© 2012 Sean C. Crandall, all rights reserved. UTSA CITE Entrepreneurship Boot Camp Intellectual...

© 2012 Sean C. Crandall, all rights reserved.

UTSA CITE Entrepreneurship Boot Camp

Intellectual Property for Entrepreneurs

Jan. 28, 2012

Sean C. CrandallRegistered Patent Attorney

Jackson Walker L.L.P.scrandall@jw.com • 210.978.7714http://www.jw.com/scrandall

Objectives

• You want to make money• Big Business has all the money, and you

can’t compete with them• Your assets are worthless• EXCEPT

– Patents– Copyright– Trademark– Trade Secret

© 2012 Sean C. Crandall, all rights reserved.

TRADEMARK

First Question

A.

B.

Trademark

• What is it?– Protection for “source identifiers.”– Right to exclude others from riding the

coattails of your good will.

• Duration– Perpetual if:

• Continual use• Continues to be a source identifier

Hypothetical

• E incorporates under the name “Seraph Image Manipulation LLC” and receives an assumed name certificate.

• B starts selling a software program called “Seraphimage.”

• What result?

Priority

• Incorporation and Assumed Name Certificate

HAVE NO TRADEMARK VALUE

Priority

• Acquiring Priority– Use in commerce– File federal TM application

• Including Intent to Use

• Knowing junior user loses– Actual notice– Constructive notice

Genericization

• Victim of your own success• All of the following used to be trademarks:

– zipper– thermos– escalator– linoleum– aspirin– heroin– butterscotch– netbook

Genericization

• Trademarks in Danger:– Xerox– Kleenex– Vaseline– Band-Aid– Rollerblade

• Saved by Timely Obsolescence?– Polaroid– Walkman

• If it ceases to be a source identifier and instead comes to identify the goods themselves, it is no longer a trademark.

Trademark Strength

• Generic– “Image Editing Software”– Never protectable (even if it was previously a

strong trademark—see genericization)

• Descriptive– “Image Enhancer Pro” or “Jones Image”– Can be protectable if you use it long enough– Legally weak/narrow– Needs secondary meaning

Trademark Strength

• Suggestive– “Photo Nirvana”– Protectable

• Arbitrary and Fanciful– “Seraphimage”– Protectable and legally strong– Initially weak from a marketing standpoint– With time, can become practically invincible from both

legal and marketing standpoint (Kodak, Exxon), except genericization

Infringement

• Elements of a Lawsuit– Priority– Protectability– Likelihood of Confusion

Infringement

• Likelihood of Confusion– Jury Question

• Do you find by a preponderance of the evidence that potential customers are likely to confuse “Guardian Angel” with “Seraphimage”?

Action Steps

• Promptly file a federal application– Nationwide priority– Helps make the mark protectable– Trumps state registrations

Action Steps

• Investigate junior users before sending nasty letters– If mark is not registered, may have territorial

rights.– If junior user has rights, your nasty letter

makes his case for him

© 2012 Sean C. Crandall, all rights reserved.

COPYRIGHT

Copyright

• What is it?• Right to exclude others from copying the

protected work.• Exclusive right to make derivative works.

Duration

• Life +70 (individual author)

• 95 – 120 years (works for hire)

• Created before Jan. 1, 1978 = different rules (very messy).

• Published in U.S. before 1923 = public domain.

Acquiring a Copyright

• When you play God, the result is copyrighted– Except: Ideas, methods, functional products, de

minimis creativity

Protected Not Protected

Expression Ideas and Facts

Form Function and Content

Creativity Effort and Aggregation

Ownership

• Individual—Vests automatically

• Employee & Works for Hire—Vests in employer if in the course and scope of employment.

• Contract Work (esp. s/w)—Vests immediately in contractor. Software is not work for hire unless by an employee.

Hypothetical

• E swears a blood oath to convey copyright to B in the presence of a Catholic Priest, Jewish Rabbi, Mormon Bishop, Protestant Pastor and Baptist Preacher.

• Result?

Assignments and Licenses

• Assignments must be in writing

• Exclusive licenses must be in writing

• Non-exclusive licenses may be in writing, oral, by course of performance, or implied by the circumstances.

Tiers of Protection

• Automatic– Attaches at moment of creation

• Notice– (c) 2011 Your Name, All rights reserved.

• Registration– Online form at http://www.copyright.gov– $40 filing fee– Easy Peasy! (Except maybe software)

Hypothetical

• E writes Seraphimage program.• B hires E’s former employee, who copies

code (abt. 1%). Total sales = $50M.• E registers and sues.• Defenses

– No knowledge.– Prior non-infringing version successful.– Can’t prove lost sales.

• What result?

Damages (w/out Timely Reg.)

Losses $0

Infringer’s Profits $0

Statutory Damages $0

Attorneys’ Fees $0

Nominal Damages $1

Total Damages $1

Attorneys’ Fees Incurred: $250,000

Hypothetical

• Same as before, but E registers one day before B starts infringing.

Damages (Timely Reg.)

Losses $0

Infringer’s Profits $0

Statutory Damages $30,000 ($150k if willful)

Attorneys’ Fees $250,000

Nominal Damages $0

Total Damages $300,000

Attorneys’ Fees Incurred: $250,000

Infringement

• There must be copying.– Substantial similarity + access.

• Compare allegedly infringing work to registered work (not necessarily the work copied).

• Abstraction– Girl falls in love with a boy who turns out to be a

vampire.– A girl named Bella falls in love with a good vampire

named Edward, who has sparkly skin, but a boy named Jacob with Indian heritage, who is also a werewolf, is also in love with Bella, and some bad vampires want to kill Bella …

Hypothetical

• E requires online activation (stops working after 30 days).

• H purchases a legal copy but hacks around activation key.

• Has H violated E’s copyright?

DMCA

• DMCA § 1201: “No person shall circumvent a technological measure that effectively controls access to a work protected under this title.”

• No copyright infringement is required• Ownership and fair use are not valid defenses

– Maybe—see MGE UPS Systems Inc v. GE Consumer and Industrial Inc, et al., 08-10521(5th Cir. Jul. 20, 2010).

Benefits

• Why use “effective technological measures”?– May get attorneys’ fees and statutory

damages even without timely registration• Up to $2,500 per act of circumvention.

– Stiff criminal penalties

DMCA Exceptions

• http://www.copyright.gov/1201/

• Examples:– Breaking CSS on DVDs for criticism or

commentary (notably, not to just watch a DVD that you lawfully own).

– Jailbreaking your iPhone.– Obsolete or damaged dongles.

© 2012 Sean C. Crandall, all rights reserved.

PATENTS

Patents

• What are they?– Right to exclude others from making, selling,

using, or importing the claimed subject matter.– Does not grant a right to make, use, sell, or

import.

• Duration– About 20 years

Subject Matter

• Statutory Subject Matter:– Machines– Compositions– Articles of manufacture– Software (sort of)

• “Everything under the sun made by man” (sort of)

Statutory Requirements

• Utility– No perpetual motion machines

• Novelty– Identical disclosure– Bar dates

• Nonobviousness– PHOSITA has all prior art in front of him and

has ordinary ingenuity

Patent Claims

• Invention: – A– B– C– D

• Subtract Prior Art: -AB• Subtract Obvious Improvements: -ABC• Patentable Claim: ABCD

– Note that ABC is a better claim if you can get it.• If your attorney leaves “killer features” out of

some of your claims, that may be a good thing.

Patent InfringementClaim No. Elements Accused Device Infringes? Claim Value

1. A A

AB

ABC

ABCD

Yes

Yes

Yes

Yes

Very High

2. AB A

AB

ABC

ABCD

No

Yes

Yes

Yes

High

3. ABC A

AB

ABC

ABCD

No

No

Yes

Yes

Moderate

4. ABCD A

AB

ABC

ABCD

No

No

No

Yes

Low

Business Methods and Software

May be patentable

Bilski

• Machine or Transformation Test– Tied to a “particular machine”

• Need guidance on whether a general-purpose computer is a “particular machine”

– Transforms matter• Transforming data that directly represent matter

may be sufficient

• MoT is absolutely not the sole test for method claim eligibility. But it is the only test that matters.

Avoid Subject Matter Problems

• Designing Around Bilski– Tie in hardware where possible (“A method for

removing red eye from a photograph comprising … receiving a digital photograph from a digital camera ….”)

– Beauregard claims are now in question. (Cybersource Corp. v. Retail Decisions, Inc., No. 2009-1358 (Fed. Cir. Aug. 16, 2011)). Hoping for en banc review.

Patent Drafting

• Get a registered patent attorney

• Do not ever, under any circumstances, try to write a patent yourself.

• No, not even if you’re really smart.

• You’re not the exception.

• Your tax attorney can’t write a patent for you. You need a registered patent attorney.

Priority

• Senate passed Smith-Leahy “America Invents Act” Sept. 8, 2011. Written by Big Business, for Big Business.

• U.S. will now have a mutant pseudo-first-to-file system.

• What you need to know: File today.

Hypothetical

• E invents a new image editing algorithm and incorporates into her product.

• Academic paper published Sep. 11, 2010.

• Commercial product ready in Feb. 2012.

• E applies for a patent application Feb. 1, 2012.

• What result?

Bar Dates

• What is It?– Date by which you must file a patent

application, or lose your right to get a patent

• Bar Dates Events Include:– Sale of a product that embodies the invention

you want to patent– Offer for sale– Publication including an enabling disclosure– Non-experimental public use or disclosure

Bar Date

• Calculating Bar Dates– U.S. has 1 year grace period

• Barring event happens on 9/11/2011. Bar date is 9/11/2012. You must file your patent application by 9/11/2012 or your invention is barred.

– Most foreign countries have no grace period• Barring event happens on 9/11/11. You must file

by 9/11/11, or you cannot get a patent in “absolute novelty” countries.

Excuses

• Events That Will Not Excuse Missing a Bar Date:– I didn’t know about the bar date.– The offer for sale was rejected.– The offer for sale was illegal.– My spouse and children were killed by a

drunk driver the week before the bar date.– Sapient aliens made first contact on the bar

date and the entire earth stood still.

Excuses

• Events That Will Excuse Missing a Bar Date:– Nothing.

© 2012 Sean C. Crandall, all rights reserved.

TRADE SECRET

Trade Secret

• Elements– It’s a SECRET.– Confers a competitive advantage– Reasonable efforts to keep it SECRET

• Examples:– Formula for Coca-Cola– The Colonel’s 11 herbs and spices– Your source code

Trade Secret

• Protecting a Trade Secret– No registration– KEEP IT A SECRET– Non-disclosure agreements (get an attorney)– Employee confidentiality agreements (the

more draconian, the better)– Posted notices

• Duration– As long as you KEEP IT SECRET

Security

• Think ahead– Which story do you want the infringer to tell the jury?

• “There were hundreds of copies of the process just lying around everywhere. I didn’t even realize it was considered secret.” vs.

• “After agreeing to the $10,000 penalty for disclosing the secret process, I disabled the armed guard with a drugged dart. I had to wear an insulating body suit to defeat the heat sensors, then climb up into the air duct. Getting around the laser grid took some time, but the real problem was the motion sensors. I spent hours getting across the room. Since the safe was impossible to crack, I had to bug the CEO’s bedroom and listen to him talk in his sleep for months. Then I had to painstakingly copy the process by hand, since it was on blue non-copy paper. Once I had my copy, I had to carefully replace the wax seal and mark it with the duplicate signet ring I had carefully constructed from the putty impression of the real signet ring I’d gotten when I …”

Hypothetical

• E develops red eye removal algorithm. E hires 10 programmers.

• Signed confidentiality agreements.• Copies of process individually water marked.• Policy is to keep process in locked drawers.• Flow chart posted by receptionists desk.• Weekly meetings to discuss security program.• What result?

Security

• Designing a Security Program– Put Everyone on Notice– Signed Confidentiality Agreements– Restrict Access– Log Access– Termination Procedures– Non-compete Agreements– Periodic Audits

© 2012 Sean C. Crandall, all rights reserved.

Questions?

© 2012 Sean C. Crandall, all rights reserved.

Support Materials

Protecting Software: http://www.jw.com/site/jsp/publicationinfo.jsp?id=1409 IP Basics: http://www.jw.com/site/jsp/publicationinfo.jsp?id=351 A Practical Guide to the GNU GPL:http://www.jw.com/site/jsp/publicationinfo.jsp?id=1453