IP Pitfalls

The role of the general business attorney
in IP
Copyright 2003, Gallagher &
Dawsey Co., LPA
IP Pitfalls
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IP renewals and maintenance fees
Provisional patent applications
Managing Disclosure
Inventorship
Valuation of IP
Copyright 2003, Gallagher &
Dawsey Co., LPA
IP Pitfalls
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Litigation preparedness
Licensing
IP Budgeting
Trademarks
Copyright
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Dawsey Co., LPA
Renewals and Maintenance
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

Copyrights:


None!
But is it in term?

www.copyright.gov
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

Patents:



U.S. Design – None (14 year term)
U.S. Utility – None while pending
Foreign – Many require maintenance for
pending applications (e.g., Canada) and may
have different schedule for issued patents
than U.S.
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

U.S. Utility Patent Maintenance:




3 to 3.5 years after grant
7 to 7.5 years after grant
11 to 11.5 years after grant
Six months grace period with late fee

(i.e., patent expires at 4, 8, or 12 year mark)
Copyright 2003, Gallagher &
Dawsey Co., LPA
Client call 
“I forgot to pay the maintenance fee!”


“You forgot to pay the maintenance fee!”


or worse;
or the very worst;
“The G-d--- patent lawyers forgot to pay
the maintenance fee!”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

Make sure you understand who is
responsible for paying these fees.
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance
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Revival


“Unavoidable”
“Unintentional”
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Dawsey Co., LPA
Renewals and Maintenance

Revival

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
All good things must come to an end – no
revival for “unintentional” failure to pay
maintenance after 24 months
Expired patent is public domain prior art and
can never be patented again
All good things have limits – intervening rights
may be established
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Renewals and Maintenance

Trademarks

“Renewals”

Must still be in use in commerce
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

U.S. Trademark Renewal Schedule
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Six years after first grant
Ten years after grant
Every ten years thereafter
Can be paid up to one year in advance
Six month grace period with late fee
Can be renewed indefinitely
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance
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Trademarks

“I forgot to pay the trademark renewal fee!”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

“I forgot to pay the renewal fee!”
Six month grace period?
 No revival
 But can reapply

Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

Tips


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Don’t rely on your patent attorney
Don’t rely on USPTO notification
Don’t pay without thinking
Copyright 2003, Gallagher &
Dawsey Co., LPA
Renewals and Maintenance

Before paying:


Think
But think slowly
Abandonment is generally irrevocable
 There may be alternatives

Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents
“Short Form Patent”
“Poor Man’s Patent”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents


35 U.S.C. § 112(b)
Purpose – Harmonize U.S. and
International law and simplify patent
process.
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents

Simplify? Yes, since:

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Inexpensive
Shorter, as only drawing “as necessary to
understand” and no claims are required
Satisfies priority date and statutory bar
requirements like a utility patent
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents

Simplify? No, in that:
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Not examined
Can never mature into an actual patent
Will only support priority for a later filed utility
patent if it is “enabling”
Vanishes in one year
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents

Good Reasons to Use:


One desperate throw of the dice
So much disclosure, so little certainty

Multiple PPA’s can be consolidated into one utility
application
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents

Good Reasons to Use:

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Fast moving technology
Upcoming disclosure
Extend patent pending period
Test marketing potential
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents
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Bad Reasons to Use:
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Being a cheapskate
Poorly conceived invention
Vague marketing plans
Enrich patent attorney
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents

Things to Watch For:
One year passes quickly
 Triggers foreign filing deadlines
 Doesn’t toll the statutory bar deadlines unless a
utility application is timely filed, e.g.:

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Item on sale 12/02
PPA filed 6/02
Utility must be filed by 6/03 to ever patent item
Copyright 2003, Gallagher &
Dawsey Co., LPA
Provisional Patents

Tips:
Provisional should contain more disclosure rather
than less
 The more your Provisional Patent Application looks
like a utility application, the more it will help you.

Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Managing the tension between disclosure
and confidentiality
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure
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Novelty
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Things that are not new cannot be patented
So what is “new?”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Novelty

35 U.S.C. § 102(a)
“known or used by others in this country”
 Or
 “patented or described in a written publication in
this or a foreign country”
 Before the Date of Invention

Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Novelty

35 U.S.C. § 102(b)
“patented or described in this or a foreign” country
 Or
 “in public use or on sale”
 More than one year prior to the date of filing

Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure
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Key Events
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“patented”
“described”
“in a printed publication”
“in public use”
“on sale in this country”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Quiz:


Can your client trigger a 102(a) event?
Can your client trigger a 102(b) event?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure
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Important ramification of “described” and
“before the date of invention”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

35 U.S.C. 102 §(a-b) events:
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Absolute deadlines
NO reprieve, renewals, late fees, exceptions,
excuses, appeals, second chances, or places
to hide!
Copyright 2003, Gallagher &
Dawsey Co., LPA
Client call 
“I think there may have been some
disclosure of this about a year ago.”

Response:
When
 Where
 What
 To Whom
 Then call your patent counsel

Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Grow the belief within your client’s
company that disclosure can have
important IP consequences
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Special problem with technology clients:

Understand and sympathize with the
difference between the cultures of science
and the law on disclosure
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Somebody (not the sales organization)
needs to review and approve upcoming
disclosure
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Upcoming sales or disclosure?
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Great !
Avoid “enabling” disclosure


But be careful – no uniform standard for
enablement
Can’t avoid enabling disclosure?
Remember the one year statutory bar
 But there may be dire foreign patent effects

Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Upcoming sales or disclosure?
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Provisional Application
Utility Application
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure


“But we don’t have all the kinks worked
out yet!”
Help your client manage “experimental
use”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure

Experimental Use

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Judicial exception to “public use”
Must be experimental use designed to test the
invention's utility


The more it looks like a science experiment, the
better it looks
Not market testing
Copyright 2003, Gallagher &
Dawsey Co., LPA
Managing Disclosure
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Defensive Patent Practice
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SIRs
Defensive Publication
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship
Copyright 2003, Gallagher &
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Inventorship

35 U.S.C. § 111
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Application must be made by “the inventor”
Who is the inventor?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship
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No easy black letter definition
One who has contributed at least one
important feature to the invention
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship

Inventor:

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Doesn’t have to do it all
Don’t have to make equal contributions
Doesn’t have to work simultaneously or in
same locale as other inventors
Must be more than a technician
Must name all inventors (35 U.S.C. 102(f) and
37 C.F.R. § 1.45)
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship

What your clients will do:


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Not understand “true inventorship”
Try to name non-inventors for political or
business purposes
Omit true inventors who have left the
company or who they don’t like
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship
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Intentional failure to name true inventors
is fraud if known by:
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any inventor
each attorney or agent
every other person substantially involved
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship
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Penalty: DEATH

(that is, death for the patent)
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship
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
With such severe penalty, a little slack is in
order:
While all inventors must be named, all
inventors don’t have to sign application
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship
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Dead, or legally incapacitated

Executor or guardian may sign
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship
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Refusing or can’t be located:
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Must make diligent effort to locate
Must petition patent office with facts
If petition granted, assignee may file in the
inventor’s name
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship

Corollary:

What does this tell you about when to get
assignments executed?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship

Corollary to Corollary:

All streets don’t run two ways - while all
inventors must file for patent; any one
inventor may dispose of rights without the
consent and without accounting to the other
inventors! (35 U.S.C. § 262)
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship

Corollary to Corollary to Corollary:

Now, what does this tell you about when to
get assignments executed?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship

Remember that employment may end
before patents are filed

Specify that end of employment does not end
responsibility to assign and to cooperate with
patent activities
Copyright 2003, Gallagher &
Dawsey Co., LPA
Inventorship

Accidental failure to name true inventors:


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Not fraud
Corrections may be made by petition after
filing
But remember that accidental ( i.e., “without
deceptive intent” (37 C.F.R. § 1.48)) is not the
same as non-malicious
Copyright 2003, Gallagher &
Dawsey Co., LPA
Valuation of IP
Copyright 2003, Gallagher &
Dawsey Co., LPA
Valuation of IP

The secret is that there is no secret – the
value of IP is whatever someone else is
willing to pay
Copyright 2003, Gallagher &
Dawsey Co., LPA
Market Valuation


Measurable only on loss or sale
Hard to Assess, Speculative

ImClone, Erbitux
Copyright 2003, Gallagher &
Dawsey Co., LPA
Cost Valuation


“Replacement Cost?”
IP Cost often skewed form real value

“New Coke”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Income Valuation

Possibly the best system for going
concerns not selling their IP
Copyright 2003, Gallagher &
Dawsey Co., LPA
Pitfalls of Income Valuation

Have you maximized value?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Pitfalls of Income Valuation

IP has a limited, and sometimes difficult to
assess, life
Copyright 2003, Gallagher &
Dawsey Co., LPA
Pitfalls of Income Valuation

Copyrights; Term essentially indefinite;
but:


Computer Software?
“Nick at Night”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Pitfalls of Income Valuation

Trademarks; nominally indefinite, but:

Enron
Copyright 2003, Gallagher &
Dawsey Co., LPA
Pitfalls of Income Valuation

Patents:

20 year term, but:

Is the market cycle different from the patent term?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Pitfalls of All IP Valuation

What are you valuing?


IP is only part of the enterprise
The current R&D problem
Copyright 2003, Gallagher &
Dawsey Co., LPA
Valuation

IP is not a lifetime commitment!
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Selling
Transfer to Holding Company
Spin Off
Donation
Abandonment
Copyright 2003, Gallagher &
Dawsey Co., LPA
Valuation; Market, Cost and
Income Methods

www.patentvaluepredictor.com
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Before trouble hits, help your client
prepare
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

No one can infringe an expired patent!

Check for maintenance payments
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Get rid of prosecution drafts


Yours, your patent attorneys, and the
inventors and assignees
Festo
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Protect invention disclosure forms as
attorney client work product:

In re Spaulding Sports Worldwide, Inc.
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Cleanse “fraud” issues


True inventorship
Ongoing duty to disclose
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Identify and Evaluate Infringers

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
Actual, Contributory, and Inducers
Collectable?
What do you want?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

The post-1981 Era

Court of Appeals for the Federal Circuit
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Pre-1981

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
Patentee had to prove patent valid
Preliminary injunctions rare
Damages usually set as lost royalties
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Post – 1981


Patents have presumption of validity
More “realistic” damages
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

Today:

Some companies run infringement
enforcement practices out of their patent
portfolios that are multi-million dollar profit
centers
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

If your client is a potential plaintiff:

Don’t be too fast to threaten suit

You might precipitate a declaratory judgment
action
Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

First step in plaintiff’s analysis:

Consult patent counsel
Patent attorney v litigators
 The vast majority of accused infringement will
never go to trial; most will probably never go to
filing of a suit

Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness

If your client is a potential defendant:

Watch out for the buccaneers of the plaintiff’s
bar
Check that patent is prima facie valid
 Don’t be too fast to settle
 Demand a detailed claim comparison, and review it
with competent counsel, before considering
settlement.

Copyright 2003, Gallagher &
Dawsey Co., LPA
Litigation Preparedness
What we do first:
 Compare your client’s broadest claim with the
infringing device
 Device must have all elements of claim
 Additional features don’t save infringer
 Only one claim needs be infringed
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Exclusive and Non-exclusive



Federal exception
Consider some middle ground licensing
Some licenses are better than owning!
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Sublicensing and Assignment


Concerns with Exclusive
Concerns with Nonexclusive
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Fees



How and when paid
Minimum
Termination
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Confidentiality



An ongoing concern
Confidentiality manager
Involve individuals
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Support

Consider the costs
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Relationship




Is it a joint venture?
Warranties
Indemnification
Insurance
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Trademark Licensing

Trademarks differ from patents
Requirement to keep in use
 Quality control

Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

ADR?


Complexity
Consider excepting IP from ADR

Preserve ability to seek injunction
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Antitrust

Nature of IP will always make this a difficult
area
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Hotspots to Beware


M&A
Package Licenses/Tying Arrangements
Competitive efficiency
 Market power




Resale Price Maintenance
Grantbacks
Expired Patents
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Generally “Safer” IP Antitrust Areas



Refusal to license
Territorial and Field-of Use Restrictions
Time/Quantity Restrictions
Copyright 2003, Gallagher &
Dawsey Co., LPA
Licensing Pitfalls

Infringement Issues in Licensing:



Who has standing to enforce?
Who pays?
Who recovers?
Copyright 2003, Gallagher &
Dawsey Co., LPA
Budgeting Pitfalls



Remember to budget it!
Learn basic patent procedure so that you
can supervise outside counsel
Foreign protection is both inexpensive and
very expensive
Copyright 2003, Gallagher &
Dawsey Co., LPA
Trademark Troubles
Copyright 2003, Gallagher &
Dawsey Co., LPA
Trademark Troubles

Applying for a trademark is easy – tens of
thousands get rejected every year
Copyright 2003, Gallagher &
Dawsey Co., LPA
Trademark Troubles

Trademarks can be as valuable for
products as patents, at 1/20 the cost


Crock-Pot
Hula hoop
Copyright 2003, Gallagher &
Dawsey Co., LPA
Trademark Troubles

Trademarks are the only effective means
of protecting certain types of IP



Brand recognition
Service Businesses
Good-will
Copyright 2003, Gallagher &
Dawsey Co., LPA
Trademark Troubles




“actual use” v “intent to use”
“specimen”
Class system
Domain names
Copyright 2003, Gallagher &
Dawsey Co., LPA
Trademark Troubles

Getting is not keeping in trademark law



Failure to use in commerce
“Naked” licensing
Genericide
Copyright 2003, Gallagher &
Dawsey Co., LPA
Copyright Pitfalls
Copyright 2003, Gallagher &
Dawsey Co., LPA
Copyright Pitfalls

Copyright is born the moment a work is
“fixed” in form
Copyright 2003, Gallagher &
Dawsey Co., LPA
Copyright Pitfalls

Buying the work without buying the
copyright
Copyright 2003, Gallagher &
Dawsey Co., LPA
Copyright Pitfalls

Websites


© your client’s website
Make sure your client, and not the website
developer, owns the copyright
Copyright 2003, Gallagher &
Dawsey Co., LPA
Copyright Pitfalls

Fair Use

Commercial use is the most limited of all “fair
use”
Copyright 2003, Gallagher &
Dawsey Co., LPA
Copyright Pitfalls


Statutory Damages
Available only to federally registered
copyrights

Columbia Pictures v Krypton
Copyright 2003, Gallagher &
Dawsey Co., LPA
Copyright Pitfalls

Because of the availability of statutory
damages, copyright can have the biggest
dollar for dollar payoff of any form of IP
protection
Copyright 2003, Gallagher &
Dawsey Co., LPA
The Bottom Line

We may do the formal IP work, but your
client looks to you for guidance and with
trust!
Copyright 2003, Gallagher &
Dawsey Co., LPA