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F U L B R I G H T & J a w o r s k i L.L.P.Surfaces in Biomaterials Foundation
BioInterface 2011Bloomington, MN
©2011 Fulbright & Jaworski L.L.P.
Identifying, Creating and Commercializing Intellectual Property: Managing Patent Portfolios, Offensive
and Defensive use of Intellectual Property
October 24-26, 2011When You Think INTELLECTUAL PROPERTY,
Think Fulbright.TM
©2011 Fulbright & Jaworski L.L.P. 2
Presentation Overview
1. What is Intellectual Property?
2. Why Protect Your Company's IP?
3. Developing and Protecting IP Rights
4. America Invents Act – Changing Rules in IP
5. Introduction to IP Business Strategy
6. Avoiding Infringement of Other’s IP Rights
©2011 Fulbright & Jaworski L.L.P. 3
INTELLECTUAL CAPITAL
INTELLECTUAL PROPERTY (IP)
PatentsTrade SecretsTrademarksCopyrights
HUMAN CAPITAL
Employee SkillsCreativityKnow-HowCorporate KnowledgeLeadershipCustomer
Relations
INTELLECTUALASSETS
InventionSoftwareBrandsBusiness PlansCustomer ListsCustomer
InformationMarketing Plans
CREATION
UTILIZATION
©2011 Fulbright & Jaworski L.L.P. 4
Types of Intellectual Property
Types of Rights Scope of Coverage Examples
Patents New and Useful Inventions
“Anything under the sun useful to man” - Products and
Processes for Manufacture; Chemical Compounds; Software and Business
Methods
Trade Secrets Secret Information with Economic Value
Manufacturing Processes, Business Plans, Databases,
Customer Information
Trademarks/Trade Dress
Identification of Source ofProduct or Service
Northwest Airlines®, Coca-Cola®, Pepsi®, Xerox®
CopyrightsUnique Expressions of
IdeasSoftware Code,Manuals, Books
©2011 Fulbright & Jaworski L.L.P. 5
Presentation Overview
1. What is Intellectual Property?
2. Why Protect Your Company's IP?
3. Developing and Protecting IP Rights
4. America Invents Act – Changing Rules in IP
5. Introduction to IP Business Strategy
6. Avoiding Infringement of Other’s IP Rights
©2011 Fulbright & Jaworski L.L.P. 6
Why Protect Your Company’s IP?
Corporate valuations is enhanced by IP • strong correlation between total number of patents
issued and increase in total revenue • Intellectual Capital and IP—not Bricks & Mortar—are
the basis of today’s leading companies
Creates ValueCreates and protects market shareCreates a competitive advantage
©2011 Fulbright & Jaworski L.L.P. 7
Benefits of IP Protection
Protect Income Streams & Recover R&D Investment
Create Strong Identity with Customers
Develop Licensing Revenue
Create Bargaining Chips (e.g., for litigation and cross-licensing)
Validate Technological Expertise
Attract and Secure Investors
©2011 Fulbright & Jaworski L.L.P. 8
Presentation Overview
1. What is Intellectual Property?
2. Why Protect Your Company's IP?
3. Developing and Protecting IP Rights
4. America Invents Act – Changing Rules in IP
5. Introduction to IP Business Strategy
6. Avoiding Infringement of Other’s IP Rights
©2011 Fulbright & Jaworski L.L.P. 9
Developing & Protecting IP Rights
Patent Protection
Trade Secret Protection
©2011 Fulbright & Jaworski L.L.P. 10
Patent ProtectionProvisional Patent Application
● Cannot mature into a patent
● Provides filing date
● Expires after 12 months
Utility Patent
Provides owner a legal right to exclude others from making, using, offering to sell, or selling the invention
-Does NOT provide owner the right to practice the patented invention
Life is 20 years from the filing date
©2011 Fulbright & Jaworski L.L.P. 11
What Can Be Patented
“Process, machine, method of manufacture, or composition of matter”● Business methods (in the U.S.)
● Mathematical algorithms, when used to achieve a concrete and useful result
● Small improvements to or differences between prior technology is frequently patentable
©2011 Fulbright & Jaworski L.L.P. 12
Useful
Novel
Not known or used by another
● Not publicly disclosed
Not Obvious● Differences between invention and what is publicly
known are not obvious to one “skilled in the art”
Basis for Patentability
©2011 Fulbright & Jaworski L.L.P. 13
Identifying an Invention?
Where something different is created and that difference offers an advantage
Engineering/Product Development/Operations Projects
● Value often exists even in cancelled or suspended projects
May be found within technical papers or reports
Supporting systems such as product concepts, visible selling features, interfaces, content creation tools, transmission and delivery systems, networks, and software
©2011 Fulbright & Jaworski L.L.P. 14
Who Is an Inventor?
Research and Development Personnel
Non-Operations Groups
● e.g., sales staff providing solutions to a customer need, finance specialists devising innovative methods for funding projects
ANYONE CAN BE AN INVENTOR
● there is no job prerequisite to create innovations
©2011 Fulbright & Jaworski L.L.P. 15
Patent-related Best Practices
Implement Invention Submission & Review Program
Ensure Proper Patent Marking
Employee Agreements
Joint Development Agreements
Avoid Public Disclosures (Non-disclosure Agreements)
©2011 Fulbright & Jaworski L.L.P. 16
NOT INVENTED HERE!
Does the company have an outside disclosure program?
Is there a policy in place to prevent employees from receiving “inventions” from third parties?
If no policy, how does the company handle situations with third party inventors?
Should the company have a policy to review third party inventions?
©2011 Fulbright & Jaworski L.L.P. 17
Pitfalls of Public Disclosure
Competitors may discover disclosure and destroy competitive advantage
Forecloses ability to provide additional value to company
Under U.S. and Canadian patent law, public disclosure triggers a one-year grace period to file a patent application (administrative headache). **Under America Invents Act, public disclosure abolishes rights for non-disclosing inventors
In most other countries, public disclosure destroys the ability to obtain enforceable patents (i.e., Absolute Novelty)
©2011 Fulbright & Jaworski L.L.P. 18
Public Disclosures
Presentations – (e.g., trade show)
Publications – professional, trade, and industry journals
Public Use● Marginal exception – experimental use (U.S. only)
Offer for Sale/License● Yes, being at a trade show indicates willingness to accept
an offer, and is thus considered an “offer for sale”
Prototyping efforts, initial supplier contacts
ANYWHERE in the WORLD
©2011 Fulbright & Jaworski L.L.P. 19
Trade Secrets (and Confidential Information)
Information of value, kept secret by an owner (e.g., the formula for Coca-Cola®)
● Usually to provide a business advantage over competitors
● Examples: scientific or technical information, designs, processes, procedures, formulae, improvements, confidential business or financial information, customer lists, databases
©2011 Fulbright & Jaworski L.L.P. 20
Trade Secrets (and Confidential Information)
Affirmative measures must be taken to keep the secret
Under AIA prior use rights are a defense against infringement upon showing of
a) reduction to practice and commercial use; and
b) commercial use occurs at least one year before the effective filing date of the claimed invention
©2011 Fulbright & Jaworski L.L.P. 21
Steps to Protect Trade Secrets
Identify Potential Trade Secrets
Limit Access within Your Company
● Limited Dissemination (Need-to-Know)
Implement Program to Maintain Confidential Status
● Security Provisions (Safes, Controlled Access)
Include Confidentiality Provisions in Employee Agreements
Use NDAs with Outside Vendors
©2011 Fulbright & Jaworski L.L.P. 22
Steps to Protect Trade Secrets - Continued
Require confidentiality or non-disclosure agreement with any party receiving the disclosure
File patent applications before any disclosure is made
©2011 Fulbright & Jaworski L.L.P. 23
Confidential Information
Assume EVERYTHING you produce at work is confidential information.
● Different than a determination of whether something is patentable or a trade secret.
Confidential Information includes:
● inventions, product plans, source code, research information, development information, know-how, technical specifications, business strategies, marketing plans, finances, costs, prices, customer names, supplier names, business opportunities, personnel
● Any other information that is of value to or provides your company with a competitive advantage.
©2011 Fulbright & Jaworski L.L.P. 24
Non-Disclosure Agreements
Use of proper non-disclosure agreements (NDAs) is critical to protecting your company’s confidential information
Require NDA confidentiality agreements with:
● Potential Business Partners
● Vendors & Suppliers
● Contractors & Consultants
● Licensees
Mark all documents produced under an NDA with a “CONFIDENTIAL” label
©2011 Fulbright & Jaworski L.L.P. 25
Presentation Overview
1. What is Intellectual Property?
2. Why Protect Your Company's IP?
3. Developing and Protecting IP Rights
4. America Invents Act – Changing Rules in IP
5. Introduction to IP Business Strategy
6. Avoiding Infringement of Other’s IP Rights
©2011 Fulbright & Jaworski L.L.P.
America Invents Act Changing Rules in IP – September 16, 2011
Three Big ChangesFirst to File – with Grace (FTFG)Changes to Post-Issuance Proceedings• Supplemental Examination – cleanse patent• Inter Partes Reexam – Revised New Standard -Reasonable likelihood of Prevailing (RLP)• Inter Partes Review – New – (RLP) Estoppel for later civil action• Post-Grant Review – New – (RLP) Estoppel for later civil action
Fee Setting But Not Fee Spending or RevenueControl
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©2011 Fulbright & Jaworski L.L.P.
AIA Phased in over 18 Months
9/16/2011 9/16/2012 3/16/2013- prior user rights Assignee oath/dec FTFG- micro entity fee 3rd Party Submission New Sec. 102 - virtual marking BPAI PTAB Derivation Proc.- best mode Supplemental ExamPrioritized Exam (9/23/2011) Inter Partes Review< 10,000 Bus Method Pat Review$4800/$2400 Post Grant ReviewFinal disposition 12 mo Inter Partes Reexam
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©2011 Fulbright & Jaworski L.L.P.
First to File with Grace – Scenario 1
A invents first and files first before B
Party A
Party B
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©2011 Fulbright & Jaworski L.L.P.
First to File with Grace – Scenario 2
A invents first, B files first
Party A
Party B
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©2011 Fulbright & Jaworski L.L.P.
First to File with Grace – Scenario 3
A invents first, B files first but A publishes first!
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One year grace
BUT – loss of foreign rights!
Party A
Party B
©2011 Fulbright & Jaworski L.L.P.
First to File with Grace – Scenario 4
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A invents first but files after B has been publicly available for les than 1 year
©2011 Fulbright & Jaworski L.L.P.
AIA – New Rules for Novelty
Publication and Grace vs. Absolute Novelty
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Ideal PatentFiling
Small InventorReality
UniversityReality
Complete disclosureno additional developments
No public disclosure No need for Grace
Large Co.Reality
Initial disclosure Followed by furtherR & D
Vetted by Patent Review Committee
Limited Provisional useLimited need for Grace
Initial concepts and Subsequent development
Patent filings competewith fund raising
Use of Provisionalsto minimize cost
Research concepts as opposed to product development
Patent filings vs. publication
Significant use of Grace
©2011 Fulbright & Jaworski L.L.P.
AIA – Take Home
First to File● Can no longer “swear behind”
Reliance on inventors notebooks to prove conception is no longer necessary
● Use of “Grace” after publication will still foreclose foreign filing in absolute novelty countries
Supplemental Examination – cleanse patentEnd of false marking claimsNew post-grant review contains significant estoppel provisions
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©2011 Fulbright & Jaworski L.L.P. 34
Introduction to IP Business Strategy
Determine value of IP to Company
Conduct Regular IP Audits
Implement Patent Strategy
Focus on Protecting Core Technologies
Prevent “Fencing-in” by Competitors
Pursue “Blocking” of Competitors
Monitor Competitors - Patent “Mapping”
©2011 Fulbright & Jaworski L.L.P. 35
Determining Value of IP to Company
Evaluate business goals
Evaluate technology and product platform
Estimate the impact of IP on profits
● Increase in product’s sale price
● Decrease in product’s production costs
● Increase product’s sales volume
Evaluate competitor’s market presence, products, and technical and patent activities
©2011 Fulbright & Jaworski L.L.P. 36
IP Audits
Obtain a “snap-shot” of your company’s IP rights and confirm ownership
Verify that core technologies and key products are protected
Ensure appropriate procedures are in place to protect IP rights and identify areas for improvement
Assess the quality and scope of those rights
Evaluate a business unit or product line for possible acquisition, sale, or merger
Review employee, joint-development, consulting, non-disclosure, and license agreements
©2011 Fulbright & Jaworski L.L.P. 37
Patent Filing Strategies
1) Assess overall “value” of invention and file when value exceeds procurement costs
2) File on all inventions that apply to core product or family of products
3) File applications for everything developed
4) File to avoid “fencing in”
File patent applications on inventions “surrounding” a base invention
5) File patent applications on inventions that the company does NOT intend to use in a product
Prevents competitors from implementing the invention, or creates a licensing opportunity
©2011 Fulbright & Jaworski L.L.P. 38
Monitoring Competitors
Identify Strategic Acquisitions (or business alliances)
Direct R&D Activity
Block or Fence-in Competitors
©2011 Fulbright & Jaworski L.L.P. 39
Presentation Overview
1. What is Intellectual Property?
2. Why Protect Your Company's IP?
3. Developing and Protecting IP Rights
4. America Invents Act – Changing Rules in IP
5. Introduction to IP Business Strategy
6. Avoiding Infringement of Other’s IP Rights
©2011 Fulbright & Jaworski L.L.P. 40
Avoiding Infringement of Other’s IP Rights
U.S. patent only gives owner the right to exclude others from the territory covered by the patent’s claims
Patent does not give owner the right to practice the invention, as the invention may require the practice of a “dominating” patent
©2011 Fulbright & Jaworski L.L.P. 41
Strategies for Avoiding Infringement
Conduct Product Clearance Investigations
Obtain Opinions of Counsel
Monitor Competitor’s IP
Challenge Patents in the PTO (as opposed to litigation)
Consider IP Infringement Insurance
©2011 Fulbright & Jaworski L.L.P. 42
Monitoring Competitors
Track and evaluate published patent applications and issued patents
Consider whether potential employees have confidential information of competitors or are under non-compete obligations; weigh benefits and risks of hiring accordingly
©2011 Fulbright & Jaworski L.L.P. 43
Challenge Patents!
Consider submitting prior art relevant to competitor’s published applications
Consider seeking invalidation of issued patents
Consider filing post-grant review
©2011 Fulbright & Jaworski L.L.P. 44
IP Infringement Insurance
Covers litigation expenses incurred in enforcing IP rights against infringers.
Reimbursement for legal expenses to defend infringement lawsuits.
See sample policy at www.infringeins.com
©2011 Fulbright & Jaworski L.L.P. 45
Discussion Points
Red Flags at companiesBest not to refer to competitor’s product/trademark!When in doubt…file!A single claim can be quite valuable even if narrow
©2011 Fulbright & Jaworski L.L.P. 4646
When You ThinkINTELLECTUAL PROPERTY
Think Fulbright.TM
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