Driving through any just about any neighborhood, you will find homes that have overgrown, unkempt lawns, a stack of freebie newspapers on the front steps, no curtains in the windows, and basically just a "nobody lives here" feel to them.
These are the properties that you are looking for. Once you find one, you need to act quickly to seize your profits!
When you locate a property that you feel is vacant, the first thing to do is attempt to locate the owners of the property. First and foremost, go to a neighbors home and ask if they know anything about the home and its former occupants. Many times a neighbor will be a gold mine of information, and they probably love to talk!
When they start talking--listen up!
Take out your notepad and begin taking down all of the information they care to share. Do understand that much of this info may be speculation and gossip, but there may indeed be a nugget of truth in there somewhere.
If they indeed say that the property is vacant, you may want to sneak a peek at any old mail that may have been delivered and not forwarded. It is illegal to take mail out of the mailbox, but you can sneak a peek, get the name off of any old mail. This in itself will aid you in locating the owner.
Now that you have armed yourself with as much ammunition as you could find at the property, you will want to set out to investigate further. Depending on the size of your city, you will want to go to the city hall or county building and simply ask to whom you should speak in order to locate the owner of a certain property.
They will direct you to the office or offices that will give you the best information. I personally have found that the tax recorders office has the best records because they collect the taxes every year.
In my town, they tell me if the property was classified as a single-family or multi-family home and the name and address of the last known owner. Between what I find out at the property itself from the neighbors and my sneaking around and the city and county buildings, I set out to contact owners.
Try to talk to a former tenant first
Before I actually attempt to get to the owners of the property on the phone, I try and talk with the person who actually lived in the property last. Many times this was a tenant. Why would I want to talk with a tenant?
Simple: You want to find out the truth about what is wrong with the place! Again, you want to try and get the previous tenants on the phone if possible.
If you have the name and address, you can do a quick search using an Online phone directory www.anywho.com. You simply input the information and hopefully you will come up with a contact number.
A quick call to the tenant explaining that you are doing research on the property located at "xyz address," and that you need information on the property "before our offices contact the owner" and you will get every bit of dirt the home has to offer!
You will know which lights are burnt out and which hinges squeak on which doors. Of course, we want all this information to gain the control we need when speaking to an owner.
The final step is to contact the owner directly. You want to have extreme confidence when speaking with them. The way to gain this confidence is to remember that you hold all the cards:
Get the owners on the phone if you can and tell them that you are an investor who purchases and renovates homes in that community.
Tell them that you are working with neighbors (You are because you spoke with them, remember?) in an effort to revitalize their neighborhood, and that you may be interested in buying the property IF the repairs are not too extensive.
At first the owners may try to play hardball and state that the home is great, and they were planning on fixing it up, but they will consider any offers. Be friendly and upbeat and explain that that would be great.
Tell them that you had already figured that they would be looking to fix it up, and that you have a list of needed repairs from an exterior inspection and speaking with the former tenant (give them the tenant's name).
At this point, they will know that you have them, and their attitudes will change. Make your low ball offer and see if they bite. Sometimes you get lucky and they say that they want to get rid of it and basically ask YOU what you want to pay. Again,low ball is the key phrase. The bottom line is to acquire the property for as little money as possible.
What if I cannot find a former tenant or the owner?
Well, if I cannot find a former tenant, I visually inspect the neighborhood and the exterior of the home. I still contact the owners with an air of confidence, as I know that they still have a vacant property that is costing them money.
If I cannot locate the owner? That's a simple one. I place a big, bold hand-printed FOR SALE BY OWNER sign in the yard with my number on it. More often than not, the owner, a relative of the owner, or a friend of the owner will call me. Most of the time, it is the owners themselves.
If they do, I apologize for the sign stating that an assistant must have gotten their house confused for another empty home in the neighborhood, "but since I have you on the phone, what are you going to do with the house?" The air of confidence comes rushing back!
You Rent Out Your Basement Apartment, But Is That 'Second Suite' Legal? By Jeffrey J. Caulfield 04/12/2011
As a Real Estate professional I've often worked with many first-time buyers, and love the experience of assisting them with their first home purchase. But as home values, especially in Toronto, are high and growing yearly, they are finding it ever-increasingly difficult to afford a home, and need extra income from somewhere to carry the mortgage. One of the main questions I am often asked is, "Can you find me a home with a rentable basement apartment?"
What Is A Basement Apartment?
A self-contained basement apartment can be labelled by many names such as: second suite; granny flat; in-law apartment; accessory apartment; retrofitted unit; or just plain rental unit. Each term essentially denotes the same thing, and the goal is to charge rent to offset the cost of owning a home. Most units are usually in the basement but this need not always be the case. It could be the second floor of a house or that an addition has been added to the property and rented out. Regardless of circumstance, all must meet certain requirements in order to be considered legal.
There are many specific items that go into the making of your 'rental unit' legal. Some of these include:
1. The unit itself must be self-contained, and as such have its own kitchen and bathroom.
2. The second unit must have two methods of escape (egress). As homeowner you should make the unit as safe as humanly possible for your prospective tenant.
3. It must have self-closing doors. This is so if a fire starts in the basement it cannot travel upstairs (and vice-versa).
4. The additional unit should be equipped with its own working smoke and carbon monoxide detectors. Additionally, it would be prudent to provide the unit with a fire extinguisher, one rated for A,B,C fires.
5. The dwelling, including any additions you may have added since initial construction, must be a minimum of 5 years old.
6. The floor area of the rental unit must be smaller in square footage compared to the rest of the home.
7. Fire retardant drywall should be used throughout.
8. The unit itself must comply with the Fire Code, any existing zoning by-laws, as well as property standards. If you are building a brand new second suite addition to your home you must first obtain the proper building permits, and comply with the Ontario - as well as - local and municipal building codes.
9. The extra unit may require more parking spaces on site for additional tenants. In reality, not all inner city properties have any parking at all, and with the increase of renters with cars, it can make getting parking permits for the street difficult. In certain areas of the city there are some exceptions to this rule of having the owner provide enough spaces on the subject property for extra automobiles, so it is best to look into this well in advance.
To find out if your existing rental unit complies with the regulations, you should have it inspected by the Fire Marshall. This service is not free, but necessary to ascertain if your 'second suite' meets code requirements. If it does not you will be asked to upgrade or modify the unit at your expense.
What started as a hobby for Keith Gamble is now a risky, exciting, full-time job: buying properties at the monthly foreclosure sale and flipping them. Gamble, and others like him, are a new generation of property flippers who buy at low prices at a foreclosure auction, clean up a property and sell it for a profit.
“Some people’s bad fortune is other people’s opportunity,” Gamble says. “I know that sounds callous—I know people doing what I’m doing at the courthouse each month are there to take advantage of that opportunity, but I also feel we provide a backstop to the market.”
Today’s flippers differ from those during the real estate boom who took advantage of rapidly increasing prices and were fueled by loose lending regulations, says Tom Maeser, a real estate analyst with the Coastal Carolinas Association of REALTORS®. When the market collapsed, many of those flippers were stuck with properties they couldn’t afford, he notes.
“That really irritated a lot of people and caused problems,” Maeser continues. The flippers during the market peak would often buy a property before construction, wait for it to be built, hold onto it for a few months and then sell it for a profit. Today the flippers are buying at low prices, doing some minor repairs and then trying to sell the properties quickly. The profits aren’t as large but the flippers may be selling more properties in a year, says Penny Boling, the broker-in-charge of Century 21 Boling and Associates in Myrtle Beach.
Flipping properties isn’t something new, she comments; it’s just taken different forms over the years, and it hasn’t always had that name. Boling says she sees some differences between today’s flippers and those during the boom, including their knowledge of the market.
“They are really doing their homework on what prices are,” she said. “Before, the market was going so fast no one was looking.” Many of the foreclosure flippers will attest to the hours of work they put in; several said they spend upwards of 60 hours leading up to the auction doing research and trying to see properties they might want to buy. Unlike a typical property purchase where a buyer can see the property and get a home inspection, often a buyer of a foreclosure at auction has little access to a property and sometimes must bid without seeing the inside of it.
“There’s just a lot of research involved in it,” says Johnny Buxani, a Realtor® who also flips foreclosure properties. He will look through a list of properties for sale, identify the ones he is interested in and then try to drive by them to see them. Once he narrows down the list, he looks at the market value and establishes how much he would be willing to pay and how much he thinks he could make on each property.
It’s important to know about the real estate market to know about any problems with developments or buildings and to be up to date with how prices are changing, Buxani said.
Armed with those papers and a budget, he heads to the monthly foreclosure sale and tries to be the winning bidder. “It’s really gambling,” Buxani says. “It’s a rush.”
There is often competition among bidders on the best properties, but most have a set cutoff price. The winning bidder has to pay a 5 percent down payment within 24 hours and the remainder of the price within 30 days. Unlike flippers during the boom, these buyers aren’t piling up loans that they can’t pay back. Instead they’re paying cash either from their own money or with the backing of investors.
Most of the time, the flippers won’t make any major repairs but typically might repaint, replace appliances and improve landscaping. Some properties need more work, such as new countertops, flooring or new heating and air conditioning systems.
Gamble explains most flippers have a set number of properties they want to have at one time and know how many they’re willing to bid on each month. For him, he’s willing to have about four properties at a time and will wait until one sells before bidding on another.
Gamble says he’s careful not to overextend himself and knows that even if he gets stuck holding some of the properties, he would be able to cover the expenses.
That caution is warranted because it’s rarely a smooth path from the purchase to the sale. It is a risky business and most foreclosure flippers have at least one story of a property that didn’t work out as they had expected. For Buxani, that was an oceanfront condo with a serious mold problem that required thousands of dollars to fix. One of Gamble’s deals fell through when he turned down one offer on two of his properties, only to see the other potential buyer back out at the last minute. For David Galfetti, another REALTOR® and real estate investor, it was a problem with a mortgage that held up a deal for several months.
“I’ve gotten stuck a few times,” says Galfetti, who represents a group of investors and typically buys two or three properties each month, depending on how quickly the ones he bought previously are selling.
Like the others, he tries to get a property on the market as quickly as possible and tries to sell it within the first couple months. “The main thing is people are sometimes amazed at how we get them resold,” Galfetti says. The trick, he explains, is to know before he buys how much he can get for a property.
Unlike Gamble and Buxani, who have been flipping foreclosures for less than a year, David Galfetti is not a newcomer to the foreclosure sales. He has been buying at the foreclosure auctions for about six years, though he’s bought more in recent years. When he started going to the foreclosure auctions, there were far fewer properties for sale and a much smaller crowd, Galfetti says.
The flippers are helping fix up foreclosure properties that are often left in bad shape and hard to sell, which is good for the market, Maeser says. “Anyone who depletes the foreclosure inventory is helping the marketplace because we will not see appreciation or increases in values until foreclosures go away,” he notes. Galfetti and the others say that they know the volume of foreclosures and current opportunities won’t last forever, but that they are an important part of the market. “It’s unfortunately the whole state of the union but we’re doing a favor to the lowest end of the market, which has to get cleaned up before the regular stuff can sell,” Galfetti says.
Boling agrees that their ability to pay cash and get rid of foreclosures is helping the overall real estate market. “They’re kind of like the street sweepers,” she comments. “They’re part of the cleanup committee of this marketplace.”
Maeser says that it’s unclear what impact the foreclosure flippers will have on prices. Flippers could help improve property values in a neighborhood if they price properties fairly, but if they are selling properties below the lowest price in the neighborhood it could have a negative impact. The properties flippers sell are typically priced at market value, though they try to be among the best priced in an area, Galfetti says.
“I don’t feel we are contributing to lower prices,” Gamble notes. “I feel more we are getting inventory out of the banks’ hands.” If banks were lending more, there would be less of a market for flipping foreclosures, he says. “In a couple years, these opportunities will dry up, banks will be lending more and inventory is getting depleted,” Gamble continues. “This niche market might disappear or get very limited.”
Boling says that sales activity is starting to pick up, and she expects foreclosures to decrease as the market improves.
Galfetti and Buxani say they’d change their focus once the opportunities to flip foreclosures dwindle. “I obviously hope it does dry up and the whole market and whole economy turns around, (but) I don’t see it happening anytime soon,” remarks Galfetti.
When working online brand building is always recommended as a means to make you or your business more recognizable. In fact developing a business brand is one of the most strategically sound advertising strategies you can implement considering the long term benefits it offers! There is little complicated about establishing an online brand however it is a process that will test your persistence and patience.
Here are 3 challenges you can expect to encounter and will need to overcome in order to establish a recognizable online brand.
Contending With the Online Noise
The internet offers up a tidal wave of noise involving late breaking news, industry chatter, idol gossip and of course promotional purges by the countless number of businesses. It is for this reason you want and need to develop a distinguishable business brand but it is also something which you must contend with when doing so! The only thing that will help you here will be your own consistently relentless efforts and knowing that once you do get noticed it will all be worth while! When you have succeeded you will come to understand and appreciated the power of your own persistence and perseverance!
Bloggers, forums and even social sites have followings therefore their opinions good or bad can be influential and carry a viral effect as well. In some cases there are those who will intentionally make inflammatory comments simply for the notoriety! As you begin to gain attention these people will begin to focus more on you. Do not be discouraged. If you stop and consider for a moment these people have developed their influence and gained the attention of others by establishing their own online brand. So therefore if nothing more, this should only further demonstrates to you why you need to invest the effort yourself!
The primary focus of any online brand is to build trust and hopefully, loyalty however to have both the trust must first be there. Online this can be difficult to do because skepticism runs rampant and this is something you will need to overcome. In order to do so be sure the image you have chosen and the strategies you use all reflect something of a positive and reliable nature. To represent yourself or your business in any other way will serve you no good purpose.
In your branding efforts you must also continually display a willingness to be of service to others. Freely offering helpful advice or any type of content people may find useful is a great way to develop this trust. At all times remember to act in a professional and cordial manner! Consider it much like a politician running for office and figure you will always be 'under the microscope' until you have proven your reliability and sincerity!
Brand building is a highly recommended approach every online business should take due to the vastness of the internet itself. In fact of all the different advertising strategies in use online developing a recognizable business brand should be one of the very first you implement. By developing an online brand you are actually giving your business a 'face' which helps you to better stand out and be heard above the noise of the internet. Although the branding process itself is not complicated it will require patience and perseverance to effectively accomplish your goals. The 3 challenges you can expect and will need to overcome as you develop your business brand are discussed above. As you can see the biggest obstacle standing between you and the online brand you want to establish will be your own patience! All things considered, it would seem that the investment of a little time and patience on your part is a small price to pay for the benefits you stand to receive.
Investing in low cost small income properties is a proven way to wealth and positive cash flow, especially in today's cheaper market. What is a small income property? A Single family house, duplex, triplex, or 4-suiter (quad) and small apartment buildings.
Why are small income properties a great investment? You have a large tenant pool to work with. Most renters would prefer to rent a house or duplex as opposed to a large apartment complex for many reasons. You can buy them at ultra low prices in CERTAIN markets, and there are more renters out there NOW than ever before. They are generally RECESSION-PROOF if bought in the right neighborhood, such as affordable rental neighborhoods.
Finding the deals:
This is the easy part to some extent.
Dealing with local brokers and agents is a good way to develop long term deal flow. But if you really want to charge full speed ahead start doing private marketing campaigns to owners of free and clear property and pre-foreclosures. Because of the real estate crash in past 3 years A LOT of the competition (Especially the amateurs) was eliminated out there! Most investors today are cash investors only going after REO's and MLS listed properties.
You have to follow certain rules and make sure yuo aren't buying junk. There are a lot of super-cheap properties out there as a result of the real estate meltdown, but remember that all that glitters is not gold. You have to put yourself in the shoes of the tenants. Make sure you have at least 2 bedrooms per unit and a nice floor plan lay-out. Remember the cash flow comes from the tenant, not out of thin air.
I focus my efforts in low-income rental markets, I find the most cash flow and success in these neighborhoods, plus the competition is a lot less, even today. The cost is low and the cash flow is high. You want to find a similar market where rents are stable but prices are still low or undervalued. They are still out there. If you live in an expensive market, you can always go outside your market. Thanks to Internet technologies this is very doable today, BUT you must have a reliable, trustworthy team in whatever market you set-up in.
Most people want to create a portfolio of cash flow rentals to maximize their income, returns and lifestyle.
Wherever you set-up shop, you must have these team players in your business:
-Real estate agent willing to work with you in getting pictures and making lots of low-ball offers
-Professional licensed property manager
-Handyman / maintenance / on-site type manager (Cheap)
-Eviction attorney that does things YOUR way
-Subcontractors such as, roofer, plumbers, HVAC, etc.
-A general contractor that won't rip you off.
-A low cost rental market with stable solid rents.
Making money in small income properties is a proven way to wealth. You simply have to have the systems set up as you go along and use a lot of common sense in your dealings with the various vendors you will use, and also including the tenants.
How do you make people own and want things while accepting everything you say is true? The key is to never say a thing, just ask questions instead. You need to ask questions so you'll know what the problem is about, and of what the person is trying to attain. It is a must that you learn what solutions are suitable to the seller, what the objectives are and of what they are trying to attain and what they are trying to get rid of. You can do a lot of things in a deal but these should be suitable to where the seller wants to go, and of what they want to get rid of so the seller becomes emotionally satisfied with the solutions you are offering them.
If ever the solution does not offer any emotional satisfaction towards the seller, then what you're saying is pointless. If you have not understood the primary concerns of the sellers, they will often tell you, "We need to think about the deal". In short, what they are really trying to say is NO. It is because they feel that you have enforced a deal that they don't want to take part of and they feel that it's not identifiable with them. Actually, the buyer or the seller can not psychologically give in to the deal you're offering and so they politely say, "I need some time to think about it" - which is a refined way of saying no.
So, that's why it's highly essential to avoid saying too much and just ask questions instead. This way, you can find out about the people's different concerns and wants. When you are entering into a negotiation with someone, you have to be the one asking the questions. These questions will help you discover how important a certain solution is to them. So, ask questions like, "What is it that you are doing now?", "What is it you want to move away from?" and "What is it we want to move towards and why?" One possible answer could be the seller to earn money out of the property and so it's good that you learn of what they want to attain while making use of that money - that way, you can offer them the best possible solutions.
But people are not doing things for money. Instead, it's what the money will be doing for them and of how it makes them feel. Money is logical and so people feel nothing towards it. But money does something to them - either it makes them feel good or bad. That is why when someone says they want money, it's important for you to know the reason why they want the money. Knowing what they want to achieve will lead you to knowing their emotion and so you'll understand how it makes them feel. It's never about the money; it's the feeling that it gives you!
Have you ever wanted to know how to invest in real estate? It can be a challenge to learn. There are hundreds of books that talk about different investing strategies. Sometimes it is too much information and you are not sure how to get started. This article will give you 3 steps that you can follow to get started investing in real estate.
Step 1: Specialize in a single investing strategy
Birddog, flip house, long term rental, tax liens, subject-to, lease purchase. These are all different strategies that you can use to invest in investment property. The worst mistake would be to try your hand at more than one strategy. It is better to become an expert at one method and have a depth of knowledge on this one strategy than it would be to have a limited knowledge on multiple methods. Consider each strategy and pick the one that best fits with your talents, skills and motivation. You should spend some considerable time in picking the right strategy.
Step 2: Build a Winning Team
Nobody can build a winning company by themselves. The only way to succeed is to surround yourself with specialists that will enhance your business with their specialized knowledge. If you want to have a successful investing business you need to have specialists on your team. Successful teams will consist of an agent, mortgage broker, closing attorney or title company, house inspector, insurance agent, contractor, accountant and general attorney. These people will help you in finding good properties and providing legal and financial advice. Do not attempt to do this yourself. Make sure you have a winning team surrounding you.
Step 3: Create a Game Plan
Now that you have selected a single strategy and created a winning team, you need to create game plan. This game plan will outline your investment strategy and how you plan on acquiring properties. It should also include information on how you are going to arrange financing for the properties. The most important part should be your exit strategy. This will tell you what you are ultimately going to do with the property. The exit strategy should explain how you are going to profit from your chosen strategy.
Once you have completed all 3 steps, you are ready to invest in real estate. If you implement all 3 steps correctly then you should have a very profitable and rewarding investing business.
More millionaires made their fortune investing in real estate than in any other form of investment. There are many methods of making a fortune in real estate investing. Regardless of the method that you use to build your fortune in real estate, you need a solid business plan to use as your road map to success.
You can find many online businesses and real estate brokers that feature a condo for sale. Lots of people are becoming addicted to condominiums as advanced age specifies style and demand far more innovative as well as a hassle-free standard of living. In addition to that, condo properties furthermore establish extravagance and elegance well over typical folks. However, just like different real-estate premises, condominiums can provide shortcomings coupled with its rewards. Consumers trying to find a condo for sale ought to be familiar with every one of these existing and specified circumstances in residing in a condominium to acquire the most effective and desirable real estate. All prospective buyers need to have the identical ambitions in buying a house which should be to enjoy the most secure household. With that, customers must look into all feasible scenarios which may be observed in the majority of condo properties to guide them to pick the correct one.
Most look for a condo for sale because of the comfort it brings from the provided services and amenities. Living in a condominium is like living in a hotel in a long-term contract. Like hotels, most condominiums have doormen, private parking spaces, pools, fitness centers and others. All of these are included in your payment for the condo no matter what financing plan you chosen. It may be hard to compare prices of condominiums for sale since most vary in many ways. Services offered are all different as well as facilities in the property. The options in various condominiums are numerous and choosing the right one that addresses your need is vital since it will all end up in the bill after all. Some condominiums use green technology and other energy saving technologies which can reduce costs for the tenants and other options. All of these things should be considered in searching for a condo for sale.
Privacy and Environment:
Another factor to consider in looking for a condo for sale is the privacy and present environment of the location and the condominium. Most condominiums are located in highly urbanized areas wherein city traffic noise can reach the comforts of your home. Activities by your neighbor can also cause discomfort if the condominium does not have good noise insulation. These are essential factors specially for people with high sensitivity to noise. Privacy is also another factor to consider, evaluate the volume of neighbors in a condominium unit, if that is fine with you and wouldn't cause too much discomfort. Having a good neighbor is one thing, too much is another.
Evaluating the condominium's structure can also be vital. Make sure that walls, floors, and ceilings have good sound insulation aside from being structurally sound. Essential facilities should also be evaluated such as fire exits and elevators which should be accessible to all tenants.
Another important factor to look into in a condo for sale is the present neighbors near and inside the condominium unit. When living near these people thus may encounter them and their activities as time goes by. Knowing the characteristics of these people whether they are students, professionals, or bums is vital. Your neighbor's daily activities can affect the way you live and have comfort in your condo unit. So make sure that you evaluate the people you will be near at.
Latest forecasts predict that in 2011 an increasing number of homeowners will face up to home repossession. If your home is repossessed and you do not move out by the date set by the court you will be issued with an eviction notice.
An eviction notice is an order informing you that you will be removed from your home on a specific time and date. The eviction notice will be personally handed to you at least three days before you are expected to leave. On the date of the eviction the bailiff will explain that you are being evicted and that you must leave the property right away. You will be given a maximum of ten minutes to pack a few personal items. After this you will have fourteen days to collect the rest of your possessions such as your clothes and furniture. If you do not remove your possessions in this time then the bailiff will arrange for them to be disposed of.
You can however attempt to get the eviction process stopped. When the bailiffs hand you the eviction notice they have to give you a form to request another court hearing. You should use this form to explain your circumstances and outline the reasons why you want the bailiff's visit to be stopped or delayed. For the eviction to be stopped you will need to present strong evidence that you are able to clear your arrears and will be able to keep up with your mortgage payments.
Even after eviction it may still be possible for you to get your home back. If the mortgage lender has not sold your house and you can raise the necessary finance to pay off the mortgage then you can apply for an injunction to stop the sale of the property. The exception to this is if contracts have already been exchanged with a buyer. In this case you will be unable to prevent your home being sold.
An Overview of Patents, Trademarks and More:
Intellectual Property is an important asset for any business. Most businesses have some form of intellectual property, whether they realize it or not. Be it an invention, a logo, an industry article, a marketing plan or whatnot, it is property that should be protected and maintained to provide your business with the optimal benefits available.
What is Intellectual Property?
In general, "Intellectual Property" refers to the creations of someone's intellect that are generally intangible but are granted certain ownership rights under the law that are similar to that of tangible property rights. By law, owners are granted certain rights to use and benefit from their intellectual property to the exclusion of others. Common types of intellectual property include patents, trade secrets, trademarks and copyrights.
Some intellectual property can embody more than one type or form. In such an instance, a choice between intellectual property protections should be considered. Of consideration should be (1) the type and characteristics of protection a particular form will provide, (2) the ease and cost of obtaining the desired form, (3) the cost of maintaining and protecting the particular form, (4) the intended use of the intellectual property and therefore whether the form will give the protection needed to meet the company's objectives, and more.
Understanding the interrelationship between the various forms is important to not only determine which form should be sought, but also how it will function within the company. For example, a patent right is granted for a specific period of time, while a trade secret may be maintained forever. However, a trade secret is lost once it is made public. Therefore, if public disclosure is necessary for obtaining any benefit from intellectual property, then a patent would be preferred over a trade secret, even if it will expire. However, if public disclosure is not necessary, then a trade secret may be the preferred form, since it can be for an indefinite period, so long as it is properly maintained and shielded from public disclosure.
What is a Patent?
A patent is an ownership right granted by the government on a particular product or process that excludes others from copying, making, using, selling, or importing the invented product or process covered by the patent. The policy behind patent rights is to encourage the creation and invention of new products and processes by providing the owner protection from losses associated with investing tremendous resources into developing an invention only to have it immediately copied, produced and profited by someone else. The patent gives the creator a sort of monopoly over the invention for a period of time that should be sufficient to provide the creator an opportunity to receive a return on their investment before a competitor, who did not have to incur the expense of the invention, is able to copy and compete with a substantially similar product or process.
There are basically three types of patents; utility patents, design patents and plant patents. Utility patents usually include processes, machines, manufactures or compositions of matter. However, they do not include abstract principles, mathematical formulas or aesthetic or emotional reactions of human beings. Design patents provide protection for the ornamental aspects of a product. However, if the design is primarily functional rather than ornamental then it will not qualify for patent protection. A design may also be copyrightable, however unlike copyright protection, the design patent will not cover the design if it is applied to a type of product that is not covered by the patent. Plant patents encompass a very narrow area of patent law. Only asexually reproducible plants are patentable. Plants reproduced by seeds are not.
Because of the exclusive rights patents impose on the market place, they are granted discriminately. To be patentable, the invention must possess (1) utility, (2) novelty and (3) non-obviousness. "Utility" means that the invention must be operable, capable of use or able to achieve some sort of purpose. "Novelty" means something that is not reasonably "anticipated" by the public or an average person. To be "non-obvious" a product or process would not be obvious to a person of ordinary skill in the pertinent art at the time of its invention. The invention cannot be a mere minor variation or modification of an old process, product or technology.
What is a Trade Secret?
A trade secret consists of confidential information that has been developed by an owner that gives the owner a competitive advantage in the market place. It must (1) have an identifiable actual value, (2) be secret and (3) be something the owner takes reasonable steps to keep secret. Examples of information that may qualify as trade secrets include customer lists, business processes, pricing information, marketing programs and more.
What is a Trademark?
A trademark is defined by law as "any word, name, symbol, or device, or any combination thereof... used by a person... to identify and distinguish his or her goods, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." Similar to trademarks are "service marks" which are marks that relate to services as opposed to a product, "collective marks" which are marks that relate to a group or organization, and "certification marks" which are marks that relate to a government or private entity that certifies products or services.
To qualify for trademark protection, a mark must be "distinctive". There are basically five categories of "distinctiveness". The strongest is "fanciful" marks. They are marks that are basically a made up term, like "GOOGLE" or "KODAK". Fanciful marks are the easiest to receive trademark protection, assuming there are no similar marks in relation to similar products or services. The next type of mark with the strongest likelihood of obtaining trademark protection is "arbitrary". An arbitrary mark is one that is an actual word, but has no meaning in relation to the product or service attributed to it. Examples of arbitrary marks would be "STARBUCKS" for a brand of coffee, "AMAZON" for a bookseller or "APPLE" for a computer company. "Suggestive" marks can receive trademark protection but may be more difficult to trademark if they are too "descriptive." They include marks that merely suggest or hint at the nature of the goods or services they are related to. Examples would include "COPPERTONE" for sun tan oil or "HANDIWIPES" for dust or cleaning cloths.
"Descriptive" marks are much more difficult to obtain trademark protection. Descriptive marks are those that provide an immediate idea of the ingredients, qualities or characteristics of the goods or services. For example, "CLAIMS MAGAZINE" for an insurance industry magazine or "SOAKER" for a toy water gun. To qualify for protection, a descriptive mark must acquire a "secondary meaning" to the point where the public primarily associates the mark with a particular seller or owner. Otherwise, a descriptive mark will not receive protection. The intentional misspelling of a descriptive term does not change it from descriptive to suggestive.
The weakest category of "distinctiveness" includes marks that are "generic." A generic mark is one that is simply a common name of the goods or service. A generic mark cannot receive trade mark protection. Some examples of marks that were found to be generic include "GOLD CARD" for a credit card and "HOAGIE" for a sandwich. Sometimes a mark can be so commonly used that while it was not generic when adopted, it can become generic. Examples or trade marks that were at risk of becoming generic include "COKE" for a carbonated soft drink or "KLEENEX" for facial tissues. Although the marketing advantage to having your trademark become so common that it begins to take on a generic meaning could be desirable ("Just 'google' it", meaning research it on the Internet, or "Will you 'xerox' this?" meaning make a copy on a copy machine), it can also cost you your trademark protections. Therefore, vigorous marketing efforts must be maintained by a trademark owner to prevent its mark from become so generic that people stop associating the name with the brand owner.
What is a Copyright?
A copyright is a protection that is granted to "original works of authorship." It generally includes works that are literary, dramatic, musical or artistic. Copyright protection is automatically conferred on an original work and includes the exclusive right to control who can use, copy or make works derivative of the original work (with a few exceptions). However, copyright protection does not extend to an idea, procedure, process, system, method of operation, concept, principle or discovery no matter what form they take. While a work does not need to be registered with the government to receive copyright protection, if there is an infringement, then the type of damages that can be legally recovered are limited and less than what is available if the work is registered.
A work receives copyright protection when it is "created." A work is created when it is "fixed in a tangible medium of expression." For example, a song or speech given in a live performance is not protected if and until it is somehow recorded or written down.
Copyright protection can cover a wide range of subject matter with minimal originality, and registration of a work is simple and inexpensive to obtain.