intellectual property 101 for entrepreneurs
TRANSCRIPT
NC State University, Dr. Ted Baker’s Entrepreneurship Class
February 28, 2012
Randy Whitmeyer, Whitmeyer Tuffin PLLCwww.whit-law.com
IP 101 for Entrepreneurs: Top 10 IP Mistakes Made by Emerging
Companies
“Starting companies is like having babies–fun to conceive but
hell to deliver.”- Anonymous
The Backdrop
• Increasingly, the value of companies, especially tech companies, revolve around intangibles and goodwill, ultimately expressed in the strength of their IP: Their trademarks, patents, copyrights, trade secrets/know-how, software, and domain names
• Ubiquitous use and reliance on Internet, IT, social media and other technologies have increased the stakes
• Global markets for in-provision of services and sale and out-licensing of products and services complicate matters
3
What is Intellectual Property?
• Intangible property rights associated
with creations of the mind, namely:
• Patents Trade Secrets
• Copyrights Trademarks
• Compare with “real” property and “personal” property
• Limited to specific country/territory
America Invents Act
• Fundamental Shift in American Patent System, passed on September 16, 2011
• Most changes take effect in 12 or 18 months from effective date• First to File instead of First to Invent (takes effect 3/16/2013)• 9-month Post-Grant Review Period• Prior Use defense expanded from business methods to other areas• Other changes: Best Mode no longer a defense; virtual patent marking
5
Requirements to Patent
• Valid Subject Matter
• Useful
• Novel
• Non-obvious
• Best Mode
• Written Description
• Enablement
Patent Prosecution Process• Draft Patent Application (time is variable)
• Describe state of the art, problem solved
• Include drawings/flow charts/etc.
• Prepare “Claims” = metes and bounds of the invention
• File Provisional or Non-Provisional Application
• File Foreign counterparts and U.S. Continuation-in-Part Application
• Patent Term – 20 years from Priority Date
• U.S. prosecution may take 3-5 years
Trade Secrets• Business or technical information
• Derives actual or potential value from
• Not being generally known
• Not being readily ascertainable
• Can last forever if secrecy is maintained & reasonable steps are taken to preserve secrecy
Maintaining Secrecy• Take affirmative steps to maintain secrecy
• Mark documents as confidential; put employees and business partners on notice
• Use Confidentiality Agreements
• Restrict facility and computer access (secure facility; computer passwords; etc.)
• Perform exit interviews with departing employees (reminder of obligations; whereabouts of information)
What Can be a Trade Secret?
• Formulas
• Compilations of information
• Patterns
• Methods
• Devices
• Techniques
• Programs
• Processes
• Project launch dates for new products
• Marketing plans
• Computer programs
• Negotiated price lists in a contract
• Customer lists
Copyrights• Original works of authorship
• Fixed in a tangible medium of expression
• Perceived, reproduced or otherwise communicated
• Directly or with use of a machine
Types of Copyrightable Works
• Textbooks, magazines, plays, brochures, software
• Visual Works: photographs, paintings, icons, graphics
• Sound: sound recordings, song words and music
• Motion Pictures: films, videos
• Others: mask works, blueprints, etc.
Not Copyrightable
• Idea
• Procedure
• Process
• System
• Method of operation
• Concept
• Principle
• Mere facts
• Lists
• Names, slogans, short phrases
Rights of Copyright Owner• Copyright owner has the exclusive right to:
• Make copies
• Prepare derivative works (e.g., translation, book from screenplay, modified work)
• Distribute or sell copies
• Publicly perform or display
Trademarks
• Trademark law is aimed at consumer protection – preventing companies from deceiving customers and taking advantage of the good will built by others
• The good will inherent in company and product names, and other identifiers of source, is often a company’s most important asset.
• For example, Red Hat doesn’t own any software, but jealously guards its trademarks
Types of TrademarksLevels of
DistinctivenessCharacteristics
Arbitrary or Fanciful
(Exxon, Kodak)Strong
No secondary meaning required
Little or no relationship to goods and services
Suggestive
(Ultracath)Somewhat weak
Secondary meaning may be required
Suggests some feature of goods and services
Descriptive
(ATMVerify)Weak
Secondary meaning required
Describes the goods and services
Generic
(Aspirin)Unprotectable No TM significance Generic
Benefits Of Federal TM Registration• Obtain constructive nationwide use
• Establish priority over other users
• Recover additional damages, attorneys fees
• Obtain access to customs/import remedies
• Protect and establish rights in domain names
• Use “®” for US registered marks only (“TM” can be used for common law rights)
Number 10
“We can save money by using contractors for IP development and not worrying about agreements”
Generally, without an express assignment, IP is owned by the independent contractor, not the party who paid for the work
Number 9
“We are excited that our scientifc founder published a paper on a really important
improvement.”
1 year grace period in US to fle for patent protection; NO grace period overseas
Number 8
“We signed a great long-term partnering agreement! Their agreement looked well-written so we used it”
It is very hard to notice what clauses are missing in a contract that might be crucial!
Default rule is that each party can exploit jointly developed copyrighted work and share profts 50-50
Number 7
“Open Source software and other materials on the Internet are saving us a lot of time. It’s great that
they are so easy to download, and it’s just like public domain materials”
Much open source software has a “viral” quality and can infect software that is intended to be proprietary
Number 6
“We fled our provisional patent application on our own. We can hire a lawyer to clean it up when we
fle a non-provisional based on this provisional” A provisional must contain a full description of the invention to support the non-provisional
Number 5
“Since we were able to incorporate our company name and obtain a domain name for our company
and products, there is no reason to worry about trademarks”
Federal trademark will trump rights in corporate names and domain names
Number 4
“We patented our technology, so there is no need to worry about freedom to operate”
A patent does not provide the patent owner with the right to practice the invention, only the right to prevent others from practicing the invention
Number 3
“We don’t need an IP Plan – Let’s fle on everything (or nothing)”
Many patents are too narrow and do not focus on commercially valuable components. Many trademarks cover logos, slogans and styles that change within a few years.
Number 2
“We are moving so fast –negotiating and signing Nondisclosure Agreements will just slow us down”
Trade secret and patent protection is predicated on maintaining secrecy.
Number 1
“We set aside $10K in the budget for IP – we want to protect everything, everywhere, plus we need a
freedom to operate opinion.” Companies should not overspend but also should not underspend on IP protection
Conclusions• Enter Into Proper Founder, Contractor and Employee
Agreements
• Determine and establish your business goals, and identify what key IP will support those goals
• Engage in appropriate patent and trademark searches, including freedom to operate
• Prepare applications for registration (patents and trademarks)
Conclusions, continued
• Properly mark and attribute materials
• Protect trade secrets and copyrights
• Use care in entering into license, development and other IP-related agreements
