What Every Small Business Needs to Know About Intellectual Property

1. Fundamental Intellectual Property
Strategies:
What every small business needs to know about Intellectual
Property
October 16, 2013
Jessica M. Mendez
Samir R. Mehta
© 2013 Armstrong Teasdale Teasdale
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2. Plan of Action
Maximizing the value of IP requires protection:
• Patents
• Copyright
• Trademarks
• Trade Secrets
• Contractual Agreements
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3. Patents
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4. Patents - What They Protect
 Processes
 Machines
 Manufacture or composition of matter
 Any new and useful improvement in these areas
 More recently, business methods
• Patentable In The U.S.
• Not Yet Adopted Broadly Internationally
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5. Patents - What They Give
 Right To Exclude Others from:
• Making
• Using
• Offering For Sale
• Selling
 Market Exclusivity
 Bargaining Tool
 Royalties
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6. Patents – The Process
General Application Process
Varies
>1 Year
Patent Clock
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7. Patents – What can they do for you?
 Patents are 3-way tools for companies, especially
small businesses
 Patents have been heavily used to protect inventions
• Significantly used in litigation by large companies,
small companies, and non-practicing entities (NPEs)
 What does your industry’s landscape like?
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8. Patents and Small Businesses - AIA
 America Invents Act in effect since March 16, 2013
• Most sweeping change to the patent system in 60
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years
 First-to-file replaces first-to-invent
• Prior art is more global in scope
• Grace period for one year after public disclosure and
certain actions
 Micro entity status
• No more than four previous non-provisional patent
applications
• > three times U.S. median household income
• 75% reduction in fees
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LLP

9. Patents – How to Live in a Changing
World
 Apply the rules where they exist
 Think broadly
 Think about the future
 Be as specific as possible
 Don’t paint yourself in
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10. Patents and Small Businesses
 Be aware of existing patents, whether you’re filing or
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not
• Proactively search for patents in your space
 Receiving a demand letter
• Read the demand carefully and be mindful of timelines
• Consider contacting an attorney
 Pay attention to rules on public disclosure
• Many actions which you may not regard as
disclosures qualify
• Competitors cannot benefit directly from your
disclosures
 Provisional patents versus non-provisionals
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11. Patents - Why Small Businesses Need
Them
 Patents can be tremendously valuable for a small
business
• A good patent can add $1M to your valuation
• A good patent can give you an M&A strategy
• A good patent can let you redirect your focus via
licensing
• A good patent can hold back competitors
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 But you need a good patent!
• Patents can be expensive
• The landscape is rocky
• Technology changes rapidly
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• International protection is complicated
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12. Patents – How to Avoid Workaround
Traps!
 Workarounds are always a problem in patents…
workarounds can diminish the value of your investment
 Consider what you want to protect
 Business today often involves many players to consider
• Your competition
• Your partners
• Your customers
 Software patents do not protect code
• Code is for copyright – it’s a different ballgame
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13. Patents – Strategies for Small
Businesses
 Consider where your edge is
• Is your business about the product, the execution, or
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both?
• Non-software companies routinely get software
patents now
 Consider the IP in your industry carefully
• Innovation ≠ novelty
• Some industries are crowded from an IP perspective,
others are blue sky
 If you have novel tech, a patent may help your
valuation
 Alternative path: Trade secrets
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14. Copyrights
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15. Copyright - What it Protects
 “Original” works of authorship “fixed” in a tangible
medium of “expression”
• Originality: originates with the author
• Fixation: recorded in a medium that can be
reproduced
• Expression: does not include ideas
 Examples:
• Written Materials, Graphic Works, Audiovisual Works,
Musical Works, Software
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16. Copyright - What It Gives
 Protects Works By Giving Exclusive Right To:
• Reproduce
• Make Derivative Works
• Distribute
• Perform
• Publicly Display
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17. Copyright - What To Do
 Consider copyright registration
• Simple, fast, and cheap
• Not required to “own” your work, but required for a lawsuit
− Provides statutory damages and attorney’s fees when timely
 Add copyright notice on materials
• © or “Copyright” + year of first publication + owner
 Consider protection when entering into contractual
agreements
• Use Work-for-hire agreements when appropriate
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 Avoid infringement of others’ copyrights
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18. Trademarks
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19. Trademarks - What They Protect
A trademark is a word, name, symbol, and/or device
used to indicate the source of the goods or services
 A trademark owner has the:
• Exclusive right to use the mark on specified
good/services
• Right to stop other uses of identical or similar marks
which are likely to cause confusion
 But the trademark must be used
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20. Trademarks - Examples
 Forms of Trademarks
 NIKE
A Design

A Slogan

A Sound
 The NBC Chimes
A Number 
7-ELEVEN
A Color
 Pink of Owens Corning Insulation
A Shape
 Vehicle Grill
Trade Dress Product Package, Restaurant Décor
• A Word
•
•
•
•
•
•
•
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21. Trademarks – What To Do
 Select A Strong Trademark  Inherently Distinctive
• Strong marks have no inherent meaning or relation to the
goods and services you offer
• Weak marks include words that describe the goods and
services you offer
• Generic terms for the goods and services you offer cannot
be protected
 After Selecting a New Mark:
• Do a trademark search to avoid infringing other marks
 Register and Maintain your Mark
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22. Trademarks – How to Maintain your
Mark
 Maintain Registration
 Trademark Use
 Trademark Notice
• ® Symbol for a registered mark
• ™ For an unregistered mark on a product
•
SM
for an unregistered service mark
 Trademark Enforcement
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23. Trademarks – Domain Names
 Trademark infringement through domain names is
often used to divert internet traffic from your
business to a competitor
• Periodically search to see if competitors are using
your trademarks through a domain name
 Be sure your own domains are not too similar to your
competitor’s trademarks or you may be accused of
infringement
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24. Trade Secrets
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25. Trade Secrets
 Protection extended to secret, competitive
information
• Once a secret is made public, the trade secret is lost
forever
 Maintained by substantial precautions:
• Employee awareness
• Contracts
• Limited Access on a need-to-know basis
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 Examples:
• Customer lists, supplier lists, secret recipes,
financials, unique business techniques, or plans
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26. Trade Secrets- Strategies and Tips




Take the time to identify what needs protection
Label materials confidential
Limit access on a need-to-know basis
Educate your employees
• Employment Handbook or Employment Contract
• Set up and maintain policies to protect your trade
secrets then make sure your employees follow those
policies
− password protection, secure networks, etc.
 Use contractual agreements to protect your trade
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secrets
• Employment agreements, Confidentiality agreements,
Non-disclosure agreements, Non-compete
agreements
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LLP

27. Contractual Agreements
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28. Contractual Agreements
 Confidentiality Agreements
 Non-Disclosure Agreements
• Especially important for meetings with investors
 Development Agreements
 Assignments
 Licenses
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29. Employment Agreements
 Maintain your confidentiality, ownership, and client-
base
 Always remember that new hires may be subject to
the same agreements
• Non-competes
• Confidentiality agreement
• Assignments of rights
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LLP

30. Corporate Concerns
 Ownership of Intellectual Property within the Company
• Contractual Interests vs. Shares
 Corporate Formalities
• Document meetings by taking minutes, individual
responsibilities, expenses… otherwise you may be
personally liable
 Financing
• Buy/Sell provisions
• Outside Investors
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 Selling your Company
• Drag Along and Tag Along Provisions
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31. Final Thoughts
 Consider your Intellectual Property protection early
 Intellectual Property enhances the value of your
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
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company
• Investors almost always ask about IP Protection
Budget for Intellectual Property Protection
Avoid Infringement
In all business dealings (employment, investment,
even basic corporate formalities), make sure you
know who owns, or has rights to use, your
intellectual property
Consider having an attorney function as part of your
team to make sure you are protected throughout the
course of your business dealings
© 2013 Armstrong Teasdale
LLP

32. Thank you!
Jessica M. Mendez
JMendez@ArmstrongTeasdale.com
314.342.4188
Samir R. Mehta
SMehta@ArmstrongTeasdale.com
314.342.4125
http://www.armstrongteasdale.com
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© 2013 Armstrong Teasdale Teasdale
© 2013 Armstrong
LLP
LLP