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Entrepreneurship
Please do not share outside the Dartmouth Community without permission.
Copyright G. Fairbrothers 2005-2014 All rights reserved.
Intellectual property: ideas $$
So you have an idea….
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What is an idea?
Can ideas be property?
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Intellectual property
Ideas and their expression can be valuable assets…
Does somebody want to steal them??
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Intellectual property
Ideas and their expression can be valuable assets…
But only if you protect your ownership
of them!
Article 1, Section 8: “The Congress shall have power … to
promote the progress of science and useful arts, by securing for
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Intellectual property
4 kinds of legally protectable intellectual assets:
• patent
• trademark
• copyright
• trade secret
Patents
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Patents
• an “exclusive right” granted by the federal
government entitling the owner to prevent anyone else from making, using, selling (or offering to sell) the patented product or process
• no guaranteed right to make or sell
• issued by the US Patent and Trademark Office (www.uspto.gov)
• term of 20 years from the application filing (14
years from issuance for design filings) for patents
issued after 6/8/95.
What can be patented:
• “Any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement thereof.”
- - 35 U.S.C. § 101
• “Everything under the sun made by man”
- - U.S. Supreme Court
• “I can patent a ham sandwich”
- - patent attorney (name withheld by request…)
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Importance of Patents
• Offensive
– Deter Competitors – Marking/marketing – Threat of Litigation
• Defensive
– Own different technologies
• Capital Asset
• Licensing/Cross-licensing
– A bargaining chip
Peter Nieves, Esq.— Sheehan, Phinney, Bass and Green
Patents
• limited to country issuing
• must be:
- useful
- novel (unique)
- non-obvious
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1 U.S. Patent Act, 35 U.S.C. §112
“Enablement”
“The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.“ 1
“Reduction to practice”
• Conception: the "formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.“
1• reduction to practice: the embodiment of the concept of an invention.
1 Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376 (Fed. Cir. 1986) (quoting 1 Robinson On Patents 532 (1890))
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“Reduction to practice”
• The embodiment of an invention can either be:
- Actual reduction to practice: “Requires that the claimed invention work for its intended purpose.“ 1
- Constructive reduction to practice: "Occurs upon the filing of a patent application on the claimed invention." 2
- "Simultaneous conception and reduction to practice": "In some instances, such as the discovery of genes or
chemicals, an inventor is unable to establish a conception until he has reduced the invention to practice through a successful experiment.“ 3
1 Brunswick Corp. v. U.S., 34 Fed. Cl. 532, 584 (1995)
2 34 Fed. Cl. 532, 584 (1995).
3 F.Supp. 740, 742 (S.D.Cal., 1994) (citing Amgen, Inc. v. Chugai Pharmaceutical Co., Ltd., 927 F.2d 1200, 1206 (Fed. Cir. 1991)).
Patents
A patent is not a guarantee…
… it’s a license to sue!
• Dominant and subservient patents: cross-licensing
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Utility patents can be:
• a machine or device
• an article of manufacture
• a process or method for producing a useful, concrete and tangible result
• a composition of matter
• an improvement of an invention that fits
within one of these categories
Utility patents and software
• “software, internet ideas, and business methods are not patentable?”
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Utility patents and software
• “software, internet ideas, and business methods are not patentable?” – wrong! (sort of)
• case law: software mimics hardware
• 7/23/98 – State Street Bank & Trust v. Signature Financial Group (mutual fund administration) – business method
• examples:
- application programs – process or machine controls
- microcode in a ROM that embodies the entire innovative notion of a new tachometer
- internal or operations programs that direct the handling of data in the computer’s own operations
- Amazon’s “One-Click” patent (successfully litigated against Barnes &
Noble in 1999)
• what’s needed – a process depiction (e.g. flow chart) and a written description
What about software code?
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Not eligible!
• software code (copyright)
• natural phenomena (e.g. photosynthesis)
• abstract ideas
- algorithms not applied to any useful purpose
- mental processes, processes of human thinking and systems that depend on human intelligence alone for their operation
• laws of nature (e.g. E=mc
2), natural phenomena, and abstract ideas (but their applications may
be)
• no claims “directed to or encompassing a
human organism”
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Other types of patents
• design patents – cover the industrial design of an object, it’s ornamental appearance
• plant patents – inventions or discoveries
involving asexual reproduction of distinct
and new varieties of plants
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Prior art
• absence of novelty or non-obviousness in light of
“prior art” is grounds for denial of an application
• prior art = any disclosure of information regarding – or use of the contents of a claim – prior to the patent application
• any information in the entire body of human knowledge can be prior art:
- publications by others - a prior, issued patent
- prior use of the invention by others
- prior “public disclosure” by the inventor(s)
Statutory bar; public disclosure
• within one year of a public disclosure (US)
• grace period now restricted: applies only to disclosures
made by the inventors themselves or disclosures by others whose disclosures are “substantially identical to the subject matter previously disclosed by the inventor.”1
• publication or public presentation – written or oral
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What about your presentations?
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Statutory bar; public disclosure
• within one year of a public disclosure (US)
• grace period now restricted: applies only to disclosures
made by the inventors themselves or disclosures by others whose disclosures are “substantially identical to the subject matter previously disclosed by the inventor.”
• publication or public presentation – written or oral
• sale, or “offer for sale” (“containing the invention”), including products of the invention (e.g. of a machine)
• market testing
• exhibitions
• use by the owner, in some cases
• exception for public use for experimental purposes
• beta testing – circumstances determine. No payments!
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Parts Of A Patent
• Three basic parts:
- drawings showing an embodiment - written description
- claims
• Contents:
- Title
- Cross Reference to Related Applications - Field of the Invention
- Background
- Summary of the Invention
- Brief Description of the Drawings - Detailed Description
- Claims - Abstract - Drawings
Other Considerations
• Process
- The patent office currently examines roughly 500,000 applications every year.
- Under-funding has led to a 700,000-patent backlog and a three- year waiting period for the average patent to receive final approval.
• Claiming strategies
• Invention = ownership. Written transfers of interest.
• Failing to name all inventors…
• PCT (Patent Cooperation Treaty) – can be filed with the national office, or the WIPO
• Cost deferral strategies
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Deferral Strategy - Provisional Patents
• A US application for a patent without formal claims, oaths/declarations, or information disclosure (prior art) statement
• Used to claim priority of the filing date in the utility patent application
• Allows use of the term “patent pending”
• Is not examined
• Must file a non-provisional (“full”) application
referencing the provisional within 12 months – no extensions!
• No amendments allowed
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Deferral Strategy - Provisional Patents
• Must contain:
- complying written description
- complying drawings, if necessary
• Filing fee - $250 ($125 for small entities)
• Cover sheet identifying:
- application is a provisional application - names of all inventors
- inventors’ residences - title of invention
- name and registration of attorney or agent and docket number - correspondence addresses
- any US Government agency that has a property interest
• Cover sheet available online at www.uspto.gov/web/forms/sb0016.pdf
• See www.uspto.gov/web/offices/pac/provapp.htm
• Fees – see http://www.uspto.gov/web/offices/ac/qs/ope/fee2004dec08.htm#patapp
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Costs
• basic utility filing (3 claims): $380 ($190 for small co., $95 for electronic filing)
• Claims in excess of 3: $250/125. In excess of 20: $60/30
• Size fee (!) – for each additional 50 sheets over 100:
$310/150
• Not filing electronically? - - $400/200 fee
• http://www.uspto.gov/web/offices/ac/qs/ope/fee092611.htm
• Additional PTO fees over the life: $4,000+
• Plus the lawyer!
• Plus international
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International protection?
- 115 countries
- applications administered by the World Intellectual Property Organization.
- streamlining of patent applications across several countries at once by filing a PCT patent application
- a way to postpone for 30 months filing applications in other countries - nearly always costs more than applying for patents in the same
countries (through the Paris Convention)
- The PCT applicant can sometimes get faster feedback from a patent office due to US backlog
The Patent Cooperation Treaty (PCT)
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International protection?
- a treaty, 110 countries
- helps those who wish to obtain patent protection in more than one country - postpones filing in more than one
Convention country for up to 1 year
The Paris Convention
Patent Costs over Time
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Contesting filings by others
• The new law now permits third parties to request a Post-Grant Review against an issued patent, but tightens the criteria for inter partes
reexaminations.1
• Requests for inter partes review will only be granted on grounds of novelty or obviousness, and the USPTO will only start a review when there is a
“reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged.”
• Post-Grant Review: Inventors or companies can now contest the validity of a patent for nine months after issue and the patent office will go back and
review the case. The patentee is allowed to file one motion to amend the patent by canceling claims or proposing reasonable of substitute claims.
1 Inter partes (“between the parties”) reexamination is a USPTO administrative proceeding in which a person
challenges an issued patent by submitting a “request” to the Office to consider grounds for disallowing one or more claims.
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More information about patents
• http://www.patents.com
• http://www.freepatentsonline.com/
• http://www.micropat.com/static/index.htm
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Trademarks
What is a trademark?
Trademarks
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Trademarks & Servicemarks
• trademark - used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others
• servicemark - identifies and distinguishes the source of a service rather than a product.
• used to prevent others from using a confusingly similar mark
• may be registered with the US PTO
Any identification used to distinguish goods or services
• Word, phrase or name
• Slogan
• Design, shape or symbol
• Picture
• Device
• Product/Packaging Shape
• Sound, musical phrase
• Color
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™ vs. ®
• Common law:
- ™ is used in the US to show knowledge of common law rights (Lanham Act)
- First to adopt
- Limited to the geographical location of the use in commerce
• Federal Protection:
- ® is used in the US once a trademark has been federally registered (USPTO)
- First to file – actual use, or intent to use
- Can stop anyone in the US from future use of the mark in the manner protected by the Federal Registration
- For use prior to filing the federal application, can limit future use to the places that someone used the mark in commerce prior to the filing date
Copyrights
What are copyrights?
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Copyrights
• federal statutory protection
• provided to authors of “original works of authorship”
including:
- literary and certain other intellectual works, both published and unpublished
- dramatic and musical works, including pantomimes and choreographic works
musical - artistic
- software code
- pictorial, graphic, and sculptural works
- motion pictures and other audiovisual works - sound recordings
- architectural works
• an exclusive right to:
- reproduce the work
- prepare derivative works
- distribute copies or phonorecords of the copyrighted work - perform or display the copyrighted work publicly
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Copyrights
• as to the work or derivative works, can be used to prevent others from:
- using - copying
- distributing - performing - displaying
• protects the form of expression rather than the subject matter of the writing (software!)
• registered by the Copyright Office of the
Library of Congress
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Requirements
• Originality Requirement
- Not just copied
- Must contain a minimal amount of creativity - Excluded: words, short phrases, slogans
• Fixation Requirement
- Must be fixed in tangible form prior to qualifying for copyright protection (fixed embodiment)
• Not granted to ideas, procedures,
processes, systems, methods of operation,
concepts, principles, or discoveries
Trade Secrets
What are trade secrets?
Why are they valuable?
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Trade Secrets
• confidential information – knowledge, inventions,
strategies and processes – held secret and protected
• if improperly disclosed or illegally acquired by a
competitor, the owner has resort to trade secret law
• eternal - no limit on term!
• certain protection procedures are required – no
protection against discovery by fair means (including independent invention and reverse engineering)
• use non-disclosure and non-compete agreements
Confidentiality Agreements
• binding legal agreement – must have statutory elements
• contains a promise by the receiver of information to:
- avoid unauthorized use or disclosure – use only as intended
- limit use and disclosure to parties identified in the agreement, or obtain written permission to disclose
- exercise appropriate care in preventing the same by others
• protected information must be described. Good practice to create a schedule or exhibit.
• mark all documents “confidential.” Good practice to number and label.
• should include preservation of intellectual property rights, current and future
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Engaging attorneys
• do you need one? “An ounce of prevention…”
• you get what you pay for
• shop around – first consultations should be free.
A means of interviewing.
• check references!
• define expectations. Negotiate! (you don’t get what you don’t ask for…)
• always get engagement letters!!
• you’re poor and starving – no retainers!
Working with attorneys
• expectations of the attorney – definition of roles
• how to work with one – good management practices
• in the end, ONLY YOU are responsible for
the outcome, not the attorney
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