Oct. 6, 2012
Sean C. Crandall
Registered Patent Attorney
Jackson Walker L.L.P.
scrandall@jw.com • 210.978.7714
http://www.jw.com/scrandall
UTSA CITE Entrepreneurship Boot Camp
Intellectual Property for Entrepreneurs
© 2012 Sean C. Crandall, all rights reserved.
Objectives
• You want to make money
• Big Business has all the money, and you
can’t compete with them
• Your assets are worthless
• EXCEPT
– Patents
– Copyright
– Trademark
– Trade Secret
TRADEMARK
© 2012 Sean C. Crandall, all rights reserved.
Quiz
• A
• B
Trademark
• What is it?
– Protection for “source identifiers.”
– Right to exclude others from riding the
coattails of your good will.
• Duration
– Perpetual if:
• Continual use
• Continues to be a source identifier
Hypothetical
• E incorporates under the name “Seraph
Image Manipulation LLC” and receives an
assumed name certificate.
• B starts selling a software program called
“Seraphimage.”
• What result?
Priority
• Incorporation and Assumed Name
Certificate
HAVE NO TRADEMARK VALUE
Priority
• Acquiring Priority
– Use in commerce
– File federal TM application
• Including Intent to Use
• Knowing junior user loses
– Actual notice
– Constructive notice
Genericization
• Victim of your own success
• All of the following used to be trademarks:
–
–
–
–
–
–
–
–
zipper
thermos
escalator
linoleum
aspirin
heroin
butterscotch
netbook
Genericization
• Trademarks in Danger:
–
–
–
–
–
Xerox
Kleenex
Vaseline
Band-Aid
Rollerblade
• Saved by Timely Obsolescence?
– Polaroid
– Walkman (but…)
• If it ceases to be a source identifier and instead
comes to identify the goods themselves, it is no
longer a trademark.
Trademark Strength
• Generic
– “Hammer” (for hammers)
– Image Editor (for image editing software)
– Zipper (even though it used to be a strong trademark)
• Descriptive
– “Delicious Tamales”
– “Alamo [Anything]” (if in San Antonio)
– Can be protectable if you use it long enough
– Initially weak/narrow
– But … “McDonald’s”
Trademark Strength
• Suggestive
– “Rhino” (hardened bed linings)
– “Pier One” (sale of retail imported goods)
– “Panda Express” (Chinese restaurants)
– Protectable
• Arbitrary and Fanciful
– “Oracle” (Does not actually predict the future)
– “Kodak” (Doesn’t mean anything in any language)
– Protectable and legally strong
– Initially weak from a marketing standpoint
– With time, can become practically invincible (Exxon), except
genericization
Infringement
• Elements of a Lawsuit
– Priority
– Protectability
– Likelihood of Confusion
Infringement
• Likelihood of Confusion
– Jury Question
• Do you find by a preponderance of the evidence
that potential customers are likely to confuse “Sign
of the Beefeater” (restaurant) with “Beefeater”
(gin)?
Action Steps
• Promptly file a federal application
– Nationwide priority
– Helps make the mark protectable
– Trumps state registrations
Action Steps
• Investigate junior users before sending
nasty letters
– If mark is not registered, may have territorial
rights.
– If junior user has rights, your nasty letter
makes his case for him
COPYRIGHT
© 2012 Sean C. Crandall, all rights reserved.
Copyright
• What is it?
• Right to exclude others from copying the
protected work.
• Exclusive right to make derivative works.
Duration
• Life +70 (individual author)
• 95 – 120 years (works for hire)
• Created before Jan. 1, 1978 = different
rules (very messy).
• Published in U.S. before 1923 = public
domain.
Acquiring a Copyright
• When you play God, the result is copyrighted
– Except: Ideas, methods, functional products, de
minimis creativity
Protected
Expression
Form
Creativity
Not Protected
Ideas and Facts
Function and
Content
Effort and
Aggregation
Ownership
• Individual—Vests automatically
• Employee & Works for Hire—Vests in
employer if in the course and scope of
employment.
• Contract Work (esp. s/w)—Vests
immediately in contractor. Software is
not work for hire unless by an
employee.
Hypothetical
• E swears a blood oath to convey copyright
to B in the presence of a Catholic Priest,
Jewish Rabbi, Mormon Bishop, Protestant
Pastor and Baptist Preacher.
• Result?
Assignments and Licenses
• Assignments must be in writing
• Exclusive licenses must be in writing
• Non-exclusive licenses may be in writing,
oral, by course of performance, or implied
by the circumstances.
Tiers of Protection
• Automatic
– Attaches at moment of creation
• Notice
– (c) 2012 Your Name, All rights reserved.
• Registration
– Online form at http://www.copyright.gov
– $40 filing fee
– Easy Peasy! (Except maybe software)
Hypothetical
• E writes software.
• B hires E’s former employee, who copies
code (abt. 1%). Total sales = $50M.
• E registers and sues.
• Defenses
– No knowledge.
– Prior non-infringing version successful.
– Can’t prove lost sales.
• What result?
Damages (w/out Timely Reg.)
Losses
$0
Infringer’s Profits
Statutory Damages
Attorneys’ Fees
Nominal Damages
Total Damages
$0
$0
$0
$1
$1
Attorneys’ Fees Incurred: $350,000
Hypothetical
• Same as before, but E registers one day
before B starts infringing.
Damages (Timely Reg.)
Losses
$0
Infringer’s Profits
Statutory Damages
Attorneys’ Fees
Nominal Damages
Total Damages
$0
$30,000 ($150k if willful)
$350,000
$0
$500,000
Attorneys’ Fees Incurred: $350,000
Infringement
• There must be copying.
– Substantial similarity + access.
• Compare allegedly infringing work to registered
work (not necessarily the work copied).
• Abstraction
– The state operates games in which people kill each
other to entertain the elite citizens.
– A girl named Katnip volunteers to participate in the
annual Anger Games to save her sister, and a boy
named Peter, who is in love with Katnip, is also
selected. Katnip and Peter form an alliance and
defeat the others, but then decide to take their own
lives rather than kill each other …
Hypothetical
• E requires online activation (stops working
after 30 days).
• H purchases a legal copy but hacks
around activation key.
• Has H violated E’s copyright?
DMCA
• DMCA § 1201: “No person shall circumvent a
technological measure that effectively controls
access to a work protected under this title.”
• No copyright infringement is required
• Ownership and fair use are not valid defenses
– Maybe—see MGE UPS Systems Inc v. GE Consumer
and Industrial Inc, et al., 08-10521(5th Cir. Jul. 20,
2010).
Benefits
• Why use “effective technological
measures”?
– May get attorneys’ fees and statutory
damages even without timely registration
• Up to $2,500 per act of circumvention.
– Stiff criminal penalties
DMCA Exceptions
• http://www.copyright.gov/1201/
• Examples:
– Breaking CSS on DVDs for criticism or
commentary (notably, not to just watch a DVD
that you lawfully own).
– Jailbreaking your iPhone.
– Obsolete or damaged dongles.
PATENTS
© 2012 Sean C. Crandall, all rights reserved.
Patents
• What are they?
– Right to exclude others from making, selling,
using, or importing the claimed subject matter.
– Does not grant a right to make, use, sell, or
import.
• Duration
– About 20 years
Subject Matter
• Statutory Subject Matter:
– Machines
– Compositions
– Articles of manufacture
– Software (sort of)
• “Everything under the sun made by man”
(sort of)
Statutory Requirements
• Utility
• Novelty
• Nonobviousness
Utility (Family Values)
Utilitaire Haute Couture
Utility for the Gentlemen
Utility Catch 22
Utility (Get Rowdy!)
Novelty
• “A translating device comprising [A] a body of
semiconductive material [B] having zones of opposite
conductivity type [C] separated by a barrier, [D] an ohmic
connection to each zone remote from the barrier, and [E]
a rectifying contact on one zone closely adjacent to the
barrier.”
• (U.S. Pat. 2,502,488)
Patent Claims
•
•
•
•
Invention (Elements A, B, C, D, E)
Subtract Prior Art: -ABC
Subtract Obvious Improvements: -ABCD
Patentable Claim: ABCDE
– Note that ABC is a better claim if you can get it.
• If your attorney leaves “killer features” out of
some of your claims, that may be a good thing.
Patent Infringement
Claim No.
Elements
Accused Device
Infringes?
Claim Value
1.
A
A
AB
ABC
ABCD
Yes
Yes
Yes
Yes
Very High
2.
AB
A
AB
ABC
ABCD
No
Yes
Yes
Yes
High
3.
ABC
A
AB
ABC
ABCD
No
No
Yes
Yes
Moderate
4.
ABCD
A
AB
ABC
ABCD
No
No
No
Yes
Low
Business Methods and Software
May be patentable
Bilski
• Machine or Transformation Test
– Tied to a “particular machine”
• Need guidance on whether a general-purpose
computer is a “particular machine”
– Transforms matter
• Transforming data that directly represent matter
may be sufficient
• MoT is absolutely not the sole test for
method claim eligibility. But it is the only
test that matters.
Avoid Subject Matter Problems
• Designing Around Bilski
– Tie in hardware where possible (“A method
for removing red eye from a photograph
comprising … receiving a digital photograph
from a digital camera ….”)
– Beauregard claims are now in question.
(Cybersource Corp. v. Retail Decisions, Inc.,
No. 2009-1358 (Fed. Cir. Aug. 16, 2011)).
Hoping for en banc review.
Patent Drafting
• Get a registered patent attorney
• Do not ever, under any circumstances,
try to write a patent yourself.
• No, not even if you’re really smart.
• No, not even you.
• Your tax attorney can’t write a patent for
you. You need a registered patent
attorney.
Priority
• Senate passed Smith-Leahy “America
Invents Act” Sept. 8, 2011. Written by Big
Business, for Big Business.
• U.S. will now have a mutant pseudo-firstto-file system.
• What you need to know: File today.
Hypothetical
• E invents a new image editing algorithm
and incorporates into her product.
• Academic paper published Sep. 11, 2010.
• Commercial product ready in Feb. 2012.
• E applies for a patent application Feb. 1,
2012.
• What result?
Bar Dates
• What is It?
– Date by which you must file a patent
application, or lose your right to get a patent
• Bar Dates Events Include:
– Sale of a product that embodies the invention
you want to patent
– Offer for sale
– Publication including an enabling disclosure
– Non-experimental public use or disclosure
Bar Date
• Calculating Bar Dates
– U.S. has 1 year grace period
• Barring event happens on 10/6/2011. Bar date is
10/6/2012. You must file your patent application
by 10/6*/2012 or your invention is barred.
– Most foreign countries have no grace period
• Barring event happens on 9/11/11. You must file
by 9/11/11, or you cannot get a patent in “absolute
novelty” countries.
*Actually, the following Monday, 10/8
Excuses
• Events That Will Not Excuse Missing a Bar
Date:
– I didn’t know about the bar date.
– The offer for sale was rejected.
– The offer for sale was illegal.
– My spouse and children were killed by a
drunk driver the week before the bar date.
– Sapient aliens made first contact on the bar
date and the entire earth stood still.
Excuses
• Events That Will Excuse Missing a Bar
Date:
– Nothing.
TRADE SECRET
© 2012 Sean C. Crandall, all rights reserved.
Trade Secret
• Elements
– It’s a SECRET.
– Confers a competitive advantage
– Reasonable efforts to keep it SECRET
• Examples:
– Formula for Coca-Cola
– The Colonel’s 11 herbs and spices
– Your source code
Trade Secret
• Protecting a Trade Secret
– No registration
– KEEP IT A SECRET!
– Non-disclosure agreements (get an attorney)
– Employee confidentiality agreements (the
more draconian, the better)
– Posted notices
• Duration
– As long as you KEEP IT SECRET
Security
• Think ahead
– Which story do you want the infringer to tell the jury?
• “There were hundreds of copies of the process just lying around
everywhere. I didn’t even realize it was considered secret.” vs.
• “After agreeing to the $10,000 penalty for disclosing the secret
process, I disabled the armed guard with a drugged dart. I had to
wear an insulating body suit to defeat the heat sensors, then climb
up into the air duct. Getting around the laser grid took some time,
but the real problem was the motion sensors. I spent hours getting
across the room. Since the safe was impossible to crack, I had to
bug the CEO’s bedroom and listen to him talk in his sleep for
months. Then I had to painstakingly copy the process by hand,
since it was on blue non-copy paper. Once I had my copy, I had to
carefully replace the wax seal and mark it with the duplicate signet
ring I had carefully constructed from the putty impression of the real
signet ring I’d gotten when I …”
Hypothetical
• E develops red eye removal algorithm. E hires
10 programmers.
• Signed confidentiality agreements.
• Copies of process individually water marked.
• Policy is to keep process in locked drawers.
• Flow chart posted by receptionists desk.
• Weekly meetings to discuss security program.
• What result?
Security
• Designing a Security Program
– Put Everyone on Notice
– Signed Confidentiality Agreements
– Restrict Access
– Log Access
– Termination Procedures
– Non-compete Agreements
– Periodic Audits
Questions?
© 2012 Sean C. Crandall, all rights reserved.
Support Materials
Protecting Software:
http://www.jw.com/site/jsp/publicationinfo.jsp?id=1409
IP Basics:
http://www.jw.com/site/jsp/publicationinfo.jsp?id=351
A Practical Guide to the GNU GPL:
http://www.jw.com/site/jsp/publicationinfo.jsp?id=1453
© 2012 Sean C. Crandall, all rights reserved.