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Patents and IP for the startup founder (pasadena connect week) 2018.10.23


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On October 23, 2018 CRASH Space hosted Ben Kuo and Stephen Vegh at Pasadena Connect week to discuss Patents and Intellectual Property (IP) for the Startup Founder.

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Patents and IP for the startup founder (pasadena connect week) 2018.10.23

  1. 1. Patents and IP for the Startup Founder Benjamin P. Kuo, Esq. Stephen Z. Vegh, Esq. © 2018 Patents by Benasaur / Vegh IP Legal In partnership with Crash Space Pasadena Connect Week / Innovate Pasadena
  2. 2. Benjamin Kuo: Brief Background • Patents by Benasaur: Solo law practice in the L.A. area • 10 years attorney experience, specializing in patent and trademark prosecution, focusing primarily on smaller companies and startups and consulting with practitioners on USPTO issues • USPTO Patent Examiner for 3 years in software networking (TC 2400), licensed before USPTO since 2010 • Background in computer science and fluent in Mandarin Chinese © 2018 Patents by Benasaur
  3. 3. The Fine Print • Disclaimer – This presentation does not create an attorney- client relationship; no information will be deemed privileged or confidential – Use information at your own risk, and attorney cannot predict or guarantee results. • The slides and presentation media will be available online © 2018 Patents by Benasaur
  4. 4. What are not patents? • Trademarks and unfair competition – Name of your business, product, or service (McDonald’s, Nike, Apple) – Registration from the USPTO affords the strongest protection; common law rights otherwise – When you think of a name, you should do a search and talk to an expert about mark strength – Common pitfalls: not doing a search; picking a weak mark; failing to do something about a confusingly similar mark; playing off of someone else’s mark © 2018 Patents by Benasaur
  5. 5. What are not patents (2)? • Copyrights – A right to a creative work (photos, videos, sound, music, writings, graphics, computer code) – Registration with the Copyright office allows you to sue – Pitfalls: Accidentally incorporating someone else’s IP into your recording; source code is easily reverse engineered (and is fair use) • Trade secrets – Some types of know-how are easily copied with little consequence (ex. Coke recipe) – Choosing between trade secrets and patents © 2018 Patents by Benasaur
  6. 6. What is a Patent? • A government-granted monopoly on an invention for a fixed term – Protection of technology and know-how in exchange for public disclosure – Term is 20 years from the date of filing – Utility (for useful inventions) – Design (ornamental and decorative features) – Plant/microbes (selective breeding, gene sequences, etc.) • Utility Patents – Most valuable and most expensive to obtain – Must be useful, novel, and non-obvious – Types: mechanical, electrical/software, bio-chem, business methods, user interfaces – Patentability hinges mostly on novelty and non-obviousness © 2018 Patents by Benasaur
  7. 7. Prosecution vs. Litigation • Prosecution – The legal process undertaken before the USPTO to obtain a patent or trademark – Begins with application, ends at patent issue / trademark registration • Administrative law proceedings – Inter partes review (IPR) before PTAB – Interference/cancelation before TTAB – Sometimes handled by prosecutors • Litigation – Article III court (federal court) – International Trade Commission (ITC) proceedings © 2018 Patents by Benasaur
  8. 8. The Land Grab Analogy for Patents © 2018 Patents by Benasaur
  9. 9. Deciding on when and what to file • After your Eureka moment: “we made it work!” but before the on-sale bar attaches – Earlier the better, because of first-to-file – Are you ready, or do you really need to pursue a patent? • Provisional vs. non-provisional applications • PCT (international application) – An international placeholder with an 18-month pendency • Should you do a search? (“it depends”) – Must disclose search results to the PTO upon filing of the non- provisional – Exotic legal products like “freedom to operate” opinions are beyond the scope of a startup © 2018 Patents by Benasaur
  10. 10. The On-Sale Bar for Patents • An application must be filed within 1 year of – Public disclosure or public use – Sale or offer-for-sale • Huge beginner issue – Kickstarters that offer product (even if they fail) – Code revisions posted to the App Store – Demos at trade shows, disclosure of tech without NDA, beta testing – Shareholder, stock purchase, funding agreements that license or promise a share of the technology © 2018 Patents by Benasaur
  11. 11. Provisional Applications • The formal application is called the “non-provisional application” – In lieu of a non-provisional that begins the prosecution process, you may file a “provisional application” • Benefits – Informal process and lower PTO fees (and lower legal fees) – Obtain earliest possible filing date in a first-to-file system – 12-month pendency to file a subsequent application • Pitfalls – Does not ever mature into a patent: Must file either nonprovisional or PCT before pendency expires – Must file the best disclosure possible under circumstances; can be used as evidence that inventor was “not in possession of invention” • Some lawyers avoid provisionals, but they have their place for cost savings, establishing priority, and delaying prosecution © 2018 Patents by Benasaur
  12. 12. Deciding on when and what to file • After your Eureka moment: “we made it work!” but before the on-sale bar attaches – Are you ready, or do you really need to pursue a patent? – Earlier the better, because of first-to-file – On-sale bar considerations • Provisional vs. non-provisional applications • PCT (international application) • Should you do a search? • Eventually, all of these turn into… the Non- Provisional Application © 2018 Patents by Benasaur
  13. 13. Prosecuting the Nonprovisional • Pendency – 1-2 years depending on technology • First Office Action – Restriction Requirement – Action on the Merits (almost always a rejection) • Response to OA – Patent attorney has 3-6 months to respond – May conduct examiner interview / FAI program • Second or Final Action – Generally no longer than 12 weeks – Because of compact prosecution, it is rare to receive a “second non-final” – Final rejection: Prosecution is closed • After-final Filings – PA may file after final or AFCP (to resolve objections and formal issues) – Request for Continued Examination (RCE) – Continuation or Divisionals (treated as separate new applications) – Appeal to PTAB • Allowance and Issue – “Allowable subject matter” means you are almost there – Can happen at any time © 2018 Patents by Benasaur
  14. 14. Understanding the Office Action • Objections are for informalities; rejections are for substantive issues • Common objections – Drawing, claim, specification – A lot of these typically indicate poor drafting • Common rejections (35 U.S.C. ___) – 112 (substantive drafting issues, inadequate disclosure, indefinite/unclear language) – 102 (anticipation by a single reference) – 103 (obviousness in light of multiple references) • Software-specific issues – Means-plus-function rejection (35 U.S.C. 112(f)/112(b)) – “Alice” abstract idea rejection (35 U.S.C. 101) © 2018 Patents by Benasaur
  15. 15. Prosecution Fees and Costs • Patents – $1,500 for provisional applications, plus costs ($140 small entity) – $4,000-6,000 for non-provisional applications, plus costs (filing fees, drawings, PCT filings fees 3.5k+) – Small and micro entity get discount on fees – $1,500 for responses to office actions – Miscellaneous costs such as RCEs and issue fees – Budget 10k for application + initial round of prosecution • Trademarks – $750 for most initial filings – $1,000 for responses to office actions – Miscellaneous costs upon approval © 2018 Patents by Benasaur
  16. 16. Patent Common Pitfalls • Not hiring a lawyer • Not filing a proper disclosure, or “sandbagging” the initial disclosure – You can fix everything else later, but you are stuck with the disclosure at the time of your filing. – For software applications, not including code, pseudocode, or software structure – Not properly translating a disclosure in a foreign language • Relying on copyrights and not patents – For source code, reverse engineering is fair use – Source code is easily distributed and modified • Not disclosing to your lawyer your bottom line – Many choices could be made during the process to fit the budget © 2018 Patents by Benasaur
  17. 17. The Bottom Line for Patent Prosecution • Risk of failure is high and underappreciated • Game is often for benefit of larger players with more resources • But… may be essential for buyout/ funding/ retail/ opening doors © 2018 Patents by Benasaur
  18. 18. Finding and Working with Attorneys • Patent work before USPTO requires patent attorney – A patent attorney “registered before the USPTO” or “patent bar” – For filing only, a patent agent may be cheaper • Caveat: Cannot dispense legal advice, not helpful to newbies – Patent attorneys / agents can work across state lines • If you are sued or case appears headed to court – Patent attorney who is a litigator – PA is required for actions before PTAB – A general “IP attorney” probably can’t competently handle patent litigation © 2018 Patents by Benasaur
  19. 19. Pitfalls with Attorneys • Not doing your homework – Not knowing the basics – Not checking attorney’s paper record – Attorney doesn’t have experience with your industry • Not reserving company resources or employee time for attorney • Reasonableness of fees – Not getting an upfront estimate of costs for proposed work – Ask if a referral fee has been received or paid and how much; YOU are subsidizing someone who didn’t do work – Paying by the hour for patent/trademark prosecution • Negotiate flat rate or fee cap • Customary in litigation – Fees are, not surprisingly, one the biggest sources of client complaints © 2018 Patents by Benasaur
  20. 20. Who is Your Best Advocate? • Your lawyer? Your employees? Your family and friends? Your customers? Your social media fan base? • Yourself! © 2018 Patents by Benasaur
  21. 21. Stephen Vegh: Patent Litigation • Introduction – Background – Experience – Practice areas © 2018 Vegh IP Legal
  22. 22. Enforcing and Defending Intellectual Property Rights • Patents – Three (3) bases of statutory patent infringement – Two (2) ways to infringe a patent – Infringement analysis: 2-step process – Potential relief/remedies for patent infringement – Factors that may impact the duration/expense of patent litigation © 2018 Vegh IP Legal
  23. 23. Enforcing and Defending Intellectual Property Rights (2) • Trademarks – Common law vs. federal registration – Infringement analysis: likelihood of confusion – Trademark dilution – Potential relief/remedies for trademark infringement – Factors that may impact the duration/expense of trademark litigation © 2018 Vegh IP Legal
  24. 24. Enforcing and Defending Intellectual Property Rights (3) • The cease and desist letter • Venues for adjudicating IP disputes • To litigate, license, and/or cease-and-desist, that is the Question… © 2018 Patents by Benasaur
  25. 25. QnA – Thank you! • Benjamin P. Kuo (Patents by Benasaur) (213) 290-2586 • Stephen Z. Vegh (Vegh IP Legal) (310) 980-7440 1240 Rosecrans Ave. #120 Manhattan Beach, CA 90266 • Lisa Luther (Crash Space) © 2018 Patents by Benasaur / Vegh IP Legal