Introduction to Intellectual PropertyNORCAT – November 20th, 2013

Introduction

• Forms of intellectual property–Using an example that people can relate to

• Useful resources• IP strategy primer• Questions

Forms of Intellectual Property Protection

• Patents• Trade-marks• Industrial Designs• Copyrights• Plant Breeder’s Rights• Integrated Circuit Topographies• Trade Secrets

What is a Patent?

• Exclusive Right• Territorial• Granted by government authority• Limited exclusive privilege that the law allows a patentee in his own

invention

• Ownership• Natural right arises from production• You cannot obtain a valid patent application on the invention of another

• Term• Limited period of time, usually 20 years from filing

Nature of Patent Right

• Bargain with the state• Inventor gives full disclosure of invention in exchange for

limited period of exclusivity• Upon expiration of patent, the invention can be exploited by

anyone• Before expiration others have access to information• Patent excludes others from making, using or selling your

invention• Your patent may not allow you to practice the invention

– No guarantee of “Freedom to Operate”

Form of Patent Application

• A patent application has:• An Abstract• A Description, comprised of the following elements:

• Title for identification purposes

• Field of the Invention, which describes the area(s) to which the invention relates

• Background of the Invention, which describes the related prior art and the problem that is solved by the invention

• Summary of the Invention, which is comprised of one or more general statements of the invention and usually provides the precise language for the claim(s)

Form of Patent Application Cont’d

• Brief Description of the Drawings, where applicable, including specific embodiments, examples, detailed description of figures, and the like

• Claims, which distinctly claim the part, improvement or combination of the invention which the applicant regards to be patentable

• Claims are drafted as a single sentence

• Broadest claim is independent and doesn’t refer to any other claims

• Drafted as “inverted pyramid” getting narrower in scope

• Drawings are included where the description lends itself to them

• A Sequence Listing is required where the invention relates to genes or fragments thereof

• Deposit of Biological Material may be required to satisfy the description requirements

Published PCT Application

Published US Patent Application

Published Canadian Patent Application

Patent Claims

Patentable Invention

• Requirements • New

• Useful

• Patentable subject matter

• Unobvious

• The first three you often get a sense of in an initial interview• Can further investigate new and unobvious through a patentability

search

Patentability Search and Assessment

• Invaluable to avoid re-patenting the wheel • To establish scope of invention• Language of the patent art• Reveal the patent landscape in a particular area• Reveal activities of competitors • Useful information to consider when choosing countries or regions

where protection should be sought if at all

Filing a Patent Application

• Must be filed in a timely manner• Before publication or disclosure to the public, or• Within grace periods, or • In keeping with International Treaty requirements

But,

• To provide a proper priority basis, the subject matter of a later claim must be taught in the priority filing

Disclosure of Invention Before Filing

• US: one-year grace period• Canada: one year grace period from Canadian filing date• EP: public disclosure prior to priority filing precludes the

grant of valid patent rights• Confidential disclosures may not be damaging, but are

relying on receiving party to maintain confidentiality• Disclosures that take place after filing can cause problems

where an inadequate priority patent application is filed and claims lose entitlement to the priority date

Patent Application Process in Context

• Patent application process fits within a larger cycle of events in a plan for commercializing technology

Whether/How to File…

• There are many factors that may play a role• Why? Because the costs associated with patent protection

and enforcement are significant and patents are territorial

Whether/How to File…(cont’d)• Factors to consider when deciding whether to file include:

• Potential commercial life of invention

• Scope of likely patent protection

• Public or private exploitation of invention

• Simple or complex technology – market lead time

• Ability to keep secret – free flow of technical information

• Capability to police patent

• State of development of technology

• Competitive posture of innovator

• How does proposed patent fit in a portfolio or strategy

• Importance of invention

• Financing/Leasing?

• A patent may be necessary to attract $

• Defensive Reasons

• Are other forms of IP protection more appropriate? In particular, trade secret, industrial design or copyright?

Patent Application Process

Typical Timeline

PARIS CONVENTION

National Filings

and

PCT Filing

3018

Publication

National Entries of PCT Filing

72

Months

Deadline to Request Examination in Canada

(5 Years from Filing)

Priority Application

0 12

Enablement• Ensures that public receives its “quid pro quo” for patent

grant• Description must enable person skilled in the art to practice

the invention without undue experimentation• Factors to consider:

• Quantity of experimentation necessary• Amount of direction and guidance provided• Presence of working examples• Nature of invention• State of prior art• Relative skill of those in the art• Predictability of art• Breadth of claims

Example of interplay between different forms of intellectual property

Vital Alert-Patents on base technology (underground communications, censor monitoring)-Patents covering different applications (safer detonation)-Trade-marks (CANARY™)-Possible registered circuit topographies-Shape of unit, possible industrial design and/or trade-mark (distinguishing guise)-Copyright protects computer code, and marketing materials-Trade secrets used to protect certain aspects of technology, and source code

Useful Materials• USPTO Website• Manual of Patent Examining Procedure (MPEP)

Useful Materials (cont’d)• U.S. File Wrappers, through Patent Application Information

Retrieval (PAIR)• The Image File Wrapper (IFW) system is an image technology system for

storage and maintenance of records associated with patent applications

• Available online

Useful Materials (cont’d)

• European Patent Office (EPO.org)• EP File wrappers available online

Useful Materials (cont’d)

• ESPACENET provides patent family information

Useful Materials (cont’d)• WIPO.org

• File wrappers for international stage available

• Published international applications and search reports available

• PCT Applicant’s guide available online provides comprehensive explanation of process

Useful Materials (cont’d)• CIPO

• File wrappers are not available online

• Our guide is the Manual of Patent Office Practice (MOPOP)

Why an IP strategy?

Not every technology company requires patents, certainly

But each tech company requires an IP strategy, which may include an explanation as to why patents may not be necessary, or a solid plan for future filings

Investors especially tend to demand at least a high level IP strategy

An IP strategy is especially important for managing disclosures (see more on this below)

And without being able to manage disclosures raising money and collaborating with outside parties is difficult, if not impossible

More on IP strategy

An IP strategy helps identify the patent targets that can create the most value

Take a broad view as to what may be patentable, so that important targets are not missed

An IP strategy identifies the full range of IP assets that can be used, including trade-marks, design patents (covering for example user interface elements), and copyright

Generally speaking, the emphasis is first on patents, but as a tech company scales, the value and importance of trade-marks increases significantly

Picking a “strong brand” with good domain name coverage is important

– usually a strong brand is a “suggestive” brand but not a “clearly descriptive” brand

– be careful that famous marks in the US receive broad protection even beyond their scope of use

– First “use” or sales establish entitlement to use a trade-mark, so performing trade-mark searches closer to launch is important

More on IP strategy

An IP strategy may include trade secret elements, and may incorporate defensive publication (especially once foundational IP is in place), which involves strategic publication of information to block third parties from patenting (used very effectively by IBM for example)

Tech companies often scale very quickly, so it is important to build a strong IP foundation that can be used to build out a broader IP portfolio, once the resources are available, and if there is a compelling business case

IP strategy provides the insights necessary to minimize the risk of joint development

IP strategy needs to be updated from time to time (business strategy and technical roadmap should both be reflected)

Development of an IP Strategy

In many cases, we develop an IP strategy informally, by discussing the technology road map, market opportunities, IP risks, and IP targets

Other times we conduct a more formal “IP audit” that involves

• Reviewing technologies

• Technology/IP evaluation processes used by tech company

• Agreements and processes affecting handling of proprietary information

• Relationships with outside parties

• Current IP portfolio

• IP activities of competitors, patent landscaping

• IP SWOT analysis

• Usually a formal IP strategy document that distils key IP priorities and process/agreement improvements for reducing risk and maximizing value

IP and value creation

The right patents can boost your valuation

One strong patent that maps to the key market differentiators of a company can be more valuable than a portfolio of “feature” patents

Acquirers will not base decisions solely on strength of IP (typically), but will prioritize targets based on IP, and consider IP in developing a valuation

An IP strategy helps make the tech company more attractive to acquirers and can unlock additional revenue (usually through licensing)

IP and traction

Especially “early mover” IP puts a stake in the ground that can be critical in protecting market position down the road

Strong, strategic, foundational patents create a “chilling effect”, long enough to raise money and/or build traction

IP is not being ignored, even tech majors understand the dangers of foundational IP, even in the hands of start-ups

Large patent infringement awards and settlements have made tech major cautious – IP could be bought by a competitor, litigation is often financed by a competitor

Many Patent infringement cases are now fought on contingency (where law firm is paid mainly based on a percentage of aware or settlement)

Established companies are very interested in early mover IP, because they can build on it

Managing disclosures

IP strategy helps the tech company understand their patent targets, which they can then shield from disclosure

It is important to keep the objective of the disclosure in mind, and disclose the appropriate level of detail in view of those objectives

A good NDA is important, and not all templates are created alike

Investors generally do not sign an NDA, but they also do not require technical details

A key reason why IP is filed is to facilitate disclosure of the technology, in situations where an NDA is not practical

Despite patent filings, it is still better to hold back “secret sauce” elements in part to underline the innovativeness of the tech company

Disclosure should be based in part on estimation of trustworthiness of the recipient of information

Non-Disclosure Agreements

• What is an NDA?• Agreement between 2 parties to keep information confidential for a set

period of time• Can be mutual or unilateral

• Typical terms of an NDA• Identify confidential information and its permitted uses/users• Define the excluded information and special treatment for any critical

information• Specify how the confidential information must be treated and returned• Outline a time period for confidentiality obligations• Importance of feedback clauses

Non-Disclosure Agreements (cont’d)

• Consequences of breaking an NDA• Remedy is based in contract against the person who signed the NDA• May include monetary damages, an injunction preventing the use of

information, or even a “constructive trust” to reverse any profits of the misuse

• Practical advice• Sharing confidential information requires a high degree of trust• A written agreement improves legal certainty and is a serious reminder

of obligations• Make records of what was disclosed at meetings, try to mark

documents appropriately, and generally keep good records• There is no “one size fits all” solution; every NDA will be unique to the

circumstances

Other considerations for building valuable patents

A key issue is engaging on a patent at the right time

There is tremendous pressure to file early mover patents, particularly with US moving recently to first-to-file

However, for patents to be approved, implementation detail is required

What ends up being patentable is somewhere between high level distillation of the essential aspects of the technology, and technical implementation details

Driving this “in between” level of abstraction is critical

The key is sometime to “envision” key implementations

IP Culture

A technology company can further enhance its valuation by adopting an “IP Culture”

This means integrating commitment to IP into day to day activities

This does not have to be time consuming

Usually it involves

• Informing the team at a high level about IP activities, in part to solicit contributions

• Tasking a key resource who manages IP related activities• Typically, we help train them to drive value into IP activities• Contributions to IP activities (such as providing strong patent

disclosures) should be rewarded and recognized (even if value is nominal)

• Organizations with IP culture produce better IP relative to investment

Foundational and compelling patents

Focus needs to be on “foundational patents”

– Early mover patents that are the first to occupy an important domain

– Patents that convey what the platform will be 2 years and 5 million development dollars later

– “Platform” patents rather than feature patents in that the patent covers the value that the core components provide to other platforms (patent what it would mean to Google to have access to the technology)

Focus needs to be on “compelling patents”

– Intelligent features, answers to technical challenges, important user insights

– Answer in the specification the question of “why is this not obvious”?

Drafting Foundational Patents

Usually the starting point is a strong provisional patent application that provides a strong priority date, and usually gathers together multiple inventions and inventive concepts, or what we often call an omnibus patent application

The omnibus patent application usually ends up as the foundation for sometimes several other patent applications down the road

The starting point is a good technical disclosure, which includes:

– An explanation of the pain being addressed

– Summary of similar technologies, or at least solutions being used currently to address the same problem

– First a high level explanation of the technology, with high level, platform view diagrams

– Explain in greater, and greater detail, referencing diagrams, and including the “environment” for implementing and extending the technology

– Highlight which aspects are future state, and which ones exist currently

– Highlight key innovative aspects, and why they are not obvious

– Include use cases that highlight the advantages, and the “technical effect” of the invention

– Explain the advantages, providing comparative data to prior art solutions, is possible

Avoiding problems

Important IP issues technology companies run into:

– Ownership of IP is not covered strongly enough in employment agreements, founder agreements

– Continued cooperation in prosecution patents, and processing assignments is not provided

– Founders leave, and IP assignments and releases are not strong enough

– Problematic agreements affecting IP such as service agreements (where client has an argument that they own some aspect of IP), or joint development agreement where ownership of IP is unclear

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