intellectual property: assets and liabilities francisco castro, ph.d. – counsel, arent fox llp...

Intellectual Property: Assets and Liabilities

Francisco Castro, Ph.D. – Counsel, Arent Fox LLPAlec Rosenberg – Partner, Arent Fox LLPDavid Gryce – Partner and Privacy Officer, Arent

Fox, LLP

Entrepreneur Education Session - July 31, 2014

Angel Venture Forum Arent Fox LLP

Bios

• Francisco Castro, Ph.D.: Francisco has over 10 years in patent prosecution and counseling and is counsel in the Arent Fox Intellectual Property Group. Prior to practicing law, Francisco was a senior research engineer at Lucent Technologies and Motorola.


Bios

• Alec Rosenberg: Alec’s practice encompasses the full range of intellectual property (IP) scenarios, from identifying and acquiring IP assets, to ownership, misappropriation, and infringement disputes, to strategic counseling and transactions. A significant part of his practice involves counseling tech entrepreneurs in connection with such matters.


Bios

• David Gryce: Dave is a 30-year veteran intellectual property practitioner, a partner in the Arent Fox Intellectual Property Group, group leader of the Emerging Companies Practice, and Privacy Officer for the firm. Dave focuses his practice on what he calls “business integrity” - both the security of the data upon which a client’s business depends and the business’ branded character.


Arent Fox LLP

• Arent Fox LLP is a national commercial practice law firm, with offices in DC, NY, LA, and San Francisco.

• Local Office:1717 K Street N.W.Washington, DC 20036202-857-6000www.ArentFox.com


Agenda

U.S. Intellectual Property• Patents• Trademarks• Copyrights• Trade Secrets• Data Security


Topical Format

• Definition and Rights• Acquisition of Rights• Measurement of Value• Enforcement• Cost/Benefit

Patents


Patent: Definition and Rights• A novel and non-obvious invention • The right to exclude others from making,

using, selling, or importing the invention claimed in the patent

• Utility patents protect functional aspects and have a duration of 20 years

• Design patents protect ornamental aspects • Geographically restricted – Red Flag: 1-year

grace period in U.S.


Patent: Acquisition of Rights• Priority – First inventor to file • Patent Application – Specification– Drawings– Claims: Define scope of rights

• Claim Types – Method, device, system, …• Provisional and Non-Provisional applications • Pre-Filing Search –worth doing, but

dependent on technology


Patent: Measurement of Value

• Claim scope identifies the exclusive rights (i.e., exclude others from making, using, selling, or importing)– Broad claims generally preferred– Targeted claims (e.g., standards)

• Licensing• Cross-licensing• Force competitors to not enter/exit market or

use less effective, more costly solutions


Patent: Enforcement

• Patent Infringement – Enforcing rights through patent litigation– Infringing product or process needs to “read” on

at least one claim in the patent• All elements of the claim met

– Remedies: Injunction, damages • Federal Courts• International Trade Commission – Remedy: Order stopping infringing imports


Patent: Cost/Benefit

• Provisional applications – lower cost, expires in one year, earlier priority

• Non-Provisional applications – higher cost, can mature into an issued patent

• Prosecution of application – can take several years; issuance of a patent or scope of claims not guaranteed

• Protection – preventing others from providing products or services covered by the patent

Questions?


Trademark: Definition and Rights

• A designation of the source or origin (i.e., “brand”)

• Traditional view – consumer protection• Modern view – property; a promise to

customers; a communication device• The right to prevent others from a mark that is

likely to cause confusion• Potentially unlimited in duration, but

geographically restricted


Trademark: Acquisition of Rights

• Priority – First to use, not merely to “adopt”• Common law – geographically restricted• Federal registration system – important

advantages– “Intent to use” applications

• Social Media: Domain names, Facebook, Twitter, etc. – registration not enough

• Clearance – yes, it’s worth doing it


Trademark: Acquisition of Rights

• Distinctiveness– Inherently distinctive marks: protectable at first

use– Descriptive marks: need “secondary meaning”

• Generic terms are not entitled to protection• Abandonment– Cessation of use– Failure to police or maintain quality control– Genericide


Trademark: Measurement of Value

• How well does it identify your company and distinguish it from your competitors?

• How “strong” (or distinctive) is it?– Inherent– Commercial

• Licensing• In many cases, a powerful trademark / brand

is the single most valuable asset of a company


Trademark: Enforcement• Prior rights plus “likelihood of confusion”– Strength of the plaintiff’s mark– Similarity of marks– Similarity of goods / services

• Dilution – Famous marks receive special protection

• Domain names (Lawsuit vs. UDRP)– Key is “Bad Faith,” but beware: new gTLDS are the

new “wild west”• Defense: Fair Use


Trademark: Cost/Benefit

• Common law – coextensive with costs to build your brand and market your company

• Federal registration – worth the modest cost, given the benefits

• Minimum benefit – let your customers find you; avoid confusion

• Maximum benefit – strong trademark is the most effective commercial communication device ever

Questions?


Copyright: Definition and Rights

• Copyright protects “original works of authorship fixed in any tangible medium of expression”

• Protects expression of ideas (not the ideas themselves)

• Prevents others from copying, publicly performing, publicly displaying, and preparing derivative works based on your work


Copyright: Acquisition of Rights

• Copyright exists at the moment of “fixation”• But, federal copyright registration is necessary

for enforcement• Copyright usually vests in the author, except if

the “work made for hire” rules apply– Employee acting within scope of employment– RED FLAG: Independent contractors / vendors– Language of your contract is critical


Copyright: Measurement of Value

• Value – depends on your business• Licensing opportunities?• Website “look and feel”• Data and data compilations• Software– Google v. Oracle: APIs are copyrightable, even

when they ensure interoperability


Copyright: Enforcement

• Copyright infringement– Ownership– Improper copying of protected expression• Access• Substantial similarity

• DMCA for some Internet-based infringements– “Notice and takedown” regime

• Fair use– Is the use for criticism? Is it “transformative”?


Copyright: Cost/Benefit

• Again, depends on your business• Copyright registration – cheap and easy• High value if– Your business is content

• Possibly significant value if– Big data– Software

• Lower value if– Widget sellers

Questions?


Trade Secret: Definition and Rights• State: UTSA– Information that derives independent economic

value from not being known and is the subject of reasonable efforts to keep it secret.

• Common Law (NY): – Information that is used in one’s business and

gives an opportunity for advantage over competitors who do not know or use it.

• Federal: Economic Espionage Act– Essentially same definition as UTSA


Trade Secret: Acquisition of Rights

• Look to definition– Information not generally known– Information has economic value arising from not

being generally known– must be the subject of reasonable efforts to keep

the information secret• Must be able to clearly define what

information is trade secret


Trade Secret: Measurement of Value

• The value of trade secrets derives from– The extent of competitive advantage the

information affords the owner– How well identified the trade secrets are– The quality of precautions implemented to protect

the trade secrets:• Physical safeguards, e.g., locks and access• Administrative safeguards, e.g., employment policies

and procedures• Technical safeguards, e.g., encryption, authentication


Trade Secret: Enforcement

• Civil litigation – state law claims– Establish trade secret definition met– “Reasonable” precautions were taken– Information was misappropriated

• Criminal – state or federal, but must be brought by the authorities

• Relative ease in defending against a claim• Expensive litigation


Trade Secret: Cost/Benefit

• Most businesses have some “secret sauce”• Acquisition of rights requires affirmative

action to protect the information• Red Flag: Easiest way to lose rights is to share

information without an NDA• Enforcement is difficult, usually arises in the

employment/consultant context• Low cost, substantial benefit if proper steps

taken


Data Security• Why worry: trade secret misappropriation,

privacy law violation, theft (exfiltration)• Three types of data security:– Physical safeguards– Administrative safeguards– Technical safeguards

• What data, whose data, and what law?• Privacy (US/international)– opt in/opt out - policy

Questions?

Thank you!

intellectual property: assets and liabilities francisco castro, ph.d. – counsel, arent fox llp...

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