LEGAL ISSUES
FOR START-UPS
The Nuts & Bolts for
Starting Your Business
Monique M. Heyninck
and
Timothy F. O'Brien
Stradling Yocca Carlson & Rauth, APC
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
(949) 725-4000
Intellectual Property includes Patents,
Trade Secrets, Trademarks and Copyrights
This presentation will focus on
Patents and Trade Secrets
Page 2
What is a Trade Secret
A trade secret is any confidential information with
commercial value, reasonably protected from disclosure
by its rightful holder.
Page 3
How to Protect Trade Secrets
“Reasonable” measures to safeguard secrecy include:
“Confidential” notices
Locks, Passwords, ID Badges
Non-Disclosure and Confidentiality Agreements
Specific procedures and policies
Page 4
Advantages of Trade Secrets
Trade secret protection has the advantage of not being
limited in time (patents last in general for up to 20 years)
and, therefore, may continue indefinitely as long as the
secret is not revealed to the public.
Trade secrets involve no registration costs (though there
may be high costs related to keeping the information
confidential).
Trade secrets have immediate effect.
Trade secret protection does not require compliance with
formalities such as disclosure of the information to a
Government authority.
Page 5
Disadvantages of Trade Secrets
If the secret is embodied in an innovative product, others
may be able to inspect it, dissect it and analyze it (i.e.,
"reverse engineer" it) and discover the secret and be
thereafter entitled to use it.
Once the secret is made public, anyone may have access
to it and use it at will.
A trade secret is more difficult to enforce than a patent.
A trade secret may be patented by someone else who
developed the relevant information by legitimate means.
Page 6
What is a Patent
A patent permits its owner to exclude members of the
public from making, using, or selling the claimed
invention.
Page 7
Patentable Inventions
35 U.S.C. 101: Whoever invents or discovers any new
and useful process, machine, manufacture, or
composition of matter, or any new and useful
improvement thereof, may obtain a patent therefore,
subject to the conditions and requirements of this title.
Page 8
Why Should you Patent an Invention
Exclusive rights - Patents provide the exclusive rights to use and exploit the
invention for twenty years from the date of filing of the patent application.
Strong market position - Prevent others from commercially using patented
invention, thereby reducing competition and establishing market presence.
Higher returns on investments – Commercialization of the invention enables
higher returns on investments.
Opportunity to license or sell the invention - Sell or license the rights to
commercialize the invention to another enterprise which will be a source of
income.
Increase in negotiating power - A patent portfolio will enhance bargaining
power if acquiring the rights to use the patents of another enterprise through a
licensing contract (e.g., potentially enter into a cross licensing arrangement)
Positive image - Business partners, investors and shareholders may perceive
patent portfolios as a demonstration of the high level of expertise, specialization
and technological capacity which may prove useful for raising funds, finding
business partners and raising a company's market value.
Page 9
Overview of the U.S. Patent Process
INVENTION
Conduct
Patentability Search?
Not Patentable
Yes
Opinion
No
Patentable
File Provisional
or Non-Provisional?
File Non-Provisional
Patent 1
Modify Idea or
Get New Idea
File Provisional
Patent
Within 12 Months
RCE
Communication
from USPTO
Office Action
File Response
Overcome
Rejections
Do Not Overcome
Rejections
Appeal, RCE
or Give Up
Allowance
Pay Issue Fee
Lose
Appeal
Win Appeal
Letters Patent
Page 10
Pay Maintenance
Fees
Appeal
1 If Non-Provisional based on Provisional, then also must foreign file.
International Patent Process
Separate Applications in Individual Countries
Patent Cooperation Treaty (PCT)
Page 11
General Information About the PCT
October 27, 2005 – 128 Contracting States (Members)
One International Application, One Set of Fees
18 Months from International Application Filing Date
(or 30 Months from Priority Application Filing Date)
Page 12
Advantages of PCT
Delays National Filings and Related Expenses
International Search Report and Written Opinion
International Publication puts the World on Notice
Page 13
Useful Links and Handouts
United States Patent and Trademark Office (USPTO):
www.uspto.gov
World Intellectual Property Organization (WIPO):
www.wipo.org
USPTO Patent and Full Text Image Database:
http://164.195.100.11/netahtml/search-bool.html
USPTO Patent Application and Full Text Image Database:
http://appft1.uspto.gov/netahtml/PTO/search-bool.html
WIPO Digital Library/Database:
http://www.wipo.int/ipdl/en/
European Patent Office (EPO):
http://my.epoline.org/portal/public
EPO Database:
http://ep.espacenet.com/search97cgi/s97_cgi.ex
e?Action=FormGen&Template=ep/en/advanced.hts
USPTO Trademark Electronic Search System (TESS):
http://tess2.uspto.gov/bin/gate.exe?f=tess&state=9hkm30.1.1
United States Copyright Office:
http://www.copyright.gov/
International Trademark Association:
http://www.inta.org/
Network Solutions (Domain Name Information):
www.networksolutions.com
Record of Invention and Invention Disclosure Form
Page 14