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Unit 4 Selected Topics

Intellectual PropertyIntellectual Property

PatentsPatents

Start up companiesStart up companies

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Start Up Companies

• Intellectual propertyIntellectual property

• ContractsContracts

• InvestmentInvestment

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Intellectual Property

• PatentsPatents

• Trade Secret/ProprietaryTrade Secret/Proprietary

• PublishingPublishing

• CopyrightsCopyrights

• LicensingLicensing

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Patents

• The most important type of intellectual property, The most important type of intellectual property, patents should possess all three of the following:patents should possess all three of the following:– UniqueUnique– UnobviousUnobvious– UsefulUseful

• The value of a start up company depends largely The value of a start up company depends largely on the number and quality of its patents.on the number and quality of its patents.

• Patents should be written as broadly as possible Patents should be written as broadly as possible to cover as many circumstances as possible. to cover as many circumstances as possible. Often something other than what you intended Often something other than what you intended may be covered by your patent.may be covered by your patent.

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How Do You Make Patents

• Usually these are created between an engineer and a Usually these are created between an engineer and a lawyer.lawyer.

• Sometimes you make the device work first and then look Sometimes you make the device work first and then look for the invention.for the invention.

• TRIZ is a systematic method for creating inventions and TRIZ is a systematic method for creating inventions and solving problems. solving problems. http://http://www.mazur.net/trizwww.mazur.net/triz//

• Patents cost money to maintain each year. If you don’t Patents cost money to maintain each year. If you don’t pay the patent becomes public domain.pay the patent becomes public domain.

• The following web site maintains a list of patents which The following web site maintains a list of patents which have become public domain:have become public domain:

• http://www.yet2.com/http://www.yet2.com/

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Other Intellectual Property

• Trade Secret/ProprietaryTrade Secret/Proprietary

• PublishingPublishing

• CopyrightsCopyrights

• LicensingLicensing

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Other Intellectual Property

• Trade Secret/ProprietaryTrade Secret/Proprietary– Used if it may be difficult to prove a patent is Used if it may be difficult to prove a patent is

being violated.being violated.– Software such as Excel and Windows fall into Software such as Excel and Windows fall into

this category since the source code is kept this category since the source code is kept secret.secret.

– You must make sure that it is kept clearly You must make sure that it is kept clearly labeled as proprietary information or trade labeled as proprietary information or trade secret.secret.

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Other Intellectual Property

• PublishingPublishing– If you publish how you do something before it If you publish how you do something before it

is patented then someone else cannot is patented then someone else cannot prevent you from doing it the way you prevent you from doing it the way you published it.published it.

– So this provides some limited protection for So this provides some limited protection for you.you.

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Other Intellectual Property

• CopyrightsCopyrights– This applies more to writing and pictures. If This applies more to writing and pictures. If

you create it, you own the copyrights. If you you create it, you own the copyrights. If you want to be able to sue someone for using want to be able to sue someone for using your material you must register it.your material you must register it.

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Other Intellectual Property

• LicensingLicensing– Legal agreements that allow you to use Legal agreements that allow you to use

someone else’s intellectual property such as a someone else’s intellectual property such as a patent.patent.

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Contracts

• Employment contracts may include Employment contracts may include clauses which prohibit you from working clauses which prohibit you from working on the same technology for another on the same technology for another company for a number of years.company for a number of years.

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Investment• InvestorsInvestors• Stock optionsStock options• IPO, Initial Public Offering of stockIPO, Initial Public Offering of stock

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Investment• InvestorsInvestors

– Venture capitalistsVenture capitalists• Investors in high risk start up companies.Investors in high risk start up companies.• Often professionally managed funds.Often professionally managed funds.

– Angel investorsAngel investors• May invest in more risky companies than venture capitalists.May invest in more risky companies than venture capitalists.• Expect a certain number of the companies to fail.Expect a certain number of the companies to fail.• Hope to make money back on the few which succeed.Hope to make money back on the few which succeed.• Sometimes organized into angel networks to pool their Sometimes organized into angel networks to pool their

money.money.

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Investment• Stock optionsStock options

– Often part of your salary when working for a start up Often part of your salary when working for a start up company is in stock options.company is in stock options.

– You may have to work for several years before they You may have to work for several years before they are fully valued.are fully valued.

– The stock options provide you with incentive to work The stock options provide you with incentive to work harder for a start up company and compensate you harder for a start up company and compensate you for the lack of security compared to working for an for the lack of security compared to working for an established company.established company.

– You have the option to buy the stock at a certain price You have the option to buy the stock at a certain price which is hopefully lower than the price at the time you which is hopefully lower than the price at the time you buy it.buy it.

– You may want to sell the stock immediately even You may want to sell the stock immediately even though you will be taxed more.though you will be taxed more.

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Investment• IPO, Initial Public Offering of stockIPO, Initial Public Offering of stock

– If you have stock options then they may be worth lots If you have stock options then they may be worth lots of money when the company goes public, offers its of money when the company goes public, offers its stock to the public for the first time (or not).stock to the public for the first time (or not).

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Links

• http://www.yet2.com/http://www.yet2.com/• http://www.mazur.net/http://www.mazur.net/

triz/triz/

• http://www.uspto.gov/http://www.uspto.gov/