Intellectual Property Ownership| Legal Solutions (2022)

December 2014 edition

Tina A. Syring and Felicia J. Boyd, Barnes & Thornburg, LLP

Intellectual Property Ownership| Legal Solutions (1)Intellectual Property Ownership| Legal Solutions (2)Companies often hire and invest in employees to develop new products, improve processes, create new technologies and develop new markets. With this investment, it should come as no surprise that employers generally own the intellectual property created by its employees in the course of their employment. However, intellectual property that is created by an employee, other than in the course of employment, is owned by the employee not the employer. These simple principles present challenges for employees and employers alike.

Employers should not rely on assumptions of ownership

Intellectual property created during the course of an employee's employment does not equate to the employer's automatic and exclusive ownership of any and all intellectual property. In fact, employers who mistakenly believe that they own such property automatically can pay an expensive price – monetarily and through the loss of inventions or improvements – for failing to protect such intellectual property or effectively securing the rights from employees.

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Critical to an employer's ownership of intellectual property is a written agreement with the employee, one which specifically assigns to the company any and all intellectual property created by the employee during the course of his or her employment with the company. Such an agreement is often called an "assignment of inventions" or "ownership of discoveries" agreement. Absent such an agreement, the employee may have ownership rights in the intellectual property he or she created while working for the company, even if the individual was specifically hired to invent a particular product or process.

To avoid disputes over whether sufficient consideration exists to support the validity of the agreement, employers should require that the agreement is executed prior to the commencement of the employment relationship, and the agreement should reflect that but for the employee's execution of the agreement, the company would not employ the individual. In the event the agreement was not entered into contemporaneous with the start of employment, the employer will need to provide additional, sufficient consideration to support the agreement. Such consideration can include, for example, a promotion, a one-time bonus, or, for example, a grant of restricted stock options. If entered into after the employment relationship has been established, the consideration must be more than a nominal amount in order to support the agreement. A dollar is not likely to constitute sufficient consideration.

Also important to the agreement is the inclusion of an addendum, wherein the individual identifies all intellectual property in which he or she has an ownership interest prior to the commencement of his or her employment with the company. If the agreement is executed after the commencement of employment (and sufficient consideration has been provided as noted above), the employer still should have the employee identify all intellectual property he or she believes to own. In the event the employee identifies and claims ownership of intellectual property that has been created during the course of employment and with company resources, and claims ownership to such property, the company should immediately work to determine if the employee truly owns it or if it is owned by the company. By doing this at the outset of the relationship and/or execution of the agreement, employers are proactively mitigating possible arguments later down the road about who owns what.

Employers also should make sure the written agreement complies with applicable state laws. For example, certain states require that the agreement include clear language carving out intellectual property created by the employee (i) entirely on his or her own time, (ii) without the use of any company property (e.g., equipment, supplies, facilities or confidential, trade secret information), (iii) that does not relate directly to the company's business or anticipated research or development, and (iv) does not result from the individual's work performed for the company. Some employers require employees to continually disclose intellectual property created outside the realm of his or her employment relationship. Again, this is done to avoid future arguments as to whether the company actually owns such intellectual property.

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Next, employers should include language detailing what happens if the employee misappropriates and/or infringes upon the company's ownership of intellectual property. The agreement should contain a remedies and relief provision, which includes the right to seek injunctive relief and the recovery of attorney's fees and costs upon demonstration of the employee's breach. Often times, employers forget to include such language and, as a result, there is no meaningful "teeth" to the agreement, causing some employees to be bold in their self-interested actions.

Finally, employers should remember to use similar "assignment of inventions" or "ownership of discoveries" provisions or agreements when working with independent contractors. The independent contractor agreement should clearly state that the independent contractor's work of authorship, finished product, invention, or other intellectual property will be owned exclusively by the company, free of any royalty fee or license. The agreement also should state the independent contractor "hereby assigns" all rights in the intellectual property so to eliminate any issues if and when the company pursues a patent or copyright.

Tips for the employer:

  1. Determine if you have a written agreement with your employees and independent contractors. If so, does it include an "assignment of inventions" or "ownership of discoveries" provision? Does that provision clearly state the employee "hereby assigns" all rights and ownership in the intellectual property, trademarks and/or copyrights?
  2. Make sure the written agreement is supported by sufficient consideration. Was the agreement executed prior to commencement of employment or later? If later, what additional consideration did the company provide to the employee in exchange for his or her execution of the agreement?
  3. Have prospective employees and/or independent contractors clearly identify, in writing, any intellectual property they may own prior to commencing the employment or contractual relationship.
  4. Periodically have employees update and identify, in writing, any intellectual property in which they believe they own and make sure such intellectual property was created independent of the company's resources and the employees' duties.
  5. Conduct exit interviews with employees and independent contractors, reminding them of their contractual obligations.
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Opportunities exist for employees to own their ideas

Where there is no employment agreement, policies or written agreements to assign rights to the employer, employers may still successfully assert ownership rights in employee inventions created during the course of the employee's employment. The lynchpin to an ownership analysis is often whether the idea was created "in the course of the employment." It is not sufficient for an employer to point to a paycheck and lay claim to all of an employee's ideas. Rather, the idea at issue must have been created during the course of the employment relationship. Thus, close examination of the relationship may reveal that the employee owns the ideas because they were developed outside of the employment relationship.

A primary focus of this analysis will be the reason for the hire of a particular employee. If the employee was hired to create intellectual property as part of their job, the employer will be the owner of the intellectual property. Thus, examination of the written employment contract and the duties described therein can be determinative of the ownership inquiry. Absent a written agreement, the courts will look to the nature of the position and whether the employer gave directives or set goals for the employee to achieve. Ideas which stem from these directives will generally belong to the employer. Consideration needs to be given to all the circumstances.

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For example, care must be taken when asserting ownership simply because the idea was conceived or developed at home, during non-working hours or using personal equipment. The fact that an employee used the employer's equipment is not enough by itself to show that the employer should own the intellectual property created with the use of that equipment. Similarly, it is not enough for the employee to claim ownership simply because he or she used their personal equipment or conceived the idea at home. The analysis will delve deeply into the role the employee played at the company and whether the idea stemmed from that role. Thus, the employee in the shower at home who suddenly conceives of the long sought after solution he has been working on at his job cannot claim ownership of the idea simply because the idea arose in the shower. Likewise, an employer cannot claim rights to an employee's creation of a computer software game built at home where the employee's work role bears no relationship to game creation, even where the employee took notes during work hours related to his game ideas or tested those ideas on employer-owned computers.

One must also consider whether there is, in fact, an employee-employer relationship. In many cases, the hire is one of an independent contractor. This too is a multi-factor analysis, but one with significant consequences. Independent contractors generally own what they conceive in the absence of written agreements specifically transferring ownership of the same to the contractor. For example, under federal copyright laws, ownership of copyrightable works is generally held by the author (the individual who creates it), with the express of exception of works made by employees during the course of their employment. This exception does not apply to works made by independent contractors. Independent contractors will own the copyright unless: (1) the work falls within one of nine statutorily specified types of works and there is a written "work-for-hire agreement" between the creator of the work and the company who commissioned its creation; or (2) the copyrights are assigned in writing by the contractor. The nine types of works that qualify as works for hire are narrow: a contribution to a collective work, part of a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional test, a test, answer material for a test, and an atlas. Fall outside these categories and the copyright belongs to the independent contractor.

Patent ownership, like copyright, is presumptively owned by the inventor, i.e. the employee inventor. Employment agreements will usually require assignment of ideas, including patentable ones, to the employer. Even if such an agreement is not in place, employee ownership may not result in exclusivity of use or exploitation of that idea. The employer may still hold "shop rights" in the process or invention whose development it supported. The idea of shop rights simply gives an employer who provided funding, materials, tools, or work time for the project nonexclusive royalty-free rights to use an invention. The employer may not assign or transfer any shop rights to another unless expressly allowed, with the exception of a transfer of the employer's business as part of a business sale.

Contracts will play a role in the ownership of trade secrets as well. Absent a contract, state law will govern ownership. This is a patchwork of laws and decisions which may assist the employee to assert ownership over a trade secret or attack the notion that the idea is a trade secret, where a contract does not exist or is not sufficiently specific with respect to the idea at issue. If the idea is not protected by copyright, patent or trade secret law, the idea is free for any and all to take, regardless of one's current or former employment relationship.

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Finally, trademarks and slogans are not typically the subject of ownership disputes. Trademarks belong to those who use them, not those who create them. Thus, the company which uses a mark to promote a service or good will own the mark and the goodwill associated with that mark. Disputes over trademark ownership in an employee-employer relationship would be atypical.

Tips for the employee:

  1. Examine your employment agreement. What did you agree to do? Understand what you sign before you sign it and seek legal advice if you are unsure of what rights you have retained.
  2. Look at any other agreements executed and determine whether consideration was paid for the execution of those agreements. Agreements signed after you are employed will be open to challenge if additional, or insufficient, consideration was not provided for these new obligations.
  3. Keep records documenting the creation of your ideas on your own time, with your funds and your own equipment. Do not rely on memory and do not assume that ideas worked on at home or on your own time belong to you.
  4. Review non-compete agreements to assess their enforceability and reasonableness. Certain states will not enforce any non-compete agreements even those agreements which have the effect of hindering the freedom of employee job changes and which are not labeled as "non-compete" agreements.
  5. Were you an employee or an independent contractor? The difference matters in determining ownership and should be reviewed by a legal professional.

This Barnes & Thornburg LLP article should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.

About the authors

Tina A. Syring is a partner in Barnes & Thornburg LLP's Minneapolis office and a member of the firm's Labor and Employment Law Department. Ms. Syring counsels clients on a variety of labor and employment issues, drafts and negotiates executive compensation agreements, and works with employers on the impact of social media. Ms. Syring was selected for inclusion in the 2011, 2012, 2013 and 2014 editions of Minnesota Super Lawyers®, and was named a Minnesota Rising Star by Minnesota Law & Politics. In 2013 and 2014, Chambers USA recognized Ms. Syring as an up and coming lawyer in the area of Labor & Employment: Minnesota.

Felicia J. Boyd is a partner at Barnes & Thornburg LLP's Minneapolis office and is co-chair of the firm's Intellectual Property Department. Ms. Boyd focuses her practice on complex intellectual property litigation and has led plaintiff and defense litigation on a large variety of claims related to patents, copyrights, trademarks, and trade dress. Ms. Boyd was recognized by Chambers USA for her IP Litigation practice and has been included in The Best Lawyers in America for the years of 2010-2015 in the field of intellectual property law. In 2013, Minnesota Lawyer named Ms. Boyd as one of its "Attorneys of the Year" and Minnesota Monthly recognized her as one of "Minnesota's Best Lawyers."

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FAQs

What is intellectual property * your answer? ›

Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.

How do you prove ownership of intellectual property? ›

An intellectual property document is a document which proves intellectual property rights. It is a legal document stating the ownership or rights for intellectual property.
...
The following are valid intellectual property documents:
  1. Trademark License.
  2. Proof of Patent.
  3. Copyright Ownership.
2 Aug 2022

How do you solve intellectual property rights? ›

Following are the best ways on how to protect intellectual property rights:
  1. Apply For Trademarks, Patents, and Copyrights. ...
  2. Never Stop Innovating. ...
  3. Arrange Some Evidence While Innovating. ...
  4. Separate Teams. ...
  5. Get the Intellectual Property Infringers Punished. ...
  6. Avoid Joint Ownership For Intellectual Property Rights.
28 Mar 2021

Why is intellectual property important? ›

IP ensures you are recognised as the creator of such things as an invention; literary and artistic works; designs and software. To protect these types of IP there are: registrable rights - IP Rights (IPRs) such as patents, trademarks and design rights; and.

Why is it important to protect intellectual property? ›

Why is IPR Important? Intellectual property protection is critical to fostering innovation. Without protection of ideas, businesses and individuals would not reap the full benefits of their inventions and would focus less on research and development.

How is ownership determined? ›

Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different parties.

What determines ownership? ›

Ownership is the legal right to use, possess, and give away a thing. Ownership can be tangible such as personal property and land, or it can be of intangible things such as intellectual property rights.

What is intellectual ownership? ›

Owning intellectual property

You own intellectual property if you: created it (and it meets the requirements for copyright, a patent or a design) bought intellectual property rights from the creator or a previous owner. have a brand that could be a trade mark, for example, a well-known product name.

How can you protect intellectual property rights in the innovation process? ›

Patents. A patent is an exclusive right given for an invention, which is a product or a method that gives a new technological solution to a problem or a new way of doing something. It gives the patent holder protection for his or her idea. The protection is only provided for a set amount of time, namely 20 years.

How can we prevent infringement of intellectual property? ›

Some ways to protect your Intellectual Property
  1. Keep it under scrutiny. ...
  2. Be aware of your Intellectual Property Rights. ...
  3. Consult an expert. ...
  4. Double check if your idea is unique. ...
  5. Hire an auditor. ...
  6. Keep a record of almost everything related. ...
  7. Protect your IP without delay.
12 Oct 2021

How can you protect your intellectual property in the international environment? ›

You must protect your IP by filing for a patent in a specific country. In order to file for a patent overseas, you must already have a U.S. Patent and Trademark Office license.

Why intellectual property is important to me as a student and future professional? ›

In today's globally competitive economy, role of intellectual property is inevitable in every profession ranging from doctors, engineers, technicians, managers, among others. Therefore it makes it all the more important for every working professional to understand and appreciate the nuances of intellectual property.

Why is intellectual property important to business? ›

For many businesses, intellectual property protects more than just an idea or a concept – it protects genuine business assets that may be integral to the core services of the business and overall long-term viability.

What is intellectual property and how is it protected? ›

Intellectual property is owned and legally protected by a person or company from outside use or implementation without consent. Intellectual property can consist of many types of assets, including trademarks, patents, and copyrights.

What is the most important intellectual property? ›

Patent: Patents protect inventions. They give the patent holder the right to exclude others from making, using, marketing, selling, offering for sale, or importing an invention for a specified period.

What happens if you don't protect your intellectual property? ›

If you don't protect your intellectual property by conducting the necessary searches or applying for applicable registrations, your company is at much greater risk of infringement, meaning a third party could prevent you from using your intellectual property, such as your name or logo.

How can I protect my intellectual property online? ›

To protect your intellectual property online, add your name and/or website URL or watermark to your training videos and documents. That way, if your content has been shared illegally, it has your logo, face and website.

How does intellectual property work? ›

Intellectual property law exists in order to protect the creators and covers areas of copyright, trademark law, and patents. Thus, intellectual property is an umbrella term encompassing both copyright and industrial property, such as trademarks, patents, and inventions.

Why is ownership important? ›

Lastly, taking ownership is important because it builds trust, support, and bonds with people you care about. A team cannot thrive without a culture of accountability because it's what keeps everyone working together toward a collective, defined organizational mission.

What are the characteristics of ownership? ›

Characteristics of Ownership
  • Right to possess - ...
  • Right to possess the thing, which he owns: ...
  • Right to use and enjoy: ...
  • Right to Consume, destroy (liberties) or alienate: ...
  • Perpetual right / Indeterminate Duration: ...
  • Actual right: ...
  • Ownership has a residuary character:

What is the importance of ownership structure? ›

Ownership structures are of major importance in corporate governance because they affect the incentives of managers and thereby the efficiency of the firm. The ownership structure is defined by the distribution of equity with regard to votes and capital but also by the identity of the equity owners.

Is ownership of property a right? ›

Ownership of property refers to the legal right to exclude others from the specific thing owned. So property is a bundle of rights associated with all physical and non-physical things.

What is right of ownership? ›

The right by which a thing belongs to some one in particular, to the exclusion of all other persons.

Can a company own intellectual property? ›

Employers typically own intellectual property developed by their employees, but there is room for negotiation. Intellectual property rights can be a concern for employees regarding works created or developed within the workplace context.

What type of property is intellectual property? ›

Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.

What are examples of intellectual property? ›

Utility patents: for tangible inventions, such as products, machines, devices, and composite materials, as well as new and useful processes. Design patents: the ornamental designs on manufactured products. Plant patents: new varieties of plants.

What is intellectual ownership in primary research? ›

Intellectual Property Rights (IPR) are automatically assigned to the creator of an original work. This also applies to the creation of research data and plays a role when creating, sharing and re-using data.

How does intellectual property effect human lives? ›

It enhances our lives, grows our economies and sustains our world by ensuring new, high-quality innovations are continually developed across society. Everyone from a researcher in a laboratory to the innovator dreaming up the next big invention in his garage uses IP to advance their work.

How do you protect your ideas? ›

About Patents

To protect your invention, you must apply for a patent. Unlike copyrights, there is no such thing as an automatic patent. Obtaining a patent can be slow and costly, taking up to 2 years and costing in the six figure range.

Why does intellectual property need to be promoted and protected? ›

IP protection encourages publication, distribution, and disclosure of the creation to the public, rather than keeping it a secret. Promotion and protection of intellectual Property promote economic development, generates new jobs and industries, and improves the quality of life.

What protects the intellectual property created by investors? ›

QUESTION: What protects the intellectual property created by inventors? ANSWER: Patents protect the intellectual property created by inventors.

How does social media protect intellectual property? ›

Best practices for copyrights in social media are:
  1. Have permission to use other's work. Just because you found it on the internet rarely means it is free for you to use. ...
  2. Use takedown notices to prevent infringement of your rights in social media. ...
  3. Know the use policies for the social media platforms you use.
4 Oct 2021

Why are intellectual property important and what considerations should you have when you are planning an intellectual property strategy for your own business Brainly? ›

Owning intellectual property helps you protect from others using something identical or similar to your creation, brand or product, and can also create new sources of revenue should you desire to license your goods or services out to third parties.

How does intellectual property helps you as a student? ›

In a nutshell, a student who discloses information about an invention (or research) before the IP is legally protected could prevent that knowledge from being patented.

What I learned about intellectual property? ›

Intellectual property rights are intangible rights that protect the product of your intelligence, creativity, and invention. Intellectual property rights prevent others from taking advantage of the product of your intelligence or creativity without your permission.

Why is intellectual property a valuable asset for the owner? ›

It gives the owner of the property the opportunity to share their creations with limited competition and protects the company's competitive point of differentiation. Intellectual property rights can sometimes be an extremely valuable bargaining tool rights, and it can be sold for financial gain.

How do you manage intellectual property? ›

Top tips for managing intellectual property
  1. Invest in the right advice early on. ...
  2. Identify and monitor IP. ...
  3. Identify an IP strategy. ...
  4. Value your IP portfolio. ...
  5. Company names and/or domain names. ...
  6. Registered designs. ...
  7. Make contracts watertight. ...
  8. If a dispute arises, specialist advice should be sought as soon as possible.

Does intellectual property have value? ›

Although it's an intangible asset, intellectual property can be far more valuable than a physical asset. It often provides a competitive advantage over other entities, making it particularly guarded and protected by those that own it.

How does intellectual property help the organization grow? ›

Intellectual property (IP) is the backbone of any modern organization. IP protection acts as both a shield and a sword for businesses: helping them secure their long-term revenue streams through IP licensing and enforcing patent rights.

What is intellectual property and its importance? ›

IP ensures you are recognised as the creator of such things as an invention; literary and artistic works; designs and software. To protect these types of IP there are: registrable rights - IP Rights (IPRs) such as patents, trademarks and design rights; and. unregistered rights such as copyright.

How can you show respect of other's intellectual property? ›

Respecting the intellectual property of others means we: Obtain proper authorization and licensing agreements before using any intellectual property and strictly follow the terms of use. Respect copyrights, trademarks, logos, likenesses and other intellectual property in our advertisements and marketing.

How long is intellectual property protected? ›

Patent protection lasts 20 years from the date of filing, and maintenance fees are required at 3.5, 7.5, and 11.5 years from the date of the patent grant. All USPTO fee schedules may be found here. In the U.S., protection for industrial designs is also provided under the patent system.

What is intellectual property? ›

Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.

What is intellectual property and examples? ›

There are four main types of intellectual property rights, including patents, trademarks, copyrights, and trade secrets. Owners of intellectual property frequently use more than one of these types of intellectual property law to protect the same intangible assets.

What is intellectual property quizlet? ›

Intellectual property (IP) is the property of your mind or proprietary knowledge. It can be an invention, a trade mark, a design or the practical application of your idea. What are the components of intellectual property? IP consists of copyright, trademarks, patents and designs.

What is intellectual property right? ›

Intellectual property rights (IPR) refers to the legal rights given to the inventor or creator to protect his invention or creation for a certain period of time. [1] These legal rights confer an exclusive right to the inventor/creator or his assignee to fully utilize his invention/creation for a given period of time.

Why is intellectual property important to business? ›

For many businesses, intellectual property protects more than just an idea or a concept – it protects genuine business assets that may be integral to the core services of the business and overall long-term viability.

How do intellectual properties work? ›

Intellectual property – or IP – refers to anything that has been created, like designs, inventions, brand names, and literary works. IP is protected by law, for example through copyright, patents, and trade marks, so the author has sole authorisation over who can use and distribute their work.

How can you protect your intellectual property rights from getting violated? ›

Some ways to protect your Intellectual Property
  1. Keep it under scrutiny. ...
  2. Be aware of your Intellectual Property Rights. ...
  3. Consult an expert. ...
  4. Double check if your idea is unique. ...
  5. Hire an auditor. ...
  6. Keep a record of almost everything related. ...
  7. Protect your IP without delay.
12 Oct 2021

What is a good example of intellectual property? ›

Examples of intellectual property include an author's copyright on a book or article, a distinctive logo design representing a soft drink company and its products, unique design elements of a web site, or a patent on a particular process to, for example, manufacture chewing gum.

How do you use intellectual property in a sentence? ›

Examples of intellectual property in a Sentence

Any song that you write is your intellectual property.

Is intellectual property an asset? ›

In accounting, intellectual property is considered an intangible asset, and, when possible, should be recorded as such on the balance sheet. Copyrights, trade marks and patents should be recorded on the balance sheet and other financial statements at or below, cost price.

What is the strongest form of intellectual property protection? ›

Patent protection is the strongest form of intellectual property protection, in that a twenty-year exclusive monopoly is granted to the owner over any expression or implementation of the protected work (35 U.S.C.

What is an example of intellectual property quizlet? ›

Examples of intellectual property are books, songs, movies, paintings, inventions, chemical formulas, and computer programs.

How long does copyright last? ›

The term of copyright for a particular work depends on several factors, including whether it has been published, and, if so, the date of first publication. As a general rule, for works created after January 1, 1978, copyright protection lasts for the life of the author plus an additional 70 years.

What are the types of intellectual property? ›

Copyrights, Patents, Trademarks, and Trade Secrets – Four Types of Intellectual Properties. If you are a business owner, you should familiarize yourself with the four types of intellectual property, otherwise known as IP.

What is intellectual property law and what is the main purpose of it? ›

It shall protect and secure the exclusive rights of scientists, inventors, artists and other gifted citizens to their intellectual property and creations, particularly when beneficial to the people, for such periods as provided in this Act. The use of intellectual property bears a social function.

What is intellectual property business? ›

Intellectual property covers a wide range of business assets, from copyright to trade marks and patents to design rights. It's important to protect your intellectual property rights and avoid infringing the rights of other intellectual property owners.

Videos

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4. Protecting Intellectual Property in the UAE - Legal Breakfast Seminar
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5. "Intellectual Property Basics: Understanding Patents, Trademarks, Copyrights and Trade Secrets"
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6. Introduction to IP: Crash Course Intellectual Property #1
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