IP And Licensing What You Need To Know About Trademarks, Patents And Licensing Agreements

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A general overview of trademarks, patents and common issues in license agreements presented on March 25, 2011 for The Entrepeneurs Initiative in Tucson, Arizona

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  • IP And Licensing What You Need To Know About Trademarks, Patents And Licensing Agreements

    1. 1. Intellectual Property and Licensing: What You Need to Know About Patents, Trademarks and Licensing Agreements Sean Garrison Emily A. Bayton March 25, 2011
    2. 2. PART I <ul><li>Intellectual Property Law Overview </li></ul>
    3. 3. Types of Intellectual Property <ul><li>Five Main Types of IP </li></ul><ul><ul><li>Patent </li></ul></ul><ul><ul><li>Trade Secret </li></ul></ul><ul><ul><li>Copyright </li></ul></ul><ul><ul><li>Rights of Publicity </li></ul></ul><ul><ul><li>Trademark </li></ul></ul><ul><li>Also </li></ul><ul><ul><li>Advertising, Privacy, Sweepstakes </li></ul></ul>
    4. 4. Patents <ul><li>Protect inventions </li></ul><ul><li>Process, system, method, machine or composition of matter or improvement thereof </li></ul><ul><li>Must be novel, non-obvious and useful </li></ul><ul><li>Granted by national governments </li></ul><ul><li>Federal law </li></ul>
    5. 5. Trade Secrets <ul><li>Confidential information, formulas, recipes </li></ul><ul><li>Kept secret and not generally known </li></ul><ul><li>Secrecy gives commercial advantage </li></ul><ul><li>Example: </li></ul><ul><ul><li>Inventions </li></ul></ul><ul><ul><li>Customer lists </li></ul></ul><ul><ul><li>COKE formula </li></ul></ul><ul><li>Protected by State Law </li></ul><ul><li>Non-disclosure agreements </li></ul>
    6. 6. Copyrights <ul><li>Original work of authorship </li></ul><ul><ul><li>Music </li></ul></ul><ul><ul><li>Books </li></ul></ul><ul><ul><li>Lesson plans </li></ul></ul><ul><ul><li>Art </li></ul></ul><ul><ul><li>Source code for software </li></ul></ul><ul><li>Covers the expression, not the idea </li></ul><ul><li>Exists at creation </li></ul><ul><li>Not words or short phrases </li></ul><ul><li>Federal law </li></ul>
    7. 7. Rights of Publicity <ul><li>Commercial Use of Identity </li></ul><ul><ul><li>Image </li></ul></ul><ul><ul><li>Name </li></ul></ul><ul><ul><li>Voice </li></ul></ul><ul><ul><li>Character </li></ul></ul><ul><ul><li>Persona </li></ul></ul><ul><li>Differs from state to state </li></ul><ul><li>Federal claims - False endorsement </li></ul><ul><li>Can exist posthumously </li></ul>
    8. 8. Trademarks <ul><li>Brands </li></ul><ul><ul><li>Name of a product or service </li></ul></ul><ul><ul><li>Logos </li></ul></ul><ul><ul><li>Words </li></ul></ul><ul><ul><li>Slogans </li></ul></ul><ul><ul><li>Colors </li></ul></ul><ul><li>Acquired by use in commerce or registration </li></ul><ul><li>Consumer protection – avoiding confusion in the marketplace </li></ul><ul><li>Federal and State law govern </li></ul>
    9. 9. PART II <ul><li>Trademarks </li></ul><ul><li>What is a Trademark? </li></ul><ul><li>Choosing a Strong Trademark </li></ul><ul><li>Trademark Protection </li></ul>
    10. 10. Trademarks <ul><li>Words </li></ul><ul><ul><li>COKE </li></ul></ul><ul><ul><li>BARBIE </li></ul></ul><ul><ul><li>UNIVERSITY OF ARIZONA </li></ul></ul><ul><ul><li>NIKE </li></ul></ul>
    11. 11. Trademarks <ul><li>Slogans </li></ul><ul><ul><li>Get a Piece of the Rock </li></ul></ul><ul><ul><li>You’re in Good Hands with Allstate </li></ul></ul><ul><ul><li>JUST DO IT! </li></ul></ul>
    12. 12. Trademarks <ul><li>Letters </li></ul><ul><ul><li>IBM </li></ul></ul><ul><ul><li>NFL </li></ul></ul><ul><ul><li>USPS </li></ul></ul><ul><ul><li>NPR </li></ul></ul><ul><ul><li>UA </li></ul></ul><ul><ul><li>ASU </li></ul></ul>
    13. 13. Trademarks <ul><li>Numbers </li></ul><ul><ul><li>501 (for jeans) </li></ul></ul><ul><ul><li>V-8 (for vegetable juice) </li></ul></ul>
    14. 14. Trademarks <ul><li>Symbols and </li></ul><ul><li>Logos </li></ul>
    15. 15. Trademarks <ul><li>Single Color </li></ul><ul><ul><li>Brown for UPS </li></ul></ul>
    16. 16. Trade Dress <ul><li>Trade Dress </li></ul><ul><ul><li>Product packaging </li></ul></ul><ul><ul><ul><li>Starbucks cup </li></ul></ul></ul><ul><ul><li>Product shape </li></ul></ul><ul><ul><ul><li>Coke bottle </li></ul></ul></ul><ul><ul><li>“Look and Feel” </li></ul></ul><ul><ul><ul><li>Fridays Restaurants </li></ul></ul></ul><ul><ul><li>Building design </li></ul></ul><ul><ul><li>Uniforms and costumes </li></ul></ul>
    17. 17. Trademarks <ul><li>Sounds </li></ul><ul><ul><li>NBC chimes </li></ul></ul><ul><ul><li>MGM’s lion’s roar </li></ul></ul><ul><ul><li>D’oh! - as spoken by Homer Simpson </li></ul></ul><ul><li>Fragrance </li></ul><ul><ul><li>for sewing thread </li></ul></ul>
    18. 18. Symbols <ul><li>Registration Symbol </li></ul><ul><ul><li>® </li></ul></ul><ul><ul><li>Federal Registration </li></ul></ul><ul><ul><li>Goods/Services in the Registration </li></ul></ul><ul><li>Trademark Symbol </li></ul><ul><ul><li>TM </li></ul></ul><ul><ul><li>Goods or Services </li></ul></ul><ul><li>Service mark Symbol </li></ul><ul><ul><li>SM </li></ul></ul><ul><ul><li>Services only </li></ul></ul>
    19. 19. Choosing a Trademark <ul><li>Coined - Arbitrary - Suggestive - Descriptive – Generic </li></ul><ul><li>SPECTRUM OF DISTINCTIVENESS </li></ul>
    20. 20. Trademark Protection Establishing Rights <ul><li>“ Common Law” Rights Based on Use of Mark </li></ul><ul><ul><li>Hang up your shingle </li></ul></ul><ul><ul><li>Limited to geographic area of use </li></ul></ul><ul><ul><li>Limited to goods/services used </li></ul></ul><ul><li>State Registration </li></ul><ul><ul><li>Headache prevention </li></ul></ul><ul><li>Federal Registration </li></ul><ul><li>International Registration </li></ul><ul><ul><li>By country or territory (European Union) </li></ul></ul>
    21. 21. Trademark Protection Establishing Rights <ul><li>Federal Registration </li></ul><ul><ul><li>Nationwide priority </li></ul></ul><ul><ul><li>Constructive notice </li></ul></ul><ul><ul><li>Presumed ownership </li></ul></ul><ul><ul><li>Intent to Use procedure </li></ul></ul><ul><ul><li>Customs enforcement </li></ul></ul><ul><ul><li>Counterfeiting remedies </li></ul></ul><ul><ul><li>Basis for International Registration </li></ul></ul>
    22. 22. Trademark Registration <ul><li>Whether to file </li></ul><ul><ul><li>Protect your core “identity” marks </li></ul></ul><ul><ul><li>Protect the marks that will bring in revenue </li></ul></ul><ul><ul><li>Protect the marks consumers rely upon </li></ul></ul><ul><ul><li>Protect the marks most likely to be infringed </li></ul></ul><ul><ul><li>Budgetary considerations </li></ul></ul>
    23. 23. Trademark Protection Establishing Rights <ul><li>Outside U.S. </li></ul><ul><ul><li>“First to File” </li></ul></ul><ul><ul><ul><li>Pirates </li></ul></ul></ul><ul><ul><ul><li>Licensees/Distributors </li></ul></ul></ul><ul><ul><li>Madrid Protocol “International Registration” </li></ul></ul><ul><ul><ul><li>80+ Countries </li></ul></ul></ul><ul><ul><ul><li>Filed from US </li></ul></ul></ul><ul><ul><ul><li>Central Renewal </li></ul></ul></ul>
    24. 24. Trademark Protection Causes of Action <ul><li>Infringement </li></ul><ul><ul><li>Likelihood of confusion </li></ul></ul><ul><ul><ul><li>Similarity of marks </li></ul></ul></ul><ul><ul><ul><li>Similarity of services </li></ul></ul></ul><ul><ul><ul><li>Channels of trade </li></ul></ul></ul><ul><ul><ul><li>Cost </li></ul></ul></ul><ul><ul><ul><li>Sophistication of Customers </li></ul></ul></ul><ul><ul><li>Dilution </li></ul></ul><ul><ul><ul><li>Famous marks only </li></ul></ul></ul><ul><ul><ul><li>Identical or nearly so </li></ul></ul></ul><ul><ul><ul><li>Tarnish or dilute distinctiveness </li></ul></ul></ul><ul><ul><li>Suggesting a False Connection to an Institution </li></ul></ul>
    25. 25. Infringements <ul><li>THIRD PARTY USE </li></ul><ul><li>Investigation/Analysis </li></ul><ul><ul><li>Who has superior rights </li></ul></ul><ul><ul><li>Strength of case </li></ul></ul><ul><ul><li>Business need </li></ul></ul><ul><li>Often addressed through Cease and Desist letter </li></ul><ul><ul><li>Federal registrations are persuasive </li></ul></ul><ul><li>Litigation or Trademark Office Action </li></ul><ul><ul><li>Temporary Retraining Order </li></ul></ul><ul><ul><li>Lawsuit or Opposition/Cancellation </li></ul></ul>
    26. 26. Trademark Protection Maintaining Rights <ul><li>You have a duty to police third party misuse of your trademarks </li></ul><ul><li>Proper use by you is critical </li></ul><ul><li>Trademarks are ADJECTIVES, not nouns </li></ul><ul><li>There should be a generic term/noun base to every trademark (the “APPLE computer”) </li></ul><ul><li>Marks should not be put into the plural form or used descriptively </li></ul><ul><li>Sometimes trademarks can become too popular – avoid genercisim of your brands </li></ul>
    27. 27. Common Trademark Issues <ul><li>CLEARANCE </li></ul><ul><ul><li>Search and Opinion </li></ul></ul><ul><ul><ul><li>Determines availability </li></ul></ul></ul><ul><ul><ul><li>Provides useful marketing information </li></ul></ul></ul><ul><ul><ul><li>Prevents investment in unavailable or unprotectable mark </li></ul></ul></ul><ul><ul><li>Conduct initial searching in-house </li></ul></ul><ul><ul><ul><li>“ Google” the term and the term with its generic word </li></ul></ul></ul><ul><ul><ul><li>Search TESS database at www.uspto.gov </li></ul></ul></ul><ul><ul><li>If clear, move to “full search” from vendor </li></ul></ul><ul><ul><ul><li>Much more comprehensive </li></ul></ul></ul>
    28. 28. Common Trademark Issues <ul><li>DOMAIN NAMES </li></ul><ul><ul><li>Cybersquatters </li></ul></ul><ul><ul><ul><li>Pornography </li></ul></ul></ul><ul><ul><ul><li>Diverting Consumers </li></ul></ul></ul><ul><ul><ul><li>Pay Per Click or Fraud </li></ul></ul></ul><ul><ul><li>Redress </li></ul></ul><ul><ul><ul><li>Cease and Desist Letters </li></ul></ul></ul><ul><ul><ul><li>Uniform Domain-Name Dispute Resolution Policy </li></ul></ul></ul><ul><ul><ul><li>Court </li></ul></ul></ul><ul><ul><ul><ul><li>ACPA or Lanham Act claims </li></ul></ul></ul></ul>
    29. 29. Common Trademark Issues <ul><li>Domain names </li></ul><ul><ul><li>Consider at the Clearance Stage – Take a proactive approach </li></ul></ul><ul><ul><li>Register in all major domains </li></ul></ul><ul><ul><ul><li>.com; .net; .org; .biz; .us </li></ul></ul></ul><ul><ul><ul><li>country codes if major brand (.cn, .ca, etc.) </li></ul></ul></ul><ul><ul><li>Consider misspellings and hyphenations </li></ul></ul><ul><ul><li>Ask yourself </li></ul></ul><ul><ul><ul><li>Do you want it? </li></ul></ul></ul><ul><ul><ul><li>Would it bother you if someone else had it? </li></ul></ul></ul>
    30. 30. PART III <ul><li>Patents </li></ul><ul><li>What’s Patentable? </li></ul><ul><li>Obtaining Patent Protection </li></ul><ul><li>Avoid Compromising Your Rights </li></ul>
    31. 31. What Can Be Patented? <ul><li>Supreme Court: “ anything under the sun that is made by man.” </li></ul><ul><ul><li>Diamond v. Chakrabarty , 447 U.S. 303, 309 (1980). </li></ul></ul><ul><li>Three categories of unpatentable subject matter: “laws of nature, natural phenomena, and abstract ideas.” </li></ul><ul><ul><li>Diamond v. Diehr , 450 U.S. 175, 185 (1981). </li></ul></ul>
    32. 32. Kinds of Patents <ul><li>Utility – Most common type, addresses functional inventions (e.g. devices, methods, processes, systems) </li></ul><ul><li>Design – Protects only ornamental appearance (but can be powerful) </li></ul><ul><li>Plants and Plant Varieties – e.g. new plants capable of being asexually reproduced (example: roses) </li></ul>
    33. 33. What Rights Do Patents Confer? <ul><li>ONLY the right to prevent OTHERS from </li></ul><ul><ul><li>Making </li></ul></ul><ul><ul><li>Using </li></ul></ul><ul><ul><li>Selling/offering for sale </li></ul></ul><ul><ul><li>Importing </li></ul></ul><ul><ul><ul><li>… the claimed invention </li></ul></ul></ul><ul><li>NOT the affirmative right to do anything! </li></ul><ul><ul><li>Just because you have a patent does not guarantee you can practice it! </li></ul></ul>
    34. 34. Example: Right to Practice <ul><li>A Chair is a Stool with a Back </li></ul><ul><li>You may own a patent to a Chair, while someone else owns a patent to a Stool. </li></ul><ul><li>To make a Chair, you would need to have license from the Stool patent owner </li></ul>
    35. 35. Obtaining Protection: The Genesis <ul><li>All inventions begin as Trade Secrets </li></ul><ul><ul><li>A Trade Secret is information that is valuable because it is not generally known </li></ul></ul><ul><ul><li>Inexpensive protection from theft, provided you take steps to protect it </li></ul></ul><ul><ul><li>BUT: Most difficult IP right to maintain and enforce </li></ul></ul>
    36. 36. Obtaining Protection: The Genesis <ul><li>Trade Secrets only become patents if you take an affirmative step </li></ul><ul><ul><li>File Utility or Provisional Patent Application </li></ul></ul><ul><ul><li>Might be a case for maintaining Trade Secret Status </li></ul></ul><ul><li>Provisional Applications </li></ul><ul><ul><li>No formal requirements, inexpensive to file, best for initial filing for upcoming publication or new business development </li></ul></ul><ul><ul><li>Automatically expire after 1 year, so formal utility application must be filed within that time </li></ul></ul><ul><ul><li>Pitfall: May trigger PCT filing deadlines </li></ul></ul>
    37. 37. How long does it take to get a patent in the U.S.? <ul><li>USPTO publishes monthly statistics on pendency of patent applications: </li></ul><ul><li>Feb 2011 stats show: </li></ul><ul><ul><li>24.5 months from filing to 1 st office action </li></ul></ul><ul><ul><li>34 months from filing to final disposition </li></ul></ul><ul><ul><li>200,000 new utility, plant and reissue (UPR) apps filed </li></ul></ul><ul><ul><li>715,000 UPR apps awaiting 1 st office action </li></ul></ul>
    38. 38. Obtaining Patent Protection Abroad <ul><li>Patents are national in scope </li></ul><ul><li>Foreign protection = foreign patent apps </li></ul><ul><li>3 options </li></ul><ul><ul><li>File separate simultaneous apps in every country you want protection </li></ul></ul><ul><ul><li>File national app in Paris Convention country and additional apps within 12 months </li></ul></ul><ul><ul><li>File 1 “international” app under PCT </li></ul></ul>
    39. 39. Patent Cooperation Treaty (PCT) <ul><li>Administered by WIPO </li></ul><ul><li>Currently 142 member countries </li></ul><ul><li>To claim priority to earlier filed national or regional app, must file PCT app within 12 months </li></ul><ul><li>Trap for the unwary: Provisional Patent Applications trigger PCT filing deadlines </li></ul>
    40. 40. PCT Procedure <ul><li>Filing and Payment of Fees </li></ul><ul><ul><li>Filing ($1,100-1,300), search ($1,150-2,450) and transmittal ($240) [$3,500 – $4,000] </li></ul></ul><ul><li>International Search </li></ul><ul><li>International Publication </li></ul><ul><li>International Preliminary Exam </li></ul><ul><li>National Phase </li></ul><ul><ul><li>You choose the countries where you want to proceed </li></ul></ul>
    41. 41. THE PATENT MINEFIELD
    42. 42. Hypothetical: <ul><li>You’ve invested your time, money, and energy in developing a successful business </li></ul><ul><li>You and your partners are about to become millionaires when the company goes public tomorrow </li></ul><ul><li>Then you receive notice to cease and desist, claiming an infringement of someone else’s patent </li></ul><ul><li> Your big IPO goes bust </li></ul><ul><li>Fiction? </li></ul><ul><ul><li>It happened to PayPal! </li></ul></ul>
    43. 43. <ul><li>Would you construct a building on a piece of empty land without buying or renting it first? </li></ul>
    44. 44. Trespass! <ul><li>Trespass is to real property as Infringement is to intellectual property </li></ul>
    45. 45. Before putting together bricks and mortar, a business should… <ul><li>Determine who owns the property </li></ul><ul><li>Ensure that the title is valid </li></ul><ul><li>Purchase or lease the property </li></ul><ul><li>Pay periodic payments such as taxes or rent to maintain the right to stay there. </li></ul><ul><li> Protecting your rights in the patent arena requires a similar, common-sense approach. </li></ul>
    46. 46. IP Strategy Plan <ul><li>Create an IP Plan that integrates into Business Plan </li></ul><ul><ul><li> Think Proactively, not Reactively! </li></ul></ul><ul><li>Assess Your Business Strategy and Goals </li></ul><ul><li>Evaluate Current IP Status </li></ul><ul><li>Implement an IP Process to Achieve Goals and Improve IP Status </li></ul><ul><li>Continuous and periodic re-evaluation </li></ul>
    47. 47. Patents Are Assets, Like Buildings and Equipment <ul><li>They exist at the Nexus of Law, Business, and Technology: Consider all Three! </li></ul>LAW BUSINESS TECHNOLOGY
    48. 48. Sample Questions to Ask <ul><li>Law : </li></ul><ul><li>Have I properly secured ownership of the rights from my employees/contractors? </li></ul><ul><li>What is my legal exposure to being sued for patent infringement? </li></ul><ul><li>Are there applicable time limits to file for patents? </li></ul><ul><li>What happens if I wait for a while before taking action? </li></ul>
    49. 49. Sample Questions to Ask <ul><li>Business : </li></ul><ul><li>How can I use or develop my IP Assets and how do they fit in? </li></ul><ul><li>How much will protection cost? </li></ul><ul><li>What is the opportunity cost of not obtaining protection, and what is the risk? </li></ul>
    50. 50. Sample Questions to Ask <ul><li>Technology : </li></ul><ul><li>What is the best way to achieve my business objective? </li></ul><ul><li>Are there better designs that may not be subject to patents? </li></ul><ul><li>Where is the industry headed? </li></ul><ul><li>What can I create or buy? </li></ul>
    51. 51. Evaluating Current IP Status <ul><li>Take a hard look at the state of your company’s patent portfolio </li></ul><ul><ul><ul><li> IP AUDIT </li></ul></ul></ul><ul><li>Investors and potential acquirers will ask: </li></ul><ul><ul><li>What patents do you own? </li></ul></ul><ul><ul><li>Are those patents valid? </li></ul></ul><ul><ul><li>Are there patent infringement issues? </li></ul></ul>
    52. 52. What should you look for? <ul><li>Unfiled inventions that need protection </li></ul><ul><li>Is relationship protected between inventors and the company? </li></ul><ul><ul><li>Employees and consultants should have invention agreements </li></ul></ul><ul><li>Procedures in place to prevent patent defeating events from occurring </li></ul><ul><li>Any defects that could impede perfection of IP rights </li></ul><ul><ul><li>e.g., failure to assign, failure to disclose prior art, improper inventorship, inadequate claims </li></ul></ul><ul><li>Research title to patents, make sure maintenance fees paid </li></ul><ul><li>Optional step: analyze competitive landscape and map out offensive/defensive strategy </li></ul>
    53. 53. <ul><li>Execute employment agreements to require assignment of patent rights </li></ul><ul><li>Educate workforce and harvest patent disclosures </li></ul><ul><li>Examine patent portfolio for “holes” based on IP Audit </li></ul><ul><li>If applicable, build Patent Committee Team (Business, Tech, and Law representatives) to approve patent filings and monitor potential infringing market </li></ul>Implement an IP Process to Achieve Goals and Improve IP Status
    54. 54. <ul><li>Disclosed inventions should be reviewed quickly, and if approved, submitted as a patent application </li></ul><ul><ul><li>Optional step: perform a search first to determine patentability, and to generate references to strengthen patent </li></ul></ul><ul><ul><li>Take steps to keep the invention confidential until it is filed. </li></ul></ul><ul><li>Update product/packaging/marketing materials with Patent Pending or Patent No. markings </li></ul>Implement an IP Process to Achieve Goals and Improve IP Status
    55. 55. WATCH THE PITFALLS <ul><li>Inventors leaving the company and taking inventions </li></ul><ul><li>Joint development projects –caution; patent rights may be compromised if not protected in advance </li></ul><ul><ul><li>No written agreement or lack of clarity in agreement </li></ul></ul><ul><ul><li>Understanding joint ownership </li></ul></ul><ul><ul><li>Use of federal funding </li></ul></ul>
    56. 56. WATCH THE PITFALLS <ul><li>Bar dates accruing – especially the “ready for patenting” issue of the on-sale bar. </li></ul><ul><li>Bar dates from publication/public use </li></ul><ul><ul><li>Absolute Novelty issues </li></ul></ul><ul><li>No 1-year grace period in foreign countries </li></ul>
    57. 57. Using Patents: Sword or Shield <ul><li>Patents provide a defensive and offensive capability </li></ul><ul><ul><li>Defensive: </li></ul></ul><ul><ul><ul><li>Best defense is a good offense: big stack of patents to assert against others </li></ul></ul></ul><ul><ul><ul><li>Long list of patents frightens off potential competitors </li></ul></ul></ul><ul><ul><ul><li>Provides barter material for cross licensing if you get sued for infringement </li></ul></ul></ul>
    58. 58. Using Patents: Sword or Shield <ul><li>Patents provide a defensive and offensive capability </li></ul><ul><ul><li>Offensive: </li></ul></ul><ul><ul><ul><li>Can leverage another party to enter into a license agreement and pay you a royalty for use </li></ul></ul></ul><ul><ul><ul><li>Can sue for an injunction to stop others from infringing or importing </li></ul></ul></ul><ul><ul><ul><li>Can sue for money damages such as lost profits or reasonable royalty </li></ul></ul></ul><ul><ul><ul><li>Value to potential investors/acquirers </li></ul></ul></ul>
    59. 59. APPLYING WHAT WE’VE LEARNED <ul><li>Consider an actual case – Paragon Trade Brands </li></ul><ul><li>As we review, think about what could have been done differently </li></ul>
    60. 60. CASE STUDY: PARAGON TRADE BRANDS <ul><li>February 1993 Paragon Trade Brands, Inc. has Initial Public Offering </li></ul><ul><li>From revenue raised, transfers $240 million to Weyerhaeuser. Receives from Weyerhaeuser intellectual property, including a patent for a disposable diaper. </li></ul><ul><li>Goes into business making private-label disposable diapers – Wal-Mart, Target, CVS, Toys 'R' US, et al. </li></ul><ul><li>Became largest manufacturer of trade brand disposable diapers in the world, third largest overall (behind P&G, Kimberly Clark) </li></ul>
    61. 61. CASE STUDY: PARAGON TRADE BRANDS <ul><li>January 1994 Paragon sued by rival Proctor and Gamble for patent infringement of two patents </li></ul><ul><li>October 1995 rival Kimberly Clark sues Paragon for patent infringement. </li></ul><ul><ul><li>Paragon ultimately settles this suit for $115 million. </li></ul></ul>
    62. 62. CASE STUDY: PARAGON TRADE BRANDS <ul><li>1997: Paragon Ordered to pay Procter & Gamble $178 million for patent infringement </li></ul><ul><ul><li>Included double damages for willful infringement of P&G’s patents. </li></ul></ul><ul><li>Court Prohibits Paragon From Selling Any More Infringing Diapers </li></ul>
    63. 63. Paragon Fires Back <ul><li>Paragon attempts to assert its patent against P&G </li></ul><ul><li>Court found P&G’s diapers did not infringe the claims of Paragon’s purchased patent </li></ul>
    64. 64. Paragon Fires Back <ul><li>Worse Yet : Court found Paragon’s patent to be invalid and unenforceable </li></ul><ul><ul><li>Lack of novelty </li></ul></ul><ul><ul><li>Inequitable conduct – inventors purposely avoided disclosing a known prior art reference. </li></ul></ul><ul><li>A TRUE KNOCK OUT! </li></ul>
    65. 65. Paragon’s Death Spiral <ul><li>1998 Paragon makes minor product modifications to attempt to avoid infringement of P&G’s patent </li></ul><ul><ul><li>Slapped with contempt order for violating injunction. </li></ul></ul><ul><ul><li>P&G adds additional claims > $1B </li></ul></ul><ul><li>Paragon Declares Bankruptcy </li></ul><ul><li>December 2001 bankruptcy case closed, purchased by Tyco Conglomerate </li></ul>
    66. 66. 5 Things You Should Be Doing Right Now <ul><li>Evaluating your own IP Status </li></ul><ul><li>Pursuing an IP Protection Program </li></ul><ul><ul><li>Internal Policies </li></ul></ul><ul><ul><li>Internal Education </li></ul></ul><ul><ul><li>Active Patent Portfolio Management </li></ul></ul>
    67. 67. 12 Ways to Lose Your Patent Rights <ul><li>(1) Waiting Too Long To file for a patent </li></ul><ul><li>(2) Waiting Too Long To send a notice of infringement </li></ul><ul><li>(3) Waiting Too Long to sue for infringement </li></ul><ul><li>(4) Discussing new products at a trade show </li></ul><ul><li>(5) Advertising your product for sale, even if it hasn’t been built </li></ul><ul><li>(6) Using your product in public </li></ul>
    68. 68. 12 Ways to Lose Your Patent Rights <ul><li>(7) Sending out samples of the product/distributing Beta copies of software </li></ul><ul><li>(8) Selling a product </li></ul><ul><li>(9) Obtaining a secured loan </li></ul><ul><li>(10) Ignoring inventors </li></ul><ul><li>(11) Jointly developing a product with someone else </li></ul><ul><li>(12) Hiring employees or contractors to develop a product without a contractual agreement to assign </li></ul>
    69. 69. To Avoid Compromising Rights, Until You File For a Patent: <ul><li>Do not publish, disclose, or speak about invention to anyone not under an obligation of confidentiality, or use your invention in public </li></ul><ul><ul><li>Non-disclosure Agreement (NDA) </li></ul></ul><ul><ul><li>Better yet, just don’t talk about it! </li></ul></ul><ul><ul><li>Possible experimental use exception </li></ul></ul><ul><li>Do not offer your invention for sale, even at its earliest phases </li></ul>
    70. 70. To Avoid Compromising Rights: <ul><li>Make sure you have all employee inventors under a written obligation to assign their inventions </li></ul><ul><li>Periodically review work to ensure all developed IP is being disclosed to the relevant corporate authority (e.g. Patent Committee) </li></ul><ul><li>Execute assignments ASAP! </li></ul>
    71. 71. To Avoid Compromising Rights: <ul><li>If you know about a patent that might anticipate your business approach, obtain an opinion of counsel regarding infringement or non-infringement </li></ul><ul><ul><li>Usually effective in reducing liability </li></ul></ul><ul><li>Do not accept ideas submitted from outside sources without prior agreement </li></ul>
    72. 72. To Avoid Compromising Rights: <ul><li>To maximize the amount of money damages you could receive if you prevail in a patent infringement lawsuit against an infringer: </li></ul><ul><ul><li>Proper marking with with “Patent Pending” or Patent Number as appropriate </li></ul></ul><ul><ul><li>Early notices of infringement </li></ul></ul><ul><ul><ul><li>But BEWARE of the Declaratory Judgment Response </li></ul></ul></ul>
    73. 73. To Avoid Compromising Rights: <ul><li>Statute of Limitations: </li></ul><ul><ul><li>You cannot obtain damages for patent infringement that occurred more than six years ago </li></ul></ul><ul><li>Laches </li></ul><ul><ul><li>If you wait six years or longer before suing for infringement of your patent, you are at risk of having the suit dropped for Laches (waiting too long) </li></ul></ul>
    74. 74. Q&A
    75. 75. PART IV <ul><li>LICENSING </li></ul><ul><li>Trademark Licensing Considerations </li></ul><ul><li>Patent Licensing Considerations </li></ul>
    76. 76. Trademark Licensing <ul><li>Trademark Licenses </li></ul><ul><ul><li>Allows someone other than the owner to legally use a trademark </li></ul></ul><ul><ul><li>Exclusive licenses must be in writing </li></ul></ul><ul><ul><li>Oral licenses are allowed if non-exclusive </li></ul></ul><ul><ul><li>Types </li></ul></ul><ul><ul><ul><li>Manufacturing </li></ul></ul></ul><ul><ul><ul><li>Marketing </li></ul></ul></ul><ul><ul><ul><li>Advertising </li></ul></ul></ul><ul><ul><ul><li>Merchandising </li></ul></ul></ul><ul><ul><ul><li>Co-branding </li></ul></ul></ul><ul><ul><ul><li>Product Placement </li></ul></ul></ul>
    77. 77. Trademark Licensing/Franchising <ul><li>CAUTION </li></ul><ul><ul><li>Traditional Franchising </li></ul></ul><ul><ul><ul><li>Trademark </li></ul></ul></ul><ul><ul><ul><li>Significant control or assistance in method of operation </li></ul></ul></ul><ul><ul><ul><li>Required payment as a condition of obtaining the franchise </li></ul></ul></ul><ul><ul><li>Business Opportunity Franchising </li></ul></ul><ul><ul><ul><li>Right to sell goods/services supplied by seller </li></ul></ul></ul><ul><ul><ul><li>Location assistance </li></ul></ul></ul><ul><ul><ul><li>Required payment </li></ul></ul></ul>
    78. 78. Trademark Licensing/Franchising <ul><li>Franchise Rules (heavily regulated) </li></ul><ul><ul><li>Federal Trade Commission </li></ul></ul><ul><ul><li>State Laws </li></ul></ul><ul><ul><li>Strict Requirements & Penalties for Non-compliance </li></ul></ul>
    79. 79. Trademark Licensing <ul><li>TM Specific Licensing Issues </li></ul><ul><ul><li>Defining the Trademarks </li></ul></ul><ul><ul><ul><li>Where </li></ul></ul></ul><ul><ul><ul><ul><li>Recitals (be sure to incorporate) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Body of Agreement </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Exhibits </li></ul></ul></ul></ul><ul><ul><ul><li>How </li></ul></ul></ul><ul><ul><ul><ul><li>Use Federal Serial/Registration numbers if available </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Include logos, typed form, colors </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Co-created marks? </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Marks developed in the future? </li></ul></ul></ul></ul>
    80. 80. Trademark Licensing <ul><li>Scope </li></ul><ul><ul><li>Territory </li></ul></ul><ul><ul><li>Type (exclusive, non-exclusive) </li></ul></ul><ul><ul><li>Term </li></ul></ul><ul><li>Purpose </li></ul><ul><ul><li>Permitted uses </li></ul></ul><ul><ul><li>Excluded uses </li></ul></ul><ul><li>Use </li></ul><ul><ul><li>Must “inure” to the TM owner’s benefit </li></ul></ul><ul><ul><li>Internationally – License Registration/Recordal </li></ul></ul><ul><ul><li>Right to sub-license? </li></ul></ul><ul><li>Royalty or royalty-free? </li></ul>
    81. 81. Trademark Licensing <ul><li>Acknowledgement of owner’s rights </li></ul><ul><li>Agreement not to interfere </li></ul><ul><ul><li>During or after term </li></ul></ul><ul><ul><li>Use or registration </li></ul></ul><ul><ul><li>No aiding or abetting </li></ul></ul><ul><li>Domain Names </li></ul><ul><ul><li>Registration </li></ul></ul><ul><ul><li>Use </li></ul></ul><ul><ul><li>Territory </li></ul></ul>
    82. 82. Trademark Licensing <ul><li>QUALITY CONTROL </li></ul><ul><ul><li>Essential </li></ul></ul><ul><ul><ul><li>Avoid Naked Licensing and Abandonment </li></ul></ul></ul><ul><ul><li>Say what you do … do what you say </li></ul></ul><ul><ul><li>Pre-license approvals </li></ul></ul><ul><ul><li>Periodic review and approvals </li></ul></ul><ul><ul><li>Site visits </li></ul></ul>
    83. 83. Trademark Licensing <ul><li>TM Usage Guidelines </li></ul><ul><ul><li>Exhibit or “provided from time to time” </li></ul></ul><ul><ul><li>Do not modify, change colors, typeface </li></ul></ul><ul><ul><li>Do not use with other marks, logos </li></ul></ul><ul><ul><li>Use of TM, SM or ® </li></ul></ul><ul><ul><li>Use of ownership legends </li></ul></ul><ul><ul><li>Use as an adjective, not a noun </li></ul></ul><ul><ul><li>Do not make plural </li></ul></ul><ul><li>Packaging Guidelines </li></ul>
    84. 84. Trademark Licensing <ul><li>Registration and IP Protection </li></ul><ul><ul><li>Duty to register and maintain the trademarks? </li></ul></ul><ul><ul><li>Pursue infringements? </li></ul></ul><ul><ul><li>Recourse – litigation required? </li></ul></ul><ul><ul><li>Who pays? </li></ul></ul><ul><ul><li>Who reaps benefits? </li></ul></ul><ul><ul><li>Requirement to assist? </li></ul></ul>
    85. 85. Trademark Licensing <ul><li>Representations, Warranties & Indemnifications </li></ul><ul><ul><li>Licensor/Owner </li></ul></ul><ul><ul><ul><li>Ownership </li></ul></ul></ul><ul><ul><ul><li>IP infringes third party rights </li></ul></ul></ul><ul><ul><li>Licensee </li></ul></ul><ul><ul><ul><li>Misuse causes IP infringement </li></ul></ul></ul><ul><ul><ul><li>Products/services cause harm </li></ul></ul></ul>
    86. 86. Trademark Licensing <ul><li>Termination and Expiration </li></ul><ul><ul><li>Effects </li></ul></ul><ul><ul><ul><li>Return of property and confidential information </li></ul></ul></ul><ul><ul><ul><li>Disposition of licensed items </li></ul></ul></ul><ul><ul><ul><ul><li>Destruction </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Return </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Sale, loan, give-away </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Bargain bins </li></ul></ul></ul></ul><ul><ul><ul><li>Timing considerations (mid-production) </li></ul></ul></ul>
    87. 87. Trademark Licensing <ul><li>Remedies </li></ul><ul><ul><li>Injunctive relief </li></ul></ul><ul><ul><li>Damages </li></ul></ul><ul><ul><ul><li>Compensatory damages and profits of infringer </li></ul></ul></ul><ul><ul><ul><li>Damages trebled for willful infringement </li></ul></ul></ul><ul><ul><ul><li>Attorneys’ fees only for extraordinary situations </li></ul></ul></ul>
    88. 88. Patent Licensing <ul><li>Type of Agreement </li></ul><ul><li>Scope: Slicing and Dicing </li></ul><ul><li>Exclusive versus Non-exclusive </li></ul><ul><li>Warranty Issues </li></ul><ul><li>Indemnification </li></ul><ul><li>Royalties </li></ul>
    89. 89. Patent Licensing: Agreement Type <ul><li>Simple License Agreement </li></ul><ul><li>Cross-licensing Agreement </li></ul><ul><li>Product Distribution Agreement </li></ul><ul><li>Product Manufacturing Agreement </li></ul><ul><li>Joint Development Agreement </li></ul>
    90. 90. Patent Licensing: Scope <ul><li>What rights are being granted? </li></ul><ul><ul><li>Make, have made, use, sell, offer to sell, import </li></ul></ul><ul><li>What is the territory? </li></ul><ul><ul><li>Local, regional, national, worldwide </li></ul></ul><ul><li>What is the duration? </li></ul><ul><li>Licensing inventions versus patents </li></ul><ul><li>Incorporation of other IP rights </li></ul>
    91. 91. Patent Licensing: Exclusivity <ul><li>Exclusive license precludes patent owner from practicing the invention </li></ul><ul><li>Typically will command higher royalty </li></ul><ul><li>Performance standards for exclusive licensees </li></ul><ul><ul><li>Gross sales minimums </li></ul></ul><ul><ul><li>Royalty minimums </li></ul></ul><ul><ul><li>Failure of licensee to meet the standards </li></ul></ul>
    92. 92. Patent Licensing: Warranties <ul><li>Non-infringement </li></ul><ul><li>Ownership/right to grant the license </li></ul><ul><li>“Best knowledge” warranties </li></ul><ul><li>Limitations of Liability </li></ul><ul><ul><li>Type of damages (indirect, special, punitive) </li></ul></ul><ul><ul><li>Amount of damages </li></ul></ul><ul><ul><li>Actions that void the warranty </li></ul></ul>
    93. 93. Patent Licensing: Indemnification <ul><li>Against infringement </li></ul><ul><ul><li>Limit to U.S. or other country’s patents </li></ul></ul><ul><ul><li>Limit to existing patents and published apps </li></ul></ul><ul><ul><li>Are combination claims covered? </li></ul></ul><ul><li>Conditions on indemnity obligation: </li></ul><ul><ul><li>Prompt notice of infringement claim </li></ul></ul><ul><ul><li>Cooperation by licensee </li></ul></ul><ul><ul><li>Right to control defense and settlement </li></ul></ul><ul><li>Right to procure license or replace </li></ul><ul><li>Exclusive remedy </li></ul>
    94. 94. Patent Licensing: Royalties <ul><li>One time or upfront license fee </li></ul><ul><li>Ongoing royalties </li></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Units </li></ul></ul><ul><li>Royalty reports </li></ul><ul><li>Right to audit </li></ul><ul><li>Anti-stacking provisions </li></ul>
    95. 95. Q&A

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