitted).
7 The lists provided are not exhaustive but just sample illustrations of the potential gaming intellectual proerty that may arise within a particular gaming segment. You should consult with experienced intellectual property counsel to identify the intellectual property that would be attributable to your gaming company.
8 Perritt, §4:1 at 4-2.
Richard H. Newman was formerly in-house patent attorney for Shuffle Master Inc. and is currently an associate with Greenberg Traurig LLP in Las Vegas. He specializes in obtaining and protecting intellectual property rights for gaming industry clients. He can be reached at
newmanr@gtlaw.com.
Sam Basile is Of Counsel at Greenberg Traurig LLP in Las Vegas. He focuses his practice on regulatory gaming and compliance, Internet gaming, tribal gaming, and gaming intellectual property. He can be reached at basiles@gtlaw.com.
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