April 2011 - Business Law & Order - Richard (Rick) Hoffmann

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This is the much anticipated sequel to SPARK’s smash hit IP–1 session last Fall. In this installment, we have assembled a star-studded cast of IP experts to discuss the ins and outs of licensing intellectual property (IP), as well as a “best practices” approach to avoiding the dreaded “cease & desist” letter from a competitor. Matt Bell from the UofM Tech Transfer Office will talk about the many opportunities that exist for entrepreneurs to acquire cutting edge technology from universities, and to engage university researchers to solve specific technical problems. Attorney Mark G. Malven will cover IP licensing for entrepreneurs. Attorney Richard (Rick) Hoffmann will share ways that startups and emerging businesses can reduce the risk of infringing third-party IP rights.

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April 2011 - Business Law & Order - Richard (Rick) Hoffmann

  1. 1. REDUCING THE RISK OF INFRINGING OTHER’S INTELLECTUAL PROPERTY RIGHTS Rick Hoffmann © 2011 Reising Ethington PC
  2. 2. Types of Intellectual Property <ul><li>Patents </li></ul><ul><li>Trademarks </li></ul><ul><li>Copyrights </li></ul><ul><li>Trade Secrets </li></ul>© 2011 Reising Ethington PC
  3. 3. Why Worry About Third Party Rights? <ul><li>Payment of Damages </li></ul><ul><li>Injunction </li></ul><ul><li>Impounding/Destruction of Infringing Articles </li></ul><ul><li>Cost to Defend </li></ul><ul><ul><ul><ul><li>Average Cost of Patent Infringement Action <$1M at stake is $967,000 * </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Average Cost of Patent Infringement Action >$1M at stake is $3,109,000* </li></ul></ul></ul></ul><ul><ul><ul><ul><li>* Source AIPLA Report of the Economic Survey, 2009 </li></ul></ul></ul></ul>© 2011 Reising Ethington PC
  4. 4. What is Patent Infringement? <ul><li>Whoever without authority makes, uses, offers to sell or sells any patented invention , within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. 35 U.S.C. § 271(a) </li></ul><ul><li>Test is whether accused device has all claim element or substantial equivalents. </li></ul><ul><li>Intent is NOT an element of direct infringement </li></ul>Direct Infringement © 2011 Reising Ethington PC
  5. 5. What is Patent Infringement? <ul><li>Contributory – Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. 35 U.S.C. § 271(c) </li></ul>Indirect Infringement Inducement - Whoever actively induces infringement of a patent shall be liable as a direct infringer. 35 U.S.C. § 271(b) © 2011 Reising Ethington PC
  6. 6. Ways to Avoid Patent Infringement <ul><li>Prior to launching design effort: </li></ul><ul><ul><ul><li>Consider using designs in public domain – expired patents </li></ul></ul></ul><ul><ul><ul><li>Search competitive literature or products for patent notices </li></ul></ul></ul><ul><ul><ul><li>Most common mistake is people saying I know my idea is new because I have not seen it on the market </li></ul></ul></ul><ul><ul><ul><li>Conduct personal “Knock-Out” search by searching USPTO website at http://patft.uspto.gov/ </li></ul></ul></ul><ul><ul><ul><li>Conduct professional clearance search using competent counsel </li></ul></ul></ul>© 2011 Reising Ethington PC
  7. 7. Ways to Avoid Patent Infringement <ul><li>Don’t simply copy a competitive product without investigation </li></ul><ul><li>Don’t knowingly direct others or help others infringe a patent </li></ul><ul><li>Don’t knowingly make a component of a patented product, unless it is a staple article of commerce </li></ul>© 2011 Reising Ethington PC
  8. 8. Proactive Steps <ul><li>Work with counsel to design around patents in creating new products </li></ul><ul><li>Patent each new invention – including each new and non-obvious design or improvement </li></ul><ul><li>Seek license from patent holder </li></ul>© 2011 Reising Ethington PC
  9. 9. What is Trademark Infringement? <ul><li>Registered Trademark under 15 U.S.C. § 1114 </li></ul><ul><li>Any person who shall, without the consent of the registrant— </li></ul><ul><li>(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or </li></ul><ul><li>(b) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, </li></ul><ul><li>shall be liable in a civil action by the registrant for the remedies hereinafter provided. </li></ul><ul><li>Intent is NOT an element of trademark infringement </li></ul>© 2011 Reising Ethington PC
  10. 10. What is Trademark Infringement? <ul><li>Unregistered Trademark under 15 U.S.C. § 1125: </li></ul><ul><li>(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which— (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or </li></ul><ul><li>(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, </li></ul><ul><li>shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. </li></ul><ul><li>Test is likelihood of confusion. </li></ul>© 2011 Reising Ethington PC
  11. 11. What is Trademark Infringement? <ul><li>Dilution under 15 U.S.C. § 1125: </li></ul><ul><li>Subject to the principles of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury. </li></ul><ul><li>Test is likelihood of dilution. </li></ul>© 2011 Reising Ethington PC
  12. 12. Ways to Avoid Trademark Infringement <ul><li>Any time you use a name or symbol you are at risk </li></ul><ul><li>Trademark rights exist upon use, NOT upon registration </li></ul><ul><li>Avoid using known marks, particularly famous marks </li></ul><ul><ul><li>On your products </li></ul></ul><ul><ul><li>On your literature </li></ul></ul><ul><ul><li>In connection with your website </li></ul></ul><ul><ul><ul><li>URL </li></ul></ul></ul><ul><ul><ul><li>Metatags </li></ul></ul></ul>© 2011 Reising Ethington PC
  13. 13. Ways to Avoid Trademark Infringement <ul><li>Searches </li></ul><ul><ul><li>Internet searches </li></ul></ul><ul><ul><li>Preliminary “Knock-Out” search of federally registered marks at USPTO website http://tess2.uspto.gov/bin/gate.exe?f=tess&state=4004:74pc5v.1.1 </li></ul></ul><ul><ul><li>Professional searches </li></ul></ul>© 2011 Reising Ethington PC
  14. 14. Proactive Steps <ul><li>Pick an arbitrary name for your product – these are least likely to infringe and make the strongest trademarks </li></ul><ul><li>Seek Federal Registration of each of your marks - this expands geographical territory of mark to entire country as of the date of registration </li></ul><ul><li>Before marks are registered use “TM” symbol </li></ul>© 2011 Reising Ethington PC
  15. 15. What is Copyright Infringement? <ul><li>17 U.S.C. § 501 </li></ul><ul><li>Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A (a) , or who imports copies or phonorecords into the United States in violation of section 602 , is an infringer of the copyright or right of the author, as the case may be. </li></ul><ul><li>Test is access and substantial similarity </li></ul>© 2011 Reising Ethington PC
  16. 16. What is Copyright Infringement? <ul><li>These exclusive rights generally are set forth in 17 U.S.C. § 106 (note this list is subject to other provisions of the statute): </li></ul><ul><li>(1) to reproduce the copyrighted work in copies or phonorecords; </li></ul><ul><li>(2) to prepare derivative works based upon the copyrighted work; </li></ul><ul><li>(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; </li></ul><ul><li>(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; </li></ul><ul><li>(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and </li></ul><ul><li>(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. </li></ul>© 2011 Reising Ethington PC
  17. 17. Common Copyright Issues <ul><li>Use of derivative work </li></ul><ul><li>Copying only portions of work </li></ul><ul><li>Copying music, text, pictures, movie clips, etc. from the internet </li></ul><ul><li>Hiring a non w-2 employee to create copyright works and thinking you own the copyright created – often photographers and writers </li></ul>© 2011 Reising Ethington PC
  18. 18. Work for Hire <ul><li>17 U.S.C. § 101: </li></ul><ul><li>A “work made for hire” is— </li></ul><ul><li>(1) a work prepared by an employee within the scope of his or her employment; or </li></ul><ul><li>(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. </li></ul>© 2011 Reising Ethington PC
  19. 19. Work for Hire <ul><li>How to be sure you own the work: </li></ul><ul><li>w-2 employee working within scope of employment </li></ul><ul><li>If not a w-2 employee, get a written agreement in advance of creation of work that does two things: </li></ul><ul><li> 1) identifies work as a work made for hire and; </li></ul><ul><li>2) if deemed not to be a work for hire, then the hired person specifically agrees to assign all copyrights to hiring party. </li></ul>© 2011 Reising Ethington PC
  20. 20. Ways To Avoid Copyright Infringement <ul><li>True independent creation – copyrights protect against copying, they do not protect ideas </li></ul><ul><li>Use works that are in the public domain – that is old works. Works that were published prior to 1293 are in the public domain and may be freely copied </li></ul><ul><li>Use works that are freely licensed or where the owner has disclaimed copyright – for example open source code – but be sure to read license agreement carefully for any restrictions </li></ul><ul><li>Fair Use – there are limited fair use exceptions </li></ul>© 2011 Reising Ethington PC
  21. 21. Ways To Avoid Copyright Infringement <ul><li>Unlike patents and trademarks, there is no effective way to conduct any meaningful searching – limited searching can be done at the copyright office website </li></ul><ul><li>Copyright exists at the time the work is created </li></ul><ul><li>Cannot be sued without registration – so ask to see it if threatened as well as the underlying work </li></ul>© 2011 Reising Ethington PC
  22. 22. Proactive Steps <ul><li>Always put the copyright notice on your works: © or “Copyright” or “Copr.”, the year of first publication and the name of the owner </li></ul><ul><li>For important works register them before there is any infringement. Individuals can register copyrights at the Copyright Office website: http://www.copyright.gov/ by going to the eCO login </li></ul>© 2011 Reising Ethington PC
  23. 23. Proactive Steps <ul><li>Early registration: </li></ul><ul><li>Allows you to sue on your works immediately </li></ul><ul><li>Allows for the election of statutory damages </li></ul>© 2011 Reising Ethington PC
  24. 24. What is a Trade Secret <ul><li>Trade Secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following: </li></ul><ul><li>Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. </li></ul><ul><li>Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy </li></ul><ul><li>MCL 445.1902(d) </li></ul>© 2011 Reising Ethington PC
  25. 25. What is Trade Secret Misappropriation? <ul><li>(b) “Misappropriation” means either of the following: </li></ul><ul><li>(i) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means. </li></ul><ul><li>(ii) Disclosure or use of a trade secret of another without express or implied consent by a person who did 1 or more of the following: </li></ul><ul><li>(A) Used improper means to acquire knowledge of the trade secret. </li></ul><ul><li>(B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it, acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, or derived from or through a person who owed a duty to the person to maintain its secrecy or limit its use. </li></ul><ul><li>(C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake. </li></ul><ul><li>MCL 445.1902(b) </li></ul>© 2011 Reising Ethington PC
  26. 26. Common Trade Secret Cases* <ul><li>Customer lists </li></ul><ul><li>Cost, profit and sales data </li></ul><ul><li>Design and manufacturing information </li></ul><ul><li>Computer Software </li></ul><ul><li>Business methods </li></ul><ul><li>* From Pappas, McNeill and Quick, Michigan Business Torts , 2d ed. (1997) </li></ul>© 2011 Reising Ethington PC
  27. 27. Ways to Avoid Trade Secret Misappropriation <ul><li>Avoid using information you obtained from previous employers – this includes for any employee you hire </li></ul><ul><li>Develop a policy that prevents employees from using previous employer's trade secrets in any manner </li></ul><ul><li>Respect the terms in all non-disclosure or non-compete agreements signed by you or any of your employees </li></ul>© 2011 Reising Ethington PC
  28. 28. Ways to Avoid Trade Secret Misappropriation <ul><li>Use only public or non-confidential information </li></ul><ul><li>Independent creation </li></ul><ul><li>Have established interview and intake procedures </li></ul><ul><li>Monitor what your employees are doing to be sure they are not using others trade secrets </li></ul>© 2011 Reising Ethington PC
  29. 29. Proactive Steps <ul><li>Identify your own trade secrets </li></ul><ul><li>Mark information as confidential and take steps to maintain the secrecy so as to avoid losing your trade secrets </li></ul>© 2011 Reising Ethington PC
  30. 30. Disclaimer <ul><li>This presentation is not intended to be a comprehensive statement of the law – nor is it intended to render legal advice. It is meant to provide general information only that you may find helpful. You should always consult counsel with respect to any intellectual property issues you have. </li></ul>© 2011 Reising Ethington PC
  31. 31. 755 West Big Beaver Road Suite 1850 Troy, Michigan 48099 Telephone: (248) 689-3500 Facsimile:  (248) 689-4071 www.reising.com © 2011 Reising Ethington PC

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