Transcript WORLD INTELLECTUAL INTERNATIONAL NETWORK PROPERTY ORGANIZATION FOR SMALL AND MEDIUM-SIZED ENTERPRISES WIPO-INSME INTERNATIONAL TRAINING PROGRAM ON THE ROLE OF INTELLECTUAL PROPERTY IN RAISING FINANCE BY SMALL.

WORLD INTELLECTUAL
INTERNATIONAL NETWORK
PROPERTY ORGANIZATION
FOR SMALL AND MEDIUM-SIZED ENTERPRISES
WIPO-INSME INTERNATIONAL TRAINING PROGRAM
ON THE ROLE OF INTELLECTUAL PROPERTY IN RAISING FINANCE
BY SMALL AND MEDIUM-SIZED ENTERPRISES
Theme 3
Strategic Use of Intellectual Capital: IP Audits and
Leveraging IP Assets in Business Strategy
Jeremy Lack
Geneva, 11.7.06
Medabiotech
Quadrant Chambers
Etude Ziegler, Poncet. Grumbach, Carrad, Luscher
[email protected]
NB. These notes are intended for general information only. They contain inaccuracies and should not be relied
on as a substitute for advice of counsel. They are provided to WIPO-INSME students solely as reference
materials. They may not be copied, used or disseminated without the express written consent of the author.
All rights reserved.
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© J. Lack 2006
Agenda
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Introduction
Background & fundamentals
Creating a business strategy
Litigation as an IP strategy
IP & HR
© J. Lack 2006
Medabiotech’s Perspective on IP & SMEs:
We bring ideas to Life™
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Specialized Life Sciences venture consultants & venture capitalists
active since 1998
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Clients: multinationals, govts., universities, TTOs, incubators, start-ups
and investors
© J. Lack 2006
Medabiotech: > 20 Start-Up Companies since 1998
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SMEs are entrepreneurial catalysts for
innovation. IP Aligns the Interests of
Science/Technology, Finance and Industry
21st Century Asset Management
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New Stakeholders are focusing on IP
Traditional IP Stakeholders
Inventors
Authors
Companies
Universities
Governments
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New IP Stakeholders + New interests =
More confusion and disputes
Regulators
Companies
VCs
Investors
Financial
Institutions
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Banks
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Start-ups
Technology
Transfer
Companies
Multiple
Inventors
Authors
Universities
Governments Indigenous
Populations
Agenda
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Introduction
Background & fundamentals
Creating a business strategy
Litigation as an IP strategy
IP & HR
© J. Lack 2006
What is Intellectual Property?
The purpose of Intellectual Property Rights = Recognition of expertise &
promotion of innovation. They provide barriers to competition and
incentives for investment.
IP = Property that is not physical (e.g., ideas), that can only be protected
and enforced by a spectrum of national laws, that change at international
borders, subject to formal national requirements.
A - Copyrights
B - Trademarks
C - Trade Secrets
D - Domain Names (not strictly speaking an IP right)
E - Utility Models
F - Designs Rights (a.k.a. Design Patents)
G - Utility Patents
H - Miscellaneous (e.g., unfair competition, passing off/goodwill, semiconductor
topographies)
Four questions to always bear in mind (country-by-country):
1. Is there valid IP here?
2. Who does it belong to?
3. Am I free to use it?
4. How can I protect it?
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What is rationale for each IP right?
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Type
Purpose
Potential Lifespan
Copyrights /
Authors
Rights
Rights relating to original/creative works, including literary, dramatic, musical,
artistic works (incl. software)
Life of author + 5070 years
Databases
Sui generis rights for substantial investments in obtaining, verifying or presenting
data
15 years from
creation
Trade secrets
Rights given to owners of confidential information (technical or commercial) that is
valuable, specific, and ascertainable, and which is treated as such
Indefinite
Domain
Names
Right to a unique alpha-numeric addresses on the Internet obtained from ICANN
Indefinite
Designs
Rights to original appearance of the whole or a part of an industrial or handcrafted
product resulting from the features of the lines, contours, colours, shape, texture,
and/or materials used.
3 (unregistered) or
25 (registered)
years
(14 in USA)
Patents
Rights to exclude others from practising inventions that are useful, novel and nonobvious in exchange for publishing this information
20 years from date
of application
Trademarks
Rights to exclusive use of words, symbols, objects, colours, sounds, smells etc. by
which consumers can identify the source of products or services (by classes of
goods or services).
Indefinite
© J. Lack 2006
How are IP Rights Created?
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Automatically (e.g., ©)
By use (e.g., ™, EU designs)
By actions (e.g., trade secrets)
By nature of investments (e.g., databases)
By registration (e.g., patents, ®, designs)
This variety of ways creates confusion and a
general lack of awareness of IP assets,
which many companies may be wasting.
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Why Obtain/Enforce IP Rights?
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Pride
Identity
Recognition
Control over use
Privileged relationships (with consumers/customers/partners)
Protect existing products/vested interests (defensive)
Create barriers to entry for competitors (offensive)
To have a currency in certain industries (trade/cross-license)
To generate revenues (royalties)
To obtain investments (equity)
Have have assets that can be pledged (loans)
To show corporate governance
In case of liquidation …
KNOW WHO YOU ARE AND WHY YOU ARE INTERESTED IN IP
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E.g., Pharma Industry Requires Strong IP Protection
• 70% of R&D Costs Are Incurred before Clinical Trials
• Cannot raise money without IP and cannot afford to get IP wrong!
Source: Boston Consulting Group: “A Revolution in R&D” 2001
$900
$880
Dollars in Millions
$800
$700
$620
$600
$530
$500
$400
$410
$370
$300
$200
Stage Cost
Cumulative Cost
$165
$100
$0
$165
Target ID
1 yr
$205
$40
Target
Validation
2 yrs
Biology
3 years
$120
Screening Optimization Pre-clinical
1.1 yrs
2 yrs
1.6 yrs
Chemistry
3.1 years
Stage of Development
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$90
© J. Lack 2006
$260
Clinical
7 yrs
Development
8.6 years
= TOTAL
14.7 years
The Increased Visibility Of IP: What Is At
Stake?
The value of IP is growing but cannot be accurately forecast in an
increasingly global and technological world. Our valuation
methodologies and laws are inefficient. This will lead to more IP
disputes
“It is estimated that by 2007, as much as 90% of the value of the
world’s top 2000 enterprises will consist of intellectual property”
Building and Enforcing Intellectual Property Value,
An International Guide for the Boardroom 2003
PriceWaterhouseCoopers
“How appropriate is our system – developed for a world in which
physical assets predominated – for an economy in which value
increasingly is embodied in ideas rather than tangible capital?”
Alan Greenspan April 4, 2003
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What is the nature of an IP asset?
• Bundles of national and territorial rights
• Rights to exclude others (NB, not to practise)
• Rights considered as property (financial assets),
which can be pledged and securitized
THE CHALLENGE = How to convert national, legal
« rights to exclude » into global, commercial
revenue-generating assets?
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Agenda
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Introduction
Background & fundamentals
Creating a business strategy
Litigation as an IP strategy
IP & HR
© J. Lack 2006
Traditional Thinking: IP is done at the
beginning
EXIT TO SUCCESS!
Company grows
More rounds of
financing
Sales & markets
Strategic partnerships
Regulatory strategy & clinics
Product development
Management/Structure of company
First round financing
Development of technology / product
Proof of concept
Business plan
Seed funding
Invention
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Protection of
invention
Entrepreneur
Transfer of technology
© J. Lack 2006
Start-up creation
But, IP is important throughout
IP + Money = O2: Lifeline of the company
EXIT TO SUCCESS!
Company grows
Sales & markets
More rounds of
financing
Strategic partnerships
Product development
Management/Structure of company
First round financing
Development of technology / product
Proof of concept
Business plan
Seed funding
Invention
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Protection of
invention
Entrepreneur
Transfer of technology
© J. Lack 2006
Start-up creation
KELVIN KING: VALUATION CONSULTING
All Property => A Bundle of Rights
Privileges of Ownership
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Use (1 = Sale of products)
Sale (2 = Assignment / M&A)
Transfer Part of the Rights (3 = License)
Merge (4 = JV / Alliance)
Mortgage
Gift
© J. Lack 2006
Possible Revenue-Generating Strategies Using IP
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Sell Products: Usually a “one-way” street, with all IP rights exhausted
(internationally or domestically) (e.g., INTEL)
License/Rent Product: Better to retain rights & maintain some control (e.g.,
transgenic mice, software: restrict access to source code & use)
Sale of IP: a) Assignment of IP assets: May be simplest (e.g., 3M Post-It)
b) License of IP Assets: How?
M&A: Sell company including the IP in it (e.g., a holding entity)
Joint Ventures: Alliances that pool their IP resources into a new company
(e.g., Nanonics)
Franchise: Package concept (e.g., McDonalds): what is the IP bundle (TM
+ © + Know-How + patents)? Quality Control and brand management
issues?
Create Market: Offer for free and then charge using installed base (e.g.,
Skype)
Open Source/Freeware/Shareware & then charge for improvements (e.g.,
.php)
Covenant not to sue? (e.g., Two start-ups to avoid depleting resources)
IP Holding companies? Who should hold IP? Tax and financing issues:
inter-company pricing and royalty considerations.
© J. Lack 2006
The Need For A Strategy
“Examples also show that the possession of a patent
portfolio on its own is not a guarantee of success. Instead, it
is the way in which the company uses that portfolio that is
crucial, which is why it is so important for investors to
understand patents and what they can be used to achieve.
No investor or financial institution can responsibly assume
that company management will automatically get it right;
the truth is that most company managements know very
little about the subject.”
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Overall
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No “one-size fits all” solution: you need to innovate with your IP as well
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Each strategy will be person, time and industry-specific (e.g., Intel at
first ≠ Intel today)
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Think it through: costs and timing issues
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What are your most important IP rights?
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What are your cash needs?
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What are your greatest concerns (SWOT analysis)?
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What would your competitors like to know?
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What are your main trade secrets ? Are they sufficiently understood and
identified?
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What do you want to protect & how can this be done?
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What feels right in your local culture/industry?
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How are you communicating your IP’s value?
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Do you have the right relationship with your IP counsel? (Each SME is
unique and over the course if time will know itself what is best. Avoid
“GIGO” and constant turnovers).
© J. Lack 2006
Three stages to any IP strategy
1 – Creation & recognition (IDENTIFY)
(automatic through registration only)
a) audits and regular reviews
2 – Value Generation (MANAGE)
a) Preservation
b) Budget and accounting
c) Revenue generation (licensing and sales)
d) Financing considerations
3 – Enforcement (PROTECT)
• Need to budget and plan globally
• Need to use the right experts at each stage
• Need to be organized internally & internationally
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Issues for Creation/Recognition
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Key personnel
Ownership rights
Holding of IP
Budgeting over time (e.g., 5 + 5 + 5 rule)
When to file?
Who to use?
Creating libraries
Benchmarking prior art
© J. Lack 2006
The Importance Of Clear & Clean Ownership
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“Collective Rights” Countries:
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“Severable Rights” Countries:
Unanimity is required for
any transfer of rights to take place, such as the grant of a nonexclusive license (e.g. CH, UK, JP)
a) Partial Independence: Each co-owner can grant nonexclusive licenses, subject to informing others and sharing
proceeds (e.g., FR)
b) Full Independence: Each co-owner can grant nonexclusive licenses. Period! (e.g., US)
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All Countries – sole co-owner cannot grant
exclusivity: Unanimity always necessary to grant exclusive
licenses or assign rights. NB: Can be dangerous if not all
inventors are listed and validity remains unaffected (e.g., CH).
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© J. Lack 2006
IP Geographical Considerations
Where to Register ≠ Where to Protect ≠ Where to Own Your IP
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Where are you based?
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Where is competitor based?
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What are your most important markets (by volume, by profits)?
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What are countries of threat?
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Timing and likelihood of success?
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Ease & costs of enforcement?
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Provisional applications v. formal applications?
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National + PCT (buy some time?)
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Limit utility patents (e.g., in 5 countries only) but register TMs
internationally (always consider EU design rights and trademarks)
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Consider G8 (plus China and India: IP assets there are increasing in value)
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Ultimately, owner of company may determine this. It is often tax or
fiscally driven (e.g., withholding taxes, dividend taxes, inter-co finance)
© J. Lack 2006
Monitor and Never Underestimate your Competition
Although you need to remain focused, it is essential to track others:
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Attend industry meetings and hear what is being said
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Read the trade & VC journals (many free online periodicals)
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Track your competitors’ IP portfolio (e.g., do automated patent watches).
Check also universities and important leaders in your space (although there is
an 18 month blackout period).
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Use the Internet for Competitive Intelligence (e.g., Google Alert).
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What can you find out about them? Check also scientific publications.
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For Trademarks, this is essential! For « Freedom to Operate » also.
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Although this can become obsessive and too expensive, it is worth doing
something. Freedom to Operate may change from one day to the next, and
you need to be ready to react and be prepared.
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Try to maintain cordial relations with your competitors. It may be worth
compiling a prior art portfolio on them (e.g., « secret disclosures » if
necessary). Paradoxically, this can improve relations.
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But, be careful of Anti-Trust/Unfair Competition restrictions. (Cannot be too
friendly with your competitors either: Never share pricing or divide markets).
THE VALUE OF YOUR IP MAY DEPEND ON THEIR ACTIVITIES
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© J. Lack 2006
Innovate Constantly & Manage the Process
Contact designated IP attorney
Set up an internal system so that whenever an employee comes up with an
invention, there is a reporting and communication system that exists and
captures key dates and information.
Best practice is to use Invention Disclosure Forms
Dates
Description of
invention
Improvements
advantages
(a) Do a search
(b) Summarize invention in view of prior art
(c) Think of applications for your invention
(d) Think of how other will try to design
Drawings
around or copy it
Figures
Related art(*)
BLOCKS SHOW KEY ISSUES
TO BE COVERED ON AN
INVENTION DISCLOSURE
FORM:
Contributors
Signatures
(*) NB – include prior uses of
the invention; conferences,
offers to sell
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© J. Lack 2006
Leverage IP Value Over Time
• Use « automatic intangibles » at first (e.g., trade
secrets and ©)
• Register limited duration rights (e.g., designs,
patents)
• Establish parameters for strong indefinite IP rights
• File international trademarks and drive brand
values over long term
• Expand the brand range/revenues (e.g., soccer +
phones)
• A first licensee drives up value …
CONSIDER USING TEMPORARY REGISTERED RIGHTS
TO BUILD UP THE VALUE OF LONG TERM BRANDS
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E.g., patents + trademarks
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The Value Of Managed ®/™s
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Create Positive Synergies Across the IP Spectrum
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IP rights are seldom mutually exclusive. Think of them over time and collectively.
Best formula is to generate synergies (e.g., Design + TM). Some examples:
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COPYRIGHT + KNOW-HOW (=TS): Almost always there. License together.
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PATENT + TRADEMARK: e.g., Patent only in G8 countries, but TM worldwide (all
Madrid Protocol) . NB: TM’s over the long term can be worth more – don’t expire!
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DOMAIN NAME + TRADEMARK: Recommended in (almost) 100% of cases.
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TRADE SECRET + TRADEMARK: Don’t disclose the secret but build up the brand
(e.g., “7X”). Describe results of TS but not the “how”.
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COPYRIGHTS + TRADE SECRET: E.g of software: license and restrict access to
source code. Program protection: have auto-delete if source code is breached.
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COPYRIGHT + TRADEMARK: Very common in entertainment industry. E.g.,
HARRY POTTER™
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COPYRIGHT + DESIGN + UTILITY MODEL: Very common in Europe.
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PATENT + TRADE SECRET: All patents start as TS, but you can still separate e.g.,
product (patented) from process (kept as trade secret). But be careful of US “Best
Mode” issues. Also beware of invalidity that may result from “misleading”
indications in patent application.
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COPYRIGHTS + 3D TRADEMARK + BRAND NAME TRADEMARK + DESIGNS
+ UTILITY PATENT: Why not? Is often done.
© J. Lack 2006
VALUE CREATION
Legal v. Business IP Cultures
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LEGAL APPROACH: Reliance on National Laws
All company employees are bound by duties of secrecy with respect to
their activities. All relevant IP belongs to the employer. This may have
criminal law sanctions. There also exist non-compete contract clauses.
The duty of confidentiality survives the termination of
employment.
NB: Employees in other companies (e.g., clients) are not bound by
duties of confidentiality unless there is a contract providing for this.
Make sure that an agreement with another company extends to all its
employees and consultants as well, and limit the information given.
Certain classes of personnel require special agreements :
- temporary staff (e.g., trainees, students)
- external consultants
- university researchers & professors
IT IS IN ALL EMPLOYEES’ INTERESTS THAT THE COMPANY CREATE
EFFECTIVE BARRIERS TO ENTRY AND HAVE A CLEAR IP POLICY.
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But Compliance is Not Enough:
You Need to Shift Your Company’s Awareness
HIGH
(sales support, R&D,
competence)
BUSINESS
Future
Today
LOW
HIGH
LOW
LEGAL
(policies, reporting, IP reporting systems)
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© J. Lack 2006
SOME BASIC QUESTIONS:
1 - What are your most important IP rights?
2 – What are your greatest future interests and concerns?
3 – What would your competitors like to know about you?
4 – What are your main trade secrets ? Are they sufficiently
understood, identified and protected?
5 – What do you want to protect & how can this be done?
6 – What feels right in your local culture?
7 – How often is IP included in your regular reports?
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Culture of Protection: Thinking Beyond Law & Core IP
Business Culture
(e.g., Planning for meetings; Documentation; Methods of doing business)
Commercial Industrial Property
(e.g., Copyrights, Trademarks, Designs, Commercial Trade Secrets)
Core Industrial Property
(e.g., Patents,
Technical Trade Secrets)
« Our value chain comprises technical, social and commercial processes »
Elkem, EBS Pamphlet
Source: Elkem, T. Gule
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© J. Lack 2006
TRADE SECRETS
BUSINESS APPROACH
“Expanding The Outer Square”
Given the importance of global technology and speed, Know-How
( “Trade Secrets”) has an increasing role to play and is often
overlooked.
Knowledge of costs, sources, or processes is sometimes hard to
protect. New competitors are always appearing.
Legalistic approach is too limited.
Companies therefore need to educate all employees and have them
create a new protection culture that is creative and proactive.
IP needs to be expanded and new non-traditional IP barriers need to
be found and created.
What analyses are needed? Some examples of possible approaches …
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© J. Lack 2006
INCLUDING IP IN PREPARING FOR MEETINGS …
E.g., Prepare for Meetings As a Team:
Do a Disclosure Strategy Chart
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PROTECT
NEGOTIATE
SHOW
(never show)
(only under CDA)
(market!)
© J. Lack 2006
Self-Assessments: Audit Your Proprietary Advantages
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Technological
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Commercial (e.g., pricing & logistics; knowledge of industry)
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Efficiency in process (e.g., machinery, waste reduction)
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Pricing strategies (e.g., flexible & linked to meeting client’s goals)
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Business stability & relations (e.g., customer loyalty)
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Clear Corporate ID : Label/Logo & Mission Statement
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Customized Products and Design features
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Enforceable IP rights
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Political & governmental relations
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Status and stability of personnel (are you a « value-added » employer?)
THESE ARE ALL WORTH IDENTIFYING AND PROTECTING!
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© J. Lack 2006
Other Examples of Possible Protection Strategies
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Integrate this way of thinking with your customers & help them use it
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Constant innovation: Keep ahead of the competition
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Add new value-added production steps or co-sell value-added products
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Create proprietary diagnostic tools: use proprietary specifications or calibration
standards that cannot be replicated by competitors
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Constantly assess reverse engineering risks
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Consider selling “consultancy” with customized product range vs. sales of generic
products (e.g., cost + AND ask for % of customer’s savings)
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Create new brand and submarket to each client as personalized (« 123VX »)
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Create data intake forms, whose relevance cannot be understood
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Use different codes and cross-reference checklists to hide internal data (e.g., internal
product catalogue that is not the same as customer’s catalogue) – Danger: Can
become confusing!
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Possible new packaging and safety features
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Re-assess Key Account identification and contact measures. Does the whole team
need to be involved? Manager only?
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Implement clear confidentiality and information access policies
© J. Lack 2006
Be Aware of Your Own Business Culture
“Many companies overlook a key feature of their own
organisation – namely, their own organisation. The
architecture of a company, both internally and
externally (including its reporting structures, incentive
mechanisms and know-how), is itself a source of
intellectual property and contributes to the creation
of other intellectual property.”
The economic role of intellectual property
(http://www.buildingipvalue.com/06KTI/048_051.htm)
Nooman Haque and Greg Smith
Deloitte
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© J. Lack 2006
Overall Advice
• IP Strategies require multidisciplinary
skills and constant audits (why, what,
how, how much, deadlines?)
• Create regular IP review meetings (bimonthly at latest)
• Develop your own in-house expertise
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© J. Lack 2006
Agenda
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Introduction
Background & fundamentals
Creating a business strategy
Litigation as an IP strategy
© J. Lack 2006
Possible Litigation Strategies for « Financing » Using IP
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Damages can be very lucrative (e.g., Polaroid)
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But market share can be more important (e.g., Kodak)
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Combining resources and suing (“trolls”)
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Building up a war chest (e.g., in Asia), then sue (e.g., in USA)
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Consider contingency fee lawyers (e.g., Lemelson/Hosier)
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Opposition and filing / delay strategies
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Multi-jurisdictional litigations (e.g., Germany v. UK v. FR)
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Generic Co. strategies: go for weak patents & be first in generics space
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Check insurance policies & protection partnerships
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Opinion letters (protection v. wilful infringement)
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Practice prior art and make prior offer for sale if won’t patent
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ADR often best, even if post-dispute -- e.g., use WIPO MED-ARB clauses.
© J. Lack 2006
IP = Global, but national: Key differences exist
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Different rights: e.g., Registered v. “use creates rights” (e.g., ® v. ™), ©
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Different standards of inventorship/ownership
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Different impacts of co-ownership (see later)
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Different enforcement: venues, jurisdictions, scopes of relief, judges
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US patent issues: e.g., 1st to invent, subjective duties (prior art & best mode)
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Antitrust and Competition Law issues (e.g., new EU TTBER 2004)
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A valid national IP right  an internationally valid/enforceable IP right
= COMPLEX, EXPENSIVE, INCONSISTENT, INEFFICIENT
+ Poor valuation tools and different methodologies (e.g., scope, validity?)
+ Confusion between “rights to exclude” v. “freedom to operate”
+ Scopes of licenses:
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what IP, worldwide, exclusive, delegable, revocable, access rights …?
© J. Lack 2006
LITIGATION & ENFORCEMENT STRATEGIES
Issues For Management
Part 1: Key Questions:
1. Venue: Where?
2. Representation: Who to hire?
3. Elements to be proven
4. Possible remedies: What can we get?
5. Cost: How much?
6. Time: How long?
7. Risk: How strong is my case? (success rates?)
Part 2: ADR & Mediation
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PART 1: KEY QUESTIONS:
Overall: Why Litigate? What Do You Wish To Achieve?
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Know why you are litigating!
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Possible reasons:
– Stop competition
– Obtain a license
– Claim (co-)ownership
– Infringe but gain market share
– Make competitor spend time and money
– Create a precedent & enforce strength of IP
– Make money (e.g., “trolls”, Lemelson)
– Destroy competitor’s barriers to entry
– Obtain visibility
– Emotions, egos & anger
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© J. Lack 2006
Question 1: Where to Litigate?
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Domicile of Defendants
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Where defendants are manufacturing or selling (most?)
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Where tort/damage happens
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Where the IP is registered (court v. admin proceedings) e.g., Washington DC
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Where laws are most favorable for IP owner / infringer
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Where cost/risk benefit is better
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Where lawyers are best/most capable
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Where procedural advantages exist:
– Discovery (common law countries)
– “Saisie en contrefaçon” (with court bailiff/huissier)
– Bifurcated court system (e.g., Germany: validity v. infringement)
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Where remedy is broader (e.g., “Euro-” or “torpedo” injunctions)
= All elements at maximizing damage to opponent and increasing your chances
of winning.
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© J. Lack 2006
Question 2: Who to Hire?
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Specialist consultants can be useful in many situations, but technical subspecialization and national laws within IP makes them essential.
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Lawyers also have Attorney/Client or Work Product privilege that protects
your communications from discovery. Purpose is: so client can confide
completely in their attorneys to check compliance.
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There are 3 Different types of IP « Attorneys »
– 1 General Business Lawyers (“Solicitors”)
– 2 Litigation Lawyers (“Barristers”)
– 3 IP Agents / IP “Attorneys”: NB In EU are not lawyers.
– A combination of 3+2 or 3+1 above may be necessary
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But be careful you have the right experts for the right countries,
technologies, courts (e.g., admin v. court proceedings) & are thinking
holistically.
© J. Lack 2006
Question 3: Elements to be Proven
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Copyrights:
– Plaintiff: Copying & derivation
– Defendant: Unknown, independent generation
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Trademarks:
– Plaintiff: Likelihood of confusion (e.g., surveys, consumer errors) & dilution
– Defendant: Invalidity, misuse of TM, abandonment, lack of confusion
•
Domain Names:
– Plaintiff: confusing/identical + no rights/interests + bad faith
– Defendant: any one of no confusion, right/interest, good faith interest
•
Design Rights:
– Plaintiff: overall impression on informed user
– Defendant: invalidity, functionality, no similarity on informed user, prior art
•
Trade Secrets:
– Plaintiff: Efforts to keep TS + Duty of care + breach of duty of care
– Defendant: No efforts to keep TS, no duty of care, in public domain, reverse
engineered, no breach (will also depend on terms of contract, if CDA-based)
•
Patents:
– Plaintiff: Product covered by all elements of a claim (directly or by equivalence)
– Defendant: Invalidity, non-infringement (missing element of claim), practicing
prior art, inequitable conduct, filewrapper estoppel …
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© J. Lack 2006
Question 4: Possible Remedies
•
Preliminary injunction/Temporary restraining order
– Emergency measures
– Act quickly & prove irreparable harm
•
Damages + interest
– Lost profits
– Reasonable royalty
– Defendant’s profits
52
•
Declaratory judgment (e.g., of invalidity or non-infringement)
•
Permanent injunction
•
Willful infringement or “contrefaçon aggravée”
•
Specific performance (e.g., of a contractual provision)
•
Astreinte = daily penalty for continued infringement
•
Accounting
•
Costs & attorneys’ fees
•
Action en revendication: to be added to or replace listed inventor
© J. Lack 2006
Questions 5-7: Risk/Cost/Time?
Top Ten Patent Litigation Jurisdictions by
Number of Patent Infringement Cases for 1997-2001
(Source: Michael C. Elmer, Finnegan Hendersen, 2005)
No.
Country
No. of
Lawsuits
Filed
Historical % of
Decisions In
Favour of
Patent Owner
Typical
Costs per
Case
(US$)
Typical
Time to 1st
Judgment
(months)
1
USA
11,652
59% or 68%
3.5 M
30
2
China
4,894
46%
450 K
24
3
Germany
3,850
41%
1.7 M
20
4
France
1,862
55%
750 K
37
5
S. Korea
1,651
--
--
--
1,478
--
--
--
1,186
20%
1.5 M
26
Source:
Finnegan
6
Taiwan
Henderson Global
7 Survey Japan
Patent
53
8
Brazil
620
--
--
--
9
UK
601
25%
1M
14
10
Canada
382
--
--
--
© J. Lack 2006
Part 2: ADR & Mediation
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National Litigation: The EPILADY Cases
55
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National Litigation: Review Country-by-Country
56
•
Depends on nature of case: Litigators will look at remedies/damages first,
legal theories second.
•
Statistics on patents: Can get very sophisticated
•
Cf. presentation by Michael Elmer of January 2001
© J. Lack 2006
The National Dilemma in Cross-Border Enforcement
“Ever more frequently, one experiences the same patent being
litigated in more than one European jurisdiction. This has very
often given rise to what I believe to be the most interesting aspect
of the topic under consideration: the differences which have
arisen in jurisprudence which reflect a difference in philosophy
and even in culture when it comes to construing patent claims.”
“As one of the London patent judges recently stated: 'Intellectual
Property litigation in general and patent litigation in particular in
Europe is in a state of some disarray.’”
Judge Michael Fysh
Patents County Court (UK)
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IP litigation is like a piece of cheese …
Perceptions = 9/10 of reality!
The invention is …
a triangle
a rectangle
=
a square
ADR of IP disputes is bound to be better than
national litigation!
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© J. Lack 2006
Typical Approaches To Dispute Resolution
Source: J. Kalowski
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A dispute is never about what it is about …
The Facts
The Law(s)
Misunderstandings
Needs
Concerns
Fears
Feelings
Emotions
Perceptions
Interests
Values
Although the
“objective” aspects
of the dispute may
be apparent …
… the “subjective”
aspects remain to be
discovered.
Source: Achille Grosvernier
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What is the Truth: Young Girl or Old Lady?
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Dispute Resolution Mechanisms Available
Least Evaluative
Least Structured
Least Formal
Source: J. Kalowski
NEGOTIATION
Consensual
Parties in control
MEDIATION
INDEPENDENT EXPERT APPRAISAL
CONCILIATION
NEUTRAL EVALUATION
ARBITRATION
Most Evaluative
Most Structured
Most Formal
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ADJUDICATION
© J. Lack 2006
Adversarial
Third party in control
Arbitration v. …
Resolution
Source: Joanna Kalowski
A
P1
63
P2
© J. Lack 2006
… Mediation
Source: Joanna Kalowski
Resolution
P1
P2
M
Subjective Fairness
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What Distinguishes Mediation from Arbitration?
PAST
Preparation
Source: Joanna Kalowski
UNDERSTANDING
PRIVATE REFLECTION
RESOLUTION/
CLOSURE
FUTURE
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© J. Lack 2006
Mediation Can Create Options that Tribunals Cannot
PAST
Pre-mediation:
Opening Preliminary Conference
Parties’
opening statements
Source: Joanna Kalowski
UNDERSTANDING
& EXPLORATION
Summarising and Agenda setting
Exploration of issues
Private Sessions
PROBLEM
SOLVING
RESOLUTON
FUTURE
66
Option Generation (v.Alternatives)
Negotiation(s)
(joint & private
sessions)
Agreement/
Closure
© J. Lack 2006
Post-mediation:
Enforcement of
agreement
Mediation can seek options for mutual gain
See “Getting to Yes”
67
•
Separate the people from the problem
•
Look to the future
•
Focus on interests v. positions
•
Communicate respective understandings
•
Assess alternatives (BATNA/WATNA/PATNA)
•
Seek/invent options for mutual gain
•
Use objective criteria
© J. Lack 2006
For enforcement:
Mediation + Arbitration =
Faster
Cheaper
Better
They are complementary, synergistic and can help
provide “complete” dispute resolution solutions.
Possible combinations:
MED-ARB, ARB-MED and MEDALOA.
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© J. Lack 2006
Agenda
•
•
•
•
•
69
Introduction
Background & fundamentals
Creating a business strategy
Litigation as an IP strategy
IP & HR
© J. Lack 2006
Human Resources & IP
• A company’s IP assets is intrinsically linked to its
personnel
• For start-ups, this is all there is starting off
• But even later-stage companies are >50% based
on IP, which indirectly reflects its employees
• Human Resources has a crucial role to play in
– a) understanding IP and
– b) managing and retaining IP across all levels of the
company
• Requires more than a legal compliance culture
• Also a business interest culture
• Starts off with education of ALL levels of company
personnel
• Conduct regular audits accordingly
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© J. Lack 2006
Levels of Human Resource Issues
•
•
•
•
71
Board of directors
Executives
All levels of staff
Consultants and advisors
© J. Lack 2006
IP Issues for Directors
•
•
•
•
•
•
•
•
72
Executive v. Non-Executive directors
Personal knowledge
Responsibilities & Restrictions
Balance sheets & valuations
Litigation exposure
IP insurance
Accurate lists of assets
Fiduciary responsibilities
© J. Lack 2006
IP Issues for Executives
73
•
•
Business units v. country roles
Key IP management positions within company:
•
•
•
•
Who coordinates?
Who reports?
Who manages?
Requires a “Holistic” approach
–
–
–
–
–
–
–
–
–
–
–
–
–
Human Resources
R&D
Legal
IP Dept
Trademarks
Sales & Marketing (incl. advertising)
Business Development & Licensing
Public relations
Regulatory
Manufacturing
QA/QC
CFO
Tax
© J. Lack 2006
IP Issues for all staff
•
•
•
•
•
•
•
•
•
•
74
National laws
Signing-on & employment contracts
Entry interviews
Initial training (handbooks, policies)
Ongoing education (e.g., ™’s)
Records & document management
Termination & departure
Exit interviews
Follow-up with future employers
Regular IP audits and review meetings
© J. Lack 2006
Employment: Three Basic IP Principles
Three important clauses in employment contracts that require consideration:
1.
Confidentiality: No secrets from previous employers should be brought in. Likewise, the
company’s secrets need to be protected. Each employee is in daily contact with company trade
secrets, whether technical or commercial. His/her knowledge and cooperation in protecting these
company trade secrets and improvements creates real barriers to entry for competitors. All
employees should be bound by obligations of confidentiality even after they leave their
employment. (NB: There can be criminal as well as civil penalties for breach). This needs to be
understood and respected by employees throughout their careers & after leaving.
2.
Non-Compete: Each key employee should agree not to work for a competitor without the
employer’s consent for a definite period of time after leaving the company (e.g., 12 months). In
exchange, the company may agree to subsidize them for a while to incentivize them to work in a
different industry, where their knowledge and expertise cannot help the competition. Although
this may appear at first to be an unreasonable restriction on freedom of movement of individuals,
this may be crucial for an SME. There is a clear collective benefit for remaining employees,
whose jobs are safer. Departing employee can usually work just as easily in related industries
(and get a subsidy). The employer feels safer and can invest more to train its staff.
3.
Invention Assignment: All improvements and inventions that relate to the industry should
belong to the employer. The employee should help the company to comply with all necessary
procedures. It is in all employee’s interests that all the company’s inventions are properly
identified and protected by it. Otherwise IP rights may often become unenforceable and
competitors get a free ride.
NB: WILL DEPEND ON NATIONAL EMPLOYMENT LAWS
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© J. Lack 2006
Ownership of Employee’s IP Rights
• Varies by country
• Three situations:
– IP created in scope of business activities
– IP is created using the company’s resources
– IP is possible due to information gained working
for the company
• Scholarly works
• Guidelines: e.g.
http://www.utsystem.edu/ogc/intellectualproperty/ippol.htm
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© J. Lack 2006
Termination of Employment
•
•
•
•
•
•
•
•
Painful and tricky
“Inhumane” but safe v. “Kind” but risky
Audits of IP assets & risks (by dept and category of IP)
Check electronic copies and access to electronic info.
Rely on and be consistent with HR policies
Exit interviews are crucial
Restrictions can be difficult: scope, time, geography
Paid “gardening leave” – need to balance protection with
fairness
• Non-solicitation obligations
• Follow up with new employers can help (but also be
tricky)
• E.g., http://www.ipfrontline.com/printtemplate.asp?id=3060
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© J. Lack 2006
Consultants
• Two typical situations
– Independent consultants
– Employed consultants
•
•
•
•
78
Four questions to always
bear in mind (country-bycountry):
1. Is there valid IP here?
2. Who does it belong to?
3. Am I free to use it?
4. How can I protect it?
Conflicts of commitment
Conflicts of interest
Freedom to use their ideas?
Ownership? (Can they assign?)
© J. Lack 2006
Remember IP Co-Ownership Issues
1.
2.
“Collective Rights” Countries: Unanimity is required for any transfer of
rights to take place, such as the grant of a non-exclusive license (e.g. CH,
UK, JP). Consultant needs consent to provide rights to third parties.
“Severable Rights” Countries:
a) Partial Independence: Each co-owner can grant non-exclusive
licenses, subject to informing others and sharing proceeds (e.g., FR).
Consultant can give to competitors but will have to pay a reasonable
proportion. NEED NON-COMPETE OR CONSENT REQUIREMENT
CLAUSES.
b) Full Independence: Each co-owner can grant non-exclusive licenses.
Period! (e.g., US). Consultant free to do as he/she likes! NEED NONCOMPETE OR CONSENT REQUIREMENT CLAUSES.
3.
All Countries – sole co-owner cannot grant exclusivity: Unanimity
always necessary to grant exclusive licenses or assign rights. NB: Can be
dangerous if not all inventors are listed and validity remains unaffected
(e.g., CH). IF YOU WILL WANT TO BE ABLE TO GRANT EXCLUSIVE
RIGHTS, YOU NEED A CLEAR CONTRACT WITH CONSULTANT.
YOU NEED TO ADDRESS THESE ISSUES PRE-EMPTIVELY, BEFORE THE
WORK IS DONE!
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© J. Lack 2006
IP & Consultants
•
•
•
•
•
•
•
•
80
Presumption of ownership w/ Consultant
Assignment
Control
Previous licenses/rights
Indemnification issues
Moral rights (esp. in © situations)
Confidentiality
Improvements (benefits from other
projects)
© J. Lack 2006
Audit Contracts with Key Consultants
•
•
•
•
Consultancy agreement provisions
Advisory Board agreements
Focus Group agreements
JV provisions (e.g.,
http://www.ipfrontline.com/printtemplate.asp?id=3060)
• Spin-offs & start-ups (e.g.,
•
http://www.otm.ui
)
uc.edu/downloads/general-tech/licensing-guidelines.pdf
Ownership, confidentiality, freedom to
use, modify, improve etc. provisions?
81
© J. Lack 2006
Conclusions
• Understand why you are interested in IP
• Keep track of relevant IP and manage it
appropriately
• Have an IP Steering Committee and set an IP
Strategy
• Your ability to implement your business plan and
receive financing increasingly depends on this
• Have an “enforcement” strategy
• Your employees and consultants are essential
stakeholders in this process. Educate and
manage them accordingly.
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© J. Lack 2006