Transcript Ready, Set, Negotiate - Jackson Walker L.L.P.

Center for Innovation and
Technology Entrepreneurship
T e c h n o l o g y
E n t r e p r e n e u r s h i p
f r o m
I n n o v a t i o n
t o
B u s i n e s s
V e n t u r e
Crafting Your IP Strategy
Stephanie L. Chandler, Esq.
October 12, 2007
Jackson Walker L.L.P.
www.jw.com
Stephanie L. Chandler
• Business Transactions and
Intellectual Property
• Specialty Area: Technology
Transfer and Commercialization
University of Nebraska
B.S.B.A. in Finance
University of Virginia
Juris Doctorate
Community Involvement: San Antonio Technology
Accelerator Initiative Entrepreneurship Alliance Committee
Member, UTSA – Engineering College Advisory Council, Texas
Emerging Technology Fund RCIC Selection Committee
Types of Intellectual Property
• Patents -- gives the inventor the right to exclude
others from making the invention
• Trade Secrets/Know How -- protection by virtue
of secrecy
• Trademarks/Service Marks -- identifies a
unique source of goods or services
• Copyrights -- protects from copying of original
works (music, books, software code)
Examples
• Business name……………trade name
• Product marks and logos...trademark
• Software, texts, music…….copyright
art, creative works
• Inventions…………………..patent
ABC Inc.
Soft Assets
ASSETS
• Employee, Customer
and Supplier
Goodwill
• Common Law
Trademark and Trade
Secret protection
Hard Assets
• Building, Equipment,
Inventory
Extra Assets
• Registered - Trademarks,
Trade Dress, Copyrights
• Patents – Utility Design,
Business Method
• IP assignments and
noncompetes - employees
and contractors
• Formal Trade Secret
Protection
• Form contracts - suppliers
and customers
ASSETS
PATENTS
Patents
• Definition: A patent is a grant from the U.S. government
allowing its owner to exclude others from making, using,
offering to sell, selling, or importing into the U.S. his
invention
• There are three types of patents:
– Utility patents, which protect new and useful
inventions and processes
– Design patents, which protect new and
ornamental designs for articles
– Plant patents, which protect new and distinct
plant varieties that are asexually reproduced
• Utility patents are the most common:
approx. 90% in 1999
What’s Patentable?
• Any new and useful
–
–
–
–
–
–
–
Process
Machine
Method of manufacture
Composition of matter
Improvements on existing things
Software
Methods of doing business
Patents
• What is protectable?
– Can’t patent laws of nature, mental processes,
mathematical algorithms per se or abstract ideas
– Utility patents are available for the invention or discovery
of any new, useful and non-obvious process, machine or
invention
• Novelty means that the invention is new – even a minor difference
conveys novelty. A single prior art patent that claims the same
invention is enough to defeat novelty.
• Only “useful” inventions are patentable. Must have some utility or
achieve some objective. Inoperative inventions do not have utility.
• Non-obviousness means that the differences between what is “out
there” and your invention are not trivial to one skilled
in the art. Somewhat subjective determination of
the PTO examiner.
Term
•17 years from issue date
(pre-June 8, 1995)
•20 years from earliest U.S. filing date
(post-June 8, 1995)
•Outside of U.S. – typically 20 years from filing date
** Maintenance Fees must be paid to keep in force.
Patents
• Bar Dates:
– For U.S. patent: application will be barred if not
filed within one year of the first:
• Public use
• Public disclosure (e.g., printed publication)
• Sale/Offer for sale
– For International patent: application will be
barred if not filed before any public
disclosure/public use of the invention anywhere.
USPTO filing considered “filing” for this purpose
– Best policy: File with the USPTO prior to
any disclosure if possible to preserve
foreign filing rights
Patents - Other Considerations
• Patents are issued on a country-bycountry basis
– A U.S. patent will not stop someone in
Japan, etc. from exploiting the patent
(you can stop imports of infringing
goods, though)
– No “international patent”
– International process for obtaining
national patents (Patent
Cooperation Treaty, or PCT)
Patents - Other Considerations
• Provisional Patent Applications
– Inexpensive way to get an invention
on file with the USPTO; Filing fee
($160/$80) + legal fees is typically
less than $2,500
– Must enable; no new matter in the
later, regular application
– Must file regular application
within 12 months to maintain
priority of filing date
Patents – Other Considerations
• Laboratory Notebooks – What are they?
– Technical diary;
– Ideas, completed work, and
accomplishments;
– Chronological order;
– Helps avoid repeated mistakes; and
– Helps to track successes and failures.
•
•
•
http://www.rod.beavon.clara.net/lab_book.htm
http://www.ruf.rice.edu/~bioslabs/tools/notebook/notebook.html
http://www.chem.uky.edu/courses/common/notebook.html
Beverage Container
Novel FeaturesClosest known prior art-
Animal
Stomach
US Patent # 6,245,999; 6,458,123
www.uspto.gov
Witness
and
Date
Advantages over prior art-
What should be entered into notebook?
•
•
•
•
•
•
•
•
Title (what is the invention called)
Purpose (what the invention does)
Description (functional and/or structural)
Sketch (informal sketch)
Ramifications
Novel features
Closest know prior art
Advantages
A Patent May Have Huge
or Little Commercial Value
My Invention
B. Handle
A. Cup
C. Metal
Disc
D. Magnet
PATENTABILITY ANALYSIS
Invention
ABCD
--A
--AB
Patentability
Operation
Novelty
subtraction
Prior art
combinations are not
patentable (§ 102)
Leaves
Combinations novel
to your invention
ABC
ABCD
Your
Description
--ABC
Obviousness
subtraction
ABCD
Leaves
Combinations
obvious “to a person
having ordinary skill
in the art” are not
patentable (§ 103)
Combination that
might be patentable
INFRINGEMENT ANALYSIS
Patent
Claim
1
2
3
Claim’s
Elements
A
AB
ABC
Accused
Devices
Patent
Infringement
A
Yes
AB
Yes
ABC
A
Yes
AB
Yes
ABC
Yes
A
No
AB
No
ABC
Yes
Claim
Value
High value
No
Moderate
value
Low value
ABC … XYZ
ABC … XY
ABC … XYZ
Invention
Prior Art
Patentable
Combination
Everything new is patentable
(almost) – if you add enough
elements to the claim
SCOPE OF CLAIM 1 WITH ELEMENT A
A
Infringements
A
Boundary
High Value
SCOPE OF CLAIM 2 WITH
ELEMENTS A AND B
A
B
Infringements
A+B
Boundary
Moderate Value
SCOPE OF CLAIM 3 WITH
ELEMENTS A, B AND C
A
B
Infringements
A+B+C
Boundary
Low Value
C
SCOPE OF A CLAIM WITH ELEMENTS A, B, C . . . Z
A
B
..ZZ
C
A+B+C+Z
Boundary
Easy to get / but tiny infringement value.
No competitors’ accused devices or methods
have all elements A,B,C . . . Z
PATENTABILITY VS. INFRINGEMENT
1. Everything new is patentable
(almost) - if you add enough
elements to the claim.
2. But the more elements needed to
get a patent, the less its value
(maybe zero) - because fewer
accused devices and methods
infringe.
TRADE
SECRETS
Trade Secrets
• Definition: Trade secrets consist of any
valuable information not generally
known to others that gives its owner a
economic or competitive advantage and
for which reasonable steps are taken to
maintain its secrecy
Patents vs. Trade Secrets
• Pros:
– Patents protect against independent
development and reverse engineering
– Trade secret lost if not maintained secret
• Cons:
– Patents have a more limited life (20 yrs vs.
indefinite); Thereafter, anyone can use
• Coca-Cola formula has been a trade secret for over 100
years and counting
– Patents are more expensive to obtain and
maintain; Trade secrets cost nothing other than
expense of keeping secret
YOUR TRADE SECRETS ARE
ONLY PROTECTABLE IF THE
JURY FINDS THAT:
• The items were relatively
secret; and
• The defendant knew the
items were secret.
TRADEMARKS
Trademarks
• Definition: a trademark is
a word, name, symbol,
device or combination
thereof that identifies and
distinguishes one’s goods
and services from those of another
– Technically, a trademark is used to identify a good or
product and a servicemark is used to identify a service
PROTECTABILITY OF TRADEMARKS
• Generic – Unprotectable
(soda for a beverage or TV for a television)
• Descriptive - May be protectable (Jury question:
Does it primarily describe or identify?)
(such as “Tax Preparation Software” for a software program that
enables users to prepare tax returns)
• Suggestive – Protectable
(such as Greyhound for bus services and Jaguar for
automobiles, with both marks suggesting the speed of their
products; 7-ELEVEN for convenience stores)
• Arbitratory or Fanciful - Very protectable
(such as Kodak, Starbucks, Verizon, Exxon)
Trademarks
• How trademarks arise:
– Trademarks arise through use of a mark
– Simple use of a mark grants rights in the mark
against later users in the location of use and a
reasonable area of expansion
• Can prevent use of mark on similar products or for
similar services
– Federal registration, although not required,
protects the mark nationwide against later
confusingly similar uses
– Common law also applies
• Can be lost if mark becomes generic:
e.g., Kleenex, Xerox
COPYRIGHTS
Copyrights
• Definition: Copyright is a form of
protection to a wide variety of works,
including literary, musical, dramatic,
graphic, sculptural and architectural
works, motion pictures and sound
recordings
– Not just critically acclaimed works
– Extends to advertising brochures
and copy and computer programs
Copyrights
• How copyrights arise:
– Copyright protection exists from the
moment a work is created
– No registration is required
– Copyright lasts for the author’s life plus 70
years (or in the case of works created by
employees for their employers, for 95 years
from publication of the work or
120 years from creation, whichever
is shorter)
Copyrights
• What is protectable:
– Copyright protects works of original
authorship
– Includes books, magazines,
promotional materials, music,
posters, movies, slide presentations,
dance routines and website content
– Does not extend to ideas, procedures, processes,
systems, concepts or mere slogans, titles or blank
forms
COMMERCIALIZATION
Licensing
• Patents -- gives the inventor
the right to exclude others
from making the invention
• Trade Secrets/Know How -protection by virtue of
secrecy
• Trademarks/Service Marks
-- identifies a unique source
of goods or services
• Copyrights -- protects from
copying of original works
(music, books, software
code)
Idea
License
$$$$
Third Party
*The terms of licensing and joint venture
relationships can add or subtract value.
License vs. other Structures
• Be aware of other structures
– Joint Ventures/Collaborations
– Outright Assignments
– R&D Partnerships
– Manufacturing/Supply Arrangements
– Equity Investments (often coupled
with License Agreements)
Product Story
Florida State University
• Cancer treatment drug
• Licensed to Bristol-Myers
Squibb, which began
production in 1992
• BMS's leading anticancer drug, with 1998
worldwide sales in
excess of $1 billion.
Bottom Line Impact
Pioneering research in both biotechnology and imaging enabled
the University of Rochester to double the amount of revenue its
basic research earned this year. The advance, to $29.5 million for
the fiscal year that ends June 30, 2001, is more than double the
$13.5 million that companies paid last year and 10 times the $2.9
million in royalties from the previous year.
- Strong Health, © 2001
Prior to 1980, fewer than 250 patents were issued to U.S.
universities each year and discoveries were seldom commercialized
for the public's benefit. In contrast, In FY 99, AUTM members
reported that 3,914 new license agreements were signed. Between
FY 1991 and FY 1999, annual invention disclosures increased 63%
(to 12,324), new patents filed increased 77% ( to 5,545) and new
licenses and options executed increased 129% (to 3,914).
- Association of University Technology
Managers (AUTM), © 2001
License Income
(Average FY 2004 - Source: Association of University Technology Managers )
$ New York University
$80,908,972
$ Baylor College of Medicine
$ 6,758,000
$ University of Texas - Austin
$ 5,057,647
$ UTHSCSA
$ 2,211,194
$ UTHSC-Houston
$ 1,998,947
$ University of Houston
$
534,053
$ University of Tx Med Branch
$
222,994
$ Texas Tech
$
157,365
$ Rice University
$
122,000
Inventor is Key to
Commercialization
• Inventor knows field
• Inventor knows potential licensees
• Inventor can continue to invent to fill
product pipeline for new ventures
• Get to know the OTV
• Get to know the University policies – this
can be very lucrative for a professor
University/small company files a patent
application on an invention, however, they
do not have the resources to:
• Manufacture,
• Distribute,
• Import,
• Market, and
• Sell
the product based on the invention.
Field of Use vs. Territory
• Use Limitation
– Allows multiple licensees to
exploit different uses of the
same technology
– Should Smallco limit the
Field of Use? Should Bigco demand
unlimited rights
(limited only to the scope of
the Patents and Know How)?
• Geographical Limitation on the
rights to exploit Patent Rights and
Know How
Diligence Obligations
• Must Bigco commit to some level of
diligence in commercializing the
technology?
– Termination rights
– Minimum royalties
– Exclusive vs.
non-exclusive
Payment Terms
• Advance Fees/Upfront Fees
• Milestones
• Royalties
Advance Fees/Upfront Fees
• Lump sum payment for entering into the
license agreement
• May be used to reimburse Smallco for
past R & D costs and fund future R & D
expenses
• Different factors impact determination of
upfront fees (R&D costs, market
potential, industry convention)
Milestones
• Future payments to Smallco upon
meeting defined goals
• Incentive used to motivate parties to
advance project
• E.g., First commercial sale of System
Royalties
• Percentage of Product Sales
• Based on “Net Sales”, but is only net of
returns, mandatory reimbursements and
rebates
• Cost of Goods Sold typically is not deducted
when determining Net Sales
• Audit rights (Right to check licensee books
and records to ensure proper payment)
TRADEMARKS–Federal
registrations
COPYRIGHTS–Copyright
registrations
PATENTS–Know how to create
value – rely on the experts
TRADE SECRETS–Create good facts
LICENSES – Clarify expectations
SUMMARY OF INTELLECTUAL PROPERTY RIGHTS*
PATENTS
PROPERTY
PROTECTED
Utility or design features of objects
or processes.
TRADEMARKS
Words, symbols, or features used
to identify your goods or services
and distinguish them from others.
COPYRIGHTS
TRADE SECRETS
Anything that is creative and
original and not primarily
physically functional.
Any secret that gives you an
advantage over those who do not
know it.
U.S. Copyright Office
None
REGISTRATION
U.S. Patent & Trademark Office and U.S. Patent & Trademark Office;
each foreign country where rights
Texas Secretary of State, and each
are desired.
foreign country where rights are
desired.
REQUIREMENTS
FOR
PROTECTION
1. Useful, novel and non-obvious.
2. Patent applied for within one
year of offering the invention
for sale or making it public.
3. Issued patent in subject country.
1. Use the mark to identify sales
1. Originality (creativity).
1. It gives you a business
of goods or services or “intent- 2. Notice of copyright (not
advantage.
to-use” federal application.
necessary, but very helpful).
2. Keep it secret.
2. Registration is not necessary,
3. Registration (not necessary until 3. Make those who know the secret
but very helpful.
suit, but very helpful).
aware it is your secret.
Utility: 20 years from date of
filing.
Common Law: No limit.
DURATION
OF
PROTECTION
Design: 14 years
Registrations: 10 years, renewable
indefinitely as long as you keep
using it.
(both subject to payment of
maintenance fees)
PUBLIC
NOTES
INFRINGEMENT
© 1995 William B. Nash
All Rights Reserved
Until it is no longer secret.
Life, plus 70 years for an
individual.
Pat. Reg. No.
OR
Pat. No.
TM if not federally registered; “®” “Copyright” or “©”, year first
Any notice of its secret nature.
if federally registered.
published, claimant.
Example: “Confidential Property of
Example: Copyright 2001
“.
William Nash, All Rights Reserved
Utility: Every claim limitation in the
patent is found, either literally or
equivalently, in the accused device
or method.
Plaintiff’s mark is protectable and
the public will likely be confused
between goods or services
identified by Plaintiff’s mark and
goods and services identified by
Defendant’s mark.
Design: Accused design has a
“substantially similar” overall
appearance.
*
The earlier of 95 years from
publication or 120 years from
creation for work for hire.
Plaintiff’s work is protectable,
Defendant copied Plaintiff’s work
and Defendant’s work is
substantially similar to the
protectable part of Plaintiff’s work.
This very simplified summary is to be used only for educational discussion purposes.
Plaintiff’s trade secret is protectable
and Defendant knowingly
misappropriated it to Defendant’s
benefit or Plaintiff’s harm.
Crafting Your IP Strategy
Questions?
Stephanie L. Chandler
Jackson Walker L.L.P.
[email protected]
210.978.7704
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