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Patent Basics for
UW Researchers
WARF Intellectual Property
Winter 2012
WARF Overview
• Established in 1925 by Prof. Harry Steenbock
• An independent, tax exempt, nonprofit, supporting
organization for UW-Madison and Morgridge Institute for
Research (MIR)
• Official designated technology transfer office for UWMadison and MIR
• WARF’s Mission: Support scientific research
at UW-Madison and MIR by:
– Moving inventions into the community
– Investing licensing proceeds to fund
further research
Patenting & Licensing Portfolio
• Receive > 350 disclosures annually
• Manage over 9700 pending and 1400 issued U.S. patents, as well
as more than 2,000 foreign equivalents
• Sign 50+ revenue generating licenses annually
• Maintain more than 500 active commercial license agreements,
with over $1 Billion of products sold each year under license from
• Returned $80 million in 2011 and over $1 billion since WARF’s
founding to UW-Madison to fund research, programs, and
• Hold equity in 40 UW-Madison spin-off companies
WARF’s Annual Margin of Excellence Gift
• Since its founding, WARF’s annual gift contributes to:
– Research projects, named professorships, graduate fellowships, faculty
retention, research facility construction
Research and Discovery
Conceive and start to develop your idea for a new technology or an improvement to
an existing technology.
Invention Disclosure
Make your idea known to WARF.
 Submit an Invention Disclosure Report.
 Meet with a WARF Intellectual Property Manager.
 Explain your idea to WARF.
WARF Decision
The WARF Disclosure Committee assesses your idea.
 Is it protectable?
 Is there a market for it?
 Can we license it?
Some disclosures may be determined a “predisclosure,” in which case, WARF can reconsider
your disclosure if you decide to develop the technology further.
Inventor Is Notified by WARF
We either accept or don’t accept the invention; either way there’s a Graduate School
Equity Review to determine funding sources and ownership rights to the invention.
 If we accept, you sign a Memorandum Agreement, in which you agree to assign
your idea to WARF, and WARF agrees to share 20 percent of any licensing revenue
with the inventor group.
 You meet with your WARF Intellectual Property Manager and a patent attorney who is
retained by WARF.
 An experienced patent attorney drafts the application with your input.
 The application is filed with the U.S. Patent and Trademark Office (USPTO).
 The application is examined by the USPTO
 A patent issues and the inventor is notified.
WARF Licensing Manager identifies companies that may be interested in the invention
and pro-actively markets the technology to those companies.
 WARF Licensing Manager identifies the commercial space for your invention.
 A summary of the technology is written and posted on the WARF Web site.
 Other marketing materials may be developed.
 A patent license is negotiated with a potential Licensee. (Note: this may take years.)
 A patent license is a contract between the patent owner (WARF) and a commercial
partner that gives the Licensee permission to make, use, sell or import the
 Licensing revenue is returned to the Inventor and the University, where it is used to
support further research.
What is a patent?
A patent for an invention is the grant of a property right to the
inventor, issued by the United States Patent and Trademark
• Types of patents:
– Utility (regular or provisional)
– Design
– Plant
History and Rationale
• Most every country has such a system of
granting and administering patent rights.
– Why?
• Article I, Section 8, clause 8 of the US
Constitution states that Congress possesses the
power to:
– Promote the Progress of Science and useful Arts by
securing for limited Times to Authors and Inventors
the exclusive Right to their respective Writings and
Patent Prosecution
• Process for obtaining a patent carried out between
inventors or patent attorneys or agents and the
United States Patent and Trademark Office.
•Patent application includes:
– Specification describing the invention
– Drawings
– Claims*
– And a fee, of course!
Example Claim
1. A media player for storing and playing media such as audio, video or images,
the media player comprising:
• a housing that encloses internally various electrical components that
provide computing operations for the media player;
• a touch pad supported by the housing and providing a first user input
element for the media player, the touch pad being based on polar
coordinates and including angular input areas for processing input from a
swirling finger motion;
• a button disposed at a central portion of the touch pad, the button being
distinct from the touch pad and providing a second user input element for
the media player, the button processing input from a finger pressing
thereon; and
• an audio delivery device configured to output music.
Drawing of Previous Claim
Title: Touch pad handheld device
A media player having a touch pad is disclosed.
Patent number: 7046230
Inventors: Stephen Paul Zadesky, Tang Yew
Assignees: Apple Computer, Inc.
Filing date: Jul 1, 2002
Issue date: May 16, 2006
Patent Examination Timeline
assigned to an
searches for prior
Examiner applies
tests for novelty,
and utility
rejections of
some or all
claims are
Office action
spells out issues
that need to be
Arguments to
persuade the
examiner that
the prior art
was incorrectly
Claims may be
amended to
distinguish the
invention from
the prior art
Applicants can
respond if only
amendments are
If arguments are
claims may be
allowed or new
rejections may
be made
Otherwise, a
request for
examination or
an appeal can be
Claims are
allowable and
the patent can
Issue and
publication fees
are paid
Statutory Requirements
• Utility and appropriate subject matter
• Claims are definite and appropriate written description
• Specification enables the practice of the invention and
discloses best mode
Utility/Subject Matter
Written Description
Enablement and Best Mode
New and Non-Obvious
First determine the current state of the art:
– Prior art constitutes those “references” created
before a specific date that might be relevant to a
patent’s claims of originality
– Typical references include patents and publications as
well as evidence of actual sales or public use in the
Then compare claimed invention to prior art
Invention must be “New”
•Novelty: each element of the claim already
contained in a single, enabling, fully anticipatory
•Section 102(b) establishes the “critical date”
– In a printed publication or patented anywhere
– In public use or on sale in the U.S.
– By the inventor: more than one year** before the filing date of the patent
– By another: before the filing date** of the patent application
** As of March 16, 2013 Shift from “First to Invent” to “First Inventor to File”
Invention must be “Non-Obvious”
• Generally, an invention is nonobvious when an
invention is not obvious to a Person Having Ordinary
Skill In The Art.
• Different than novelty because it applies when an
invention is not identically disclosed.
• The Graham test:
 The scope and content of the prior art
 The “level of ordinary skill” in the prior art
 The differences between invention and the prior art
 Other evidence, including unexpected results, long-felt need,
commercial success, failures of others, etc
Patent Exploitation
• The patent gives the owner the right to exclude others from
practicing the invention, meaning the right to exclude others
from: Making, Using, Selling, Offering to Sell Importing
• Patent issues . . . Now what?
– Licensing
– Suit for infringement
Patent Licensing
• A contract between owner and third party granting right to
practice invention
• License is a promise not to sue, if licensee complies with
terms of the agreement
• Exclusive verses nonexclusive
• Up front payments, milestones and royalties on sales
Remedies for Infringement
• Must start a civil action in federal court, and prevail, to
recover any remedies.
• Remedies are civil (money and/or injunction) - no one goes
to jail.
• Injunctions, 35 U.S.C. § 283
 court orders; in patent cases, requiring infringer to cease infringing
• Damages, 35 U.S.C. § 284
 compensatory damages, no less than a reasonable royalty, decided
by judge or jury
 may be tripled in judge’s discretion
Patents in the Rest of the World
•The Patent Cooperation Treaty
Special uniform application procedure to simplify
multinational patent acquisition
Patent Family Tree
Provisional U.S. Application
Filed January 1, 2004
U.S. Utility Application
Filed January 1, 2005
PCT Application
Filed January 1, 2005
Divisional Application
National Phase
Canada Application
National Phase
Japan Application
Continuation Application
European Patent Office
National Phase
Mexico Application
CIP Application
France Application
Germany Application
United Kingdom
Leahy-Smith America Invents Act (AIA)
• The U.S. will move from a “first to invent” to
a “first inventor to file” system for
applications filed on or after March 16, 2013.
• Actions and prior art that bar patentability
will include public use, sales, publications,
and other disclosures available to the public
anywhere in the world as of the filing date,
other than publications by the inventor
within one year of filing
– Intervening publications based on the inventor’s
publication may be an issue
• The U.S. still has the grace period for the
inventor’s own work; many countries have a
requirement of “absolute novelty”
• Public participation in examination process
more typical internationally and new
provisions in U.S. law allow this as well
Other Forms of IP Protection
Trade Secrets
Copyrights Trademarks
• A trademark is a word, phrase, symbol or design, or a
combination of words, phrases, symbols or designs, that
identifies and distinguishes the source of the goods of one
party from those of others.
Why have trademarks?
Service Mark
• Identifies and distinguishes the source of a service.
Trade Dress
• A product’s distinctive shape, color, graphics, sales
technique or combination.
• Associated by consumers with a particular source.
Adopting a Trademark
• First, perform a trademark search – look at what other’s
have registered or are using for similar goods and services so
that you can avoid those right from the start.
• Second, devise a list of marks that are different from those
you have seen for similar goods and services.
• Third, choose the "strongest" mark possible.
• Fourth, register the mark.
Standards and Enforcement
• Arise under State law as soon as mark is used.
• Federal registration gives procedural advantages
• A trademark owner may prevent others from using any mark that
creates a likelihood of confusion as to the source or sponsorship
of the associated goods or services.
• Trademark rights persist so long as the mark continues to be used
and retains its distinctiveness
Fair Use – When Can You Use Another’s
•Comparative advertising
•Journalistic uses
•Compatibility of
aftermarket goods
Copyrights protect an EXPRESSION of an idea
Gives protection to authors of “original works of
Copyright encourages creative efforts by securing the
exclusive right to reproduce works and derive
income from them
Copyrightable Subject Matter
• Literary works
• Musical works
• Dramatic works
• Pictorial, graphic and
sculptural works
• Web pages
• Software and computer
• Mask works and
semiconductor chips
• Architectural works
• Motion pictures and
other audiovisual works
Copyright Does Not Protect
Ideas that have not been fixed in tangible form of
Titles, names, short phrases, logos and slogans (may be
trademark protected)
Works entirely in the public domain such as facts,
standard calendars, height and weight charts, tape
measures and rulers
Obtaining Copyright Protection
Copyright is created automatically once an original effort
has begun and it has been fixed in a tangible medium
Registration is not required (but highly recommended)
 Additional protection and notice to potential infringers.
 Simple and inexpensive
 Symbol, year, author
Term of Copyright Protection
Works created on or after January 1, 1978
– Life of the author plus 70 years
– Work-for-Hire: earlier of 95 years from publication or 120 years
from creation
Works created before January 1, 1978
– 28 years renewable for up to a total of
95 years
Limits on Copyright Protection
• “Fair Use” doctrine
– Parody under First Amendment grounds generally protected
• Certain limited “compulsory license” provisions when specified
royalties are paid
Trade Secrets
Covered Intellectual Assets
Trade Secret
• New and useful inventions
• Processes for manufacturing
• Methods of doing business
• Non-human life forms
• Plant varieties
• Ornamental designs
• Almost anything a business
maintains as secret that is
not generally known to
competitors that gives it a
competitive advantage in the
marketplace such as
– Manufacturing processes
– Software
– Customer lists
– Marketing and other
business data
Covered Intellectual Assets
• Pick one, not both.
• Patent and trade secret protection are mutually exclusive
– A patent requires full disclosure of the invention including the best
mode of practicing the invention
– A trade secret requires secrecy
Technology Transfer & Licensing
What is Technology Transfer?
• The transfer of scientific findings
• From one organization to another
– University to Industry
– Industry to Industry
– University to University
• For the purpose of
– Further development
– Commercialization
Technology Transfer – University and Industry
Knowledge for
Knowledge’s Sake
Management of
Knowledge for Profit
of New and Useful
Academic Freedom
Open Discourse
Product R&D
Limited Public Disclosure
Source: Dilworth Paxson
Ultimate Benefits of Technology Transfer
• Protection of investment
– Time
– Dollars
• Public benefits derived from
– Products reaching the market
– Job creation
• Company benefits
State and
– Reduced R&D costs
– Improved time to market
– New market opportunities
and Startups
How Does WARF Make Their Decision?
• Potential application(s)
• Key selling points/features/benefits
– What are unique benefits to licensee?
– Is product first in class? Next generation? Follower?
– Does product offer advantage over current technologies? (Faster/cheaper/better?)
• What’s the market?
– Key companies
– Market size
– Market trends
• Is the market in launch, growth, mature, or decline phase?
– Five forces
• Buyers, suppliers, complements, substitutes, barriers to entry
• Technology trends
– Are similar technologies emerging in academia or industry?
Licensing Considerations For New Disclosures
• Chance of licensing
– State of the market, technology impact, WARF’s history in licensing
• Timeline for licensing
– Stage of the technology, patent status, position in WARF’s portfolio
• Licensing strategy
– Companies (existing or start-up), exclusive vs. non, field limitations
• Plan for the next year
– Further technology development, proactive marketing, marketing materials
• Revenue projections
– Early revenue, patent reimbursement, lifetime royalty projections
IP Licensing
• What is a license?
– A contract between owner and third party
– Rights to: make, use, sell, or import
– License is a promise not to sue, if licensee complies with the terms
• Caveat
– Not a guarantee of freedom-to-operate
Licensing – The Process
• Requirements
Recognize societal and/or commercial benefit
Capability to develop
Commitment to commercialize
Able to pay a reasonable licensing fee
• Upfront, royalties, milestones, etc.
– Fulfill obligations under Bayh-Dole
The License Agreement - Terms
• Grant - What is given to the licensee
– License
• Exclusive, Non-exclusive
– Sublicense
• Considerations – What licensee gives to WARF
– Upfront Fee
– Patent Reimbursement (Cost Recovery)
– Royalty Rate on Product Sales
– Milestones
– Minimum Royalty/Annual Maintenance Fee
– Development Reports
Determining the Value
• Technology Overview
– Potential application
– Key selling points/features/benefits
• What are unique customer benefits?
• Is product first in class? Next generation? Follower?
• Does product offer advantage over current technologies?
– Technology trends
• Are similar technologies emerging in academia or industry?
• Market
– Market size ($ and units over five-year period and CAGR)
– Market trends
• Is the market in launch, growth, mature, or decline phase?
– Five forces
• Buyers, suppliers, complements, substitutes, barriers to entry
Determining the Value cont.
• Comparable/Competitive Technologies
– Technology description
– Cost of current products
• What are the typical product margins, payback period, return in market?
– Phase of development
• Is product a leader, #2, #3, follower, or new entrant?
– Benefits/disadvantages in comparison to WARF technology
• Discounted cash flow or Monte Carlo methods
• Historical Licenses/Industry Standards
• Fairness Doctrine – 25% of the profit
• What a licensee is willing to pay
Factors to consider before starting a company
Technology Factors
• What are the potential applications?
• Is it an incremental improvement or revolutionary?
• What makes it different?
– Selling points
• Is product first in class? Next generation? Follower?
– Features
• Does product offer advantage over current technologies?
– Benefits
• Why is the consumer going to buy your product?
• Trends
– Are similar technologies emerging in academia or industry?
• What is the patent landscape?
– Can the technology stand alone?
• What development and/or approvals are necessary?
Market Factors
• What is the size of the market?
– Total $
– Units sold over five year period
• What are the current market trends?
– Nonexistent?
– Nascent or mature?
– Growing or declining?
• Consider the five forces
Barriers to entry
Management Factors
• Is this the first start up for you or the team?
• Are you or the team experienced in this technology area?
• Have you or the team successfully raised money?
• Have you or the team successfully exited?
• Does the team have a good group of advisors?
• Has senior management had leadership roles in other startups?
• What is the inventor involvement in the start-up?
Capital Factors
• What are the critical milestones?
– Development
– Product
– Sales
• How much capital is required to reach each milestone?
• What is the value of the company at each milestone?
• Who will provide the capital?
– Investors: Angels, VCs
– R & D funding: SBIR, etc.
• What is the exit strategy?
Additional IP Agreements
• Confidential Disclosure (CDA)
• Standstill
• Option
• Material Transfer (MTA)
• Research License
• Agree to keep information that is not in the public
domain confidential and not to use the confidential
information without first obtaining a license
• Important to have when discussing information with a
company/individual that has not been included in a
patent application
• Things to consider include the purpose of sharing the
information and the length of time your are requiring
them to keep it confidential
• Used by both academic institutions and industry to
share their materials for research purposes.
• These allow the receiver to use the materials for a
specified purpose and usually for a given time period.
• They limit the receiver's ability to share/distribute the
materials to others and often have ask for rights to new
materials or inventions that include the existing
Standstill & Option
• Agreements by which the IP owner agrees not to license the IP to
a third party for a specified time period
• Standstills are typically used with start-up companies and give
them time to develop their business plan with assurance that the
technology will still be available to license
• Options are used with established companies to give them the
opportunity to evaluate product feasibility and the market
potential. At the end of the option period, if still interested, the
company can enter into license negotiations.
• Things to consider with these agreements are the length of time,
the measure of exclusivity, and field.
Research License
• Commercial research licenses allow the company to internally
evaluate the technology, not develop a product.
• In the case of a material, under a research license companies use
the material in their internal research but can not sell the
material to others.
Finding WARF Technologies
• WARF Website – – Technologies
Navigating UW-Madison
• Wisconsin Discovery Portal –
Gilson Bootstrapping Series
• Dedicated to nurturing the exchange of ideas between
the university and small businesses, and to support
• Regular lecture series on emerging topics in technology
venture creation