This document provides an overview of crowdfunding and intellectual property considerations related to crowdfunding campaigns. It defines different types of crowdfunding, such as reward-based crowdfunding and equity crowdfunding. It discusses examples of successful crowdfunding campaigns on sites like Kickstarter and discusses litigation related to failed crowdfunding projects. The document also provides best practices for intellectual property strategies before, during, and after a crowdfunding campaign to protect inventions and avoid infringement issues. It concludes with a discussion of proposed SEC regulations for equity crowdfunding under the JOBS Act.

1. Crowdfunding- The Questions?
The Realities!
© 2012 Day Pitney LLP

2. DEFINITIONS
 Crowd Sourcing- Engagement process by which organizations
seek input from people, to contribute ideas, solutions or support
which are reinforced through social media.
 Crowdfunding/crowd financing- the collective effort of individuals
who network and pool their money to support efforts initiated by
other people or organizations.
 Equity crowdfunding- enables broad groups of investors to fund
startup companies and small businesses in return for equity.
Investors give money to a business and receive ownership of a
small piece of that business (equity and / or debt).
If the business succeeds, the value of that share of that
business goes up
The converse is also true.
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3. QUIRKY
Pivot Power Invented by Jake Zien and
855 people
•279,000 units sold at $30 each- $8.9
million
•Jake Zien has made $300,000 to date!
Mocubo Invented by Justin Giannone and
1437 people
Broom Groomer Invented by Bill Ward and
772 people

4. KICKSTARTER REALITIES
52,140 Projects funded successfully!
12 Projects raised over $1Million in 2012
No Due Diligence on creators
Not a Store- product can not be made
Cant Cap Goals- too many preorders
After Goal is met the relationship is over or so
you think!
 Price, Quantity and Timeline is Public
 885 million Pledged
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5. Reward Based Crowdfunding PROS
 Unconventional Financing of Good Ideas
 Validation of Good ideas
 Public Traction = Even More Funding
 Originator of Idea/Project retains operation control
 Establish Personal Relationships with your Crowd/Customers
 Making Change in your community/Support causes where you live
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6. Kickstarter Litigations

Quest v. Singh
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Quest: Inventor of Hanfree- IPAD stand; raised
$35,004 from 440 backers

Singh- Lawyer one of the 440 backers
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11/28/12- Quest cancelled production of Hanfreeno Hanfree; money to be returned
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Singh brought suit. Ticked Off! “Why he became a
lawyer”
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Quest- bankrupt from lawsuit; Public Failure!
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Kickstarter not to blame if a product fails to deliver is
someone isn't qualified to create the product
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7. Kickstarter Litigations cont.
FORM 1: An affordable, professional 3D
printer by Formlabs
An affordable, high-resolution 3D printer for
professional creators.
•3D Systems v. Formlabs and Kickstarter
•October 2012- 3D Systems seeking injunctive relief and damages for patent infringement of US
Patent 5,597,520: Simultaneous multiple layer curing in stereolithography.
•Patent Damages: Suit alleges that Kickstarter’s role as “facilitator of the record setting sales of
the printer” is an aspect of the case.
•Kickstarter: specific intent to infringe, willful blindness of patent, encouraging infringement:
GUIDELINES: D.I.Y. We love projects from the hacker and maker communities
(weekend experiments, 3D printers, CNC machines) and projects that are open
source. Software projects should be run by the developers themselves.
•Formlabs contends the patents are expired.
•Printers have been shipped to backers all over the world.
•Maker faires; training classes
•11/2013- Form 1 and 3d Systems in settlement; Kickstarter on standby; Case
removed to District of NY
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8. Kickstarter Litigations Cont.
 IS CROWDFUNDING PATENTABLE?
 Patent No. 7,885,887: Methods and apparatuses for financing and
marketing a creative work granted to Fan Funded
 Inventor: Brian Camelio, founder of ArtistShare; Assignee: Fan
Funded
 Kickstarter v. ArtistShare
 2011: Fan Funded approached KS about licensing their platform
and patent rights
 2011: KS files claim asking for the ArtistShare patent to be
invalidated and/or that KS is not liable for infringement.
 2012: ArtistShare files a Motion to Dismiss which was Denied.
 2013: ArtistShare filed a counterclaim for Patent Infringement.
 Courts Response: “there is a sufficient controversy between the
parties that is both immediate and real.
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9. Kickstarter Litigations Cont.
 Aug 14, 2013- Ducotes d/b/a War Chest Publishing v.
Kickstarter in NY Fed. Court
 Breach of its own Terms of Use; Implied Covenant of Good
faith and Fair Dealing; Tortious Interference with Prospective
Business relations Defamation.
 Kick starter- F rating at BBB- 6 unresponded to Complaints.
 Kickstarter stopped their Campaign days after Approving it and
days before a TV appearance.
 Kickstarter Terms of Service: We reserve the right to change,
suspend, discontinue at any time for any reason!
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10. IP Strategies-BEFORE YOU LAUNCH YOUR
Crowdfunding Campaign
 DO NOT RUSH!
 Americas Invents Act- First to File as of March 16, 2013
not First to Invent- Your pitch cant prove invention
 NOVELTY and COMMERCIAL SEARCH
 File a provisional patent application
 Provisional application
-lower-cost ($400/$200/$100)
-inventor can simply describe the inventive concept in the application
-file it at PTO- preserve patent rights and stake claim to the filing date
-PTO will not examine the application unless the applicant subsequently
files a full, non-provisional patent application within one year.
-Gives applicant time to refine the invention, assess the viability of the
market, and raise the necessary funds to pursue the invention further.
 Avoid disclosing technical details of your invention: TRADE SECRETS!
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11. STRATEGIES- PLANNING YOUR COMPAIGN
 Marketing Plan-Build Your Crowd on Social
Media before you Launch!
 Business Plan- Plan Your Rewards!!
 Investment Plan- Equity; Corporate Structure
 Legal Plan: Who is your Competition? Their
Legal History!
 Examine the Way the Portal treats
INTELLECTUAL PROPERTY! Terms of Use!
 Pick the Right Portal- Each has its own
audience.
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12. STRATEGIES- For Your Campaign
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Make a cool Video- 3-4 minutes!
Tell your Story!
Use Heartstrings if applicable! Use WE!
UPDATE!! UPDATE!! Your backers
MAKE SURE YOUR IP IS PROPERLY
MARKED AND ATTRIBUTED!
 Trademark Protection
 Copyright Protection- photos, drawings, DMCA
Takedown- make sure you can use the images!
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13. IP Strategies- AFTER YOU LAUNCH
 If you launched and didn’t file a Patent Application: Do not
allow one year to pass after making a public disclosure-Forfeit:
U.S. and International patent rights!
 Foreign Internet Trolls- Be wary!
 DISCOVERING YOUR IP BEING INFRINGED ON A
PORTAL- Contact them ASAP!
 IF SOMEBODY THINKS YOUR ARE AN INFRINGERCreate a reasonable licensing structure.
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14. Future of Reward Based Crowdfunding
Fashion: Cut the Bias (US) and ZaoZao (China)- materials, style surveys
Public Projects: NY City Council Page on Kickstarter:
-Positive community change, civic engagement and urban renewal is limitless
-Neighborhood urban farms, Public art installations, Co-ops, cafes
-From East NY to the South Bronx.
Gambitiious- Netherlands (independent game developers)
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GOFUND ME: Take 2.9% of every transaction- money sent directly to your
account. Altruistic Projects- funeral services; volunteer programs; education
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Pubslush- books and authors
CONSOLIDATION of Portals- 500+ worldwide!
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15. Jumpstart Our Business Startups (JOBS) ACT
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Deadline was 12/31/2012
Proposed Rules- Nov/Dec 2014

CURRENT RULES: Rule 501- Regulation D:
Securities can be Offered to Accredited Investors Only!
 a bank, insurance company, registered investment company, business development
company, or small business investment company;
 a charitable organization, corporation, or partnership with assets exceeding $5
million;
 a natural person who has individual net worth, or joint net worth with the person’s
spouse, that exceeds $1 million at the time of the purchase, excluding the value of
the primary residence of such person;
 Individual- Income over $200,000 per year/$300,000 Joint
 Net worth exceeding $1 million
GATED COMMUNITY!
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16. I WANT TO OFFER EQUITY!
Very Few Equity Funding Portals in the U.S.
 RockThePost - Bendigo Securities d/b/a CrowdClear
is their broker dealer
 Must submit to the Portal:
-Executive Summary
-Term Sheet
-Investor Relation Presentations
-Pro Formal Financial Projections
-Legal Representation
-Corporate Governance documents
RIGHT NOW: GATED COMMUNITY UNTIL
REGULATIONS COME OUT!
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17. EQUITY BASED PORTALS- AWAITING SCE APPROVAL
 Fundable- $99 per month; 3.5%
-For rewards: no equity is provided to backers
-For equity: Capital investments minimums range from $1,000 to
$50,000 and are only available to accredited investors and at the
discretion of the startups in accordance with all State and Federal
laws
Circle Up- Food Products; Green Products;
Microventures- Angel meets investor connecting $100 to apply; $250 if
approved; 10% finders fee
KIVA- Loan Based- up to $49,500; NOT FOR 1st World countries
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18. SEC-PROPOSED RULES- REGULATION
CROWDFUNDING
Individual/Entity can only raise up to $1M in 12 months.
Investors can invest from $2,000 up to $100,000.
Investments must be made through a registered Broker dealer or a
Crowdfunding Portal as an intermediary! Intermediaries can not receive
equity!
 Issuers of Equity can do a limited kind of advertising, essentially a very short
notice in print or electronic media that directs potential investors to the
intermediary platform hosting the offering.
Disclosure Requirements. Issuers will be required to provide certain
information to both prospective investors and the intermediary that will be
the conduit for their crowdfunding offering on a new filing form – Form C,
which must be filed prior to the offering.
Ongoing Reporting. Once the offering is completed, the issuer becomes
subject to ongoing reporting requirements.
 Investors may cancel within 48 hours.
 Issuer Liable if made untrue or misleading statements
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19. David Postolski
One Jefferson Road
Parsippany, NJ 07054-2891
T: (973) 966 8101
F: (973) 206 6611
dpostolski@daypitney.com
PRACTICE AREAS
Patent Prosecution and Counseling
Trademark, Copyright and Advertising
Life Sciences and Healthcare
EDUCATION
Nova Southeastern University Shepard Broad Law Center, J.D., 1999
Oregon State University, B.S. (equiv.), 2010
New York University, B.A., 1995
ADMISSIONS
State of New York
United States Patent and Trademark Office
Page 19 | Intellectual Property Primer

20. David D. Postolski
Associate
One Jefferson Road
Parsippany, NJ 07054-2891
T: (973) 966 8101
F: (973) 206 6611
dpostolski@daypitney.com
Practice Areas:
 Patent Prosecution and Counseling
 Trademark, Copyright and Advertising
 Life Sciences and Healthcare
Education:
 Nova Southeastern University Shepard Broad Law Center,
J.D., 1999
 Oregon State University, B.S. (equiv.), 2010
 New York University, B.A., 1995
Admissions:
 State of New York
 United States Patent and Trademark Office
Page 20 | Intellectual Property Primer
Professional Experience
David Postolski is a registered patent attorney and intellectual property attorney
in the Intellectual Property department at Day Pitney. His practice includes
prosecuting patent and trademark applications both domestically and
internationally. David’s patent practice encompasses various technological and
scientific areas, including software development, financial transactions, gaming
and business methods, as well as patents related to chemistry. He has
experience managing patent and trademark portfolios and advising clients on
prosecution strategies, as well as drafting replies to office actions and appeals
briefs, and conducting interviews with examiners. In addition, David prepares
instructions to foreign associates regarding prosecution in various countries and
evaluates IP portfolios for potential licensing value, technical merit and
patentability/validity. David also has experience in copyright, trade secret
protection and corporate transactional matters including the drafting and
negotiating of end user licenses, master service and terms of services
agreements, security agreements, coexistence agreements, and non-disclosure
agreements.
David's life sciences industry experience includes counseling, drafting and
prosecuting U.S. and Foreign patent applications in the fields of chemistry,
biochemistry, physics and chemical engineering. He has prosecuted applications
with subject matter including but not limited to thermodynamics, thermometry,
paramagnetism, hyperpolarization, carbon dioxide emissions and effects,
medical devices, a variety of healthcare products and pharmaceuticals. His
experience also extends to the corresponding branding, trademark, business
and corporate side of intellectual property, including drafting and negotiating
licenses, product development, manufacturing and launch, FDA processes,
ANDA procedures and consumer product safety commission processes.