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Home = : Economics= &=20 Public Policy : Courts : IP Law=20 And Competition For Retail Space=20

IP Law And Competition For = Retail=20 Space

Manufacturers must assert intellectual = property=20 protection to defend or secure choice retail space.=20

Wednesday, July = 05,=20 2006
By 

Manufacturers that make and sell mass-market retail products = are locked=20 in a continual battle to either keep their hard-won shelf space or = secure=20 a retail market for new products. Increasingly, they are turning = to=20 intellectual property law as a way of fending off competitors. The = traditional utility patents are important, but current weapons of = choice=20 also include design patent and trade dress protections. Copyright=20 protection is sometimes used.

Design patents have several advantages for = goods sold=20 in mass retail markets and should form a central part of a legal = strategy.=20 They protect ornamental appearances, are comparatively low cost, = and have=20 a short enough processing time to be useful while the product is = still=20 relatively young.

Trade dress is no-cost IP protection. For that = reason,=20 manufacturers who didn't bother to apply for patents use it, and = it is=20 increasingly asserted against competitive products that have a = similar=20 appearance. It has some limitations, however. It protects only=20 non-functional product features and only when the product design = has=20 already acquired a so-called "secondary meaning," i.e., = recognition in the=20 minds of the public that the design primarily identifies the = source of the=20 product. If a competitor enters the market quickly, trade dress = claims (as=20 to product appearance) may be defeated based on insufficient = secondary=20 meaning. In many cases, design patents offer better protection for = non-functional features.

Another defense to a trade dress claim is that the product = design is=20 not really a source identifier but instead that the design just = renders=20 the product more aesthetically pleasing. For example, a cocktail = shaker in=20 the shape of a penguin is deemed functional and not protectable = under=20 trade dress law. It could be protected, however, with a design = patent.

Utility patents protect functionality. This is = the=20 strongest form of protection and it generally transcends issues of = appearance. However, it takes a few years to obtain one, and by = then, some=20 of the product life may be exhausted. This form of protection is = highly=20 appropriate for products with long lives, where aesthetics are = less=20 important than functionality, or where the invention might be = improved in=20 the future by others. Owning a basic, controlling utility patent = is a=20 formidable advantage in protecting a product or for = cross-licensing in the=20 future, should it be necessary to have something valuable with = which to=20 barter.

Copyright is well suited to protecting = audiovisual=20 works, software, and the like but generally cannot be used to = protect=20 other retail products except in special cases, such as lamps which = can be=20 regarded as sculptural works. The main problem with copyrights is = that=20 they do not protect utilitarian features unless there are artistic = features that can be "conceptualized as existing independently of = their=20 utilitarian function." Like trade dress law, copyright law is not = meant to=20 be a replacement for patent law.

Asserting And Defending IP Rights

No matter the type of IP protection a manufacturer uses for a = product,=20 it is of no use in defending or securing choice retail space if = it's not=20 asserted.

When a competing product hits the shelves that is at all = similar to its=20 own, the first step for the manufacturer should be to demand that=20 retailers suspend further sales of the disputed product. The = burden this=20 places on retailers is significant. Should they continue to sell a = disputed product after receiving notification, they could = eventually be=20 found to have engaged in willful infringement and be liable for = damages=20 should the original manufacturer win its case in court. To defend = against=20 such claims, the retailer will want to show compliance with an = affirmative=20 duty of due care. That generally means getting an opinion of = counsel or=20 terminating sales. This decision has to be made before any = adjudication.=20 Usually the retailer turns to the supplier for indemnification, a = letter=20 from counsel, and defense against the accusation.

For the manufacturer of the new product, quick action is = necessary. If=20 there is concern over a design patent or trade dress claim, a fast = redesign of the product's appearance may be feasible, though this = often=20 requires new molds -- and, of course, additional expense. = Meanwhile,=20 further shipments of the product from abroad might be redirected = to=20 another market where the asserted IP right does not exist.

A settlement might also be worked out with the IP owner. This = can=20 involve a cash payment, sourcing, favorable manufacturing rights,=20 marketing assistance or transfer of the product line.

Edward D. Manzo is a senior partner with Cook Alex = (Chicago), an=20 intellectual property law firm. He can be reached at emanzo@cookalex.com = or=20 312-236-8500.



=C2=A92007 IndustryWeek. All Rights=20 Reserved.

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