Transcript www.lacountlaw.com

Intellectual Property 101
For Entrepreneurs
HMC Entrepreneurial Conference
Claremont, California
March 6, 2004
Stephen H. LaCount
Core Intellectual Property Rights
• Patents
• Trade Secrets
• Copyrights
• Trademarks
Patent Protection For Inventions
• Patent holder is granted the exclusive right to
exclude others from making, using, selling
and offering for sale
• Types of patents: utility, design and plant
Patent Protection For Inventions
• Utility patents: any new or useful process,
machine, manufacture or composition of
matter, or new and useful improvement
• Term: 17 years from date of issue, or 20 years
from date of first filing (earlier of)
Patent Protection For Inventions
• One year grace period to file application in
US; not applicable in many foreign countries
• “Prosecution” – negotiation with patent
examiner
• PTO issuance times
Patent Protection For Inventions
• Patentability standard: novelty and
nonobviousness
• Significance of prior art
• Anatomy of a patent application
Patent Protection For Inventions
• Patent rights begin when patent issues
• Joint ownership problems – assignment to the
entity
• Scope of license rights
Patent Protection For Inventions
• Enforcement defenses –
invalidity and non-infringement
• Patentability of software
• Patent litigation and
indemnification
Trade Secret Protection
Definition (Model Trade Secrets Act)
“Trade Secret’ means information, including a formula,
pattern, compilation, program, device, method, technique
or process that: (1) derives independent economic
value…from not being generally known to, and not being
readily ascertainable by proper means by, other
persons…, and (2) is the subject of efforts that are
reasonable under the circumstances to maintain its
secrecy.”
Trade Secret Protection –
Policies and Procedures
• Restrict visitors – control or deny access to
sensitive areas
• Limit disclosure – implement strict “need to
know” standard
• Internal procedures and safeguards
Trade Secret Protection –
Policies and Procedures
• Explicit written agreements: employeremployee; buyer-seller; licensor-licensee;
beta site evaluations; distributors; resellers
• Stamp and legend documents: “Confidential”
“Proprietary Information of...” “Do Not
Duplicate or Distribute”
Trade Secret Protection
• No filing fees or government
registration
• Perpetual duration (Coca Cola
formula)
• Duty of confidentiality extends
to former employees; due
diligence on new hires
Trade Secret Protection
• Reverse engineering activities
• Espionage and trade secret misappropriation
• Trade secret protection
can be waived or lost
– forever in the
public domain!
Copyright Protection
• Original works of authorship fixed in any
tangible medium of expression
• Ideas not copyrightable; only expression
• Automatically begins when work is “fixed”
Copyright Protection
• Bundle of exclusive rights:
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reproduce and copy
distribute copies of the work
prepare derivative works
publicly perform and display
Copyright Protection
• Copyright registration – “license to sue”
• “Works for hire” – authorship and copyright
ownership attributed to employer
• Assignment agreement from independent
contractors
Copyright Protection
• Software – works of authorship – object and
source code versions
• Software licenses: a broad spectrum
• Copyright infringement: access and
substantial similarity
Copyright Protection
• Databases
• “Fair Use” Defense
– Amount of work used
– Purpose of use
(commercial?)
– Parody
Trademark Protection
• Lanham Act: “Any word, name, symbol, or
device, or combination thereof, used by a
party to identify its goods and distinguish
them from those manufactured or sold by
others.”
• Trademarks identify the source or origin or a
particular product or service
Trademark Protection
• Selection criteria: “fanciful” or “arbitrary”
• Avoid descriptive marks
• Trademark searches: “common law users”
Trademark Protection
• Registration benefits
• Use and intent to use registrations
• Domain names as trademarks
Five Common IP Mistakes
• Vague and untailored non-disclosure
agreements (“NDAs”)
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One-way versus two-way: rules of the game
Definition of “confidential information”
Include standard exceptions
Duration issues (protection beyond 3-5 years?)
“Residuals”
Five Common IP Mistakes
• Poorly conceived license agreements:
– “Company hereby grants to MS a worldwide, fully paid,
perpetual, non-exclusive, irrevocable license (a) to use,
modify, create derivative works based upon, reproduce,
distribute or license or sell, rent or lease copies of, the
Licensed Software, in source or object code forms, and
derivative works thereof, and (b) to license third parties to
exercise the foregoing rights, including the right to license
such rights to further third parties.”
Five Common IP Mistakes
• Poorly designed agreements with
independent programmers and technology
developers:
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IP ownership in “deliverables” not defined
Entitlement to use preexisting works
“Best efforts” - no payment milestones
No “acceptance criteria”
Five Common IP Mistakes
• Open-ended IP indemnification provisions:
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Allocation of risk between the parties
Scope of IP rights and covered parties
Triggering events
Exclusions
Specific remedies
Five Common IP Mistakes
• Poor selection and use of trademarks:
– Weak descriptive marks
– Reliance on cursory search results
– Sloppy use in product literature and
promotional materials (e.g., adjective use)
– Failure to police proprietary marks