IP BasicsFor the Solo/Small Firm

John M. BradshawJBradshaw@USpatent.com

Type of IP What it Protects

• Patent Inventions

• Trademark Identity/Brands

• Copyright Original Works of Authorship

• Trade Secret Valuable Information

Why Obtain Patents?

• To protect market share

• To use as a defensive weapon in case of patent infringement claim by another against you: cross-licensing offer

Patents: Utility & Design

• Utility Patent – protects the functional features of an invention.– Has written “claims”.

• Design Patent – protects the ornamental features of a product.– No written “claims”; rather the drawings define

the scope of protection.

Keep Inventions Secret Before Filing

Disclosure of an invention to one not under a duty of confidentiality to you prior to filing

a patent application starts a one year deadline clock running in the U.S. and

prohibits foreign filing in most countries

Basic Requirements of Patentability

New

Not obvious to one of ordinary skill in the art to which the invention pertains

Prior Art Is Key

Typical Sequence of Events

1. Invention first conceived (may or may not be prototyped)

2. Patentability search3. File U.S. patent application (begins “patent pending”)

a) Provisional utilityb) Regular utility

4. Foreign patent filings within one (1) year of first U.S. filing (provisional or regular utility)

5. Launch product in the marketplace6. Patent application issues as a patent—start marking

products with patent number(s)7. Patent expires—stop marking products with patent

number(s)

Invention Notebooks & Disclosures

• Reason: prove a date of invention earlier than your U.S. patent application filing date (presumptive date of invention).

• “Corroboration”: Must be signed and dated by a witness, who:1. Is NOT a co-inventor;2. Understands the technology; and,3. Has confidentiality obligation (fellow employee).

• Be detailed; show alternative versions• Show testing results or summaries• No breaks or gaps• Tamper evident book: bound to show no pages added or

removed• “Diligence” is good.• “Abandoned, suppressed or concealed” is bad.

“Prior Art” (pre-existing technology) Includes:• Earlier patents & applications• Earlier publications, including, but not limited to:

– Journal articles– Brochures & ads– Product catalogs

• Your own activity more than one (1) year before filing date:

– Offer for sale– Sale– Public use– Publication, Website, Catalog, Brochure

• Earlier products/methods offered, sold or used in U.S.• Earlier invention by others in the U.S.• Public knowledge

“Nonobviousness”• No single item of prior technology (“prior art”) has all the features

claimed: “new” test is met• May not use hindsight – evaluate as of the time that the invention was

made.• Evaluate from the perspective of a person of “ordinary” skill in the field.• Supreme Court: “The combination of familiar elements according to

known methods is likely to be obvious when it does no more than yield predictable results”.

• Other considerations in this “flexible” test include:– Commercial success– Long felt need satisfied– Copying by others– Others tried but failed to solve problem– Praise for the invention

• Suggestion or motivation to combine prior art is not required, but if it exists, then that undermines patentability so long as there is a reasonable expectation of success.

Foreign Patent Filing

Where to file?– Usual path is to file a PCT application

designating all PCT member countries and then decide (30 months after the priority filing date for the first application on the invention) where you would like to nationalize Where you are doing business (manufacturing or

selling) Where you want to license the patent to competitors “A good hockey player plays where the puck is, a

great hockey player plays where the puck is going to be.” -Wayne Gretzky

Scope of Legal Rights

• How broad are patents?

Utility Patent: defined by the written claims.

Design Patent: “substantially similar” in the eyes of the ordinary observer to the patent’s drawings.

Duty of Candor to the Patent Office

• Must always be truthful.• Must disclose prior art that you know about

and that is “material”.• Do not omit material information (e.g.,

person signing an affidavit in favor of your patent application is being paid by you as a consultant).

Infringement: How to Avoid• Do not copy a competitor’s product.

• If you do copy:– Look for patent numbers on the product; and,– Do a formal patent search; and,– Get a formal legal opinion.

• With legal advice, “design around” their claims.

• Having your own improvement patent can be used as a negotiating tool, but is not a defense.

• Avoid other copying pitfalls such as trade dress and copyrights.

• CGL policy coverage for “advertising injury” normally does NOT apply to patents.

• Patent infringement specialty insurance is available if your situation qualifies.

Working With Patents

• Design Around – it’s good to have options– Avoids an injunction against your product line– Strengthens your settlement bargaining position– Weakens opponent’s damages case even if you

do not settle

Infringement: Bad Things Can Happen

• Injunction:– Stop selling order from a court– Destruction of infringing inventory

• Pay damages caused to plaintiff– Plaintiff’s profits that it lost– Price erosion– Reasonable royalties– Other theories of damage…

• Turn over infringing profits to the plaintiff (design patents only)• Damages/profits tripled in exceptional case (e.g., jury finding

that infringement was “willful”)• Pay “court costs”• Pay opponent’s attorneys’ fees in exceptional case (often several

million dollars)

Practical Pointers

• Get present assignments of inventions & “conceptions”: “agree to assign and hereby do assign”.– From all employees– From all non-employees– All consultants– All computer programmers

• File applications on important products to protect market share.

• Be aware of and respect competitors’ patents.

Trademarks

• How, where, and when to obtain rights.• How broad are trademark rights.• Infringement: how to avoid.• Bad things that can happen.• Practical pointers.

Trademarks

• Branding is source identification for your goods and services

• Trademark (goods) or Service Mark (services): word(s), font, logo, symbol, slogan, or sound for your goods or services that identify quality and/or you as the source.

• Trade Dress: distinctive appearance of the product or the place where services are provided, e.g., packaging, coloring, décor, and/or form of the product that acts as a brand.

Trademarks are an InvestmentThrough use and

reputation, marks increase the recognition value of your company as:

1) The source of your goods and services, and

2) The quality of your goods and services

Famous or well-recognized marks can increase the value of your business:

• Through their use as collateral for loans;

• Because they can create revenue through licensing; and

• Through their use as measures of consumer goodwill toward your business

Trademark Examples

Nike

Dockers

501

iPod

Apple

Service Mark Examples

Allstate

AT&T

Trade Dress Examples

House Marks and Product Marks

• House mark: your company’s overall identifier or brand (e.g., “Kodak® ”).

• Product mark: a mark associated with a particular product or product line (e.g., “Kodacolor® ”).

Trademarks

• Common law rights – obtained by merely using the mark in the marketplace.Note: If you are manufacturing or selling in another country, you should obtain a registration there. Only common law countries such as the U.S., the U.K., and Canada recognize use-based rights

• Federal registration – enhances rights and guarantees use of federal court for any disputes.– Based on actual use; or– Based on a bona fide intent to use.

Federal Registration

Some Advantages to Having a Registration

• Nationwide rights, even if your business currently is only local or regional.– Allows you to “reserve” the rest of the country.

• Legal presumption that you own the rights for the goods/services stated in your registration.

• Gives the Trademark Office evidence to help you by rejecting later applications that conflict.– Can save you money and avoid litigation.

• Needed for U.S. Customs and for some counterfeit seizure enforcement.

• Others include:– Foreign trademark “priority” if filed within 6 months of U.S. filing.– Identifiable assets for loan collateral, future sale of the business,

charitable donation, etc.– Foreign registration required to protect yourself from infringement

in a non-common law country.

Term Of Trademark

• Lasts as long as trademark continues to be used and renewed every 10 years: could be forever.

• Rights can be lost if:– Expressly abandon the mark.– Mark becomes generic ( “aspirin”, “escalator”).– Stop using and do not intend to reuse; this is

presumed after three years.– Mark is not policed against encroachment by

others.

Typical Sequence of Events

1. Choose mark (preliminarily)a) Strongest marks: arbitrary or fanciful

e.g., Apple® for computersb) Strong marks: suggestive

e.g., Lands End® for outdoor sportswearc) Weak marks: descriptive

e.g., Muscular Dystrophy Association® for charitable services related to muscular dystrophy diseases

d) Unprotectable marks: generic e.g., aspirin for painkilling drug

Typical Sequence of Events2. Search:

a) Free initial search: www.uspto.govb) Formal search by an attorney.

3. File U.S. registration application4. Use mark in the marketplace (can occur at

any stage in the process)5. Consider foreign filing of trademarks

a) Where you manufactureb) Where you sellc) Where you intend to manufacture or selld) Where you license or intend to license

Foreign Trademarks: Choices

• Mosaic v. Monolithic approaches

• Will you use the mark in commerce for more than 5 years?

ANSWER: Where your markets are (or will be in the future).

•PRIORITIZE COUNTRIES: Priority filing within 6 months of first filing in any country; Later use may dictate later filing in second tier priority countries.

How broad are trademark rights?

• Prevent same mark (mark + goods/services).

• Prevent “likelihood of confusion”.

• If the mark is “famous” (e.g., Coca-Cola®), prevent “dilution”.

Choose a Protectable Trademark

• Protectable marks are distinctive – the more unique the better the legal protection

Spectrum of Distinctiveness/ Strength(example for tanning lotions)

Arbitrary or fanciful –SEX KITTEN®

Suggestive –AUSTRALIAN GOLD®

Descriptive –BRONZE FACES®

Generic – tanning lotion

“Likelihood of Confusion”- Test Considers:

1. Similarity of the marks being compared2. Similarity of the goods / services3. Strength of the earlier mark4. Channels of trade (wholesale, retail, etc.)5. How much care is used in the purchasing

decision6. Proof of actual confusion in the market, if any7. Bad faith intent to confuse, if any

Infringement: How to avoid

• Do not copy a competitor’s mark• Choose an arbitrary or fanciful mark• Take care in selecting your mark• Search for earlier marks.

– Especially the federal trademark register.• Be willing to change if a likelihood of

confusion with a prior mark becomes apparent

Minimize Infringement Threat

• “Advertising Injury” coverage for defense of infringement lawsuits against you is common in commercial general liability policies– Check your CGL to ensure that you have this

coverage– Check the “exceptions” in the policy– Shop around for a new CGL policy if you do not

currently have this coverage– Consider obtaining special trademark

infringement insurance if your circumstances qualify for such insurance

Infringement: Bad Things Can Happen

• Injunction:– Stop selling order from a court– Destruction of infringing inventory

• Turn over infringing profits to the plaintiff• Pay damages caused to plaintiff• Pay “court costs”• Exceptional cases: pay opposing party’s

attorneys’ fees (often over $1 million dollars)

Practical Pointers

• Use ™ to identify a trademark and SM to identify a service mark if the marks are not registered.

• Once federal registration is obtained, must use ® to designate that the mark is federally registered (notice provision).– Failure to do so can prevent recovery of money

damages from an infringer.– Do not use ® before a registration issues or you

could be liable for false marking.

Practical Pointers

• Use trademarks as adjectives.– Example: “The Kodak® camera is the highest

quality product that you can buy.”– Or better yet: “The Kodak® brand camera is the

very best …”.

• Never use as a verb or a noun:– Example: “Please xerox this document.”– Example: “Please ride the escalator.”

• Search before committing to a mark.

Practical Pointers

• Use trademarks prominently.– Capital letters when used in text– Can also use bold or other font when used in

text

• Police your marks against encroachment by others.– Register for watch service—U.S. and foreign– Perform periodic checks of the Internet

Practical Pointers• Consider consciously developing a trade dress through:

– Unique color schemes– Unique packaging– Unique product shapes– Unique décor– Memorable characters (e.g., Geico gecko)– Extending the theme across multiple products– Must have “look for” advertising in order to build trade dress rights

(e.g., “What can Brown® do for you?”)

• Federally register trade dress (not merely more conventional word or logo marks).– Federal registration for trade dress is even more important than

for trademarks because the existence of trade dress rights can be difficult (read: expensive) to prove without a registration.

• Expressly promote your trade dress as a brand in your advertising:– Example: “Look for the yellow bottle with a red cap® brand as the

sign of quality that you deserve.”

Copyrights

• What is a copyright? – “original works of authorship fixed in any tangible medium of expression …”

• Only the “expression” is protectable, not the underlying idea itself.

• Ideas, methods, discoveries and machines are not copyrightable (they may be patentable).

• Titles and slogans are not copyrightable (they may be trademarks) – but logo artwork is copyrightable.

• Pure information is not copyrightable (phone book; raw data).

Examples Of Copyrightable Materials• Text and/or pictures:

– Product catalogs– Brochures– Manuals– Product packaging

• Engineering drawings• Computer software

(code, graphics)• Content of a web site

• Advertisements• Audiovisual works

(videos)• Sound recordings• Architectural works

(home/building designs)• Any other original work of

authorship “expressed” in a tangible medium of expression

Copyrights Are Most Helpful to Your Business if Registered Early

• Copyrights automatically come into being when the work is created.

• Registration is not required, but is strongly recommended (particularly if value or creation time/effort/expense is great).– Without registration, you have few legal rights.

Federal Copyright Registration – How To Obtain

• Fill out a simple form and send it to the U.S. Copyright Office along with the required fee (currently $45) and two copies of the work.

• Registration of computer programs also requires certain pages of source code.

• Code pages can be selected to preserve trade secrets.

• Forms and instructions are available at www.loc.gov/copyright.

Federal Copyright Registration

• Has several advantages:– Provides proof of creation date– Required before bringing copyright infringement action in

court– If registration is applied for within 5 years of publication,

registration will establish a legal presumption of validity and ownership.

– If registration is made within 3 months after publication or prior to infringement, statutory damages and attorneys’ fees are available to copyright owner.

– Otherwise, only award of actual damages and profits is available to copyright owner—no attorneys’ fees.

Typical Sequence of Events

1. Obtain present assignment of rights prior to beginning work in order to establish ownership rights (“agree to assign and hereby do assign”).

2. Work created3. File U.S. copyright registration application.4. Publish the work in the marketplace.

Copyright Duration

• For works originally created on or after January 1, 1978, a copyright lasts for:– 70 years after the last surviving author’s death,

unless …– If “work for hire” or if anonymous, then 95 years

from publication or 120 years from creation, whichever is shorter.

Copyright Notice

• Notice is optional, but strongly recommended. Extensive use of the notice helps show willful infringement (possible increased money damages from an infringer).

• Notice = Symbol + Year of 1st publication + Name of owner:– Examples:

© 2010 Jones Industries, Inc. Copyright 2010 Jones Industries, Inc.

• Notice required to obtain statutory damages and attorneys’ fees

How Broad Are Copyright Rights?

• Prevents copying of the “protectable expression” in a “substantially similar” work.

• OK to copy merely the “idea”.

• Proof of copying (a jury question):– Access to the plaintiff’s work.– Substantially similar expression.

• True independent creation is not copying, even if you obtain identical end results.

Infringement: How to Avoid

• Do not copy a competitor’s work.• If you want to copy a competitor’s idea:

– Quarantine your creators from the earlier work;– Be able to prove no access or copying, but rather independent

creation: Strict “no copy” instructions; Legal opinion to state only “the idea” to the creators; Maintain time records; Use an independent vendor to do the development; Videotape the creative process.

• Searching is of little value here.• Most CGL policies include “advertising injury” coverage that

covers copyright infringement. Be sure to check your policy to ensure that you have this coverage with no exclusions therefor.

Infringement: Bad Things Can Happen

• Injunction:– Stop selling order from a court.– Destruction of infringing inventory.

• Turn over infringing profits to the plaintiff.• Pay damages caused to plaintiff.• Pay “court costs”.• Normal case: pay opposing party’s attorneys’ fees

(often several hundred thousand dollars)(BUT: only for the plaintiff if it timely registered).

Practical Pointers

• Just because you paid for it does not mean that you own it.– Employees (W-2), no problem.– Others are often entitled to retain ownership of

copyrights unless they sign a written agreement that they will assign copyrights to you.

– A simple letter agreement is better than nothing. “XYZ agrees to assign and hereby does assign all

copyrights in the Project to Jones Industries, Inc.”

Practical Pointers

• Get assignments of copyrights.– From all employees (employment agreements)– From all non-employees– All consultants– All computer programmers– All photographers, videographers– Ad agencies

Their photographers Their other vendors

Practical Pointers

• Register copyrights for anything that a competitor might knock off.– It’s cheap.– It’s easy.

• Register copyrights promptly.– Eligibility for reimbursement of attorneys’ fees

creates huge leverage. Legal fees for suit often reach hundreds of

thousands of dollars.

Practical Pointers

• Review your insurance policy for “advertising injury” coverage for copyright infringement.– Check the “exceptions” in the policy too.

Trade Secrets

= information

Neither the form of the information nor the media on which the information is stored matters: written; human memory; electronic; physical sample, etc.

Trade Secrets

• Under Indiana law, a trade secret is information including a formula, pattern, compilation, program, device, method, technique, or process that:– (1) derives independent economic value, actual or

potential, from not being known or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and

– (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

Trade Secrets

• Under Indiana law, a trade secret is information including a formula, pattern, compilation, program, device, method, technique, or process that:– (1) derives independent economic value, actual or

potential, from not being known or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and

– (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

Trade Secrets

• Under Indiana law, a trade secret is information including a formula, pattern, compilation, program, device, method, technique, or process that:– (1) derives independent economic value, actual or

potential, from not being known or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and

– (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

Trade Secrets

• Under Indiana law, a trade secret is information including a formula, pattern, compilation, program, device, method, technique, or process that:– (1) derives independent economic value, actual or

potential, from not being known or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and

– (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

Examples of Trade Secrets• Manufacturing methods,

jigs, processes• Formulas• Customer lists• Customer preferences• Material composition• Computer code• Engineering drawings,

specs, changes• Pricing, cost & profit

information

• Data compilations• Information re:

regulatory approval• Failures; what did not

work• Bids• Lab notebooks, meeting

minutes• Legal information• Vendor & raw material

identification, pricing, etc.

• Testing and QC procedures

Examples Of Efforts That Are “Reasonable” to Maintain Secrecy

• Confidentiality agreements– Vendors and contractors– Employees– Visitors

• Security alarms, systems• Restrict computer access (user groups, limited authorization,

passwords)• Legends on documents: “Confidential” or “Trade Secret”• Limit tours and other access• Visitor sign-in log• Compartmentalize information: access given on a “need to

know” basis

Courts look at what efforts you undertook – be active, not passive.

Trade Secrets

• Trade Secret Owner has right to recover money and stop misappropriation of trade secret.

• No trade secret violation if:– Information is in the public domain (known or

“readily ascertainable”)– Someone independently develops– Information is obtained through reverse

engineering

Misappropriation

• Trade Secret information is “misappropriated” (i.e., infringed) if improperly:

1. Acquired;2. Used;3. Disclosed; or4. Any combination of the above.

Confidentiality Agreements

• Before disclosing your ideas or information to a company/person for its consideration, consider having a representative sign a confidentiality agreement.

• Disclose only on a need to know basis.• Reclaim possession of documents afterwards.• Preserve foreign patent rights; reduce likelihood of

theft/misappropriation of the invention; create evidence of prior invention for subsequent inventorship disputes.

• Confidentiality agreements typically include a general description of your work, language indicating that company agrees not to disclose or use your work without your permission, and signature lines for both parties.

• Beware: duration clauses (“this Agreement shall be for a term of three (3) years…”) create a strong argument that the information is no longer confidential thereafter.

Questions:

John M. BradshawJBradshaw@USpatent.com