Intellectual Property: The Essentials for Start-ups
(or Putting the “FUN” in IP Fundamentals)
© Copyright 2013 by K&L Gates LLP. All rights reserved.
November 19, 2013
Agenda
 Introduction
 Intellectual Property Fundamentals
 Patents
 Copyrights
 Trademarks
 Agreements
 Q&A (But Don’t Wait)
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Common Issues – the Context
 Start-up Company
 Protecting the intellectual property assets of the
company
 Remember the Audience
 Prospective Investors
 Prospective Buyers
 Prospective Licensees
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The Three Big Questions
 Does the Company own its intellectual property?
 Is the Company infringing the intellectual property of
a third party?
 Has the Company protected its intellectual property?
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Developing an IP Road Map

Take a 360-degree Walk Around the IP

What type of protections are available?
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Patents
Copyrights
Trademarks / Trade Dress
Contractual Rights (e.g., Know How) / Trade Secrets
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When and where should I pursue protection?
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What are my IP protection priorities?
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How do I best use my resources to maximize IP protection?
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What is “Intellectual Property”?
 Products of “intellectual” activity or the
mind can be assets, rather than
products of physical effort.
 Also reflects that intangible things or
ideas can be protected under the law,
similar to personal property (e.g., cars)
and real property (e.g., house).
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Examples of Different Types of IP
Copyright (expression of the idea
of a process for making a baked product)
Trademark (source identifier
for cooking products or services)
Grandma Mike’s®
Cookbook
1. Mix eggs, flour, milk, chocolate chips,
and hot peppers.
2. Form into cookie shapes.
3. Bake at 350°for 40 min.
Patent (underlying idea of a process for making a baked product)
– could also be kept as a Trade Secret
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Intellectual Property Fundamentals
Patents
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Patent: What is it?
1.
An “exclusive” right – the right, for a limited time, to exclude or stop
others from making, using, selling, offering for sale, or importing the
invention – these are called “infringements” of the patent right.
2.
A document that describes with text and drawings what an invention
is and how to make and use the invention.
3.
A patent is called an “intangible asset” – it’s not a tangible asset like a
truck, a desk, or a computer.
4.
United States Patent Law has its origin in the U.S. Constitution (Art. I,
Sec. 8): “The Congress shall have the power . . . to promote the
progress of science and useful arts by securing for limited times to
authors and inventors the exclusive right to their respective writings
and discoveries.”
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Patent: What is it?
 Operative word is “exclude.” A patent is not an affirmative right
to make, use, or sell the invention. It is an exclusive right to
prevent others from doing so. In fact, it is possible to infringe
another’s patent rights by practicing your own patented
invention.
 Should always consider whether you are “free to operate” in
view of others’ potential patent rights.
 The right is granted in exchange for disclosing to the public the
details of how to make and use the invention.
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Procurement: Patent Application Types (U.S.)

Utility – protects processes, machines, articles of
manufacture, compositions of matter, including functional
features – generally good for 20 years from filing date.

Design – protects only new ornamental designs for an
article of manufacture and not functional features – good
for 14 years from issue date.

Plant – Protects distinct and new asexually reproduced
plant varieties.
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What can be covered in a utility patent
application? What is patent-eligible?
- Processes (e.g., software or “computerimplemented methods”)
- Machines (e.g., computer system)
- Articles of Manufacture (e.g., geneticallyaltered mouse)
- Compositions of Matter (e.g., chemical
compounds)
- First patent - 3rd century BCE – a food recipe
made in the Greek city of Sybaris
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Taking a 360-degree walk around the invention:
 A method for directing the actions of a character in a
game environment . . . [“method” = software or other
instructions]
 A controller configured for interacting with a video
game system . . .
 A user interface programmed for receiving commands
from a user playing a game . . .
 A video gaming system programmed for providing an
interactive gaming environment for a user . . .
 Ornamental appearance of video game controller . . .
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Racing to the Patent Office
Filing Date
Papers, Articles,
and Other Publications
“Prior Art”
is Constantly Being Generated
Websites
and Public Uses
Patent Office
Our Inventor
Other Inventors
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Novelty of Claimed Invention
A person shall be entitled to a patent unless –
(1)
the claimed invention was patented, described in a printed publication,
or in public use, on sale, or otherwise available to the public before the effective
filing date of the claimed invention; or
(2)
the claimed invention was described in a patent or a published
application naming a different inventor and was effectively filed before the
effective filing date of the claimed invention.
Getting an Early Filing Date is Critical!
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Novelty (cont.)
Notable Exceptions:
 Disclosures by an inventor not more than one year before the effective
filing date.
 Disclosures by anyone occurring less than one year before the
effective filing date and after an inventor disclosure.
Exceptions are narrow – still need to get an early filing
date, but the inventor’s own public uses or disclosures
are not necessarily fatal to patent rights.
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Things Not To Do Before Filing a Patent Application,
Especially If Protection Outside the United States is
Desired
 Publish manuscript, paper or thesis – beware of early
electronic publishing.
 Disclose invention in a presentation.
 Discuss the invention without a confidentiality agreement.
 Offer the invention for sale or conduct other commercial
activity.
 Discuss the invention in a trade show presentation.
 Submit a non-confidential grant application.
 Conduct experiments with the invention in a public way.
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Non-Obviousness of Claimed Invention
 A patent for a claimed invention may not be obtained if the differences
between the claimed invention and the prior art are such that the
claimed invention as a whole would have been obvious before the
effective filing date of the claimed invention to a person having
ordinary skill in the art to which the claimed invention pertains.
What is the gap between your invention and the prior
art? Was it enough of a leap?
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What is Obvious?
 Combining prior art elements according to known methods
to achieve predictable results;
 Simple substitution of one known element for another to
obtain predictable results;
 Use of known techniques to improve similar devices
(methods, or products) in the same way;
 Applying a known technique to a known device, method, or
product ready for improvement to yield predictable results;
 “Obvious to try” – choosing from a finite number of identified,
predictable solutions, with a reasonable expectation of
success; or
 Known work in one field of endeavor may prompt variations
of it for use in either the same field or a different one based
on design incentives or market forces if the variations would
have been predictable to one of ordinary skill in the art.
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How To Rebut an Obviousness Rejection
 Rebutting the Functional Test:
 The invention is not merely a combination of known elements.
 The invention has an unexpected result or synergy.
 Show that there would be no motivation to combine prior art
references:
 The references “teach away” from the proposed combination.
 Rebutting “Obvious to Try”
 At the time of the invention, there was not a small number of
possible solutions, but a large number or broad range of them.
 At the time, the solution chosen did not appear to have a
reasonable likelihood of success.
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Patents: Best Practices
 File early – utilize provisional applications.
 Maintain the invention in confidence until after the patent application is filed.
 Maintain substantiated records of all disclosures to anyone else, any
publications, uses, and/or offers for sale.
 Consider searching for relevant prior art before filing, even at the R&D phase, so
you can design around the closest prior art, if necessary.
 Determine the scope of desired protection available in view of the prior art and
commercial expectations – think of commercial uses for your invention.
 Prepare examples of the generic concept to support the desired scope.
 Be over-descriptive in the application - your target audience includes patent
examiners, judges, juries, investors, and business people. Laws vary among
countries and may change, requiring more stringent examination and
interpretation of patent claims.
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Why Should We Care About Obtaining
Patents?
 To block competition / carve out space.
 To attract investors, and because investors care
about them.
 To use as collateral.
 To use in cross-licensing in settlement of patent
infringement litigation.
 To license for revenue stream.
 To document current products and processes to
establish ownership of technology.
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A Quick Case Study in the Value of Patents:
Apple v. Samsung
D593,087
D504,889
D604,305
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A Quick Case Study in the Value of Patents:
Apple v. Samsung

Patent infringement suit involving the design and
functionality of smart phones and tablets.

Side-by-side image comparisons of iPhone 3GS
and i9000 Galaxy S.

Jury verdict for over $1 Billion (litigation still
pending).
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Patents: Who is an Inventor?
 Inventorship Guidelines – Key is conception.

An inventor is a person who conceives of
the invention claimed in a patent application
or patent. Not someone who merely
reduces the invention to practice on
instruction by another.
 A person is not an inventor simply because
he is the boss, friend, or deserving
colleague or employee of another, or a
project financier, or toiled a lifetime
developing an invention conceived by
another in an instant.
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Patents: Written Description
To satisfy the written description
requirement, a patent specification must
describe the claimed invention in sufficient
detail that one skilled in the art can
reasonably conclude that the inventor had
possession of the claimed invention at the
time the application was filed.
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Patents: Written Description
How do you show possession of the invention?
 By describing the claimed invention with all of its
limitations using such descriptive means as words,
structures, figures, diagrams, and formulas so as to
fully set forth the claimed invention.
 An applicant is not required to disclose every detail
of an invention. The disclosure obligation varies
with the maturity of the art to which the invention
pertains – what does “one skilled in the art”
understand?
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Patents: Written Description (cont.)
 Consider alternate ways of carrying out the
invention and include those in the initial invention
disclosure. Anticipate how third parties might try to
avoid infringement.
 Consider other commercial uses for the invention,
and include a description of these possible uses.
 Be over-inclusive and over-descriptive in the initial
description – the quality of the invention disclosure
is a primary factor in the value of any patent
ultimately granted.
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Working with Growth Companies
on Patent Applications:
 Leverage Readily Available Information:
 Academic Papers
 Presentations
 Business Plans
 Utilize provisional patent applications
 Samples of previously filed patent applications
 Invention Disclosure Forms – questionnaires
 Balancing quality of submission vs. early filing
date
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Patenting Process: A Brief Overview
1. Conceive an invention.
2. Reduce the invention to practice (make the
invention or describe it in a patent application).
3. File provisional or non-provisional patent
application in the United States.
4. Submit or publish paper, speak at seminar, offer
product for sale.
5. File international applications corresponding to
U.S. application.
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Patents vs. Trade Secrets
 A trade secret may be anything that can be and is kept
confidential and that provides a commercial advantage.
 Example - a method of manufacturing that reduces
manufacturing costs and that can be kept secret.
 Patent has a limited duration. Trade secret rights may
be of unlimited duration (e.g., Coca-Cola formula).
 Once a trade secret becomes publicly known or is
reverse engineered, it loses its trade secret status.
 One cannot enforce trade secret rights against another
who independently develops the same invention.
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Intellectual Property Fundamentals
Copyrights
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What is a Copyrightable Work?
 Rights arise automatically upon creation of work.
 Protects original works of authorship fixed in a
tangible medium, including:
©
 Books and other literary works.
 Paintings, photographs and graphic works.
 Music and recordings.
 Dramatic and choreographic works.
 Motion pictures / audiovisual works.
 Computer software / programs.
 User interfaces and web site pages.
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Idea / Expression Dichotomy
 Copyright protection does not extend to “any idea,
procedure, process, system, method of operation,
concept, principle, or discovery, regardless of the
form in which it is described, explained, illustrated, or
embodied. . . .”
 Compare copyrights to patent rights, which are
generally broader in scope.
 Federal copyright registration is not necessary until a
law suit is filed.
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Authorship
 The “author” of the work owns the copyright.
 Who is the “author”?
 The person(s) who created the work; or
 If it can be considered a “work made for hire,” then it is
the employer or other person for whom the work was
prepared.
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Work Made for Hire
What constitutes a “work made for hire”?
 A work prepared by an “employee”
(i.e., salary/wages paid, taxes withheld, benefits
offered, etc.) within the scope of employment; OR
 A work specially ordered or commissioned:
 If the parties expressly agree in a written instrument
signed by them that the work shall be considered a work
made for hire,
 and the work falls in one of nine specific statutory
categories of works: a contribution to a collective work, a
part of a motion picture or other audiovisual work, as a
translation, a supplementary work, a compilation, an
instructional text, a test, answer material for a test, or an
atlas.
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Work Made for Hire – Independent Contractor
 Agreements should state that works created by
independent contractors are works made for hire,
where applicable.
 Agreements should also provide for an assignment of
IP rights in the work in case the type of work created
does not fall within the statutory definition of a
specially ordered or commissioned work.
 Benefit as the “author” of a work – rights may revert
back to the author in the future.
 Many works do not fall under the statutory definition of
specially ordered or commissioned work.
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Exclusive Rights
The copyright owner has the exclusive right to:

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

reproduce the work in any form
prepare derivative works
distribute copies
publicly perform
 publicly display
 transmit
 each right above may be licensed separately
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Copyright Ownership vs. Physical Ownership
 Although you may own physical work, may not own
the copyright.
 Without the copyright, you may not be able to legally
duplicate the work, distribute copies, or revise the
work.
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Copyright – Fair Use Doctrine
 Fair use says: “What I’m doing would otherwise be considered
copyright infringement, but it’s actually a fair use of the work.”
 Common “fair uses” include criticism, comment, news reporting,
teaching, scholarship, and research.
 Also, factors to be considered in determining whether or not a
particular use is fair:
 The purpose and character of the use (e.g., commercial
nature vs. nonprofit educational purposes).
 The nature of the copyrighted work.
 The amount and substantiality of the portion used in relation to
the copyrighted work as a whole.
 The effect of the use upon the potential market for, or value of,
the copyrighted work.
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Intellectual Property Fundamentals
Trademarks
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What is a Trademark?
A trademark is any word, name, symbol, or device, or
any combination thereof used to identify the source of
goods or services and to distinguish the goods or
services from those manufactured or sold by others
®
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What is a Trademark?
 Trademarks can be words or slogans:
 U2®
 JUST DO IT.®
 Trademarks can be designs:
 Trademarks can be colors or sounds:
 Pink for roofing shingles
 NBC chimes
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What is a Trademark?
 Functions of a Trademark:
 Identify and distinguish the goods of the owner from
competing goods in the marketplace.
 Guarantee a consistent level of quality.
 Function as an advertising or marketing tool.
 A trademark represents the goodwill and reputation
of a company.
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Acquiring Rights in Trademarks
Rights accrue through use of the mark:
 Once a mark is used, consumers begin to associate
the mark with a specific product.
 The mark becomes a symbol of the company’s
reputation.
 This is a U.S. concept - most other countries recognize
trademark rights only on the basis of formal
registration.
 Rights last as long as use of mark continues.
 Consider benefits of federal registration.
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Intellectual Property Fundamentals
Agreements / Corporate Issues
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Contracts
 Invention assignment agreements
 Non-disclosure agreements
 Non-competition agreements
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Intellectual Property Assignments
 Why are they necessary?
 Current
 Prospective
 Employee v. Independent Contractor
 Post-employment
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Non-disclosure agreements
 Two material provisions
 Confidentiality obligation
 Limited use of confidential information
 Exceptions (e.g., publicly available information)
 Term
 Significance for trade secret protection
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Non-competition agreements

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
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Length of time
Substantive scope
Geographic scope
Consideration
Reasonableness
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Start-up Concerns - Ownership
 Application – founders/employees/contractors
 Identify all inventors
 Do the inventors own their inventions?
 Do they have obligations to other employers
 Currently employed?
 Formerly employed?
 If employed, check:
 Employment Agreement
 Invention Assignment
 Policy
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Start-up Company – Summary of the Big Issues
 Own the intellectual property
 Due diligence
 Inventor assignments
 Don’t infringe third party IP
 Freedom to operate
 Develop a road map to protect intellectual property
 Traditional IP protection
 Contractual obligations
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THANK YOU!
Mike Lazzara
(412) 355-8994
michael.lazzara@klgates.com
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