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Intellectual Property 101 for Start-Ups

Intellectual Property 101 for Start-Ups



Rob McInnes, one of Australia's leading patent and technology licensing lawyers gives an overview of IP basics and recent developments aimed at startups. ...

Rob McInnes, one of Australia's leading patent and technology licensing lawyers gives an overview of IP basics and recent developments aimed at startups.

This was presented in a recent workshop for the INCUBATE startups.



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    Intellectual Property 101 for Start-Ups Intellectual Property 101 for Start-Ups Presentation Transcript

    • IP 101 for Start-Ups Rob McInnes
    • 2 Today’s Content   Why does IP matter?   IP basics   IP in start-ups   (If time permits) IP management © DibbsBarker
    • 3 Why Does it Matter?   IP is how competitive advantage is sustained in the knowledge economy   Other barriers are falling away as trade is freed, labour is more mobile, capital is less rationed and customers have more access to information   IP is a tradeable asset in its own right   As businesses move away from in-house R&D towards outsourcing and in-licensing   As “virtual integration” increases   “NPEs” exist solely to enforce patents   Defensive patent pools   Patent auctions/patent licences as tradeable instruments © DibbsBarker
    • 4 IP is Big Money   Apple/Microsoft/RIM paid $4.5Bn for Nortel’s 17,000 patents   Google paying $12.5Bn for Motorola, with the stated aim of expanding its patent portfolio   Apple brand valued at $185 Bn   IP-based transactions were worth >US$18 billion in 2011-12, compared to US$450 million in 2010-11 (IAM Magazine) © DibbsBarker
    • 5 What’s Special About IP?   Capital markets and investment analysts increasingly focus on intellectual assets   80% of the value of the S&P 500 companies (not just high- tech companies) was attributed to intangibles in 2005, up from 17% in 1975   There’s more IP around   < 1million patent applications in 1985 to > 2 million in 2010   Patents cover more than they did 20 years ago   But the pendulum is swinging back © DibbsBarker
    • 6 How Does IP Add and Create Value?   Inhibits competition against the company’s existing products   Helps extract value from technologies not used in products sold directly   Allows technologies to be acquired with some assurance of value   Codifies the company’s knowledge both internally and to investors © DibbsBarker
    • 7© DibbsBarker Human Capital - expertise - know-how - skills - creativity Intellectual Capital - processes - innovations - methodologies Physical Capital Intellectual Property IP Within an Enterprise
    • 8 IP Rights - Registered   Patents for inventions   Utility Models etc. for lower level innovations   Registered Designs for 3-D articles   Registered Trade Marks for brands & logos © DibbsBarker
    • 9 IP Rights - Unregistered   Copyright for literary & artistic works (including software)   Confidential Information & Know How   Goodwill & Reputation © DibbsBarker
    • 10 What is a Patent?   Reward for an inventive contribution to society’s knowledge   Exclusive (20 year) monopoly   Protection for a technical result, not an abstract idea   Not a positive right to market (subject to law and the IP rights of others) © DibbsBarker
    • 11 What Can Be Patented?   An invention   Not being excluded subject matter   That is new   And that involves an inventive step compared with the prior art © DibbsBarker
    • 12 What are Patents Granted For?   Routinely:   Machines, devices, hardware   Processes, techniques, methods   Materials, chemicals, drugs, alloys   Cell lines   Not Always:   Medical treatments   Yes in AU, US   No in EP, NZ, JP   Software   Not “per se” in EP, NZ   E-commerce & business methods   Pendulum has swung against   Gene sequences   Higher animals
    • 13 Typical Steps in Patenting   Awareness of IP landscape   Is it an invention? Is it novel and non-obvious?   File provisional application   Can order a search to get early indication of problems   At P+12 months file a PCT application (multi-country)   Will be examined and an opinion issued   At P+18 months application will be published   At P+30 months need to file individual country or regional applications   Not unusual to take 5-7 years to grant © DibbsBarker
    • 14 Copyright   Protection against copying (not a monopoly)   Long term protection   Automatic protection (optional registration in USA)   Does not protect concept or abstract idea   Infringed by taking a ‘substantial part’ © DibbsBarker
    • 15 Confidential Information   Must in fact be confidential   Can the information be derived/reverse-engineered?   Confidentiality should be asserted   Should be documented   Of value but not a monopoly   Value eroded by independent discovery   Not really ‘property’, so care with licensing and assignment language   A licence may permit use but not disclosure © DibbsBarker
    • 16 Trademarks / Brands   A “sign” can include words, logos, shapes, sounds, even smells   Must be distinctive, or capable of becoming so   Choose a protectable brand   Register it   Beware DIY registration   Control its use © DibbsBarker
    • 17 IP in Start-Ups   Any professional investor will carry out due diligence on IP   Full IP due diligence on a mature company will be a six-figure job that takes weeks   Any successful tech company will be subjected to full IP due diligence whenever an early investor has a chance to exit   How do we avoid creating issues that will not pass IP due diligence?
    • 18 Key Questions   Identify the key technologies of the company and its key IP rights.   Do the key technologies fall within the key IP rights? Will that continue to be the case?   Does the company actually own its IP? Identify in- licences that may be relevant.   Is it contractually free to exploit its IP as desired? (Having regard to licence terms, funding conditions etc.) © DibbsBarker
    • 19 Key Questions (cont.)   How likely are its pending patent applications to proceed to registration? How likely are the resulting patents to be valid?   What will be the effective scope of monopoly afforded by the IP rights covering key technologies?   Will its technology will infringe any third party IP rights?   Generally, does the company manage its IP well? © DibbsBarker
    • 20 Ownership/Control Issues   Inventors and employment   distinguishing employees and consultants   student and academic issues   Chain of title   Licence conditions   Funding conditions
    • 21 Acquiring IP   In-house development   formal process of IP capture   Licensing in   issues of royalty base, restrictions on field, rights of use, background IP   Collaborations   issues of IP ownership, licence rights (beware joint IP)   Purchase/M&A   need to do your own due diligence
    • 22 Beware Patent Puffery   No “worldwide” patent   An application will almost never be granted in the form applied for   A granted patent may not be valid or enforceable   Different national principles apply
    • 23 Best Practice IP Management   Dealing with staff and contractors   Dealing with research collaborators   Dealing with suppliers & customers   Planning and conducting R&D with IP issues in mind   Understanding the IP landscape   Building and maintaining the IP portfolio
    • 24 IP Landscape   To inform business strategy development and R&D planning   For competitor intelligence   To understand the technology and IP position of prospective licensees/collaborators   To determine what is available to in-license   To look for strategic and blocking IP opportunities © DibbsBarker
    • 25 R&D Processes Should…   Filter projects by IP and market as well as technical criteria   Institutionalise IP acquisition in the development of new products and processes   Raise the question of how protectable the new product or process will be   Analyse at an early stage the avoidance of infringement of third party rights   Require consideration of in-licensing technology rather than developing it in-house © DibbsBarker
    • 26 Different IP Business Strategies   Comprehensive product protection by building mutually reinforcing bundles of rights including patents, designs, copyright and brands   Placing roadblocks in competitors’ paths   Generating cross-licensing currency to deal with blocking rights of third parties   Building value for market perception   “Fit” with technology/IP deficits of prospective licensees © DibbsBarker
    • 27© DibbsBarker Any Questions? Rob McInnes T +61 2 8233 9556 E rob.mcinnes@dibbsbarker.com
    • 28© DibbsBarker