inventor boot camp 2010

Townsend and Townsend and Crew LLP2

Presentation Overview

• Demystify the different types of intellectual property (IP) necessary to master your market in a knowledge economy

• Learn about IP timing issues to best protect your innovation before it slips into the public domain

• Explore strategies for protecting your innovation cost effectively

• Top IP mistakes that will doom your company


Business Value of Intellectual Property

• Economists estimate that two-thirds of the value of large businesses in the US is due to intangible or intellectual property assets*

• The World Bank estimates that, on average, 40% of company valuations are from intellectual property*

• PriceWatershouseCoopers estimated that as much as 90% of the value of the world’s top 2000 enterprises would consist of intellectual property*

• In 1978, IP accounted for 20% of shareholder value, but has grown to 80% in 2007**

*Source: Patent Barista, April 2008**Source: Brookings Institution and Ocean Tomo

80%73%46%20%

1978 1988 1998 2007


Intellectual Capital: Intangible Ideas

IdeasBusinessMethods

Brands

Software

ProductNames Future

ProductsIdeas

PromotionsBusinessRelationships

ManufacturingProcesses


Leveraging Intangibles to Create Intellectual Property• Intellectual capital is an intangible asset that must be protected like any other valuable

company asset– As we move away from the industrial age and into the information age, leveraging intellectual capital

is paramount• Trade Secrets, Copyrights, Patents, & Trademarks are the legal tools that convert some

intellectual capital into IP– These legal tools are analogous to security measures to protect tangible assets– Use of these tools prevents further loss of value and converts ideas into property

• A custom IP strategy should be developed to suit:– Type of business– Products– Actions by competitors– Litigiousness of industry– Funding cycle– Size of company– Growth strategy

• High costs require customized solution for your business• More money is lost pursuing the wrong strategy--no matter how inexpensively--than

pursuing the right strategy within the confines of a reasonable budget


Securing Your Intellectual Capital as IP

Copyright

TrademarkTradeSecret

PatentI deas

Bus inessMethods

Brands

Software

ProductNames Future

ProductsIdeas

Promotions


Types of IP: Trade Secrets

• Definition: Any secret formula, pattern, device, or compilation of information used by the company that gives it an advantage over competitors

• Must not be in the public domain• Company must take steps to protect their trade secrets• No Expiration: Trade secret rights last forever if properly protected• May loose some rights to a trade secret if someone else patents it• Action: Trade Secret Program & reminder letters to employees who leave

SECRET

CONFIDENTIAL PROPRIETARY


Types of IP: Copyrights

• Definition: Protects works of original artistic expression in tangible form• Software, Written Material, Maskworks, Recordings, Maybe Logos• Non-employees generally own their copyright so must have assignment in

consulting agreement• Prevents: Reproduction, Distribution, Public Performance, Display, and

Derivative Works• Why: Statutory Damages/Attorney Fees/Ability to Sue in Federal Court• Term:

– Individuals: Life+70 yrs.– Companies: Shorter of 95 yrs. from publication or 120 yrs. From creation

• Once Filing Program Set Up, No Attorney Typically Needed• Example Notice: ©ABC Corporation, 2004. All Rights Reserved.• More Info: www.copyright.gov ©


Types of IP: Domain Names

• Definition: World Wide Web address for a domain• Right to name purchased from domain name registry• Must be renewed periodically• Various gTLD and ccTLD have different rules• Cyber-squatters diligently prey on lax registration by

companies


Types of IP: Service Marks and Trademarks

• Definition: Words, symbols, designs, colors & sounds used to identify the source of one’s products or services to consumers

• A mark indicates the source of the product/service• Mark must distinctively identify product/service to avoid

customer confusion• Local rights accrue in the US based upon use• Federal Registration “®” enhances rights and damages• Never expire so long as used• TM for products and SM for services• Similar to trade dress• More Info: www.USPTO.gov

®


Types of IP: Patents

• Definition: Confers the inventor the right to exclude others from making, using, manufacturing, importing the invention

• A patent does not give you the right to practice your invention, just the right to exclude others from practicing your invention

• Protects Invention for 20 years from filing• “Anything under the sun made by man”—Supreme Court

– Software, Business Methods, Genes, Man-made Organisms• Exchange Government Monopoly for Full Disclosure of Invention• Doesn’t require infringer to be exposed to idea like trade secrets or

copyrights• Invention must be novel and non-obvious• Cannot be publicly known or offered for sale (one year grace period in US)• Inventor-based system in US so must get assignment from inventor• More Info: www.USPTO.gov


SECRET

CONFIDENTIALPROPRIETARY

Trade Secret Timing Issues

• Definition: Any secret formula, pattern, device, or compilation of information used by the company that gives it an advantage over competitors and is actively protected

• Timing Issues– Must keep secret– Never expire if kept secret– Train new employees to avoid use of trade secrets or IP from prior employer

• Action Items– Employment/Contractor agreements addressing confidentiality of IP– Non-Disclosure agreements with vendors and partners– Identify trade secrets (e.g., “PROPRIETARY”) and take action to protect (e.g.,

computer, e-mail, document control, security)– Consider publication policy that requires review prior to technical journal

publications, participation in standards boards and presentation at technical symposia

– Remind workers of confidentiality in exit interviews


Copyright Timing Issues

• Definition: Protects works of original artistic expression in tangible form (e.g., Software, Written Material, Maskworks, Recordings, Maybe Logos)

• Timing Issues– File Federal Registration prior to release of product– Term: Individuals: Life+70 yrs. Companies: Shorter of 95 yrs. from publication

or 120 yrs. from creation• Action Items

– No longer required to mark with ©, but still recommended– Set-up program to regularly file copyrights– Lock-up rights of non-employees who generally own their copyright so must

have assignment in consulting agreement– Train employees on Open Source issues and use of other third party material– Check all agreements for stealth out-licenses of copyrights– Don’t rely upon “fair use” or other exceptions unless approved by counsel

©


Domain Name Timing Issues

• Definition: World Wide Web address for a domain of computersthat serve content on the Internet

• Timing Issues– First come first served for registration– Renewals are performed annually– Be prepared to purchase when domains are search to avoid cybersquatters

who monitor searches• Action Items

– Register all potential trademarks and consider different marks if someone else owns the mark

– Organize all registrations to ease administration and automate renewals– Standardize contact information on position/title rather than individual– Register domains that are likely to be used by typo squatters– Consider action against cybersquatters using current marks


Service Mark and Trademark Timing Issues

• Definition: Words, symbols, designs, colors & sounds used to identify the source of one’s products or services to consumers

• Timing Issues– Search once potential mark(s) are chosen as it will only get more difficult to change– Consider Federal Registration prior to use if mark will ultimately be used in interstate

commerce– Choose foreign filings to match product footprint– Use not required prior to filing, but use should be expected in the next 4 years or so to

avoid abandonment of your issued registration for failure to show use– Trademark rights never expire so long as used continuously

• Action Items– Encourage clients to pick several possible names to chose from after search results

indicate those cheapest to adopt– Properly label marks with “TM” or “®” to enhances rights and damages– Set-up marking guidelines that the organization follows to avoid self-inflicted damage to

marks– Watch for and remedy any infringement/dilution/genericide of mark

®


Patent Timing Issues

• Definition: Confers the inventor the right to exclude others from making, using, manufacturing, importing the invention

• Timing Issues– Protects invention for 20 years from filing– Patent rights go to the first to invent, not the first to file– Cannot be publicly known before filing to preserve foreign rights– Cannot be publicly known or offered for sale more than one year before filing to preserve US rights

• Action Items– Consider way to capture your technical staff inventing first such as an inventor notebook program– Assess patent landscape when entering a new area with different competitors– Consider freedom to operate clearance study prior to investment in a specific product, and work

through any design arounds to avoid redesign– Monitor design reviews, trade show plans, proposed technical papers, or any other investment in

product development for ideas suitable for patenting– Consider patent committee to champion filings and patent reward program to incentivize inventors– File patents on improvements to keep products always covered by patents– Confirm proper marking of products to not patent pending or issued patents


Move Into New Product Area

BeginConsiderPatents

Scientists/Engineers Begin Design

PatentLandscape Study

InventProduct/Service

ProductClearance Study

Repeat

Product Name(s)Chosen

Domain Purchase(s)

Public MarketingBegins

File Patents Prior to Disclosure

Trademark Search(es)

Design Finalized

File Patents on Improvements

File Copyrights on Code & Literature

File Trademark Application(s)

$ ProductImproved

ProductSold

File More Patents on Details from Design

Police IP Infringement

Consider Copyright Filing on Derivative

$$

Interact withVendors/Partners

Non-DisclosureAgreements

©

®


Patent Strategies

• Offensive Strategy “Sword”– Pursuit of Licensing Revenue– Litigating Patents– Use as “Stick” in Negotiations

• Defensive Strategy “Shield”– Portfolio Building– Avoiding Patent Litigation– Avoiding Willful Infringement


Offensive Patent Strategy “Sword”

• Pursuit of Licensing Revenue cognizant of the risk the party approached will sue us on their patents

• Litigating patents where parties decline to license• Use as “Stick” in negotiations, for example,

extracting favorable terms when negotiating a contract


Defensive Patent Strategy “Shield”

• Goal: Have a patent portfolio equal to any party who might assert a patent

• Equal portfolios are measured by their ability extract equal damages from the other side if litigated

• Smart & focused portfolio building• Accentuates expertise to competitors and customers• “If you have one bad patent, you have one bad patent. If you

have five bad patents, you have a licensing program.”


Portfolio Building

• Tie patent expenditures to where you add value in marketplace (Market driven versus innovation driven)

• Decide level of commitment to patents necessary to reduce risk of pre-emptive suit by competition

• Monitor design reviews, trade show plans, proposed technical papers, or any other investment in product development for ideas suitable for patenting

• Consider patent committee to champion filings and patent reward program to incentivize inventors

• File patents on improvements to keep products always covered by unexpired patents


Top IP mistakes that will doom your company

• Employees/contractors don’t assign patent, copyrights & trade secrets before leaving

• Employees take trade secrets with them or introduce other’s IP to your products

• Immediate registration of domain names• Picking the wrong name—search marks before adoption• Prompt registration of marks before use & copyrights at

release• Not patenting technology that gives marketing advantage• Giving up patent rights through your own actions with public

disclosure or an offer for sale—remember NDAs


Thomas Franklin, [email protected]

– Tom Franklin is a partner in the full service intellectual property (IP) firm of Townsend and Townsend and Crew ("Townsend"). Townsend is one of the largest firms specializing in IP with a 150 year history and nearly 200 lawyers in eight different offices. Mr. Franklin supports a national practice where he splits his time between the Townsend offices in Denver and San Diego. Tom Franklin uses IP protection to assist large companies maintaining their dominance and assist startups vying to dominate.

– With over a dozen years in private practice, Mr. Franklin specializes in strong patent protection for high tech companies in the electronic and software fields. He regularly performs due diligence, patent portfolio development, expedited patent protection, and other techniques to efficiently achieve his clients goals.

– Mr. Franklin received his law degree from University of San Diego after a B.S. in Electrical and Computer Engineering from San Diego State University (Class of 1990), summa cum laude. Prior to practicing law, Mr. Franklin spent eight years as an engineer with Hughes Electronics and a senior engineer with L3 Communications and Lockheed Martin.

Practice AreaElectronics & Software

Denver Office1200 Seventeenth Street

Suite 2700Denver, CO 80202dir 720.258.6588fax 303.571.4321

San Diego Office12730 High Bluff Drive

Suite 400San Diego, CA 92130

dir 858.764.0577fax 858.350.6111


Web Resources

• Patent and Trademark Offices– Searchable databases of patents, publications, and

trade/service marks– US: http://www.uspto.gov or http://google.com/patents – Europe: http://ep.espacenet.com– Japan: http://www.jpo.go.jp

• US Copyright Office– http://www.copyright.gov

• Townsend and Townsend and Crew– http://www.townsend.com

http://www.uspto.gov/

http://google.gov/

http://ep.espacenet.com/

http://www.jpo.go.jp/

http://www.copyright.gov/

http://www.townsend.com/

inventor boot camp 2010

Education

proposed technical

original artistic

trade show

patentingconsider

incentivize

patent reward

intellectual

trade secrets