IP Ownership Issues - Association of Corporate Counsel
Download
Report
Transcript IP Ownership Issues - Association of Corporate Counsel
IP Ownership Issues
How to "Write it Right" in Your Agreements
and Corporate Structuring to Avoid
Ownership Disputes Down the Road
ACCA 2011 Double Header
October 5, 2011
Welcome
Overview of Presentation
Introduction of Speakers
Paul Bokota, Toshiba
John B. Sganga, Jr., Knobbe Martens
Michael A. Guiliana, Knobbe Martens
2
© 2010 Knobbe Martens Olson & Bear LLP
Why Do We Need to “Write it Right”?
IP is “property” with a Chain of Title
IP Rights can be divided, transferred and licensed in
many different ways.
Contract terms in Chain of Title can impact:
ability to sell IP rights
ability to enforce IP rights
who may/must participate in IP litigation
remedies
whether the IP suit can continue
3
© 2010 Knobbe Martens Olson & Bear LLP
Types of Transactions
License Agreements
Financial Transactions
Industrial Agreements
IP Services
International Transactions
4
© 2010 Knobbe Martens Olson & Bear LLP
Financial Transactions (Private)
PPO's
Mergers and Acquisitions
Assignment Agreements
Security Agreements
Strategic Alliances
5
© 2010 Knobbe Martens Olson & Bear LLP
Types of Agreements That Affect IP Rights
Employment Agreements
Nondisclosure Agreements
Visitor Confidentiality Agreements
Consulting Agreements
Development Agreements
Manufacturing Agreements
Software Escrow Agreements
6
© 2010 Knobbe Martens Olson & Bear LLP
Three Areas for Analysis
IP Rights can change hands many times
Each transfer raises potential for issues in chain of title
Creators
7
Purchasers
Users
© 2010 Knobbe Martens Olson & Bear LLP
When to Consider IP Ownership Issues
Hiring creative employees
Exit interview
Filing for patent/trademark/copyright
Issuance of patent/trademark /copyright
Employee “visitor” at third party
Joint Development Agreements
Entering license
Intra-company licenses/tax planning
Prior to filing suit
Prior to financing/corporate transaction
8
© 2010 Knobbe Martens Olson & Bear LLP
Creation of IP Rights
Creation is First Opportunity to Write it Right
IP Ownership Rights Begin at Creation
Copyright: Author
Trademark: First User
Patent: Inventor
9
© 2010 Knobbe Martens Olson & Bear LLP
Patent Rights – Creator Presumed Owner
U.S. Patent Law and Employment Law Favors Inventor
At point of invention, Inventor is owner.
10
“Work for Hire/Hired to Invent” - Caveat
Employee Inventors – Employee is presumed
owner, employment agreement can establish
obligation to assign inventions to Company.
Contractor Inventors – Contractor is presumed
owner, Contractor Agreement can establish
obligation to assign inventions to Company.
© 2010 Knobbe Martens Olson & Bear LLP
Internal Creations
Employee Inventor - Presumed Owner
Employment Agreement – Specific IP clauses can
transfer ownership and establish obligation to execute
transfer documents.
Disgruntled Employees might refuse to execute.
Incentive Programs and Comprehensive Employment
Agreements Achieve Higher Compliance Rates
Express Consideration for Inventions
Cash Bonuses for Participation in IP program
11
© 2010 Knobbe Martens Olson & Bear LLP
IP Ownership of Outsourced Creation
Third party assists in product development
Consultant/Developer
TP presumed owner of inventions
TP Agreement can establish:
Transfer ownership and obligation to execute
transfer documents
License Terms
Hostile TP’s might refuse to assign or license IP rights
Enter TP relationships carefully
Consultant/Developer Agreement Should Establish
Ownership
12
© 2010 Knobbe Martens Olson & Bear LLP
Good Intentions – Bad Ideas
Good Intentions
Cooperation
Generosity
Fairness
Reasonableness
Bad Ideas
“Agree to Agree”
Set Royalty Rates Later, If Product is Successful
Joint Ownership
Rush to Develop – Decide Ownership Later
13
© 2010 Knobbe Martens Olson & Bear LLP
Write it Right
Employment Agreements
Declare specific consideration for inventions
Incentive program
Consultant/Developer Agreements
Specify ownership
Determine license rights at outset
Royalty Rates – predictable/precise
Notice provisions for patent filings
Specify preexisting IP
14
© 2010 Knobbe Martens Olson & Bear LLP
Write it Right
License Agreements
Include termination date
Clarify how royalty calculated
Be specific as to IP licensed
Who controls litigation
Define improvements
Assignment Agreements
Agreeing to assign vs. actually assigning
Assignment of past damages
15
© 2010 Knobbe Martens Olson & Bear LLP
Write it Right
License Agreements – pitfalls on term
Royalties due solely to an expired patent is “unlawful
per se” Brulotte v. Thys Co., 379 U.S. 29, 32 (1964)
Exceptions:
16
Improvement patents "incorporated" in licensed
products can extend royalties after original patent
expires Zila, Inc. v. Tinnell, 502 F.3d 1014, 1026 (9th Cir. 2007)
Trade secrets licensed
Portfolio-wide patent licensing
Automatic Radio Mfg Co
v. Hazeltine Research, 339 U.S. 827 (1950)
© 2010 Knobbe Martens Olson & Bear LLP
Write it Right
License Agreements – pitfalls on term (cont’d)
Articulate administrative convenience/legal ground for
term tied to something other than patent expiration
Example of what not to do:
17
"The royalties shall be paid for so long as the patents to be
issued on said patent application and improvements thereon
represented by improvement patents shall be in existence
and shall terminate on the expiration of such patents and
improvement patents."
© 2010 Knobbe Martens Olson & Bear LLP
Write it Right
Assignment Agreements – pitfalls
Backdating agreement
Do: Memorialize prior oral understanding
Don’t: change signature dates!
Reference to patent or registration number
18
© 2010 Knobbe Martens Olson & Bear LLP
Write it Right
Assignment Agreements – pitfalls
Agreeing to assign at some future date
19
1st Agreement: “agree[d] to assign” to Stanford “right, title and
interest in” inventions resulting from employment at the
University.
2nd Agreement: “will assign and do[es] hereby assign” to
Cetus “right, title and interest in each of the ideas, inventions
and improvements” made “as a consequence of [his] access”
to Cetus.
Federal Circuit: “the contract language “agree to assign”
reflects a mere promise to assign rights in the future, not an
immediate transfer of expectant interests.”
2nd Agreement trumps 1st, and later patent assignment
Stanford v. Roche 583 F.3d 832 (Fed. Cir. 2009)
© 2010 Knobbe Martens Olson & Bear LLP
Write it Right
Developer Agreements – pitfalls
Agreeing to negotiate royalty rates
20
“Contractor has exclusive right to control design
created under this agreement, pending payment of
a reasonable all-inclusive royalty and/or license,
such royalty and/or license being based on the
scope of exclusionary protection afforded, the cost
of producing the design, and the costs for
purchasing alternatives, to be negotiated in a
future agreement with Subcontractor.”
Why does corporate structure matter for IP?
Impacts ability to enforce IP rights
Determines who can participate in IP litigation
Can affect what remedies can be recovered
May determine whether the IP suit can continue
21
© 2010 Knobbe Martens Olson & Bear LLP
Who should retain rights to IP?
Whoever paid for development
Whoever gets the tax advantages
Whoever survived merger/acquisition
Often ignored:
corporate entity commercially using the IP
22
© 2010 Knobbe Martens Olson & Bear LLP
Who has rights to enforce IP?
Patent
Owner of patent or its exclusive
licensee
Trademark
Registered owner and those who
obtain the right to sue from the
registered owner
Copyright
Copyright owner and any exclusive
licensee
23
© 2010 Knobbe Martens Olson & Bear LLP
Who has rights to enforce IP? (cont’d)
Fact-intensive inquiry
Use of the term “exclusive” not sufficient; must examine
the actual rights conferred in each license agreement
Continuum of rights
Owner of all rights with no licenses
Exclusive licensee with right to enforce
Exclusive licensee of a subset of rights
Exclusive licensee subject to pre-existing licenses
Non-exclusive licensee
24
© 2010 Knobbe Martens Olson & Bear LLP
How can corporate structure affect IP remedies?
Can determine whether injunctive relief is available in
patent cases
corporate entity that suffers harm must be a party
to the suit
Can determine whether lost profits can be awarded for
patent damage
plaintiff must show it would have made sales, or
that profits from sales made by a related corporate
entity “inexorably flow” back to the plaintiff
25
© 2010 Knobbe Martens Olson & Bear LLP
Cases where corporate structure affected outcome
Related corporate litigants have been dismissed where
they lacked standing to bring suit
Spine Solutions, Inc. v. Medtronic, 620 F.3d 1305 (Fed. Cir. 2010)
Injunctive relief has been denied where the named
plaintiff could not show competitive injury
Medtronic Sofamor Danek USA v. Globus Medical, 637 F.Supp.2d 290 (E.D. Pa. 2009)
Lost profits have been denied, where named plaintiff did
not make sales and could not show that it was impacted
by the sales made by the infringer
Poly-America L.P. v. GSE Licensing Technology, Inc., 383 F.3d 1303 (Fed. Cir. 2004)
Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359 (Fed. Cir. 2008)
26
© 2010 Knobbe Martens Olson & Bear LLP
What can you do to maximize ability to enforce IP?
Make corporate entity selling in U.S. a party to the
lawsuit, either as owner of the IP or exclusive licensee
with right to enforce
To recover lost profits
Include the U.S. entity in the suit, or
Make a showing that profits from the U.S. entity flow
back to the corporate entity bringing the lawsuit
27
© 2010 Knobbe Martens Olson & Bear LLP
How can in-house counsel monitor these IP issues to
avoid enforcement concerns?
Track these issues at the time the IP is generated
Be aware when these issues could arise
- Tax restructuring
- Updates of intercompany agreements
- Acquisitions
Work with tax or corporate counsel to address these
issues
28
© 2010 Knobbe Martens Olson & Bear LLP
What other intercompany arrangements can impact IP
rights?
Intercompany patent licenses should require the licensee
to mark the licensed patents
Can impact the time period in which damages can
be recovered
Intercompany trademark licenses should include quality
control provisions
Lack of quality control could be deemed to be
abandonment of trademark
29
© 2010 Knobbe Martens Olson & Bear LLP
Benjamin Franklin on Business Partnerships
“I very explicitly settled, in our articles, everything to
be done by or expected from each partner, so that there
was nothing to dispute, which precaution I would
therefore recommend to all who enter into
partnerships; for…little jealousies and disgusts may
arise…with lawsuits and other disagreeable
consequences.”
» B. Franklin, his autobiography
30
Questions?
31
© 2010 Knobbe Martens Olson & Bear LLP
Orange County, CA
San Diego, CA
San Francisco, CA
Silicon Valley, CA
Los Angeles, CA
Riverside, CA
Seattle, WA
Washington, D.C.
kmob.com