Copyright, database rights, and some countries’ design rights—as well as rights covering confidential information, know-how, trade names, and get-up—are intellectual property rights that do not depend on an application process that results in registration.
If a right is not registered, third parties may find it impossible to identify either the ownership and/or the extent to which the unregistered right is protected.
Statutory unregistered rights are generally vested with the characteristics of property and may be assigned, licensed, and used as collateral, whereas nonstatutory rights may not possess these qualities.
The most legally and commercially significant nonregistered intellectual property right is copyright, a broad term that encompasses many different types of right. Some unregistered designs are also accorded protection.
Rights involving confidential information and trade secrets are generally recognized, although the manner in which the law protects them may differ substantially between different jurisdictions.
Unregistered rights in trade names and get-up, variously protected by laws of unfair competition and passing-off, serve to reinforce the registered protection provided by trademark and registered design law.
While patents, trademarks, and some other intellectual property rights require registration following a process of application and examination or deposit, other rights (such as copyright or some design rights) automatically come into being either when a work is created or as a consequence of a relationship. Examples of the latter are the rights in confidential information that arise from the relationship of a person who communicates information to a specific person or persons, and rights in the goodwill in a trading name that result from the relationship between a trader and his customers.
Nonregistered intellectual property rights are just as important as registered rights. Examples of extremely valuable nonregistered rights include J. K. Rowling’s copyright in the Harry Potter books and the formula for the Coca-Cola syrup. Both nonregistered and registered rights may exist together in the same object, whether serially or simultaneously. Thus an invention, which is vulnerable until the patent right is granted, is protected as a trade secret until it is disclosed to the public. Equally, a computer program that satisfies the appropriate criteria for patentability is also protected by copyright.
Problems Arising from Nonregistered Rights
Without registration, it is not easy to identify the rights holder of, in particular, a copyright work. It is dangerous to rely on information contained in a copyright notice in a published work or on a web page, since title to the copyright may have passed on more than once since the notice was originally published. Often a work is considered to be an “orphan work” if the author or copyright owner cannot be identified or traced at all. Some businesses are prepared to take the risk of using an orphan work without permission on the assumption that, if no author or copyright owner can be found, that use will remain undetected.
For practical reasons, it is not possible to provide a registration system for confidential information and technical know-how. A licensee of the use of such information may therefore unwittingly be paying for the right to use information that is already available in the public domain and which, with effort, the licensee could have found and used without payment. The party possessing such information will be reluctant to warrant its secret nature since it too has no means of verifying whether this is so.
As for trade dress (the visual appearance of a product), trade names, and logos, internet search engines have now facilitated identification of their existence and the extent and geographical scope of their use. Instances of accidental use of a trade name or trade dress that closely resembles that of a competitor have therefore fallen sharply. The same applies to unregistered designs of products whose shape is distinctive.
Nonregistered Rights As Property
Although details vary between different countries, copyright, database rights, and designs are generally protected by statute that specifically accords them the status of property that can be assigned, licensed, mortgaged, or left to someone in a will or on death. Rights in respect of confidential information, know-how, trade dress, get-up and the like are generally said to be in personam. This means that those rights can only be enforced against others when they are infringed in certain circumstances, but they do not constitute property as such. Commercial practice in most countries, however, is to treat the latter category of rights as though they were property when assigning them (whether together with the business from which they originated or separately).
Because of its variety and longevity, copyright in a single work may be simultaneously the subject of many separate property transactions. For example, the right to publish a work of fiction in book form may be assigned to A for 20 years, the right to serialize it in a newspaper may be exclusively licensed to B for six months, and the right to reproduce it in cartoon form for the full copyright term may be nonexclusively licensed to D. An option to purchase the movie rights, exercisable for 10 years, may be bought by E, and the right to produce a computer game based on it may be pledged to F as collateral for a loan which enables the copyright owner to pay for its translation into French so that it may be published in that language by G for 50 years. Since assigned rights may themselves be disposed of by the assignee, and many licenses permit the grant of sublicenses, a party that is not aware of all these transactions may struggle to establish precisely who controls which rights to a given work.
In principle, the owner of copyright, database right, or design right is the party that initially creates it. Rules which vary from country to country regulate issues relating to ownership where the creator is employed by another or is commissioned by another as an independent contractor.
Copyright, Database Right, and Unregistered Designs
In general, copyright extends to original literary, dramatic, artistic, and musical works and movies, sound recordings, broadcasts, and transmissions, but there may be substantial national variations. Thus, some countries’ copyright laws protect original perfumes, while others protect new published editions of old works and the first publication of a hitherto-unpublished work after expiry of the normal copyright term. The term of protection for original authors’ works generally contains a substantial postmortem element, while media that contain or transmit works are protected for a shorter, fixed period. Complex rules relate to normally unauthorized uses of others’ works that are permitted for news reporting, criticism and review, freedom of speech, and, in some jurisdictions, transformative use that results in the creation of a substantially new work.
Where a copyright work is created by an identifiable human author, that author may be entitled to exercise moral rights in addition to normal commercial rights. Moral rights may include the right to be known as the author, the right to object to pejorative alterations, the right to decide when the work is finished, and the right to withdraw it from circulation. In addition, in some countries a nonauthor has a corresponding right not to be falsely identified as author. These rights may be commercially insignificant, but if ignored can add delay, expense, and ill-will to any commercialization of an affected work.
Database right protects compilations of data where there has been substantial investment in their creation or acquisition but that fail to satisfy the criterion of originality for copyright in an author’s work. This 15-year right is provided in the national law of each European Union member state but has not yet been accepted as an international norm.
Many countries protect original or novel designs under an unregistered design right, either in place of or in addition to a regime for registration of designs. In the European Union, the harmonized national unregistered design right provides protection for three years—usually sufficient to assist a product based on a novel design concept at the earliest stages of its marketing.
Rights in Confidential Information and Know-How
Depending on the jurisdiction, confidential information is generally protected by principles of civil law or by equitable rules that govern unreasonable conduct. Where the relationship of confidentiality between discloser and disclosee is contractual (as in the case of the licensing of trade secrets or technical know-how), the nature and extent of protection against wrongful use or disclosure are governed by the terms of the contract. If the confidentiality relates to personal rather than technical or commercial information, a further level of protection may be imposed by obligations to protect personal privacy under the Universal Declaration of Human Rights, the European Convention on Human Rights, or under local laws.
Where the confidentiality of information is lost through a wrongful act, the accused party may face both a claim for damages and an injunction to prevent it obtaining advantage from the fact that the information is no longer secret.
Rights in Commercial Get-Up, Trade Names, and the Like
Even where no trademark right is registered, any sign, emblem, or get-up identified with one trader may not be used by another with a view to diverting custom. This is achieved by rules relating to unfair competition, or passing-off, or by statutes that prohibit specific unfair marketing practices. To invoke this protection, injured parties must generally prove that the allegedly infringing item is associated with them by their customers. Such evidence can be expensive to obtain and, where obtained by survey evidence, may be rejected as methodologically flawed.
Although this relief is invoked with decreasing frequency as the scope of registrability of trademarks widens, it remains important. It may be the only relief where, for example, the plaintiff’s trade name or get-up is not registrable as a trademark, or where the activity objected to does not fall within the legal definition of trademark infringement but nonetheless interferes with the plaintiff ’s trade.
Hypothetical Case Study
Calorie Corporation develops a fast-food concept that it wishes to develop as a business format franchise. Following confidential discussions with external consultants and key officers, the corporation creates a manual containing descriptions of the various concepts that will comprise the new franchise, together with sketches and guidance on operating, reordering stock, accounting, and advertising. Each element of the manual is protected by copyright as well as by confidentiality.
Calorie next produces a model for the restaurant, including furniture and design concepts, which it trials at a nearby location. Now the existence of the restaurant becomes public knowledge, though the contents of the manual do not. Members of the public give their reactions, which are favorable, to the ambience and décor, which, collectively, constitute the restaurant’s get-up. The name Fancy-Fry is chosen for the concept. This cannot initially be registered as a trademark since it is descriptive of the restaurant’s fare. However, the name catches on and generates goodwill among local diners.
A disgruntled ex-employee surreptitiously obtains a copy of the format manual, which he photocopies and returns. Using it, he opens up the Fancy-Free restaurant across the street from Fancy-Fry. The ambience and get-up of the two restaurants cause diners to assume that they belong to the same franchise.
Calorie can sue for injury to its confidential information, infringement of its unregistered trademark and its copyright, for misappropriation of its trade dress, and can force Fancy-Free to change or close—all without the assistance of any registered intellectual property rights.