Common Questions
• Question: Why should I even
care about intellectual property
(IP)?
• Answer: MONEY– IP is very
likely the most valuable
part of your client’s business.
Asset Components of S&P 500 Market Value
100%
80%
60%
40%
20%
0%
Intangible
1975
17%
1985
32%
1995
68%
2005
80%
2015
84%
Tangible
83%
68%
32%
20%
16%
*Source: Ocean Tomo
Specific Example
Buys
Sells
Motorola
Lenovo
Value of IP
• Startup Financing- Investors want to make sure that the
business is protecting the IP.
•
May want to know what IP the business has and how it is being
protected.
•
May require a collateral interest in the IP (security interest).
• Preserve and Grow Market Share- Legal Barrier to Entry
• Selling the Business- IP Due Diligence (e.g., IP list)
•
Purchaser may require a warranty for any defects in the IP.
•
IP problem have and will kill deals!
Example
Company B
Company A
Selling
Common Questions
• Question: Why do I need to worry about IP-- my client’s business is not a
technology business?
• Answer: It is a common misconception that IP law only concerns
inventions and technology (i.e., patents). In fact, almost any business
needs some form of IP protection.
•
Business/product name- trademarks.
•
Appearance of products, websites, sales materials, restaurant space, etc.copyrights, trademarks, & design patents.
•
Financial information, customer lists, & price lists- trade secrets.
• Examples of businesses with valuable IP (not in the tech business).
Common Questions
• Question: Why should my client care about getting sued over IP– the
general business insurance policy should cover it?
• Answer: Typically, most business insurance policies do not cover patent
infringement lawsuits and usually have carve outs for trademark and
copyright infringement lawsuits as well.
• You generally need to purchase a separate policy to cover IP
infringement lawsuits, especially for patents.
Different Types of Intellectual Property Rights
Common Questions
• Question: I heard that you can’t get patent
protection for
(fill in the blank)?
• Answer: Generally, speaking you can get patent
protection for any invention that is new and
nonobvious.
• There are a few exceptions where you cannot get
patent protection, such as for laws of nature,
abstract ideas, criminal tools, and perpetual motion
machines.
• Although you can receive patent protection for
them, there are certain types inventions that might
be better protected with other forms of intellectual
property, such as trade secrets for industrial
chemical/manufacturing processes.
Different Types of Intellectual Property Rights
Trademark
Trademark
Trademark
Trademark
Trademarks- What are Some Types?
• Trademark – identify the source & qualities of goods
(cars, clothing…) (e.g., Coke® for soft drinks)
• Service Mark – identify the source & qualities of
services (accounting, restaurants,…) (e.g.,
McDonalds® for fast food services)
• Trade Dress - packaging or form of the product that
operates to distinguish source/quality of the goods
(e.g., Coke bottle)
Ownership: Trademarks
• Trademark = Word, symbol, sound, or other
device a manufacturer or merchant adopts to
identify and distinguish their goods or
services from others.
• A Trademark is Different from a Trade Name
• Trade Name = The official (legal) name of the
business/organization, usually registered with
the government.
• Although different, part or all of the Trade Name
might be used as a trademark.
Trademark v. Trade Name
Ford Motor Company
Different Types of Intellectual Property Rights
Different Types of Intellectual Property Rights
How Do You Obtain US Protection?
Registration
Required
• Patents: Registration required (filing an application).
• Trademarks: Registration not required but
recommended.
• Copyrights: Registration not required but
recommended.
• Trade Secrets: No registration process.
No
Registration
How Long Does the Registration Process Last?
Copyrights
Weeks to
Months
Trademarks
Months
Patents
Years (2-5)
Common Questions
• Question: Why do I need to file a federal trademark registration– couldn’t I
just use it or file a state registration or rely on common law rights?
• Answer: In the big picture, federal trademark registrations are relatively
inexpensive (typically, just a few $100’s) and provide several significant
advantages, including:
•
•
•
•
•
•
Protection throughout the United States
Increases marketability and licensing value of mark
Decreases chance a competitor will adopt a similar mark
Ability to recover lost profit damages in federal court
Prevent importation of infringing goods
Ability to depreciate value of trademark for federal taxes
Trademarks- Consider Federally Registering
• Marks that have significant value for client’s
business.
• Brands Used Outside the US
• Generally, most countries require registration to
enforce your trademark
• Examples
• Corporate Brand
• House Brands
• Product Brands
(with significant sales)
Trademarks- Do Not Need to Register Them All
• Generally, only register marks with long term
value for client’s business.
• Remember you still have “common law” rights in the
US to the mark even if you don’t register it.
• Trademarks that you might not need to register
• One-off, short term product or service
• Low value to the business
Common Questions
• Question: Why do you need to register a
copyright?
• Answer: You receive copyright protection for the
work as soon as it is created, but if you are a
US national, you need to register it in order to:
• Sue for damages
• Receive attorneys fees
• Block importations
• Although registration is inexpensive, you do not
need to register every work, only the ones you
think are valuable to the business and/or
competitors.
How Much Does Obtaining Protection Cost?
(Legal Costs)
Expensive
• Patents: Expensive- thousands of dollars.
• Trademarks: Not cheap- hundreds of dollars.
• Copyrights: Cheap- tens of dollars.
• Trade Secrets: Free- no registration process (but
might cost a lot to keep the secret from others).
Inexpensive
Who Can Handle the Registration Process?
• Similar to Maintenance/Repair
•
•
Some things you can do yourself.
Other things you should get an expert.
Patents
Patent
Attorney
Trademarks
Any Attorney
with Training
Copyrights
Client With
Appropriate
Training
How Do You Obtain Foreign Protection? Registration
Required
• Patents: Foreign applications generally need to be
filed within 1 year of earliest filed application (6-month
deadline for design patents).
• Trademarks: Foreign applications generally need to
be filed within 6 months of earliest filing date in order
to gain priority date.
• Copyrights: Registration generally not required.
• Trade Secrets: No registration process.
No
Registration
Common Questions
• Question: Why should I even care about foreign
trademark protection, my client is in Indiana?
• Answer: Most countries grant trademark rights
based on the first to register the mark and not
based on who is using the mark.
• Common practice in China is for Chinese
distributors or manufacturers to register the US
trademark in China before approaching the US
trademark holder.
• Recently, there has been string of trademark
squatters for US marks in Cuba.
How Long Do You Receive Protection?
Shorter
• Patents: 20 years from earliest filing date.
• Copyrights: depends, about 70-120 years.
• Trademarks: Forever, if you continue to use it.
• Trade Secrets: Forever, if it remains a secret.
Longer
Trademarks- How Long Do Trademarks Last?
• Common law rights generally last as long as trademark
continues to be used in commerce
• Registrations typically need to be renewed every 10 years
• Rights can be lost if:
–
–
–
–
Expressly abandon the mark
Mark becomes generic ( “aspirin”, “Xerox”, “Kleenex”)
Stop using and do not intend to reuse, presumed after 2 years
Allowing loss of distinctiveness by not enforcing infringement
What is Typically the Most Valuable IP Asset?
• For most companies, trademarks (i.e., their
good name) are the most important.
Trademarks- Selecting
• Before using a valuable trademark (or trade name)
strongly consider having a trademark clearance search
performed.
• Considerable liability risk
• Initial Clearance Considerations
•
•
•
•
Check Domain Name Availability
Perform Web Search
Check Federal Trademark Registrations- tmsearch.uspto.gov
Check Secretary of State
Trademark Searching
Federal
Reg.
State
Reg.
Yellow Pages,
Web,
Directories,
etc.
Trademark Protection
Overview of US Trademark Prosecution
• Every application has one or more filing bases
– Intent-To-Use (ITU)- want to use the trademark.
– Use- already using the trademark.
– Paris Convention 44(a)- based on a foreign
trademark application or registration.
– Madrid Protocol- based on an international
trademark application.
• Last three are also bases for registration
Trademark Filing
• Checklist- What you need to know to file
– What is the mark exactly?
 Is it a word, stylized, design, etc.?
 What are the goods and services?
– Who is/will be the trademark owner- look up official
name and address in the Secretary of State Records
– Are they using the mark in commerce?
 If so, when did they start using and first used in commerce?
 If not, file as intent-to-use (ITU).
– Do they have specimens (as of the 1st use date)?
Description of Goods or Services
• Need a description broad enough to encompass
what the client is doing.
– Common basis for objection in an Office Action.
• Can save client money by picking from acceptable
identifications of goods and services.
– Reduced filing fees
– Reduced chance of an Office Action
– Non-standard ID’s can be an issue when
internationally filing.
Description of Goods or Services
• U.S. Acceptable Identification of Goods and
Services Manual (ID Manual)
– http://tess2.uspto.gov/netahtml/tidm.html
Specimens
• A “specimen” is a real-life sample of how a
client is using the mark.
• The Trademark Office requires specimens as
proof of actual usage of the mark.
– Not all uses of a mark constitute trademark uses
Specimens
• There are four (4) requirements for a
specimen:
1. Must show the mark as shown in the
application/registration;
2. Must be a brand that identifies the good, not
merely the company name;
3. Must have been actually “used” (i.e., goods sold
or transported) in interstate commerce as of the
date that we are representing to the Trademark
Office;
4. A separate specimen is required for each class
of goods (but is not required for each good within a
class).
Specimens- Goods
NOT ACCEPTABLE
ACCEPTABLE

Packaging or container for the goods


Label on product or package
Artwork to be used by label printer or
ad agency

Tag on product or package


Website page that displays a product, if
the mark appears on the web page and
the web page provides a means for
ordering the goods
General, non-point of sale, advertising
(for example, advertising that is not
located at a store or location where
one can purchase the good) (print,
radio, TV)

Advertising circulars and brochures

Mark printed, molded, embossed or
stamped directly on the goods

Letterhead

Point-of-sale display or advertising
associated with the goods (for example,
at a store or location where one can
purchase the goods)

Envelopes

Business cards

Invoices
Catalogs, if they have a picture of the
goods, near the mark, and instructions
for how to order those goods

Telephone book listings

Yellow pages ads
Manuals and instruction sheets
included with the goods

Listings in trade directories

Price lists

Announcements

Publicity releases


See also,
http://www.uspto.gov/trademarks/
resources/examguide1-13.doc
Specimens- Services
The specimen for a service mark must
show proper use in commerce by:
1. Showing the mark used or displayed as a
service mark in the sale of the services,
which includes use in the course of rendering
or performing the services; or
2. Showing the mark used or displayed in
advertising the services, which encompasses
marketing and promotional materials.
See,
http://www.uspto.gov/sites/default/files/trademarks/notices/SvcMrkSpe
cEG.doc
Typical
Timeline
-Mark
Used in
Commerce
From
http://www.uspto.gov
/trademarks/process/
tm_timeline.jsp
Post Registration- US (Typical)
•
5-6 Years from Registration Need to File (6 month grace):
– Section 8 Declaration- mark still used in commerce (or excusable
nonuse) to avoid cancellation
– Section 15 Declaration- mark in continuous use, now incontestable
(principal registrations)
– Specimen
– Fee
•
Every 10 Years Need to File (6 month grace):
– Section 8 Declaration- mark still used in commerce
– Section 9 Declaration- renewal
– Specimen
– Fee
Post Registration- US
• Incontestable (Section 15 Declaration- optional but should file)
– Mark is considered distinctive
– More difficult to challenge (but not impossible) because cannot
challenge as lacking distinctiveness (i.e., secondary meaning)
• Accused Infringer Can Still Challenge Incontestable Marks
– Fraud
– Abandonment
– Mark use misrepresents source
– Mark is your own name
– Your mark registered before incontestable mark
Types of Property Control
Types of Property Control
Types of Property Control
Types of Property Control
Types of Property Control
Example
McDonald’s Corporation
McDonald’s Owned
Franchisee
Operated
1st Establish Ownership
Owner/Officer
3rd Party Supplier
Employee
1st Establish Ownership
• Ownership- Generally the default rule is that
the author or inventor owns the copyright or
patent.
• Business should own all IP (not individuals).
• Do NOT rely on “work for hire” doctrine because
too many exceptions and a large number of
foreign countries do not recognize it.
• Written Agreement- Have Everyone Sign &
Keep it Somewhere Safe
• You need to be able to find it.
• Consult with an IP attorney- courts in a number
of cases require “special” language in order to
transfer ownership.
Ownership: Technology Related Agreements
• Include Non-Disclosure Agreement (NDA)- to
preserve patent and trade secret rights.
• Watch NDA term provisions- want to survive the
agreement.
• Joint Development Agreement- Have it
before any work starts.
• Who owns the newly developed IP?
• Define what is (and is not) newly developed IP.
• Who is responsible and will pay for registration?
• Any licenses of existing IP required?
• Typically, carve out trademarks from any licenses
in order to avoid naked licensing problems.
Ownership: Supplier Agreements
• NDA
• Intellectual Property (IP) Warranties
• They own or licensed the IP
• Will pay for legal expenses if sued for IP
infringement
• Ownership of Intellectual Property
• Establish business ownership of IP
• Web Developers- don’t let them own the domain
name or copyright to website
Ownership: Trademarks
• Registration
• Make sure the applicant (owner) exactly matches
the Secretary of State/corporate records (commas
matter)!
• Make sure identified applicant is actually using
the mark as a trademark
• Selling products or providing services with the
trademark
• Licensing others who are using the mark
• Assignments
• Avoid assignments in gross- the assignment
needs to transfer the trademark and associated
goodwill. (“magic words”)
Licensing: General
• Recommendations
• Watch out for the many landmines.
• Be reasonable- unless required by the type of
business arrangement, have generic provisions
apply equally to both parties (e.g., NDA).
• Consult with an IP attorney with experience in the
particular IP area (e.g., copyrights, patents,
trademarks, etc.).
Licensing: General
• General Considerations When Drafting
• What type of IP is being licensed?
• Copyrights, patents, trademarks, etc. each provide a
different set of rights, so you need to use the
appropriate language to identify what is or is not
licensed according to the IP rights.
• Is the IP protected?
• For example, you don’t need a license for an expired
patent or an abandoned trademark.
• What is the licensing relationship?
• Is it exclusive or nonexclusive?
• Exclusive typically requires a higher royalty rate.
• Are there limits to the license?
• Field of use- particular industry.
• Geographic limits.
Licensing: General
• General Considerations When Drafting
• What is the term of the license?
• Watch out for patent licenses that extend past the life
of the patent.
• What is the royalty?
• Fixed fee?
• Percentage? If so, how do you easily count the
basis?
• Can other party request an accounting? If so, who
pays, how often, what needs to be provided, etc.?
• Anything requires an NDA? Any trade secrets
and/or technology involved?
• Any tying arrangements or antitrust concerns?
Licensing: Trademarks
• General Considerations When Drafting
• Avoid naked licensing because the client can lose
the trademark
• Require quality review of the goods or services for
the licensed trademark.
• Watch out- you might be creating an unintended
franchise!
• Under Indiana Code, Franchisors Need to Register
with the Secretary of State.
Franchise Example
Contract
License/Franchise Agreement
Doctor’s Associates, Inc.
Can Use
Trademarks
Trade Secrets
(Know How)
Licensing: Trademarks
• Indiana Code§ 23-2-2.5-1
• As used in this chapter:
• (a) "Franchise" means a contract by which:
• (1) a franchisee is granted the right to engage in
the business of dispensing goods or services,
under a marketing plan or system prescribed in
substantial part by a franchisor;
• (2) the operation of the franchisee's business
pursuant to such a plan is substantially
associated with the franchisor's trademark,
service mark, trade name, logotype, advertising,
or other commercial symbol designating the
franchisor or its affiliate; and
• (3) the person granted the right to engage in this
business is required to pay a franchise fee.
Example of Layering IP
65
Example of Layering IP
1974
Art Fry
invents using
the adhesive
to anchor
bookmarks in
hymnbook
1968
Dr. Spencer
Silver Invents
“low-tack”
reusable
adhesive
1970
3M files
patent for
adhesive
1977
Launch
PRESS N’
PEEL in 4
cities but
sales
lackluster
1975
3M files
federal
trademark
application
for POST-IT®
66
1978
Provided
Samples in
Boise Idaho
95% intent to
repurchase
Example of Layering IP
1980
Product debut as
POST-IT NOTES
1987
1st Patent to adhesive
expires
1984
3M files patent
application for a
method of making a
removable and
repositionable sheet
1990-2000’s
Remaining patents
expire
1996
3M files federal
trademark application
for the color “Canary
Yellow” for stationery
notes containing
adhesive on one side
for attachment to
surfaces (registered in
2000)
67
Example of Layering IP
68
Contact Information
Chuck Schmal (cschmal@uspatent.com)
Woodard, Emhardt, Moriarty, McNett & Henry LLP
111 Monument Circle, Suite 3700
Indianapolis, IN 46204
(317)713-4954 (direct)
(317)634-3456 (main)
www.uspatent.com