0
MY 
DIRTY 
LITTLE 
START-UP 
INTELLECTUAL PROPERTY 
FOR LEGAL-O-PHOBES 
SECRET 
http://www.flickr.com/photos/wetfoto/
PART 1…..…………….The Roots of Intellectual Property 
PART 2….……….……………Intellectual Property Law 101 
PART 3.......Making Mon...
PART 1 
The Roots of Intellectual Property
Intellectual Property (IP) is a tactical 
management tool
and nothing more
This is key 
because the most common mistake 
entrepreneurs make is to be awed, 
emotional, or self-righteous about IP, 
w...
Intellectual Property is not one of your 
fundamental, natural rights
As it so happens, it is a public policy 
that was crafted in 17th century Europe
For kings, merchants, and clerics to 
divvy up the benefits of (and control) 
the newly invented printing press
Before that
For tens of thousands of years of 
human history
Patents 
Copyrights 
Trade Marks
did not exist (*) 
(*) OK, super IP geeks, give me a break on this one. I’s more exciting if I state it this way, and, des...
Today, IP policy has evolved from its 
mercantile roots into a mechanism to 
accelerate innovation (patents and 
copyright...
Here’s the basic Econ 101 party line
If an inventor cannot reap the financial 
rewards from inventing, because 
someone else steals the ideas, the 
inventor wi...
If a pirate can pass themselves off as a 
quality brand, while producing cheaply, 
then there will be no incentive for the...
So, to fend off future stagnation, 
governments strike a societal balance 
between the evils of monopoly and the 
benefits...
At it’s core, modern IP is a legal 
framework that grants inventors a 
limited window of monopoly during 
which they can e...
Or in the words of the big dogs… 
“The Congress shall have the power 
to promote the progress of science 
and useful arts,...
So, simply put
Patents protect inventions
Copyrights protect (artistic) expression 
of ideas
Trademarks protect quality brands / 
market reputation
But… 
To reiterate, ideas and inventions are 
not fundamental rights
They are temporary grants, given for a 
specific societal benefit 
incentivization
The ideas are not “yours”
and you shouldn’t get attached to them
and… 
if there are more effective ways to 
achieve the societal aims of 
incentivizing inventors, then we all 
shouldn’t g...
But, one last word before we stop with 
all this philosophy crap
There are also serious, potentially 
unresolvable problems with IP in 
today’s world
Think of these as unwanted drug side-effects
1. Humanity was plenty inventive before 1600AD. The very 
assumption that inventors won’t invent without cash may 
be wron...
But let’s leave it at that for now
If you’re keen, you can join the rich 
discussions online about why IP is evil 
on your own
For now, let’s make sure that we 
understand the IP regime, so that we 
can legally manipulate it to our 
maximum financia...
as entrepreneurs are meant to do with 
all public policy
mwahahahahahahahaha
PART 2 
Intellectual Property Law 101
But wait, isn't IP law something to 
leave to the lawyers?
NOOOOOOOOOO!
Did you know 
• By 1999, 75% of Fortune 100 total market cap 
was represented in intangible assets 
• Massive firm investm...
IP is NOT something for your lawyers
It is something for you
How you manage IP is a critical part of 
corporate strategy and one of every manager's 
responsibilities
Lawyers can help you proof read your legal 
documents
and, if your lawyers are truly bad ass… 
they can even ask you tough, clarifying 
questions, or give you ideas from what t...
but the terms of the deals are for you, the 
business, to define
based on your strategic objectives
OK, so what do you need to know about IP in 
order to do your job?
At it's core, IP strategy 
(which is really just corporate strategy) 
defines how you manage 4 assets
1. Patents 
2. Copyrights 
3. Trademarks 
4. Trade Secrets
Each of these assets wraps a specific 
form of intangible value (like ideas or 
brand image) into a legal form that can 
b...
In other words, IP turns the fluffy, 
intangible value into a tangible economic 
asset, that can be bought, sold, 
transfe...
Each of these 4 types of IP asset can be 
understood in terms of 6 characteristics
1. What can be protected 
2. How long do you get the protection for 
3. What constitutes infringement 
4. How do you enfor...
Here's an example of what I mean
PATENT COPYRIGHT TRADEMARK TRADE SECRET 
Scope Product of process 
Inventions that do 
something new 
FYI: Utility, Design...
Of course, this is just an example
despite international agreements like PCT, 
TRIPs, the Berne Convention, etc., all 6 
characteristics will vary from count...
lawyers can help you answer questions 
about which laws apply where
but for the lawyer to do much more, you’ll 
need to answer some fundamental 
questions
1. Where (in which countries) should I 
register, given my short, mid and long-term 
business/marketing plan 
2. What is t...
That’s the stuff the lawyer will have no idea 
about
but it’s the stuff that really matters
PART 3 
Making Money from Intellectual 
Property
with all that said, at the end of the day, 
the good entrepreneur has only one 
question
how do I make money from all this?
there are 6 ways (that I can think of) to 
squeeze value from IP
1. License Agreements 
2. Valuation 
3. Competitive Tactics 
4. Branding 
5. Internal Incentives 
6. Litigation
The most practical use for 
IP is to legally/formally 
establish an underlying 
asset that can be sold, 
borrowed, traded,...
And the legal mechanism 
that underlies the economic 
transaction involving IP is 
called a 
License Agreement 
Licensing ...
A License Agreement is a 
contract between an IP 
owner and an IP user 
Licensing 
Valuation 
Tactics 
Branding 
Incentive...
It defines the terms of the 
transaction 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
• What can the buyer do (or 
explicitly not do) with the asset 
• How much will the buyer pay for 
the asset and what are ...
For example, 
"for the agreed upon 
consideration (let's say 59.99), 
the user may download the 
software onto a single PC...
you know. 
when you get that 
Microsoft pop-up dialog 
with that long stream of 
blah-blah-blah text that you 
ignore and ...
That's a License Agreement 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
And you've just signed away 
your first-born child by 
clicking, "I accept" 
Licensing 
Valuation 
Tactics 
Branding 
Ince...
Finally, note that the terms 
of a License Agreement can 
be as varied as the 
imaginations of the buyer 
and seller 
Lice...
Don't feel restricted to any 
template 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
The License terms are just 
your business model 
masquerading as a legal 
document 
Licensing 
Valuation 
Tactics 
Brandin...
That's why License 
Innovation can be as 
profound as Product 
Innovation 
Licensing 
Valuation 
Tactics 
Branding 
Incent...
Consider the earthquakes 
caused in the Software 
Industry by the innovation 
of the GNU General Public 
License – which w...
IP can also form the 
underlying asset used to 
increase a company's 
valuation 
Licensing 
Valuation 
Tactics 
Branding 
...
Sometimes we refer to a 
company's, "goodwill value" 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
This "goodwill value" is the 
hypothetical value of a 
company's intangible assets 
including reputation, brand, 
Intellec...
when valuing a company (in 
the case of acquisition for 
example), the goodwill 
value is added to the hard 
value of phys...
The goodwill value can be 
significant 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
We already mentioned the 
Fortune 500 stat earlier! 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
Since IP is one of a 
company's intangible assets, 
formalizing that IP through 
patents, copyrights, or trade 
marks can ...
But…. 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
Just having a patent does not 
immediately raise your 
valuation, as start-up 
folklore might suggest 
Licensing 
Valuatio...
At the end of the day, you 
still need to explain what 
you are going to do with 
your IP….how you will 
convert the intan...
There are also lots of fun, 
wonderfully-evil, 
Machievellian / Sun Tzu 
types of tactical games that 
companies play with...
Though, to be frank, these 
are more interesting for big 
companies rather than start-ups 
Licensing 
Valuation 
Tactics 
...
The most basic IP tactic is 
the Pre-emptive strike 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
Which is basically… 
Patent before someone else 
does. 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
The thing is…. 
Even if you legitimately have the IP 
first, you don't want to get bogged 
down in a bunch of annoying 
la...
Once you have the patent, you 
proactively fend off potential 
annoyance – like a bug spray 
Licensing 
Valuation 
Tactics...
By proactively patenting, you'll also 
go through the Patent Search 
process 
Licensing 
Valuation 
Tactics 
Branding 
Inc...
This helps ensure that there 
are no Submarine Patents or 
other bugs lurking out there 
that could come back to bite 
you...
And these bugs can be VERY 
annoying 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
Consider Patent Trolls (non-practicing 
entity) 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
A Patent Troll is an 
aggressive, opportunist 
person /company that claims 
patents, often with no 
intention to manufactu...
The Patent Troll takes advantage of 
the fact that the cost of defending 
against a patent infringement suit, 
as of 2004,...
And worse yet, you never 
know what might happen 
when a jury is involved! 
Licensing 
Valuation 
Tactics 
Branding 
Incen...
Trolls know that high costs & 
risks mean that defendants 
may settle even frivolous 
suits (for hundreds of 
thousands), ...
By the way, there is no 
obligation to defend an unused 
patent immediately 
Licensing 
Valuation 
Tactics 
Branding 
Ince...
So the Patent Troll's target may 
produce the patented product 
for years before the Troll sues 
them (Submarine Patent) 
...
But aren't the costs of a pre-emptive 
approach too high? 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
You’ll have the legal costs of 
course: 
• Application support 
• Search 
• Registration 
Licensing 
Valuation 
Tactics 
B...
But you’ll also have the 
internal costs 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
For example, you’ll be 
taking your best engineers 
and sticking them in front of 
a Word document 
composing product 
spe...
That's where Collective 
Defensive Patent 
Aggregation (DPA) comes 
into play 
Licensing 
Valuation 
Tactics 
Branding 
In...
With Collective DPA, companies 
agree to share the insurance 
cost of pre-emption by forming 
a joint Patent Pool where th...
This has a sneaky anti-competition 
side effect as an 
entry barrier to future 
legitimate market actors 
Licensing 
Valua...
If 3-5 big players share the pool 
of patents required to execute a 
certain technology, they can 
ensure that no future 
...
Not naming any names, but 
this works very well if you can 
make it look like you are playing 
nicely and helping to defin...
Sometimes we call the resulting 
pool a patent fence or thicket 
(which can be created by a single, 
rich firm as easily a...
A Patent Fence is, as wikipedia says, 
“a dense web of overlapping or 
dependent intellectual property 
rights that a comp...
Alternatively an IP holder can build 
a fence by patenting all mechanisms 
to achieve the result – even if they 
only actu...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
Patent 
YOU US 
YOU 
YOU 
Patent Patent 
X 
X 
X
This is all great for the big boys 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
But crap for you and me 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
So what are the little guys, on 
little budgets, to do? 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
Ultimately, if you are going to 
play the IP game, you need to 
find a hole in the patent fence 
and innovate around paten...
Here is how it might work in 
simple terms 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
Let’s say that the original innovator 
patents a product such as square, 
connected to triangle, connected to 
circle 
The...
Of course, despite the engineering, 
the customer experiences the 
product as the red outline 
Licensing 
Valuation 
Tacti...
So the smart competitor delivers the 
customer experience with a slightly 
different design of 2 rectangles and 2 
semi-ci...
This can be achieved via reverse 
engineering, or simply creative, 
cheeky design 
Licensing 
Valuation 
Tactics 
Branding...
Of course, big companies with 
valuable/complex IP portfolios, or in 
industries where IP has a profound 
impact, closely ...
These firms will maintain a patent 
map/landscape, which is a 
graphical model of patent 
visualisation and will constantl...
In the process, they can play fun 
games like misdirection or 
vapourware 
Licensing 
Valuation 
Tactics 
Branding 
Incent...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
US 
Misdirection 
File pending patents that you don't int...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
Vapourware 
Fake the process, but don't suffer the spend ...
A smart IP Holder can also send 
threatening letters (regardless of 
the legitimacy of their claim) 
Licensing 
Valuation ...
For example, I’m an investor in a 
company that was called Racerbook 
Licensing 
Valuation 
Tactics 
Branding 
Incentives ...
Some months ago, Facebook sent us 
a threatening letter claiming 
Trademark violation 
Licensing 
Valuation 
Tactics 
Bran...
Despite the fact that we all felt 
Facebook had no legal claim as the 
businesses were very different… 
Licensing 
Valuati...
We backed down and renamed the 
company Racerlink 
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation
After all, who wants to fight 
Facebook’s giant financial warchest 
and their army of lawyers on staff, 
who get paid sala...
But big companies will not only 
fence off their playing field with 
product (engineering) patents. 
They will also patent...
Further, companies may often buy 
patents up & down the value chain 
so that they cannot be held hostage 
by suppliers who...
Consider the effects of Nokia’s 
patents on loudspeakers 
documented on Wikipedia 
Licensing 
Valuation 
Tactics 
Branding...
Even though the company does not 
engage in the production of cell-phone 
components, it keeps a 
handle on its suppliers ...
Nokia has such patents not in order 
to squeeze suppliers but to forearm 
against price increases in an 
upstream segment ...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
IP strategy can also impact 
manufacturing
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
Many companies break up the 
process of manufacturing acr...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
This helps prevent manufacturers 
(especially in weak IP ...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
IP can also be used as a branding 
tool
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
If you show your customers and 
analysts a vast IP portfo...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
And don’t forget HR policies 
Companies like Google use t...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
This locks scientists in for the 
duration and can be see...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
Last but not least, you can 
potentially earn quite a bit...
Licensing 
Valuation 
Tactics 
Branding 
Incentives 
Litigation 
And even if you don’t sue anyone, 
you can get quite a bi...
PART 4 
Beyond Intellectual Property
So, with all that said, there is also a 
case that you shouldn’t waste your 
time, efforts, and money on IP
For one, IP, especially patents, is 
incredibly expensive to obtain, maintain, 
monitor & enforce
But, even after all that expense, 
the protection may only offer weak, 
unenforceable protection 
Especially if you are a ...
In addition, once you leave the 
cosy confines of Trade Secret, your 
IP will only have a limited lifespan 
as registering...
Plus your competitors can start 
working on the workaround the 
minute your invention is published 
for the patent applica...
Further, depending on your 
industry’s speed of innovation, by 
the time you prepare for, and 
obtain, protection, the mar...
and one more thing…
if I may take my tie and cufflinks off for 
a moment
IP is ethically immoral
But far more importantly, given 
enforceability, the fact that IP must 
flow into the public domain if it is to be 
regist...
so what else will work?
CLIFF HANGER 
ALERT!!!
Wanna find out about Better Barriers 
to Entry? 
Follow me on Slideshare 
http://www.slideshare.net/selenasol/p 
resentati...
PART 5 
IP Resources
Selling Wine without Bottles https://projects.eff.org/~barlow/EconomyOfIdeas.h 
tml 
What is the process for filing a 
pat...
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Intellectual Property for Entrepreneurs

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  • If one is going to play the 'game of patents', one should play to win. While there are rules and deadlines which have to be met, one can still choose the 'game' they are playing: Cops & RObbers; MOnopoly, RIsk; Stratego; Dice; Jacks or Rubiks Cube. But remember, just because you are in the 'game', does not mean your competition will be playing the same game you are playing...
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  • Eric - very nice presentation (although maybe you can reduce the 175 slides?) Basic question I ask companies that are serious about their IP - who is managing and overseeing the IP? R&D - too busy, they have deadlines to meet; Marketing - not technical enough; Legal Team - tey don't care about your marketing plans or business strategy... and even if they did its an ineffective use of your resources as well and theirs (they get paid to draft and litigate patents). This is why it is important to establish IP Development teams (focused on IP strategy and Business Development).
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  • Great point ehrp!
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  • Congratulations. For what I’ve seen, so far so enlightening, but I’ll have to look into it later on.
    One thing I can share by experience is that the Examiners should be enlightened experts within each field.
    The comments to my latest PCT application are so weak technically, but mandatory because it comes from a PCT Examiner. !!!UUAAOO!!!
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  • I'll have to fix these issues when i get home from travel. Cheers!
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Transcript of "Intellectual Property for Entrepreneurs"

  1. 1. MY DIRTY LITTLE START-UP INTELLECTUAL PROPERTY FOR LEGAL-O-PHOBES SECRET http://www.flickr.com/photos/wetfoto/
  2. 2. PART 1…..…………….The Roots of Intellectual Property PART 2….……….……………Intellectual Property Law 101 PART 3.......Making Money from Intellectual Property PART 4……..………………….Beyond Intellectual Property PART 5………..………………………………………..IP Resources
  3. 3. PART 1 The Roots of Intellectual Property
  4. 4. Intellectual Property (IP) is a tactical management tool
  5. 5. and nothing more
  6. 6. This is key because the most common mistake entrepreneurs make is to be awed, emotional, or self-righteous about IP, when they should be Machiavellian
  7. 7. Intellectual Property is not one of your fundamental, natural rights
  8. 8. As it so happens, it is a public policy that was crafted in 17th century Europe
  9. 9. For kings, merchants, and clerics to divvy up the benefits of (and control) the newly invented printing press
  10. 10. Before that
  11. 11. For tens of thousands of years of human history
  12. 12. Patents Copyrights Trade Marks
  13. 13. did not exist (*) (*) OK, super IP geeks, give me a break on this one. I’s more exciting if I state it this way, and, despite Ancient China and Senor Brunelleschi and all, it is true in the spirit of the argument
  14. 14. Today, IP policy has evolved from its mercantile roots into a mechanism to accelerate innovation (patents and copyrights) and quality (trademarks)
  15. 15. Here’s the basic Econ 101 party line
  16. 16. If an inventor cannot reap the financial rewards from inventing, because someone else steals the ideas, the inventor will not spend the blood, sweat, and tears required to invent in the first place, and the whole growth machine grinds to a halt (patents & copyrights)
  17. 17. If a pirate can pass themselves off as a quality brand, while producing cheaply, then there will be no incentive for the quality brand to invest in a quality product in the first place (trademark)
  18. 18. So, to fend off future stagnation, governments strike a societal balance between the evils of monopoly and the benefits of innovation & quality
  19. 19. At it’s core, modern IP is a legal framework that grants inventors a limited window of monopoly during which they can enjoy economic benefit
  20. 20. Or in the words of the big dogs… “The Congress shall have the power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries” -Article I, Section 8 US Constitution
  21. 21. So, simply put
  22. 22. Patents protect inventions
  23. 23. Copyrights protect (artistic) expression of ideas
  24. 24. Trademarks protect quality brands / market reputation
  25. 25. But… To reiterate, ideas and inventions are not fundamental rights
  26. 26. They are temporary grants, given for a specific societal benefit incentivization
  27. 27. The ideas are not “yours”
  28. 28. and you shouldn’t get attached to them
  29. 29. and… if there are more effective ways to achieve the societal aims of incentivizing inventors, then we all shouldn’t get so hung up on IP
  30. 30. But, one last word before we stop with all this philosophy crap
  31. 31. There are also serious, potentially unresolvable problems with IP in today’s world
  32. 32. Think of these as unwanted drug side-effects
  33. 33. 1. Humanity was plenty inventive before 1600AD. The very assumption that inventors won’t invent without cash may be wrong from inception 2. The accelerated speed of invention prompted by the IP system may be dangerous for society in a larger sense 3. It may not be fair that ideas built on thousands of years of public domain are individually owned 4. IP enforcement is getting so hard that IP may be an unenforceable right (e.g.: digital piracy, different legal regimes from country to country, etc) 5. Given creativity & technology complexity and options, IP is increasingly easy to innovate around 6. What about squeegie topics like patenting your genes 7. IP is easily abused by the powerful (e.g.: bio piracy, First World wants versus Third World needs, etc…)
  34. 34. But let’s leave it at that for now
  35. 35. If you’re keen, you can join the rich discussions online about why IP is evil on your own
  36. 36. For now, let’s make sure that we understand the IP regime, so that we can legally manipulate it to our maximum financial advantage as entrepreneurs
  37. 37. as entrepreneurs are meant to do with all public policy
  38. 38. mwahahahahahahahaha
  39. 39. PART 2 Intellectual Property Law 101
  40. 40. But wait, isn't IP law something to leave to the lawyers?
  41. 41. NOOOOOOOOOO!
  42. 42. Did you know • By 1999, 75% of Fortune 100 total market cap was represented in intangible assets • Massive firm investments are required for IP creation and protection • We are living in a globalized knowledge economy • IP rights are key strategic and tactical levers in Competitive Strategy that can make or break firms
  43. 43. IP is NOT something for your lawyers
  44. 44. It is something for you
  45. 45. How you manage IP is a critical part of corporate strategy and one of every manager's responsibilities
  46. 46. Lawyers can help you proof read your legal documents
  47. 47. and, if your lawyers are truly bad ass… they can even ask you tough, clarifying questions, or give you ideas from what they've learned in other cases
  48. 48. but the terms of the deals are for you, the business, to define
  49. 49. based on your strategic objectives
  50. 50. OK, so what do you need to know about IP in order to do your job?
  51. 51. At it's core, IP strategy (which is really just corporate strategy) defines how you manage 4 assets
  52. 52. 1. Patents 2. Copyrights 3. Trademarks 4. Trade Secrets
  53. 53. Each of these assets wraps a specific form of intangible value (like ideas or brand image) into a legal form that can be manipulated as any traditional, physical form of property
  54. 54. In other words, IP turns the fluffy, intangible value into a tangible economic asset, that can be bought, sold, transferred, administrated, & adjudicated in a market place
  55. 55. Each of these 4 types of IP asset can be understood in terms of 6 characteristics
  56. 56. 1. What can be protected 2. How long do you get the protection for 3. What constitutes infringement 4. How do you enforce your rights 5. How do you punish infringers 6. What is the process required to obtain the asset, how long does it take, & how much does it cost
  57. 57. Here's an example of what I mean
  58. 58. PATENT COPYRIGHT TRADEMARK TRADE SECRET Scope Product of process Inventions that do something new FYI: Utility, Design, and Plant Patents cover a smaller scope Expression of an original idea (not the idea itself), whether in words or an "artistic" endeavor, 2-D or 3-D, static or performance Word, phrase, symbol or design, or a combination thereof, that identifies and distinguishes the source of the goods of one party from those of others. • not generally known to the public • confers some sort of economic benefit on its holder (benefit must derive specifically from its not being publically known, not just from the value of the info) • is the subject of reasonable efforts to maintain its secrecy Duration (before asset moves to public domain) 20 years from filing FYI: Various rules about the period between filing & securing a patent 70 years after the death of the author (work-for-hire up to 120 years) 10 years In the words of Bono, "a secret is something you tell one other person" Infringement Others may not make, use, sell, or import your invention Others may not reproduce, prepare derivatives, distribute, perform or display in public (fair use claim possible) Others may not use your trade mark (pretend to be you in the course of trade with customers to your detriment) Others may not use what they have learned unless as above for scope Enforcement Patent Infringement Action Civil suit or criminal misdemeanour / felony Lawsuit You may sue for Misappropriation Remedies Varies Usually injunction to stop infringing + damages + forfeit of remaining duplicates Usually injunction to stop infringing + damages Varies Process / Cost (see the last slide of this deck) Quite complex and potentially very expensive Easy and cheap You don't even need to register, though you can. None
  59. 59. Of course, this is just an example
  60. 60. despite international agreements like PCT, TRIPs, the Berne Convention, etc., all 6 characteristics will vary from country to country
  61. 61. lawyers can help you answer questions about which laws apply where
  62. 62. but for the lawyer to do much more, you’ll need to answer some fundamental questions
  63. 63. 1. Where (in which countries) should I register, given my short, mid and long-term business/marketing plan 2. What is the right mix of protections to invest in, given expected market responses 3. How much should I (can I afford to) spend on IP registration, protection, & management given forecasted ROI and risk
  64. 64. That’s the stuff the lawyer will have no idea about
  65. 65. but it’s the stuff that really matters
  66. 66. PART 3 Making Money from Intellectual Property
  67. 67. with all that said, at the end of the day, the good entrepreneur has only one question
  68. 68. how do I make money from all this?
  69. 69. there are 6 ways (that I can think of) to squeeze value from IP
  70. 70. 1. License Agreements 2. Valuation 3. Competitive Tactics 4. Branding 5. Internal Incentives 6. Litigation
  71. 71. The most practical use for IP is to legally/formally establish an underlying asset that can be sold, borrowed, traded, or used as the basis for some economic transaction Licensing Valuation Tactics Branding Incentives Litigation
  72. 72. And the legal mechanism that underlies the economic transaction involving IP is called a License Agreement Licensing Valuation Tactics Branding Incentives Litigation
  73. 73. A License Agreement is a contract between an IP owner and an IP user Licensing Valuation Tactics Branding Incentives Litigation
  74. 74. It defines the terms of the transaction Licensing Valuation Tactics Branding Incentives Litigation
  75. 75. • What can the buyer do (or explicitly not do) with the asset • How much will the buyer pay for the asset and what are the terms of that payment • What other services come with the transaction (like support) • How long will the buyer enjoy these rights before they need to re-sign? • In which territories will the rights apply? • Etc… Licensing Valuation Tactics Branding Incentives Litigation
  76. 76. For example, "for the agreed upon consideration (let's say 59.99), the user may download the software onto a single PC and use it for 3 years. She may also enjoy up to 3 support requests during the license term" Licensing Valuation Tactics Branding Incentives Litigation
  77. 77. you know. when you get that Microsoft pop-up dialog with that long stream of blah-blah-blah text that you ignore and then quickly click "I agree" Licensing Valuation Tactics Branding Incentives Litigation
  78. 78. That's a License Agreement Licensing Valuation Tactics Branding Incentives Litigation
  79. 79. And you've just signed away your first-born child by clicking, "I accept" Licensing Valuation Tactics Branding Incentives Litigation
  80. 80. Finally, note that the terms of a License Agreement can be as varied as the imaginations of the buyer and seller Licensing Valuation Tactics Branding Incentives Litigation
  81. 81. Don't feel restricted to any template Licensing Valuation Tactics Branding Incentives Litigation
  82. 82. The License terms are just your business model masquerading as a legal document Licensing Valuation Tactics Branding Incentives Litigation
  83. 83. That's why License Innovation can be as profound as Product Innovation Licensing Valuation Tactics Branding Incentives Litigation
  84. 84. Consider the earthquakes caused in the Software Industry by the innovation of the GNU General Public License – which was not technology (http://www.gnu.org/licenses/gpl.html) Licensing Valuation Tactics Branding Incentives Litigation
  85. 85. IP can also form the underlying asset used to increase a company's valuation Licensing Valuation Tactics Branding Incentives Litigation
  86. 86. Sometimes we refer to a company's, "goodwill value" Licensing Valuation Tactics Branding Incentives Litigation
  87. 87. This "goodwill value" is the hypothetical value of a company's intangible assets including reputation, brand, Intellectual Property, etc Licensing Valuation Tactics Branding Incentives Litigation
  88. 88. when valuing a company (in the case of acquisition for example), the goodwill value is added to the hard value of physical assets like buildings or inventories and the hard-ish value of financial forecasts Licensing Valuation Tactics Branding Incentives Litigation
  89. 89. The goodwill value can be significant Licensing Valuation Tactics Branding Incentives Litigation
  90. 90. We already mentioned the Fortune 500 stat earlier! Licensing Valuation Tactics Branding Incentives Litigation
  91. 91. Since IP is one of a company's intangible assets, formalizing that IP through patents, copyrights, or trade marks can be helpful when arguing for goodwill value when your company is being valued Licensing Valuation Tactics Branding Incentives Litigation
  92. 92. But…. Licensing Valuation Tactics Branding Incentives Litigation
  93. 93. Just having a patent does not immediately raise your valuation, as start-up folklore might suggest Licensing Valuation Tactics Branding Incentives Litigation
  94. 94. At the end of the day, you still need to explain what you are going to do with your IP….how you will convert the intangible value into cold, hard cash Licensing Valuation Tactics Branding Incentives Litigation
  95. 95. There are also lots of fun, wonderfully-evil, Machievellian / Sun Tzu types of tactical games that companies play with IP for profit Licensing Valuation Tactics Branding Incentives Litigation
  96. 96. Though, to be frank, these are more interesting for big companies rather than start-ups Licensing Valuation Tactics Branding Incentives Litigation
  97. 97. The most basic IP tactic is the Pre-emptive strike Licensing Valuation Tactics Branding Incentives Litigation
  98. 98. Which is basically… Patent before someone else does. Licensing Valuation Tactics Branding Incentives Litigation
  99. 99. The thing is…. Even if you legitimately have the IP first, you don't want to get bogged down in a bunch of annoying lawsuits because some joker files and then starts causing trouble Licensing Valuation Tactics Branding Incentives Litigation
  100. 100. Once you have the patent, you proactively fend off potential annoyance – like a bug spray Licensing Valuation Tactics Branding Incentives Litigation
  101. 101. By proactively patenting, you'll also go through the Patent Search process Licensing Valuation Tactics Branding Incentives Litigation
  102. 102. This helps ensure that there are no Submarine Patents or other bugs lurking out there that could come back to bite you when you are rolling in the dough Licensing Valuation Tactics Branding Incentives Litigation
  103. 103. And these bugs can be VERY annoying Licensing Valuation Tactics Branding Incentives Litigation
  104. 104. Consider Patent Trolls (non-practicing entity) Licensing Valuation Tactics Branding Incentives Litigation
  105. 105. A Patent Troll is an aggressive, opportunist person /company that claims patents, often with no intention to manufacture or market the product AKA an A$$hole Licensing Valuation Tactics Branding Incentives Litigation
  106. 106. The Patent Troll takes advantage of the fact that the cost of defending against a patent infringement suit, as of 2004, is typically $1 million or more before trial, and $2.5 million for a complete defence, even if successful https://en.wikipedia.org/wiki/Patent_troll Licensing Valuation Tactics Branding Incentives Litigation
  107. 107. And worse yet, you never know what might happen when a jury is involved! Licensing Valuation Tactics Branding Incentives Litigation
  108. 108. Trolls know that high costs & risks mean that defendants may settle even frivolous suits (for hundreds of thousands), just to swat the mosquito Licensing Valuation Tactics Branding Incentives Litigation
  109. 109. By the way, there is no obligation to defend an unused patent immediately Licensing Valuation Tactics Branding Incentives Litigation
  110. 110. So the Patent Troll's target may produce the patented product for years before the Troll sues them (Submarine Patent) Licensing Valuation Tactics Branding Incentives Litigation
  111. 111. But aren't the costs of a pre-emptive approach too high? Licensing Valuation Tactics Branding Incentives Litigation
  112. 112. You’ll have the legal costs of course: • Application support • Search • Registration Licensing Valuation Tactics Branding Incentives Litigation
  113. 113. But you’ll also have the internal costs Licensing Valuation Tactics Branding Incentives Litigation
  114. 114. For example, you’ll be taking your best engineers and sticking them in front of a Word document composing product specifications (which they hate doing) when they could be out inventing the next product! Licensing Valuation Tactics Branding Incentives Litigation
  115. 115. That's where Collective Defensive Patent Aggregation (DPA) comes into play Licensing Valuation Tactics Branding Incentives Litigation
  116. 116. With Collective DPA, companies agree to share the insurance cost of pre-emption by forming a joint Patent Pool where they co-purchase patents as a joint defence Licensing Valuation Tactics Branding Incentives Litigation
  117. 117. This has a sneaky anti-competition side effect as an entry barrier to future legitimate market actors Licensing Valuation Tactics Branding Incentives Litigation
  118. 118. If 3-5 big players share the pool of patents required to execute a certain technology, they can ensure that no future competitors enter the market because the licensing costs will be too high Licensing Valuation Tactics Branding Incentives Litigation
  119. 119. Not naming any names, but this works very well if you can make it look like you are playing nicely and helping to define an industry standard (e.g.: IEEE) Licensing Valuation Tactics Branding Incentives Litigation
  120. 120. Sometimes we call the resulting pool a patent fence or thicket (which can be created by a single, rich firm as easily as it can by a group) Licensing Valuation Tactics Branding Incentives Litigation
  121. 121. A Patent Fence is, as wikipedia says, “a dense web of overlapping or dependent intellectual property rights that a competitor must hack its way through in order to actually commercialize new technology.“ Licensing Valuation Tactics Branding Incentives Litigation
  122. 122. Alternatively an IP holder can build a fence by patenting all mechanisms to achieve the result – even if they only actually use one of them in practice Licensing Valuation Tactics Branding Incentives Litigation
  123. 123. Licensing Valuation Tactics Branding Incentives Litigation Patent YOU US YOU YOU Patent Patent X X X
  124. 124. This is all great for the big boys Licensing Valuation Tactics Branding Incentives Litigation
  125. 125. But crap for you and me Licensing Valuation Tactics Branding Incentives Litigation
  126. 126. So what are the little guys, on little budgets, to do? Licensing Valuation Tactics Branding Incentives Litigation
  127. 127. Ultimately, if you are going to play the IP game, you need to find a hole in the patent fence and innovate around patents Licensing Valuation Tactics Branding Incentives Litigation
  128. 128. Here is how it might work in simple terms Licensing Valuation Tactics Branding Incentives Litigation
  129. 129. Let’s say that the original innovator patents a product such as square, connected to triangle, connected to circle Then they patent this Licensing Valuation Tactics Branding Incentives Litigation
  130. 130. Of course, despite the engineering, the customer experiences the product as the red outline Licensing Valuation Tactics Branding Incentives Litigation
  131. 131. So the smart competitor delivers the customer experience with a slightly different design of 2 rectangles and 2 semi-circles And patents the new solution Licensing Valuation Tactics Branding Incentives Litigation
  132. 132. This can be achieved via reverse engineering, or simply creative, cheeky design Licensing Valuation Tactics Branding Incentives Litigation
  133. 133. Of course, big companies with valuable/complex IP portfolios, or in industries where IP has a profound impact, closely monitor new patents & patent applications (here come the lawyers again) Licensing Valuation Tactics Branding Incentives Litigation
  134. 134. These firms will maintain a patent map/landscape, which is a graphical model of patent visualisation and will constantly scan all new patent applications in their area Licensing Valuation Tactics Branding Incentives Litigation
  135. 135. In the process, they can play fun games like misdirection or vapourware Licensing Valuation Tactics Branding Incentives Litigation
  136. 136. Licensing Valuation Tactics Branding Incentives Litigation US Misdirection File pending patents that you don't intend to use to trick competitor into moving into undesirable market space
  137. 137. Licensing Valuation Tactics Branding Incentives Litigation Vapourware Fake the process, but don't suffer the spend so that your competitor goes into another market space to avoid the fight Patent Patent
  138. 138. A smart IP Holder can also send threatening letters (regardless of the legitimacy of their claim) Licensing Valuation Tactics Branding Incentives Litigation
  139. 139. For example, I’m an investor in a company that was called Racerbook Licensing Valuation Tactics Branding Incentives Litigation
  140. 140. Some months ago, Facebook sent us a threatening letter claiming Trademark violation Licensing Valuation Tactics Branding Incentives Litigation
  141. 141. Despite the fact that we all felt Facebook had no legal claim as the businesses were very different… Licensing Valuation Tactics Branding Incentives Litigation
  142. 142. We backed down and renamed the company Racerlink Licensing Valuation Tactics Branding Incentives Litigation
  143. 143. After all, who wants to fight Facebook’s giant financial warchest and their army of lawyers on staff, who get paid salary no matter what they do?!?!?!?! Licensing Valuation Tactics Branding Incentives Litigation
  144. 144. But big companies will not only fence off their playing field with product (engineering) patents. They will also patent manufacturing process or delivery mechanisms (especially for drugs) Licensing Valuation Tactics Branding Incentives Litigation
  145. 145. Further, companies may often buy patents up & down the value chain so that they cannot be held hostage by suppliers who may use IP to extract too much margin Licensing Valuation Tactics Branding Incentives Litigation
  146. 146. Consider the effects of Nokia’s patents on loudspeakers documented on Wikipedia Licensing Valuation Tactics Branding Incentives Litigation
  147. 147. Even though the company does not engage in the production of cell-phone components, it keeps a handle on its suppliers by maintaining control of key IP rights in different segments of the value chain Licensing Valuation Tactics Branding Incentives Litigation
  148. 148. Nokia has such patents not in order to squeeze suppliers but to forearm against price increases in an upstream segment where competition is not too high as there is only a handful of suppliers Licensing Valuation Tactics Branding Incentives Litigation
  149. 149. Licensing Valuation Tactics Branding Incentives Litigation IP strategy can also impact manufacturing
  150. 150. Licensing Valuation Tactics Branding Incentives Litigation Many companies break up the process of manufacturing across several manufacturing firms, each one producing only part of the whole product
  151. 151. Licensing Valuation Tactics Branding Incentives Litigation This helps prevent manufacturers (especially in weak IP enforcement zones like China) from learning/replicating all the key secrets
  152. 152. Licensing Valuation Tactics Branding Incentives Litigation IP can also be used as a branding tool
  153. 153. Licensing Valuation Tactics Branding Incentives Litigation If you show your customers and analysts a vast IP portfolio, they will assume that you are a cutting-edge firm made up of really, freaking smart people and that will bolster your brand value
  154. 154. Licensing Valuation Tactics Branding Incentives Litigation And don’t forget HR policies Companies like Google use the patenting process to lock-in their best and brightest by allowing them to co-patent inventions
  155. 155. Licensing Valuation Tactics Branding Incentives Litigation This locks scientists in for the duration and can be seen as an incentive to the super geeks who forgot they left university
  156. 156. Licensing Valuation Tactics Branding Incentives Litigation Last but not least, you can potentially earn quite a bit of money in Civil cases
  157. 157. Licensing Valuation Tactics Branding Incentives Litigation And even if you don’t sue anyone, you can get quite a bit of press by leading high-profile raids!
  158. 158. PART 4 Beyond Intellectual Property
  159. 159. So, with all that said, there is also a case that you shouldn’t waste your time, efforts, and money on IP
  160. 160. For one, IP, especially patents, is incredibly expensive to obtain, maintain, monitor & enforce
  161. 161. But, even after all that expense, the protection may only offer weak, unenforceable protection Especially if you are a little guy
  162. 162. In addition, once you leave the cosy confines of Trade Secret, your IP will only have a limited lifespan as registering it means eventually giving it up to the public domain
  163. 163. Plus your competitors can start working on the workaround the minute your invention is published for the patent application
  164. 164. Further, depending on your industry’s speed of innovation, by the time you prepare for, and obtain, protection, the market moment may be passed
  165. 165. and one more thing…
  166. 166. if I may take my tie and cufflinks off for a moment
  167. 167. IP is ethically immoral
  168. 168. But far more importantly, given enforceability, the fact that IP must flow into the public domain if it is to be registered, and the exorbitant costs associated with IP management, many firms other than the big guys, may look at the ROI and say….nah!
  169. 169. so what else will work?
  170. 170. CLIFF HANGER ALERT!!!
  171. 171. Wanna find out about Better Barriers to Entry? Follow me on Slideshare http://www.slideshare.net/selenasol/p resentations The next deck is coming…..
  172. 172. PART 5 IP Resources
  173. 173. Selling Wine without Bottles https://projects.eff.org/~barlow/EconomyOfIdeas.h tml What is the process for filing a patent in the US? http://www.uspto.gov/patents/process/ppo_texton ly.jsp What is the process for filing a patent in Singapore? http://www.ipos.gov.sg/AboutIP/TypesofIPWhatisIn tellectualProperty/Whatisapatent/Applyingforapate nt/ApplyingforapatentinSingapore.aspx What do you do if someone infringes your copyright? http://www.copyright.gov/help/faq/faq-infringement. html What do you do if someone infringes your patent? http://www.beemlaw.com/video-gallery/what-if-someone- is-infringing-your-patent What do you do if someone infringes your trademark? http://en.wikipedia.org/wiki/Trademark_infringeme nt
  174. 174. SHARE THIS DECK & FOLLOW ME (please-oh-please-oh-please-oh-please) stay up to date with my future slideshare posts http://www.slideshare.net/selenasol/presentations https://twitter.com/eric_tachibana http://www.linkedin.com/pub/eric-tachibana/0/33/b53 Please note that all content & opinions expressed in this deck are my own and don’t necessarily represent the position of my current, or any previous,
  175. 175. CLICK HERE FOR MORE!!!!
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