idea to ipo... and beyond 2011 intellectual property: the basics of protecting and optimizing your...

IDEA TO IPO . . . AND BEYOND 2011

INTELLECTUAL PROPERTY:The Basics of Protecting and Optimizing Your Emerging Company’s Intellectual Property Assets

Sean Solberg and Victor Jonas

2 I D E A T O I P O . . . A N D B E Y O N D 2 0 11

Presenters

Victor JonasProsecution/Portfolio

Management/Patentability and FTO Analyses/IP Due Diligence

Fortune 500/Medtech Clients

Medical Device and Mechanical

EMAIL: [email protected]

PHONE: 612-766-7611

Sean SolbergProsecution/Portfolio Management/

Patentability and FTO Analyses/IP Due Diligence

Startup/Fortune 500/Tech Transfer Clients

Medical Device and Biotech

EMAIL: [email protected]

PHONE: 612-766-8739


IOWA

ENGLAND

About Faegre & Benson LLP

• AmLaw 100 firm with more than 500 lawyers worldwide• Founded in Minneapolis in 1886 and now serving clients throughout the U.S., Europe and Asia

CHINA

MINNESOTA

COLORADO


Technology/Company Life Cycle –Idea to IPO and Beyond


Summary

Corporate Formation Short summary of basic considerations for starting your company

Patents 101 The requirements of patentability and basics of the patent application process

IP Agreements 101 Technology agreements, including licenses, employment, and confidentiality agreements

Portfolio Management & Strategy 101 Some of the factors involved in building and managing an IP portfolio with an eye towards commercialization

Trade Secrets 101

Trademarks 101

Copyrights 101


Corporate Formation

• State of Incorporation– California: some convenience and cost savings – Delaware: most common state; well defined corporate laws; higher

franchise tax; well accepted by investors from all over the country• Capital Structure

– Initial capital: friends and family– Keep it simple up front: Don’t want to have significant rights (anti-

dilution, board seats, blocking rights) that could screw up your venture capital financing

• Keep good records– If you don’t do it right the first time, it will cost you a lot to fix it for a VC

to invest


Corporate Formation – Entity Selection

• Sole Proprietorship – unincorporated, single owner, owner pays taxes• Partnership – unincorporated, at least two owners, owners pay taxes

– Limited Liability Partnership – partial limited liability, can choose to be taxed as corporation or partnership (exception)

• C Corporation – corporate entity, shareholders not liable for corporate debt

– Corporation pays taxes, shareholders do not (except for dividends)• S Corporation – corporate entity, shareholders not liable for corporate

debt– Shareholders pay taxes, shareholders limited (in number & type)

• Limited Liability Company – hybrid entity– Shareholders liable for corporate debt– Can choose to be taxed as corporation or partnership


Type of Right Scope of Coverage Example

Patents Ideas – products, processes Telephone

Trade Secrets Confidential information Strategies, lists

Trademarks Identifies source & quality Coca-Cola®

Copyrights Expressions of ideas Movies, books

Agreements Fills gaps Confidentiality agreements, licenses

IP 101 - 5 Categories of Rights


9

PATENTS

101

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What is a Patent?

• A patent is a right granted by the U.S. Government for new, unobvious and useful inventions

– A patent is a deal with the U.S. Government: exclusivity for eventual dedication to the public

– Basis in Article 1 of the Constitution• The rights conferred under a patent are exclusionary and limited in

time


Utility Patents

An example of a utility patent: A new, non-obvious and useful process, product or composition of matter, or any new and useful improvement thereof.

Main components:• Front Page• Drawings• Written Description

– Background– Preferred Embodiments

• Claims


Design Patents

An example of a design patent:A new, non-obvious, original and ornamental design for an article of manufacture or improvement thereof.

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PATENT


Filing Date

[22] Filed: Feb. 13, 1995


Inventors

[75] Inventors: Erwin Knott, Poing; Giinter Friedmann, Ubersee, both of Germany


Assignee

[73] Assignee: Stöckert Instrumente GmbH, Munich, Germany


Priority Application

[30] Foreign Applicaton Priority DateFeb. 16, 1994 [EP] European Pat. Off. . 94102331


Cited Prior Art

FOREIGN PATENT DOCUMENTS0033666 2/1981 European Pat. Off.. 0147733 12/1984 European Pat. Off..467288 6/1937 United Kingdom ……… 417/477.1 1353156 10/1970 United Kingdom . 2027283 7/1979 United Kingdom

U.S. PATENT DOCUMENTS4,631,008 12/1986 Stenner …………..417/477.14,842,815 6/1989 Cauguelin et al. ……..403/3254,909,713 3/1990 Finsterwald et al. …417/477.1


Abstract

[57] ABSTRACTA roller pump for heart-lung machines with a pump head, consisting of a pump stator which possesses a pump bed serving as a support for a hose piece or length, and a pump roter which is arranged in the pump stator so as to be rotatable about its central longitudinal axis and which possesses rollers rotatably supported on a roller carrier, which during a rotation of the pump rotor travel along the hose piece which is inserted into the pump head, and including a five unit for producing the rotational movement of the pump rotor and with a pump housing for the support of the pump head and for receiving the drive unit which is inventively configured in such a manner that the drive unit is connected with the pump head whereby the pump head is moveable relative to the pump housing.


Drawings


Background of the Invention

BACKGROUND OF THE INVENTION1. Field of the InventionThe present invention relates to a roller

pump, especially for heart-lung machines, wherein the roller pump possesses a pump head consisting of a pump stator and a pump rotor, a drive unit and a pump housing.

Basically, roller pumps consist of a pump head, a drive unit and a pump housing, of which, in turn, the pump head again consists of a pump stator and a pump rotor. The pump stator is an essentially cylindrical hollow chamber whose inner wall, which is designated as a pump bed, serves as a support for a hose piece or length which is inserted into the pump head and which lies against the inner wall. The pump rotor, which is rotatable about its central longitudinal axis, is arranged in the pump stator in such a manner that rollers, , which are rotatably supported on a roller carrier, are rollable along the hose piece and thereby compress the hose piece. …


Summary of the Invention

SUMMARY OF THE INVENTIONAccordingly, commencing from the foregoing

state of the art, it is an object of the present invention to provide a roller pump of the above-mentioned type whose construction supports the intended shortening in the length of the hose.

The foregoing object is achieved through a roller pump for heart-lung machines with a pump head, consisting of a pump stator which possesses a pump bed serving as a support for a hose piece or length, and a pump rotor which is arranged in the pump stator so as to be rotatable about its central longitudinal axis and which possesses rollers rotatably supported on a roller carrier, which during a rotation of the pump rotor travel along the hose piece which is inserted into the pump head, and including a drive unit for producing the rotational movement of the pump rotor and with a pump housing for the support of the pump head and for receiving the drive unit which is inventively configured in such a manner that the drive unit is connected with the pump head whereby the pump head is moveable relative to the pump housing.


Detailed Description

DETAILED DESCRIPTIONIn FIG. 1 there is illustrated a roller pump

which consists of a pump head 1, a drive unit 2 and a pump housing 3. The pump head 1 encompasses a pump stator 4, in the essentially cylindrical hollow chamber 5 of which there is arranged a pump rotor 6 so as to be rotatable about its central longitudinal axis. As is illustrated in FIG. 2, the pump rotor 6 possesses rollers 8 which are each presently supported on a roller carrier 7, and whereby during a rotational movement of the pump rotor 6 the rollers travel along a hose piece 9 which is inserted into the pump head. The inner wall of the cylindrical hollow chamber of the pump stator 4 serves as a counter support against which there lies the hose piece 9 as shown in FIG. 2. Third support is usually designated as a pump bed.


Claim 1

1. Roller pump for heart-lung machines including a pump . head (1) comprising a pump stator (4) having a pump bed serving as a support for a hose piece (9), and a pump rotor (6) arranged in said pump stator for rotation about a central longitudinal axis of said pump rotor, a roller carrier (7) rotatably supporting rollers (8) on said pump rotor, said rollers traveling along the hose piece which is inserted into the pump head (1) during a rotational movement of the pump rotor (6); a drive unit (2) for producing the rotational movement of the pump rotor (6); a pump housing (3) for supporting the pump head (1) and for receiving. the drive unit (2), said drive unit (2) being connected with the pump head (1) such that the pump head (1) is movable relative to the pump housing (3); and a locking device (21) for releasably securing the pump head (1) to the pump housing (3).


Patent Databases

• Access to Patents and Applications– Searching – Patent Office - http://patft.uspto.gov/

– Can do simple searches for patents and published applications– Access in http format (or single pdf pages) – No ability to download

– Pdf Copies of Patents – Free Websites – Example – http://www.pat2pdf.org/– Can download pdf copies of patents or published applications

• Detailed Patent and Application Information• Application Info – Patent Office – http://portal.uspto.gov/external/portal/pair

• Can search for any patent or published application• Provides detailed information about patent/application, including status• Can access file history of patent/application

• Owner Info – Patent Office – http://assignments.uspto.gov/assignments/q• Can search for assignment information – who owns the patent?

http://patft.uspto.gov/

http://www.pat2pdf.org/

http://portal.uspto.gov/external/portal/pair

http://assignments.uspto.gov/assignments/q


Prosecution – Process of Pursuing a Patent

• File Application– Non-provisional or provisional application

• File Information Disclosure Statement (“IDS”) – disclosure of all known prior art• Office Action - PTO issues a communication to the Applicant

– Usually within 2-4 years of filing– Claims will be rejected based on prior art or formalities

• Response - Applicant will work with a patent attorney to formulate a response to the claim rejections

– Can amend claims and/or argue against the rejections– Arguments - mixture of legal and technology-based

• Further Office Actions and Responses – 1, 2, 3, 4 or more times• Notice of Allowance – Examiner recognizes one or more of the claims as allowed• Issuance – Patent issues after Applicant pays issue fee• Pay Maintenance Fees


A Note About Provisionals

• A “provisional” application is one which is not examined; merely “holds your place in line”, e.g. your priority date

– Frequently used by Universities and Start-Ups • Within a year, standard non-provisional application must be filed

– Non-provisional application is subjected to full examination by PTO• Within a year, foreign applications must be filed as well to preserve

foreign rights (more on this later)• Caveat – same strict formality requirements as non-provisional are

applied to provisional applications (more on this later)– Filing of scientific publications or “flimsy” provisionals may significantly

impact future rights


What is the Right Granted?

• The right to exclude others from making, using or selling your invention

– A right to sue to prevent someone else from “practicing the patent” – making, using, selling, importing, or offering to sell the invention

• Patent DOES NOT grant the patent owner the right to make, use or sell its invention

• Length of Protection– 20 years from filing date for Utility Patent

• All recently filed patents are eligible for a term extension for Patent Office delays

– 14 years from grant date for Design Patent


The Invention is Defined by the Claims

• The claims define the subject matter covered – i.e. what cannot be made, used or sold– This is what the patent examiner looks at during prosecution and what

the courts look at during litigation– The rest of the specification defines the terms in the claims

• The claims can be thought of as an empty cardboard box, defining boundaries


Patentability vs. Freedom-to-Operate

Stents

• Sample Stent Claim– An expandable graft for use in a vessel

comprising:(a) a thin-walled tubular member having

wall surface with a plurality of slots,(b) the tubular member having a first

diameter for delivery, and(c) a second, expanded diameter for

expanding the vessel


Patentability vs. Freedom-to-Operate

• Sample Drug-Eluting Stent Claim– An expandable graft for use in a vessel

comprising:(a) a thin-walled tubular member having

wall surface with a plurality of slots,(b) the tubular member having a first

diameter for delivery, and(c) a second, expanded diameter for

expanding the vessel(d) wherein the tubular member is

embedded with an active agent

Stents

Drug-eluting stent


Key Point #1

• Patent provides only a right to exclude others– Prevent third parties from practicing your invention

• Patent does NOT provide an affirmative right to make, use, or sell any commercial embodiment of your invention (does NOT provide FREEDOM TO OPERATE)

– Freedom to operate is a completely separate analysis– You could have 100 patents and NOT have freedom to operate


Key Point #2

• A company does not NEED a patent to commercialize a technology but it DOES need freedom to operate


What Does it Take to Get a Patent?

• There must be patentable subject matter (35 U.S.C. § 101)• The invention must be novel (§ 102)• The invention must be non-obvious (§ 103)• The specification must enable one of skill in the art to make and use

the invention without undue experimentation (§ 112)• A good patent attorney!


Patentable Subject Matter: §101

• §101: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title

• “Anything man-made under the sun”


Subject Matter

• Patentable Subject Matter– Devices – machines, devices, etc.– Compositions – drugs, new materials, new compounds in a form not

found in nature– Methods – methods of making, methods of using, business methods– Improvements to existing technologies

• Non-Patentable Subject Matter– Forces of nature – E=mc2, gravity, natural mechanisms

(protein interactions, etc.)– Mathematical formulas, databases, algorithms


Patentable Methods

• Machine or Transformation Test (In re Bilski – Federal Circuit – 2008)– Method is patentable if:

• It is tied to a particular machine or apparatus, or• It transforms a particular article into a different state or thing.

– Transformation requirement not satisfied by insignificant activity or a mere data-gathering step.

• Abstract Ideas Test (In re Bilski – Supreme Court – 2010)– Machine or transformation test is not the sole test, but is a useful tool.– Section 101 term “process” cannot be read to categorically exclude

business methods, but there is no suggestion of broad patentability of such inventions.

– Applies old rule – abstract ideas are not patentable (citing three pre-Bilski Supreme Court cases)


Patentable Methods – Medical Methods/Diagnostics• In re Prometheus

– Invention – optimizing proper dosage of thiopurine drugs (which treat autoimmune diseases)• Example - claim 1 requires a method of optimizing comprising (1)

administering the drug, and (2) determining the level of the drug in the patient (the level indicating a need to increase or decrease dosage)

– Federal Circuit – 2009 – methods satisfy transformation prong of test• Administering step is transformative – transforms human body• Determining step also transformative – manipulation required to extract

metabolites and determine their concentration.– Federal Circuit – 2010 (post-Bilski) – methods patentable

• The claims are not drawn to a natural phenomenon, the patenting of which would entirely preempt its use (Benson or Flook), but rather are drawn only to a particular application of that phenomenon (Diehr).

• Claims also satisfy the machine-or-transformation test


Patentability of Genes

• AMP v. Myriad – currently before the Federal Circuit– District court – held gene claims invalid– U.S. Dept. of Justice

• Isolated, “naturally occurring” genetic sequences – unpatentable• Genetically engineered human genetic material – patentable


Bars to Patentability – Novelty (§102)

• Novelty Requirement – a patent application cannot be filed in the U.S. if:– The invention was described in a printed publication more that one year

prior to filing the application; or• A key concern for universities and faculty

– The invention was offered for sale more than one year prior to filing the application• “Offer for sale” has been interpreted broadly

NOTE: Most foreign countries do not allow the one year grace period.


Bars to Patentability – Obviousness (§103)

• Non-obviousness Requirement– Even if the invention is not identically disclosed by a single reference

(“anticipated” under §102), if the differences between the invention and the prior art are such that the invention would have been obvious to a person of skill in the art, the invention is “obvious”

– Typically based on a combination of two or more prior art references (no single reference requirement)

Note: This is where most of the patentability arguments in the patent office occur.


Obviousness

• Legal obviousness test includes four factual inquiries (Graham factors):

– Determining the scope and content of the prior art;– Ascertaining the differences between the prior art and the claims;– Resolving the level of ordinary skill in the art; and– Evaluating evidence of secondary considerations

• Exs: commercial success, long-felt need, copying, unexpected results, etc.

• KSR Int’l Co. v. Teleflex Inc. (Supreme Court, April 30, 2007)– Apparent Reason Test


Obviousness

• Additional test that can provide “helpful insight” – TSM Test– Whether the prior art contains the teaching, suggestion, or motivation to

combine the references and practice the invention– There must be a reasonable expectation of success– Each and every element of the claims must be found in the prior art


Overcoming a 102 or 103 Rejection

• Novelty (102) – Anticipation Rejection– To overcome a novelty rejection based on a single prior art reference, you must

establish that the reference does NOT:• Have “each and every element” of the claims; or • Enable “one of skill in the art” to make and use the invention (e.g., someone

must be able to do it from the information provided and the state of the art)• Non-Obviousness (103) – Obviousness Rejection

– To overcome an obviousness rejection, you must establish that:• The combination of references does not have each and every element of the

claims; or• The references do not enable one of skill to make and use the invention; or• There is no apparent reason to combine the references

– The references teach away from the combination; or– One of the reference inventions is rendered inoperable by the combination


Section 112

• While §§ 101, 102 and 103 are concerned with the invention, §112 is concerned with the specification

– Get it right the first time!– Claims may be amended and/or added– New material can be added in a continuation-in-part

application

NOTE: A specification is “carved in stone” upon filing


Section 112 Requirements

• Written description• Enablement – describe the invention with sufficient detail to enable

“one of ordinary skill in the art” to reproduce it• Best mode• Claims that “particularly point out and distinctly claim” the subject

matter of the invention


Determination of Inventorship

• Inventorship is set by the claims– “The touchstone of inventorship is

conception.”• Sole inventorship• Joint inventorship

– Joint labors– Small contributions by one inventor

and large contributions by another• Genus/species inventorship

– Independent contributions My idea!


Ownership

• Ownership in the U.S. is based initially on inventorship– Each named inventor jointly owns full rights in the application/patent

with every other named inventor• Employees - ownership typically transfers to an employer as a result

of state law and/or employment agreement– Non-employees (owners, contractors, etc.) – typically required to

transfer ownership to the appropriate entity as a result of a contract provision

• California State Law – Section 2870 of the California Labor Code– Assignment to employer does not apply to any invention developed

entirely on employee’s own time without using employer’s equipment, supplies, facilities, or trade secret information• Except for inventions (1) that relate to the employer’s business or R&D, or

(2) result from work performed by the employee for the employer


Ownership

• UC Patent Policy– Generally, inventions and patents are owned by the University –

“An agreement to assign inventions and patents to the University, except those resulting from permissible consulting activities without use of University facilities, shall be mandatory for all employees, for persons not employed by the University but who use University research facilities, and for those who receive gift, grant, or contract funds through the University.”

– However, the University can give ownership back to the inventors –“[T]he University may release patent rights to the inventor in those circumstances when:1) the University elects not to file a patent application and the inventor is

prepared to do so, or2) the equity of the situation clearly indicates such release should be

given, . . . provided that a shop right is granted to the University.”


UCSF Office of Technology Management

• UCSF INVENTORS – THE OTM IS YOUR FRIEND– When in doubt – call the OTM– Director – Joel Kirschbaum

• Phone – 415-353-4462• E-mail – [email protected]

• Procedure– All UCSF inventions must be submitted to the OTM– All commercialization – licensing, startups, etc. – is organized/guided by

the OTM• Everything else in this presentation about IP strategy,

commercialization, fundraising, etc. is SECONDARY to the above.

mailto:[email protected]


International Protection

• Paris Convention of 1883 - within 1 year of an original filing, an applicant may file a priority application in another Paris Convention country

• Patent Cooperation Treaty (PCT) – “International” patent application– Roughly 120 nations are members of the PCT– Searched by the International Search Authority (E.g., USPTO, EPO)– Receives brief examination– Applicant may file national stage applications in any designated

countries, up to 30 months from the priority date


Patent Differences Between the U.S.and the Rest of the World

• U.S. is the only “first to invent” country – Everywhere else is “first to file”– Policy: help the little guy, we’re a country of innovators– Patent Reform Act 2011– Consequences

• Interference practice• One-year grace period with respect to disclosure (discussed earlier)


Key Point #3

• Inventorship/Ownership– Inventorship is a legally-defined status – it cannot be

negotiated, obtained contractually, or dictated based on seniority

– Ownership is initially determined by inventorship but can be transferred by contract


Key Point #4

• Foreign Patent Protection– If you want to protect your technology outside the U.S., you will need to

pursue patents outside the U.S.– Filing a PCT application gives you 30 months before you must enter the

national stage in each country


Key Point #5

• UCSF Office of Technology Management– For UCSF inventions, everything goes through the OTM.– When in doubt, call the OTM.


57

IP AGREEMENTS

101


IP Agreements

• Licenses (especially patent licenses)– Patent License – an agreement by the patent holder (Licensor) to waive its right

to sue the Licensee for conduct which, absent the license, would be actionable as patent infringement

– In exchange, the Licensee generally agrees to pay money to the Licensor in the form of license fees, royalties, milestone payments, sublicensing fees etc.

• UC Patent Policy– Inventor gets 35% of net royalties and fees– 15% of net royalties and fees is allocated to the inventor’s

campus or laboratory for research-related purposes

• Employment Agreements• Joint Development Agreements• Confidentiality Agreements PATENTS


59

PORTFOLIO MANAGEMENT

AND STRATEGY

101


Why Protect Your Company’s IP?

• Protect Income Streams & Recover R&D Investment• Obtain a Competitive Advantage (i.e., Exclude the Competition)• Fence In Current Competitors’ Positions• Create an Opportunity for Licensing Revenue• Compile Bargaining Chips (Leverage) (e.g., Litigation and Cross-

Licensing)• Validate Technological Expertise• Enhance Equity Value and Impress/Attract Investors


Portfolio Management – Key Components

• Evaluate Technology and Intellectual Property• Maximize IP Protection• Tailor IP Strategy and Revisit Regularly


Evaluation: Characterizing Your Technology

• Is This Technology Worth Patenting?– Thorough, objective, realistic analysis– Is it patentable?– Advantage to patenting?

• Market Considerations– Established market for resulting product?– If not, will the product establish a market? Why?– Market advantage of product?

• Would sale or licensing out of technology be better?• Are trade secrets a better approach?

– Some technologies lean towards trade secrets rather than patents– Be very aware of strict requirements for trade secrets

• Evaluation of additional rights to license-in• How does need for funding relate to these considerations?


Evaluation: IP Audits

• What does an IP Audit Entail?– Taking an inventory of your company’s IP rights and verifying ownership– Assessing the quality and scope of those rights– Review employee, joint-development, consulting, non-disclosure, and

license agreements– Evaluating and improving your company’s protection procedures

• Why perform an IP Audit?– To obtain a “snap-shot” of your company’s IP rights and procedures in

place to protect your IP rights– Verify that core technologies and key products are protected– Ensure that effective protection procedures are in place– Evaluate a business unit or product line for possible acquisition, sale, or

merger


Commercially Valuable Patents

• Two Basic Characteristics:– Likelihood of use by others– Ease of detecting infringement

• These two characteristics are frequently found in patents focusing on– Broad Product Concepts– Selling features– Architectural features– Product interfaces and protocols– Parts and supplies


Evaluation: Ownership of IP

• Prior employment agreements at prior companies• Present employment agreements• Collaborations – past and present• Government funding• Licensed-in technologies


Evaluation: Competitive Analysis

• Identification of competitors – market competitors and IP competitors– Market competitors - may impact patentability of technology and/or

scope of protection available– IP competitors - impact not only patentability and scope, but also right to

use (risk of infringement)• Patent Mapping• Blocking Patents

– Definition - a patent that prevents you from making, using, or selling your product

– Options:• Design Around• Patent Opinion of Non-Infringement or Invalidity (No License)• License


Evaluation: Competitive Analysis (cont’d)

• Freedom to operate (“right-to-use”) opinions – litigation risk analysis

– Patentability vs. Freedom to Operate: Must determine whether you can play in this space

• Note that FTO issues are usually the focus of VC IP due diligence on an emerging company

• Know the competition’s IP portfolio as well as you know their business


Freedom to Operate

• FTO can be found in two ways:– No infringement– Invalidity of patent

• Two types of infringement– Literal infringement– Infringement under the Doctrine of Equivalents

• The heart of a FTO analysis is what is claimed• Claims must be “construed” to figure out what they mean

– Factors that go into construction are:• definitions in the specification• What was said during prosecution (“file history estoppel”)• Other factors (case law under development in this area)


Strategic Planning: Strong Patent PortfoliosGo Beyond Filing Defensive Patents

Defensive Patents Offensive Patents Combination Patents

Protect what your company is doing or wants to do

Protect what others might do to get around your Company

PartneringTrade bait

Most companies stop hereLeading companies implement these IP strategies


Intellectual Property Strategic Planning

• Defensive Strategy – Protecting YOUR Technology– Protection of what you’re doing and what you want to do,

including technology you’re using, and products you are selling/planning to sell

– Protection in form of patents, trademarks, know how, and trade secrets

– Maximize strategic use of patent system - File Early & Often• MUST be aggressive on filing and prosecution• Best way to protect IP – multiple filings• Aggressive continuation practice - Leaves the file open,

creates expansion opportunities and business space



• Offensive Patent Strategy– Seek protection for areas of technology competitors might use to get around

your IP– Seek protection for future technologies/products

• Where will the field be in 5-10 years?



• Combination Patent Strategy– Claim inventions in combination with others’ existing technologies– Part of protecting future technologies/products– Value added for collaborations – create leverage through combination

applications– Easier to join (license) than to fight– Examples – medical device and

biotech, drug combos, assay combos

Ourcombined

application



• Foreign Patent Strategy– Expensive, so plan wisely– Evaluate markets, partners, competitors, collaborators, etc. – Use the “triage” approach to foreign filings:

• PRIORITIZE - what gets foreign filed, how, where and why?• Realistic assessment of different countries• Implement same portfolio analysis above for each jurisdiction of interest• Different technologies may be treated differently

– Ex: Medical devices – methods of use not patentable


Claim Drafting Strategies

• Pursue claims having varying breadth– Minimize prosecution estoppel issues

• Pursue claims directed to broader system– Supports larger damages claim

• Avoid claim limitations that are likely to change as technology progresses

• Who is your potential infringer?– Draft claim such that all elements performed by a single entity

• Pursue “concept” claims where prior art permits


IP Strategic Planning

Patent Continuation Practice Creates Patent Expansion Opportunities and Business Space

Cont.

Parent Application

CIP

CIP

CIP

Divisional

Continuation

CIP

Divisional

CIP

CIP

Divisional

Continuation

CIP

Divisional


IP Strategic Planning – Example

Position o f B lade

Trip le-B lade

U nobstructed R insing R eg ion

C hem ical C oatings

Shaving S trips

R azor H ead

M eta llic C overed P lastic

E jecto r System

Spring Biased P lunger

R azor H and le

P ivo t Support S tructu re

P ivo t B /T H ead and H and le

R azor



• Licensing In– Obtaining Licenses Instead of Ownership

• University technology transfer– Supplementing your ownership rights with additional licensed rights

• Complementary technologies to enhance your products– Licensing as required to avoid infringement

• Licensing Out– Maximizing profits by allowing others to utilize your technology in fields

outside your focus– You can license out ANY STICK from your bundle of rights in almost any

way you see fit


Strategic Planning – Staying Current

• Proposed Patent Reform Act of 2010/2011– First-to-file rights and elimination of interference proceedings– Limitation of damages to only the economic value of the improvement

as compared to the prior-art– Specific limitations on when damages may be trebled for willfulness– Post-grant opposition proceedings with a reduction in the litigation

estoppel effect


Evaluation: Identifying Goals

• Identify Portfolio Goals– Funding, collaborations, exclusivity, licensing– Different technologies may have different goals

• For example, new drugs have both patent and FDA “exclusivity” considerations, and filing strategy can significantly effect patent term and thus length of royalty stream

• Establish strategy– Involve business development personnel and scientists

• Revisit strategy every 6-12 months


Start-up Goal: FUNDING

• IP strategy vs. funding = catch 22?– To protect your technology and reduce risk of patent infringement – you first

need $$$– To get $$$ – you first need to protect your technology and reduce risk of patent

infringement• Tech Company Business Plan Must Address Intellectual Property• Think about your target – INVESTORS

– Investors - freedom to operate as important or more important than patent applications/patent portfolio

– Venture capitalists (VCs) rarely sign confidentiality agreements• IP on a Budget

– Provisional application– Preliminary freedom to operate (FTO) analysis


Start-up Goal: FUNDING (cont’d)

• Disclosure of Confidential/Privileged Information– Tension between maintaining confidentiality/privilege and trying to raise funds.

• Attorneys – prefer that clients not disclose anything that could be construed as confidential or privileged

• Investors – prefer to get all the information about the company and the technology– Middle ground – file applications encompassing all embodiments/variations of

technology before disclosing anything to investors• Don’t oversell the strength of your IP/freedom to operate!

– AVOID phrases like “we have this space LOCKED UP” or “we have confirmed that our inventions are FULLY PATENTABLE.”

– Investors generally understand that this process is generally about minimizing risks – not eliminating them


Venture Capital Funding

• Need to file application first– Won’t sign NDA

• Probably should do preliminary FTO– Need fixed commercial embodiment to perform analysis– Don’t spend too much (VCs will do their own analysis)

• Most important to VCs – you have given serious consideration to IP and have taken fundamental/necessary steps

• Must prepare for IP Due Diligence– IP due diligence – VCs review of all IP (company’s portfolio, freedom to

operate, IP landscape, etc.)• Review scope of portfolio, inventorship, ownership, etc.

– Typically performed AFTER closing– VCs bring in their own attorney/law firm for this review


Case Study – Medical Device Start-Up: Scenario

• Background– You invent the drug-eluting stent– You want to build a company around your technology that markets and

sells the stent• You’re Building Your Business Plan

– What is your intellectual property strategy?– What are some of the key things you need to think about?


Case Study – IP Strategy Considerations

• Protecting Your Drug-Eluting Stent Technology– File patent application(s)?

• Provisional vs. non-provisional• Utility vs. design

– Trade secrets?• Ownership of Intellectual Property

– Does your company have a CLEAN CHAIN OF TITLE?– Have all employees and officers and founders signed employment

agreements and/or assignments?– Have all consultants and medical advisory board members signed

appropriate agreements?


Case Study – IP Strategy Considerations

• Can You Sell Your Stent? – analyzing your freedom to operate– Establish at least one commercial embodiment – be prepared to revise

as analysis progresses– FTO Analysis – non-infringement and/or invalidity positions– Design around?– Licensing rights in?

• Who Will Fund Your Company?– Angels – more likely to sign NDAs– VCs – more sophisticated than angels regarding IP issues


Case Study – IP Strategy Considerations (cont’d)

• How Much Can You Disclose About Your Stent?– Have you filed applications that cover the stent technology?– Are there trade secrets that absolutely cannot be disclosed?– Do you have an NDA with the potential investor?

• Are you Ready for Due Diligence?• What Are Your IP Needs re Branding for Stent and Company?

– Do you have a company name that can be protected with a trademark?– Do you have product names for your stents that can be protected?– Have you filed trademark applications for those names?


Key Point #6

• An effective IP strategy requires:– Integration with business goals and objectives– Appropriate and complementary use of patent, trade secret, and

trademark protection– Awareness of third-party IP rights, with a focus on key competitors– Continue to revisit strategy– Consult your IP attorneys to stay current on IP laws and

regulations


88

“Today, the recipe is locked away in a safe in Louisville, Ky. Only a handful of people know that multi-million dollar recipe (and they've signed strict confidentiality contracts).”

http://www.kfc.com/about/secret.htm

TRADE SECRETS

101Trade Secret protection exists so long as

the information is not generally known


Trade Secret Overview

• Trade Secrets protect: – Information

• Typically any information (including inventions, product plans, technical specifications, strategies, costs, prices, names, finances, marketing plans, business opportunities, personnel, research information, development information, know-how, customer lists)

– That is not generally known (i.e., it does not have to be completely unknown to be protected)

• Trade Secrets prevent others from obtaining the information through improper means

• Protection Mechanisms– Uniform Trade Secret Act - adopted by 45 states, including MN– Contract Obligations– Common Law– Economic Espionage Act of 1996 - criminal charges



• Economic Espionage Act of 1996– Imprisonment for up to 10 years– Fine up to $500,000– Forfeiture of cash or property received

as a result of violation– An injunction preventing further

use of trade secret

http://images.google.com/imgres?imgurl=http://blogs.indiewire.com/morganspurlock/archives/Morgan%20jail%202.JPG&imgrefurl=http://blogs.indiewire.com/morganspurlock/archives/010550.html&h=2100&w=1400&sz=751&hl=en&start=1&tbnid=ZJNWLkpWyxqw8M:&tbnh=150&tbnw=100&prev=/images?q=jail&gbv=2&svnum=10&hl=en


Patents Trade Secrets

Term – 20 years from filing Forever, so long as you maintain

Cost – Around $10-30k plus maintenance fees at 3.5, 7.5 and 11.5 years

Varies widely depending on size of company and measures taken

Scope - Broad Subject Matter but must be invention (no customer lists, etc.)

Cannot protect anything that can be reverse-engineered, but no patentability standards.

Risks – Public notification of invention Lose rights if independently developed and patented

Enforcement - Absolute right to enforce Violator must have misappropriated

Patent or Trade Secret?


92

Distinctiveness Spectrum

TRADEMARKS101

Trademarks Do Not Protect Marks that are merely

descriptive or “generic”


Trademark Overview

• Trademarks Protect:– Words, names, symbols, devices, sounds, smells, trade dress, or

product shapes • Examples: Coca-Cola, Coke bottle, NBC chimes, Owens Corning pink

– that identify and distinguish goods and services• Example:

– calling a computer “Apple” is distinctive– calling the fruit an “apple” is not distinctive

• Indicate the source or origin of the goods or services• Guarantee the quality of the goods bearing the mark• Branding

– Create and maintain a demand for the product through advertising


World’s Most Valuable Brands

Source: Interbrand Corp., BusinessWeek, August 1, 2005

Rank Brand Value ($bil.)

1. 67.5

2. 59.9

3. 53.3

4. 46.9

5. 35.5

Rank Brand Value ($bil.)

6. 10.1

7. 7.8

8. 5.2

9. 4.2

10. 2.5


95

COPYRIGHTS

101


Copyright Overview

• Copyrights Protect– Works fixed in a tangible medium of expression,

• Examples: literary, musical, pictorial, computer software, architectural works

– That are original and creative • Level of creativity is low

– Examples: White Pages telephone listings are unprotectable, but an artistic yellow page advertisement is protectable

– A couple of lines of code may be protectable


Copyright Overview

• Federal rights are created the moment ideas and thoughts are fixed in any tangible medium of expression - i.e., protection is automatic when fixed.

– Registration is NOT required • But, registration provides several advantages

– allows collection of statutory damages and attorney fees– A copyright notice is NOT required to protect the work!!

• But, use of notice negates innocent infringement defense• Length of Protection:

(different rules exist for many categories of works)– Life of the author plus at least 70 years– Work for hire: 95 years from publication or 120 years from creation


98

THANKS VERY MUCH FOR YOUR TIME

[email protected]

[email protected]

QUESTIONS?


99

IP AGREEMENTS 101[ADDITIONAL INFO]


LicenseeB

LicenseeC

LicenseeA

Vascular Incision Closure Device

Laparoscopic Incision Closure Device

Laparoscopic IncisionClosure Device

Non-exclusive license Non-exclusive licenseNon-exclusive

license

LicensorIncision Closure Device

A Non-Exclusive License May Lead toDirect Competition


An Exclusive License with a Field of Use Limitation Avoids Direct Competition

LicenseeB

LicenseeA

Vascular IncisionClosure Device

Laparoscopic IncisionClosure Device


Exclusive licensefor a “field of use”

Exclusive licensefor a “field of use”


LicenseeB

LicenseeA

Laparoscopic Device(United States)

An Exclusive License with a Territory Limitation Avoids Direct Competition

Exclusive licensefor a “territory”

Exclusive licensefor a “territory”


Laparoscopic Device(Japan)


World-WideLaparoscopic

Device

World-WideVascular

Device

World-WideOther

Applications


ExclusiveLicensee

An Exclusive License without Limitationis the Broadest License


Employment Agreements

• Require ALL Employees to sign employee agreements at the time of hiring

• Discuss the terms of the agreement with each employee• File the agreements in a safe location


Employment Agreements

• The Employee should agree to:– Disclose all inventions relating to your company's business– Assign ownership rights to all inventions and ideas to company– Keep all company trade secrets in confidence– Disclose to company any restrictions from previous employee

agreements– Not compete with company for a reasonable period of time after leaving

employment


Joint Development Agreements

• Joint development arrangement can raise IP ownership issues• Absent an agreement, any invention:

– solely by employees of your company, is owned by the company,– solely by employees of the other company is owned by the other

company, and– invented jointly by employees from each company is jointly owned


Non-Disclosure Agreements

• Use of proper non-disclosure agreements (NDAs) is critical to protecting Your Company’s confidential information

• Require Confidentiality Agreements with:– Potential Business Partners– Vendors & Suppliers– Contractors & Consultants– Licensees– Employees

• Mark all documents produced under an NDA with a “CONFIDENTIAL” label


108

[Additional Info]

TRADE SECRETS 101



• Reasonable Efforts to Maintain Secrecy:– Restrict Access to information (even internally)– Use a non-disclosure agreement when disclosing to a 3rd party– Mark documents as “confidential” or “trade secret”– Implement physical and electronic document controls– Prevent any one person from having access to all parts of the trade

secret (e.g. Coke® formula)– Periodic employee training– Exit interviews



• Economic Espionage Act of 1996– Former Coca-Cola secretary sentenced to 8 years in prison


111

[Additional Info]

TRADEMARKS101


Trademark Overview

• 2 Ways to Obtain U.S. Trademark Rights– Use the mark– Have a bona fide intent to use the mark followed by use of the mark– (Other countries – first to file)

• 3 Types of Trademark Rights– Federal (Use, Intent to Use) – State (Use, Intent to Use - Depending on State)– Common Law (Use)

• Length of Protection– Common Law - as long as properly used as a trademark– Federal Registration - initial term 10 years - Renewable for 10 year

periods - no limit on renewals– State trademark systems vary in length of protection


Trademark Overview

• Trademarks prevent others from using a word, name, symbol, device that:

– causes a likelihood of consumer confusion, mistake or deception; or – dilutes the distinctive nature of a mark


Trademark Overview

• U.S. – Trademark rights predicated on use– A prior user can prevent registration of a mark to a later adopter who

files an application for registration first.• Most Other Countries are “first-to-file” jurisdictions

– The first party to submit a trademark application owns the mark • Exception - The owner of an internationally famous trademark may

challenge


Marks versus Design Patents

Reg. No. 1,484,254, protects the appearance of an “S” shaped

packing peanut as a trademark.

U.S. Patent No. D 319,392 protects the appearance of an “I”

shaped packing peanut as a patented design.


116

COPYRIGHTS 101

[ADDITIONAL INFO]


Copyright Overview

• Utilitarian Aspects of a Work Are Not Protected by Copyright• Example:

– Design feature of a sink may exist apart from the function it performs


Copyright Overview

• A Copyright allows the owner to prevent others from– Reproducing (copying)– Creating derivative works (modify)– Distributing publicly– Performing publicly– Displaying publicly; and– Transmitting certain types of information

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