Intellectual Property Basics
Peggy Wade, Ph.D.
Director, Division of Engineering Research
3428 Engineering Building
Michigan State University
517-353-9492
E-mail: wadem@egr.msu.edu
http://www.egr.msu.edu/egr/research/techtransfer.php
11-4-2005
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Introduction
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What is intellectual property?
Why do we want to protect it?
How do we protect it?
How do we transfer the technology to
the public?
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What is intellectual property?
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Intellectual properties are intangible products
of the mind. These include:
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inventions (devices, compositions, plants, designs)
publications
videotapes
computer programs
works of art.
They must be reduced to a tangible form in order to
be protected.
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Why do we want to protect
and license IP?
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It is very difficult to license technology that is
not protected.
Makes the technology available to the public
and provides opportunities for graduates and
recognition to faculty.
IP is a marketable commodity that can be
used to leverage additional research dollars
and income to support the inventors and the
university, and help in the formation of new
companies and jobs.
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Statistics from Association of
University Technology Managers
(AUTM)
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Since 1998, over 2200 new products have
been introduced in the market place.
In 2003 in the U.S. and Canada (AUTM
Survey Data, ~200 Universities):
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Over 15,500 Invention Disclosures, 4500 new
Licenses
7921 patent applications were filed; 3933 new
patents issued
374 new companies formed; 2279 start-ups still
operating.
License revenue was over $1,310,000,000
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How do we protect intellectual
property?
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Copyrights
Trademark
Trade Secret
Plant Variety Certification
Patents
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Office of Intellectual Property
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Handles all patents and trademarks for
MSU.
Engineering rep - Brad Shaw 355-2186
http://www.msu.edu/unit/oip/
Brochures noting MSU policies
http://www.msu.edu/unit/oip/brochures
andforms.html
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Office of the Assoc. Vice Pres. for
Research and Graduate Studies
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Handles all copyrights for the university.
Lori Hudson : ljh@msu.edu; 355-2186
http://www.msu.edu/unit/facrecds/FacH
and/develpinstruct.html
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Copyrights
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Documents, art, music, motion pictures, software,
etc. are automatically copyrighted when the
document is created.
Can register the copyright with the government for
$30.00. Must be registered before filing any
infringement lawsuits.®
Lasts the life of the author plus 70 years
Or lasts 95 years from publication or 120 years from
creation, if it was a work for hire
MSU Policy and FAQ
http://www.msu.edu/unit/oip/LEED/copyhand02.pdf
US Copyright Website http://www.loc.gov/copyright/
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Trademarks
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Used to protect a symbol or phrase that’s
identified with a product (e.g. Coca-Cola,
Gatorade, Xerox). ™
Registration costs $325 but is not required
except for federal court proceedings and for
foreign protection; last for 10 years and is
renewable indefinitely®.
Becomes effective when begin selling
commercially.
http://www.uspto.gov/main/trademarks.htm
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Trade Secrets
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Specialized knowledge that can include data,
formulas, compilations, programs, etc. which
are maintained as a secret
Can be used where patents may not have a
long enough term or be possible.
Trade secrets are kept under lock and key,
with restricted access and publications.
Example - Coca-cola formula
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Plant Variety Certification
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Used for plants that reproduce sexually
making it illegal to sell and propagate
them commercially.
Certification protection is for 5 years
and costs ~$2500.
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Patents
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Used for inventions, processes, machines,
improvements, and composition of matter.
Not possible to patent scientific principles,
methods of doing business or most naturally
occurring articles.
Software algorithms can often be patented,
but typically software is protected under
copyright.
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Three Patent Requirements
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Novel - new to the patent literature, not
published or described in an enabling
manner. Time limit of one year from
public disclosure to file a U.S. patent.
Foreign patents must be filed BEFORE
any public disclosure.
Utility - must be useful
Non-obvious to one skilled in the art.
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Types of Patents
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Utility – how something works or is used;
multiple claims
Design – how something looks; only one
claim
Provisional – establishes a filing date and
provide 1 year to file a full patent application
with claims
Plant – for asexually reproducing a new plant;
one claim
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Differences between International
& US Patents
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US – First to Invent
Most International – First to File
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Very important to file protection before
publicly disclosing to preserve foreign
patent rights
Foreign protection very important to most
companies
Provisional Patents have great use here
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What does Patent Protection
Provide?
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The right to EXCLUDE others from making,
using, selling of offering to sell the claimed
invention during the patent term.
Must be marked as ‘patented’, or can’t
recover from anyone who infringes on it.
Patent term typically = 20 years from date of
filing
Design patent = 14 years
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Bayh-Dole Act (1980)
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The Bayh-Dole Act was intended to promote
investment by the private sector in the
commercialization of discoveries made using
research funds provided by the federal
government.
Prior to the Act, the government retained title
to these inventions, and because it was
cumbersome to get a license, few
technologies were licensed and
commercialized.
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MSU Policy
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MSU owns all intellectual property created by
its employees using university equipment and
supplies.
Students (unpaid) own their intellectual
property.
Patents, copyrights, and trademarks are
handled by Office of Intellectual Property and
Assoc. VP for Research and Grad. Studies.
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If you invent while at MSU…
Student Inventor
Student Invents
not an MSU employee
i.e. part of a course, works in an
unrelated campus job
Student Invents
while an MSU employee
i.e. paid in a lab
on a research grant
Student pays for patent expenses
files patent, receives 100% royalties
Student must develop, market, license or sell
technology
MSU pays for patents
shares royalties (~33%)
licenses and markets
technology
U.S. patent costs
~$10-15K takes ~ 2yrs
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MSU Royalty Policy
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First $5000 goes to the inventor(s).
Patent expenses are then recovered.
Net Royalty
Next $100,000
Next $400,000
Next $500,000
Excess >$1M
Inventor(s)
33.3%
30%
20%
15%
Academic University
33.3%
33.3%
30%
40%
20%
60%
15%
70%
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Procedure for inventions at
MSU
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Inventors submit an invention disclosure form describing the
invention, whether the research was supported by government
or industry, publication details.
http://www.egr.msu.edu/egr/research/techtransfer.php
OIP assesses invention, assigns a case number.
Patent search initiated by attorney if invention is complete
enough [D-I-Y at http:www.uspto.gov].
If patentable, decision made by committee on whether to file a
patent based on financial and other basis.
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Procedure for inventions at
MSU (continued)
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If a patent application is filed, it will be reviewed by
the Patent Office approximately 12-18 months later.
Patents will be published by the USPTO after 18
months.
If a patent issues, it is usually about 2 years after the
initial filing. Patent is valid for 20 years from the
filing date.
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Industry Patent Policies
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Who owns IP – inventors or employer?
Employee Agreement as condition of
employment
Does the inventor get royalties?
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Employment Agreements
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Typically are a condition at hiring & include
salary, benefit details.
Often include trade secret & confidentiality
language for a term that exceeds termination
from the company.
Includes IP ownership information.
May include non-compete language to
prevent you from working for a competitor for
a period of time.
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Why Patents are Important to
Start-up Businesses
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Patents are key to solidifying product
protection
Patent portfolio a significant asset when
company needs funding (from
investors, venture capitol, etc.)
Patent filing/protection needs to be part
of initial company formation/planning
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A Start-up Success Story
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Red Cedar Technology
http://www.redcedartech.com/
Co-Founded by Drs. Goodman and
Averill
Licensed MSU Design Optimization
Technology developed by MSU
Engineering Faculty
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Typical Clauses in Company
Agreement
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You cannot disclose or profit (monetarily or
otherwise) from company confidential
information, trade secrets or customer lists.
[disclosing trade secrets is a federal offense]
Anything you invent, discover or improve
belongs to the company if it's related to the
existing or planned scope of the company's
business in any way.
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Determining Inventorship
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Must include all who contributed
intellectually and creatively to the
invention.
Best determined by the IP attorney.
Need to have contributed to at least
one of the claims.
If needed, royalty split can reflect the
relative efforts.
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What you should have for an
invention, besides a great idea
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Bound lab notebooks which
document the conception of the
idea and the research
Periodic witness and dated
signature by someone able to
understand the invention, but
who will not profit from it
Completed ID form noting any
sponsors, publications and all
inventors.
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Licensing Intellectual Property
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Licensing handled by OIP staff at MSU.
Most likely licensees are those who sponsored the
research, companies the inventors suggests, or
those in a similar or competing business.
Maybe a start-up company will be formed around the
technology
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Lessons Learned When Licensing
Goes Bad….
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Important to have termination clause
May need to restrict “field of use” to a specific field
[i.e. automotive, not transportation]
Terms may restrict inventor from working with other
companies on future research if IP is already
committed
Other reasons to Terminate:
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Failure to obtain necessary capital to develop product
Failure to take product to market (shelving rather than
developing)
Failure to meet other financial/marketing milestones
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Major Financial Parts of a License
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an “up front fee” (must at least cover
patent costs to date)
running royalties of a % of sales (~3-9%)
future patent costs (including foreign
patents)
often includes minimum royalties based on
milestones
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Contacting Potential Licensees
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Use a non-proprietary description of the invention to
assess their interest initially.
Have a Confidentiality Disclosure Agreement signed
in order to provide additional technical details or
speak with the inventors.
http://www.msu.edu/unit/oip/cda2001.html
A Provisional Patent application may be filed for
added protection before speaking with industry.
If they are still interested, arrange a meeting to
discuss the “next step” - research dollars, option,
license, etc.
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Key Points for
Confidential Disclosure Agreement or
Non-Disclosure Agreement
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Must define the specific subject to be discussed, and
any documents/materials must be marked
“Confidential”.
Must have a reasonable term of enforcement defined
(i.e. 1-5 years).
Must include other ways the information could have
been received/dispensed (by a third party, already
known, required by law, etc.)
Must be signed by an authorized representative of
the company/institution (usually not the individual in
the discussions).
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Summary
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Basics of Intellectual Property
Why we want to protect and license IP
Various ways to protect IP
Mechanisms for getting the technology
out to the public
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