AZ Center for InnovationCommercial Reality StartUp Session  Protecting and Managing your      Intellectual Property       ...
Types of Intellectual Property                                             www.lewisandroca.com•   Patents•   Trade secret...
IP Portfolio Development and Management                                                  www.lewisandroca.com• 50% - 85% o...
Intellectual Property Policy                                            www.lewisandroca.com• Policy should address not on...
Intellectual Property Policy                                                     www.lewisandroca.comSupplement the genera...
IP Valuation                                                               www.lewisandroca.com• Three valuation approache...
IP Valuation – Royalty Rates                                                      www.lewisandroca.com• Determining proper...
PATENTS          www.lewisandroca.com
Patents and Patent Portfolio                                                     www.lewisandroca.com• Invention Disclosur...
Patents                                                            www.lewisandroca.com• Provisional patent applications  ...
Patents                                               www.lewisandroca.com• Patent/Prior Art Searching   –   Novelty searc...
TRADE SECRETS                www.lewisandroca.com
Proprietary, Confidential and Trade                    Secret Information                                               ww...
Identifying Protectable Information                                           www.lewisandroca.com• What information do yo...
Identifying Protectable Information                                           www.lewisandroca.com• Other areas of potenti...
Levels of Confidentiality                                                 www.lewisandroca.comDetermine the level of secre...
Security Measures                                          www.lewisandroca.com• Types of security measures   – Educationa...
Trade Secret Agreements                                            www.lewisandroca.comThree types of contractual provisio...
Covenants Not to Compete                                             www.lewisandroca.com• One size does not fit all• Who ...
Covenants Not to Compete                                                 www.lewisandroca.comFor each type of employee ask...
Covenants Not to Compete                                          www.lewisandroca.com• Restrictions must be narrowly tail...
Anti-Solicitation Agreements                                             www.lewisandroca.comCustomers  – Restriction shou...
Anti-Solicitation Agreements                                                  www.lewisandroca.comEmployees  – Restriction...
Non-Disclosure Agreements                                             www.lewisandroca.com• Provide a reasonably concrete ...
Employee Education                                             www.lewisandroca.com•   Pre-hiring•   Orientation•   Period...
The Exit Interview                                            www.lewisandroca.com• Every employee should receive an exit ...
TRADEMARKS             www.lewisandroca.com
Process of Selecting a Trademark                                       www.lewisandroca.com•   Brainstorming•   Registrabi...
Selecting a Mark                                                              www.lewisandroca.com               • Distinc...
Trademark Searches                                                 www.lewisandroca.com• International screening search• C...
How Are Trademark Rights Obtained?                                    www.lewisandroca.comRights are obtained either:   - ...
Common-Law Rights vs. Registration                                                    www.lewisandroca.comCommon Law• Boun...
Common Law Rights vs. Registration                                                 www.lewisandroca.comU.S. Federal Regist...
Protecting Your Mark Abroad                                                             www.lewisandroca.com• Rights are a...
Protecting Your Mark Abroad                                                      www.lewisandroca.com• Advantages of Filin...
Protecting Your Mark Abroad                                                         www.lewisandroca.com• Disadvantages of...
Avoiding Genericide                                            www.lewisandroca.com• Once a trademark, not always a tradem...
Proper Use — Avoiding Genericide                                             www.lewisandroca.com• Use the ™ and ® symbols...
Proper Use – Avoiding Genericide                                             www.lewisandroca.com• Always use the mark fol...
Proper Use — Avoiding Genericide                                     www.lewisandroca.com• Never a verb   Wrong: Xerox a d...
Domain Names and Trademarks                                                  www.lewisandroca.com• Registering a domain na...
COPYRIGHTS             www.lewisandroca.com
Copyrights                                                           www.lewisandroca.com• What it protects and what it do...
Copyrights                                                        www.lewisandroca.com• Registration is not required for p...
Copyrights                                                                  www.lewisandroca.com• Employee v. Independent ...
Building Your Website                                                             www.lewisandroca.com• Although it is rel...
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AZCI Commercial Reality Start Up Session Protecting And Managing Your Intellectual Property

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October 2010 presentation at AZ Center for Innovation

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AZCI Commercial Reality Start Up Session Protecting And Managing Your Intellectual Property

  1. 1. AZ Center for InnovationCommercial Reality StartUp Session Protecting and Managing your Intellectual Property Sean Garrison sgarrison@LRLaw.com 602 239-7434 Flavia Campbell fcampbell@LRLaw.com 602 262-0244 A Legacy of Integrity and Trust
  2. 2. Types of Intellectual Property www.lewisandroca.com• Patents• Trade secrets• Trademarks• Copyrights• Rights of publicity
  3. 3. IP Portfolio Development and Management www.lewisandroca.com• 50% - 85% of corporate value derived from IP and intangible assets• Budget Management – Planning and allocation to various IP assets – Patents, trademarks, trade secrets, copyrights• Strategic Planning – Competitive Planning – Exit Strategies
  4. 4. Intellectual Property Policy www.lewisandroca.com• Policy should address not only the intellectual property owned by the company but also the prohibition of the unauthorized use of third party intellectual property• Patents, copyrights, trademarks, trade secrets• Reasonably concrete description of the types of information the company regards as its trade secrets
  5. 5. Intellectual Property Policy www.lewisandroca.comSupplement the general policy with specific policiesregarding the use of equipment and technology: – Employee use of computers, e-mail, social media and the Internet – Employer’s right to monitor employee’s use – Employee use of copy/scan/fax machines – Document retention policy (hard copy and electronic) – Policy and procedures to identify risks of disclosure and to report violations
  6. 6. IP Valuation www.lewisandroca.com• Three valuation approaches: – Cost – What would it cost to develop/purchase a similar replacement asset at current prices? Problem in applying to IP – does not account for the economic benefits to be enjoyed from the asset or the period of time over which those benefits may last – Income – What is the present value of the future stream of income that can be derived from the asset? Problem in applying to IP – May be difficult to reasonably estimate proper income, economic life of the asset or proper discount rate – Market – What is the value of comparable assets that have been purchased/licensed by third parties? Problem in applying to IP – Comparable assets may not exist
  7. 7. IP Valuation – Royalty Rates www.lewisandroca.com• Determining proper royalty rates for IP assets involves a number of factors: – Barriers to market entry – Capital investment requirements – Market size and potential degree of market penetration – Commercialization costs – Likely profit margins – Comparables and available alternatives – Exclusivity v. non-exclusivity
  8. 8. PATENTS www.lewisandroca.com
  9. 9. Patents and Patent Portfolio www.lewisandroca.com• Invention Disclosures and Assignments – Requirement in employment or other contract – Invention disclosure forms for documentation• Periodic Patent/technology review meetings – As grow larger, may need to form a committee – Documentation – Forum to discuss patent protection and competitive landscape – Involve your patent counsel
  10. 10. Patents www.lewisandroca.com• Provisional patent applications – Placeholder for priority until utility application is filed – Must file utility patent application within 1 year – Not always a good strategy and often not appropriate – Starts the clock for international filings• Public use, disclosure or sale of inventions – Only in U.S. – can file patent application within 1 year – Precludes patent protection in foreign countries – Use of non-disclosure agreements with vendors, customers, investors
  11. 11. Patents www.lewisandroca.com• Patent/Prior Art Searching – Novelty searches – Freedom to operate searches – Validity – Infringement• Searching not required• Searching can help build a stronger patent application
  12. 12. TRADE SECRETS www.lewisandroca.com
  13. 13. Proprietary, Confidential and Trade Secret Information www.lewisandroca.com• What do we mean by these terms?• Proprietary - means really just means ownership• Confidential - not for public disclosure• Trade Secret - Confidential and derives economic value from not being generally known to or readily ascertainable by others who can obtain economic value from its disclosure or use
  14. 14. Identifying Protectable Information www.lewisandroca.com• What information do you have that others do not such that it gives you a competitive advantage?• What types of research and development do you perform? – Product – Sales and marketing – Technical – Competitors – Customers and potential customers
  15. 15. Identifying Protectable Information www.lewisandroca.com• Other areas of potential trade secret information: Processes Profit Margins Formulae Vendor information Financial Information Customer lists Technical Information Diagrams Quality Control data Sales Forecasts Prototypes Marketing studies Proprietary software Business plans Cost and pricing data Employee information
  16. 16. Levels of Confidentiality www.lewisandroca.comDetermine the level of secrecy and relative value of the information – Investment of time and money to develop – What particular advantage is conferred? – What aspects, if any, are known to the public or to competitors? – Who within the company knows this information? – What is the consequence of disclosure?
  17. 17. Security Measures www.lewisandroca.com• Types of security measures – Educational - Physical – Contractual - Policies – Electronic - Biometrics• Assign measures appropriate to the level of secrecy of the information
  18. 18. Trade Secret Agreements www.lewisandroca.comThree types of contractual provisions: (1) Covenants not to compete – Post termination – Pre termination (2) Anti-solicitation agreements – Employees – Customers (3) Non-disclosure agreements – Limitations on use of information – Obligations of return/destruction
  19. 19. Covenants Not to Compete www.lewisandroca.com• One size does not fit all• Who would truly hurt the company if he/she quit and went to work for your competitor? – High level employees – Employees with R&D responsibilities – Sales agents – Customer service representatives
  20. 20. Covenants Not to Compete www.lewisandroca.comFor each type of employee ask: – What are the employee’s specific responsibilities? – What interests am I trying to protect? – In what ways might this employee damage those interests? – How long will it take to find, train and bring a replacement up to speed? – What is the competitive landscape for the particular interests I want to protect?
  21. 21. Covenants Not to Compete www.lewisandroca.com• Restrictions must be narrowly tailored to the interests to be protected• Document the reasons why particular limitations are selected and discuss them with the potential employee• Overly broad restrictions are invalid• Arizona courts will not rewrite overbroad provisions
  22. 22. Anti-Solicitation Agreements www.lewisandroca.comCustomers – Restriction should be limited to those customers with whom the employee had contacts and/or supervisory duties – Limited in duration until employee’s replacement can shore up the customer relationship – Limited in scope to contacts designed to interfere with and/or terminate the company’s relationship with that customer
  23. 23. Anti-Solicitation Agreements www.lewisandroca.comEmployees – Restriction need not be limited to employees with whom former employee had a relationship but should focus on key employees whose exit from the company would damage the company – Consider a restriction that goes beyond mere solicitation for competitive purposes where intensive training required for new employees – Consider liquidated damages for a successful effort to hire away an employee through direct or indirect means
  24. 24. Non-Disclosure Agreements www.lewisandroca.com• Provide a reasonably concrete definition of the information subject to confidentiality• Explain the reasons why confidentiality is imperative and the potential harm that could befall the company if the information is disclosed• Define the limitations of use• Define the obligations to return or destroy the information upon the termination of the relationship or the project
  25. 25. Employee Education www.lewisandroca.com• Pre-hiring• Orientation• Periodic meetings• Written memos and electronic reminders• Prominent posted notices• Performance reviews
  26. 26. The Exit Interview www.lewisandroca.com• Every employee should receive an exit interview upon the termination of employment• Review terms of executed agreements• Discuss types of confidential information and duty to keep information confidential• Return all physical items containing confidential information – USB devices; memory cards• Employee should execute an acknowledgment• Forensic exam of untrustworthy employee’s computer
  27. 27. TRADEMARKS www.lewisandroca.com
  28. 28. Process of Selecting a Trademark www.lewisandroca.com• Brainstorming• Registrability• Availability• Registration
  29. 29. Selecting a Mark www.lewisandroca.com • Distinctiveness SpectrumThe more distinctive the mark, the greater its level of legal protectability.
  30. 30. Trademark Searches www.lewisandroca.com• International screening search• Country-specific search – Trademark registers (federal and state) – Common-law uses – Internet, domain names – Corporate names
  31. 31. How Are Trademark Rights Obtained? www.lewisandroca.comRights are obtained either: - By use; or - By registration
  32. 32. Common-Law Rights vs. Registration www.lewisandroca.comCommon Law• Bound by the geographic area in which the product or service is marketed.• Protection generally begins only after the product or service is actually available for sale on the market.• Rights can be lost after deciding on a mark and before bringing a product to market if someone begins commercial sales first.
  33. 33. Common Law Rights vs. Registration www.lewisandroca.comU.S. Federal Registration• Valid in the whole country• Priority based on date of application• “Intent to Use” application allows applying for a mark before using it• Gives trademark owners the ability to expand at their own pace• How long and how costly is the process• Notice of registration: ® ™ SM• Renewals, Continued Use, Policing
  34. 34. Protecting Your Mark Abroad www.lewisandroca.com• Rights are acquired on a country-by-country basis, so you should obtain a trademark registration in all countries where you do business.• Most countries are First-to-File Countries, which grant rights to those who file trademark applications first, as opposed to those who use the mark first. Beware of trademark pirates.• International Registrations – One U.S. based application/registration can be extended to any country member of the Madrid Protocol (83 members), upon payment of additional fees• Community Trademark Registrations – One registration covers all 27 members of the European Union
  35. 35. Protecting Your Mark Abroad www.lewisandroca.com• Advantages of Filing Trademark Applications via Madrid Protocol vs. Filing on a Country-by-Country basis – Cost savings – Simplified renewals, assignments, recordals of change of address – One simplified filing process as opposed to multiple countries filing processes – No need to engage counsel in several countries to file the application
  36. 36. Protecting Your Mark Abroad www.lewisandroca.com• Disadvantages of Filing Trademark Applications via Madrid Protocol vs. Filing on a Country-by-Country basis – An International Registration must mirror the base U.S. application/registration – All foreign extensions from an International Registration remain dependent on the base U.S. application/registration for 5 years, thus, if the base U.S. application/registration fails, all foreign extensions fail
  37. 37. Avoiding Genericide www.lewisandroca.com• Once a trademark, not always a trademark. © Xerox Corporation
  38. 38. Proper Use — Avoiding Genericide www.lewisandroca.com• Use the ™ and ® symbols where appropriate• Always distinguish from surrounding text by using: Quotation marks – “Mercedes Benz” Larger-sized print – Mercedes Benz All capital letters – MERCEDES BENZ Initial capitals – Mercedes Benz Distinctive print – Mercedes Benz Color – Mercedes Benz
  39. 39. Proper Use – Avoiding Genericide www.lewisandroca.com• Always use the mark followed by a noun: e.g., KLEENEX tissue, Q-TIP cotton swabs• Never plural Wrong: Two DELLS Correct: Two DELL computers• Never possessive Wrong: POST-IT’s quality Correct: POST-IT note pads’ quality
  40. 40. Proper Use — Avoiding Genericide www.lewisandroca.com• Never a verb Wrong: Xerox a document Correct: Photocopy a document on a XEROX copier• Proper spelling Wrong: COCACOLA Correct: Coca-Cola
  41. 41. Domain Names and Trademarks www.lewisandroca.com• Registering a domain name does not create a trademark or trademark rights – But a domain name can be a trademark if advertised and used that way (i.e. - Amazon.com, Buy.com)• A domain name registration is an indication of a potential prior user that may conflict with your trademark• If name is available, consider registering DNs in all main gTLDs• Consider registering typos and XYZsucks
  42. 42. COPYRIGHTS www.lewisandroca.com
  43. 43. Copyrights www.lewisandroca.com• What it protects and what it does not protect – Protects original, creative expression – Does not protect ideas, concepts, functionality, or titles – Protects against unauthorized copying but not against another’s own independent creation (even if the resulting work is identical) – For software: Protects the expression by the programmer in the written software code and perhaps the design, selection and arrangement of how portions of the code fit together (if not dictated by function) But does not protect the overall idea, function or output of the program
  44. 44. Copyrights www.lewisandroca.com• Registration is not required for protection – Copyright attaches at the moment the protected expression is fixed in a tangible medium (i.e. the source code is written)• In the U.S., registration is a prerequisite to filing a suit for infringement – Can register after learning of an infringement and still file a lawsuit – But it must pre-date the infringement for certain remedies to be available (statutory damages and attorney’s fees)
  45. 45. Copyrights www.lewisandroca.com• Employee v. Independent Contractor – A frequent trap for the unwary – If an employee creates a copyrighted work within the scope of her employment, the employer is considered to be the author/owner and the creation is a “work for hire” – If a contractor is retained to create a copyrighted work, the contractor is the author and owner of the copyright unless she assigns it in writing to the company In the absence of a written assignment, the company will only have a limited license to use the work for the purpose for which it was created Most likely, the company won’t be able to modify, make enhancements to or create new works from the original work of the contractor – If you hire a contractor to create a work and need to own all rights in the work, you must spell that out in a written contract assigning the copyright in the work to you
  46. 46. Building Your Website www.lewisandroca.com• Although it is relatively simple to create and publish a website, there are legal ramifications you should be aware of: – Website content and risk of copyright infringement- make sure you have the right to use all photographs, images, language and other copyrightable materials shown on your website. – Privacy Policy and Terms and Conditions- Privacy laws mandate that websites disclose what type of viewers’ information is collected by the site, how it will be used, who it will be shared with, etc.

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