Copyright 2003, Gallagher & Dawsey Co., LPA IP Pitfalls The role of the general business attorney in IP The role of the general business attorney in IP

Copyright 2003, Gallagher & DawCopyright 2003, Gallagher & Dawsey Co., LPAsey Co., LPA

IP PitfallsIP Pitfalls

The role of the general business The role of the general business attorney in IPattorney in IP



IP renewals and maintenance feesIP renewals and maintenance fees Provisional patent applicationsProvisional patent applications Managing DisclosureManaging Disclosure InventorshipInventorship Valuation of IPValuation of IP



Litigation preparednessLitigation preparedness LicensingLicensing IP BudgetingIP Budgeting TrademarksTrademarks CopyrightCopyright


Renewals and MaintenanceRenewals and Maintenance



Copyrights:Copyrights: None!None! But is it in term?But is it in term?

www.copyright.govwww.copyright.gov



Patents:Patents: U.S. Design – None (14 year term)U.S. Design – None (14 year term) U.S. Utility – None U.S. Utility – None whilewhile pendingpending Foreign – Many require maintenance for Foreign – Many require maintenance for

pending applications (e.g., Canada) and pending applications (e.g., Canada) and may have different schedule for issued may have different schedule for issued patents than U.S.patents than U.S.



U.S. Utility Patent Maintenance:U.S. Utility Patent Maintenance: 3 to 3.5 years after grant3 to 3.5 years after grant 7 to 7.5 years after grant7 to 7.5 years after grant 11 to 11.5 years after grant11 to 11.5 years after grant Six months grace period with late feeSix months grace period with late fee

(i.e., patent expires at 4, 8, or 12 year mark)(i.e., patent expires at 4, 8, or 12 year mark)


Client call -Client call -

““I forgot to pay the maintenance I forgot to pay the maintenance fee!”fee!” or worse;or worse;

““You forgot to pay the maintenance You forgot to pay the maintenance fee!”fee!” or the very worst;or the very worst;

““The G-d--- patent lawyers forgot to The G-d--- patent lawyers forgot to pay the maintenance fee!”pay the maintenance fee!”



Make sure you understand who is Make sure you understand who is responsible for paying these fees.responsible for paying these fees.



RevivalRevival ““Unavoidable”Unavoidable” ““Unintentional”Unintentional”



RevivalRevival All good things must come to an end – All good things must come to an end –

no revival for “unintentional” failure to no revival for “unintentional” failure to pay maintenance after 24 monthspay maintenance after 24 months

Expired patent is public domain prior art Expired patent is public domain prior art and can never be patented againand can never be patented again

All good things have limits – intervening All good things have limits – intervening rights may be establishedrights may be established



TrademarksTrademarks ““Renewals”Renewals”

Must still be in use in commerceMust still be in use in commerce



U.S. Trademark Renewal ScheduleU.S. Trademark Renewal Schedule Six years after first grantSix years after first grant Ten years after grantTen years after grant Every ten years thereafterEvery ten years thereafter Can be paid up to one year in advance Can be paid up to one year in advance Six month grace period with late feeSix month grace period with late fee Can be renewed indefinitelyCan be renewed indefinitely



TrademarksTrademarks ““I forgot to pay the trademark renewal I forgot to pay the trademark renewal

fee!”fee!”



““I forgot to pay the renewal fee!”I forgot to pay the renewal fee!” Six month grace period?Six month grace period? No revivalNo revival But can reapplyBut can reapply



TipsTips Don’t rely on your patent attorneyDon’t rely on your patent attorney Don’t rely on USPTO notificationDon’t rely on USPTO notification Don’t pay without thinkingDon’t pay without thinking



Before paying:Before paying: ThinkThink But think slowlyBut think slowly

Abandonment is generally irrevocableAbandonment is generally irrevocable There may be alternativesThere may be alternatives


Provisional PatentsProvisional Patents



““Short Form Patent”Short Form Patent”

““Poor Man’s Patent”Poor Man’s Patent”



35 U.S.C. 35 U.S.C. § 112(b)§ 112(b) Purpose – Harmonize U.S. and Purpose – Harmonize U.S. and

International law and simplify patent International law and simplify patent process.process.



Simplify? Yes, since:Simplify? Yes, since: InexpensiveInexpensive Shorter, as only drawing “as necessary Shorter, as only drawing “as necessary

to understand” and no claims are to understand” and no claims are requiredrequired

Satisfies priority date and statutory bar Satisfies priority date and statutory bar requirements like a utility patentrequirements like a utility patent



Simplify? No, in that:Simplify? No, in that: Not examinedNot examined Can never mature into an actual patentCan never mature into an actual patent Will only support priority for a later filed Will only support priority for a later filed

utility patent if it is “enabling”utility patent if it is “enabling” Vanishes in one yearVanishes in one year



Good Reasons to Use:Good Reasons to Use: One desperate throw of the diceOne desperate throw of the dice So much disclosure, so little certaintySo much disclosure, so little certainty

Multiple PPA’s can be consolidated into one Multiple PPA’s can be consolidated into one utility applicationutility application



Good Reasons to Use:Good Reasons to Use: Fast moving technologyFast moving technology Upcoming disclosureUpcoming disclosure Extend patent pending periodExtend patent pending period Test marketing potentialTest marketing potential



Bad Reasons to Use:Bad Reasons to Use: Being a cheapskateBeing a cheapskate Poorly conceived inventionPoorly conceived invention Vague marketing plansVague marketing plans Enrich patent attorneyEnrich patent attorney



Things to Watch For:Things to Watch For: One year passes quicklyOne year passes quickly Triggers foreign filing deadlinesTriggers foreign filing deadlines Doesn’t toll the statutory bar deadlines Doesn’t toll the statutory bar deadlines

unless a utility application is timely filed, unless a utility application is timely filed, e.g.:e.g.:

Item on sale 12/02Item on sale 12/02 PPA filed 6/02PPA filed 6/02 Utility must be filed by 6/03 to ever patent itemUtility must be filed by 6/03 to ever patent item



Tips:Tips: Provisional should contain more disclosure Provisional should contain more disclosure

rather than lessrather than less The more your Provisional Patent Application The more your Provisional Patent Application

looks like a utility application, the more it looks like a utility application, the more it will help you.will help you.


Managing DisclosureManaging Disclosure



Managing the tension between Managing the tension between disclosure and confidentialitydisclosure and confidentiality



NoveltyNovelty Things that are not new cannot be Things that are not new cannot be

patentedpatented So what is “new?”So what is “new?”



NoveltyNovelty 35 U.S.C. 35 U.S.C. § 102(a)§ 102(a)

““known or used by others in this country”known or used by others in this country” OrOr ““patented or described in a written patented or described in a written

publication in this or a foreign country”publication in this or a foreign country” Before the Date of InventionBefore the Date of Invention



NoveltyNovelty 35 U.S.C. 35 U.S.C. § 102(b)§ 102(b)

““patented or described in this or a foreign” patented or described in this or a foreign” countrycountry

OrOr ““in public use or on sale”in public use or on sale” More than one year prior to the date of filingMore than one year prior to the date of filing



Key EventsKey Events ““patented”patented” ““described”described” ““in a printed publication”in a printed publication” ““in public use”in public use” ““on sale in this country”on sale in this country”



Quiz:Quiz: Can your client trigger a 102(a) event?Can your client trigger a 102(a) event? Can your client trigger a 102(b) event?Can your client trigger a 102(b) event?



Important ramification of “described” Important ramification of “described” and “before the date of invention”and “before the date of invention”



35 U.S.C. 102 35 U.S.C. 102 §§(a-b) events:(a-b) events: Absolute deadlinesAbsolute deadlines NO reprieve, renewals, late fees, NO reprieve, renewals, late fees,

exceptions, excuses, appeals, second exceptions, excuses, appeals, second chances, or places to hide!chances, or places to hide!


Client call - Client call -

““I think there may have been some I think there may have been some disclosure of this about a year ago.”disclosure of this about a year ago.” Response:Response:

WhenWhen WhereWhere WhatWhat To WhomTo Whom Then call your patent counselThen call your patent counsel



Grow the belief within your client’s Grow the belief within your client’s company that disclosure can have company that disclosure can have important IP consequencesimportant IP consequences



Special problem with technology Special problem with technology clients:clients: Understand and sympathize with the Understand and sympathize with the

difference between the cultures of difference between the cultures of science and the law on disclosurescience and the law on disclosure



Somebody (not the sales Somebody (not the sales organization) needs to review and organization) needs to review and approve upcoming disclosureapprove upcoming disclosure



Upcoming sales or disclosure?Upcoming sales or disclosure? Great !Great ! Avoid “enabling” disclosureAvoid “enabling” disclosure

But be careful – no uniform standard for But be careful – no uniform standard for enablementenablement

Can’t avoid enabling disclosure?Can’t avoid enabling disclosure? Remember the one year statutory barRemember the one year statutory bar But there may be dire foreign patent effectsBut there may be dire foreign patent effects



Upcoming sales or disclosure?Upcoming sales or disclosure? Provisional ApplicationProvisional Application Utility ApplicationUtility Application



““But we don’t have all the kinks But we don’t have all the kinks worked out yet!”worked out yet!”

Help your client manage Help your client manage “experimental use”“experimental use”



Experimental UseExperimental Use Judicial exception to “public use”Judicial exception to “public use” Must be experimental use designed to Must be experimental use designed to

test the invention's test the invention's utilityutility The more it looks like a science experiment, The more it looks like a science experiment,

the better it looksthe better it looks Not market testingNot market testing



Defensive Patent PracticeDefensive Patent Practice SIRsSIRs Defensive PublicationDefensive Publication


InventorshipInventorship



35 U.S.C. 35 U.S.C. § 111§ 111 Application must be made by “the Application must be made by “the

inventor”inventor” Who is the inventor?Who is the inventor?



No easy black letter definitionNo easy black letter definition One who has contributed at least one One who has contributed at least one

important feature to the inventionimportant feature to the invention



Inventor:Inventor: Doesn’t have to do it allDoesn’t have to do it all Don’t have to make equal contributionsDon’t have to make equal contributions Doesn’t have to work simultaneously or Doesn’t have to work simultaneously or

in same locale as other inventorsin same locale as other inventors Must be more than a technicianMust be more than a technician Must name all inventors (35 U.S.C. Must name all inventors (35 U.S.C.

102(f) and 37 C.F.R. § 1.45)102(f) and 37 C.F.R. § 1.45)



What your clients will do:What your clients will do: Not understand “true inventorship”Not understand “true inventorship” Try to name non-inventors for political Try to name non-inventors for political

or business purposesor business purposes Omit true inventors who have left the Omit true inventors who have left the

company or who they don’t likecompany or who they don’t like



Intentional failure to name true Intentional failure to name true inventors is fraud if known by:inventors is fraud if known by: any inventorany inventor each attorney or agenteach attorney or agent every other person substantially every other person substantially

involvedinvolved



Penalty:Penalty: DEATHDEATH (that is, death for the patent)(that is, death for the patent)



With such severe penalty, a little With such severe penalty, a little slack is in order:slack is in order:

While all inventors must be named, While all inventors must be named, all inventors don’t have to sign all inventors don’t have to sign applicationapplication



Dead, or legally incapacitatedDead, or legally incapacitated Executor or guardian may signExecutor or guardian may sign



Refusing or can’t be located:Refusing or can’t be located: Must make diligent effort to locateMust make diligent effort to locate Must petition patent office with facts Must petition patent office with facts If petition granted, assignee may file in If petition granted, assignee may file in

the inventor’s namethe inventor’s name



Corollary:Corollary: What does this tell you about when to What does this tell you about when to

get assignments executed?get assignments executed?



Corollary to Corollary:Corollary to Corollary: All streets don’t run two ways - while all All streets don’t run two ways - while all

inventors must file for patent; any one inventors must file for patent; any one inventor may dispose of rights inventor may dispose of rights without without the consent and without accounting to the consent and without accounting to the other inventors! the other inventors! (35 U.S.C. § 262)(35 U.S.C. § 262)



Corollary to Corollary to Corollary:Corollary to Corollary to Corollary: Now, what does this tell you about when Now, what does this tell you about when

to get assignments executed?to get assignments executed?



Remember that employment may Remember that employment may end before patents are filedend before patents are filed Specify that end of employment does Specify that end of employment does

not end responsibility to assign not end responsibility to assign andand to to cooperate with patent activitiescooperate with patent activities



Accidental failure to name true Accidental failure to name true inventors:inventors: Not fraudNot fraud Corrections may be made by petition Corrections may be made by petition

after filingafter filing But remember that accidental ( i.e., But remember that accidental ( i.e.,

“without deceptive intent” (37 C.F.R. § “without deceptive intent” (37 C.F.R. § 1.48)) is not the same as non-malicious1.48)) is not the same as non-malicious


Valuation of IPValuation of IP


Valuation of IPValuation of IP

The secret is that there is no secret – The secret is that there is no secret – the value of IP is whatever someone the value of IP is whatever someone else is willing to payelse is willing to pay


Market ValuationMarket Valuation

Measurable only on loss or saleMeasurable only on loss or sale Hard to Assess, SpeculativeHard to Assess, Speculative

ImClone, ErbituxImClone, Erbitux


Cost ValuationCost Valuation

““Replacement Cost?”Replacement Cost?” IP Cost often skewed form real valueIP Cost often skewed form real value

““New Coke”New Coke”


Income ValuationIncome Valuation

Possibly the best system for going Possibly the best system for going concerns not selling their IPconcerns not selling their IP


Pitfalls of Income ValuationPitfalls of Income Valuation

Have you maximized value?Have you maximized value?



IP has a limited, and sometimes IP has a limited, and sometimes difficult to assess, lifedifficult to assess, life



Copyrights; Term essentially Copyrights; Term essentially indefinite; but:indefinite; but: Computer Software?Computer Software? ““Nick at Night”Nick at Night”



Trademarks; nominally indefinite, Trademarks; nominally indefinite, but:but: EnronEnron



Patents:Patents: 20 year term, but:20 year term, but:

Is the market cycle different from the patent Is the market cycle different from the patent term?term?


Pitfalls of All IP ValuationPitfalls of All IP Valuation

What are you valuing?What are you valuing? IP is only part of the enterpriseIP is only part of the enterprise The current R&D problemThe current R&D problem


ValuationValuation

IP is not a lifetime commitment!IP is not a lifetime commitment! SellingSelling Transfer to Holding CompanyTransfer to Holding Company Spin OffSpin Off DonationDonation AbandonmentAbandonment


Valuation; Market, Cost and Valuation; Market, Cost and Income MethodsIncome Methods

www.patentvaluepredictor.comwww.patentvaluepredictor.com


Litigation PreparednessLitigation Preparedness



Before trouble hits, help your client Before trouble hits, help your client prepareprepare



No one can infringe an expired No one can infringe an expired patent!patent! Check for maintenance paymentsCheck for maintenance payments



Get rid of prosecution draftsGet rid of prosecution drafts Yours, your patent attorneys, and the Yours, your patent attorneys, and the

inventors and assigneesinventors and assignees FestoFesto



Protect invention disclosure forms as Protect invention disclosure forms as attorney client work product:attorney client work product: In re Spaulding Sports Worldwide, Inc.In re Spaulding Sports Worldwide, Inc.



Cleanse “fraud” issuesCleanse “fraud” issues True inventorshipTrue inventorship Ongoing duty to discloseOngoing duty to disclose



Identify and Evaluate InfringersIdentify and Evaluate Infringers Actual, Contributory, and InducersActual, Contributory, and Inducers Collectable?Collectable? What do you want?What do you want?



The post-1981 EraThe post-1981 Era Court of Appeals for the Federal CircuitCourt of Appeals for the Federal Circuit



Pre-1981Pre-1981 Patentee had to prove patent validPatentee had to prove patent valid Preliminary injunctions rarePreliminary injunctions rare Damages usually set as lost royaltiesDamages usually set as lost royalties



Post – 1981Post – 1981 Patents have presumption of validityPatents have presumption of validity More “realistic” damagesMore “realistic” damages



Today:Today: Some companies run infringement Some companies run infringement

enforcement practices out of their enforcement practices out of their patent portfolios that are multi-million patent portfolios that are multi-million dollar profit centersdollar profit centers



If your client is a potential plaintiff:If your client is a potential plaintiff: Don’t be too fast to threaten suitDon’t be too fast to threaten suit

You might precipitate a declaratory You might precipitate a declaratory judgment actionjudgment action



First step in plaintiff’s analysis:First step in plaintiff’s analysis: Consult patent counselConsult patent counsel

Patent attorney v litigatorsPatent attorney v litigators The vast majority of accused infringement The vast majority of accused infringement

will never go to trial; most will probably will never go to trial; most will probably never go to filing of a suitnever go to filing of a suit



If your client is a potential defendant:If your client is a potential defendant: Watch out for the buccaneers of the Watch out for the buccaneers of the

plaintiff’s barplaintiff’s bar Check that patent is prima facie validCheck that patent is prima facie valid Don’t be too fast to settleDon’t be too fast to settle Demand a detailed claim comparison, and Demand a detailed claim comparison, and

review it with competent counsel, before review it with competent counsel, before considering settlement.considering settlement.



What we do first:What we do first: Compare your client’s broadest claim Compare your client’s broadest claim

with the infringing devicewith the infringing device Device must have all elements of claimDevice must have all elements of claim Additional features don’t save infringerAdditional features don’t save infringer Only one claim needs be infringedOnly one claim needs be infringed


Licensing PitfallsLicensing Pitfalls



Exclusive and Non-exclusiveExclusive and Non-exclusive Federal exceptionFederal exception Consider some middle ground licensingConsider some middle ground licensing

Some licenses are better than Some licenses are better than owning!owning!



Sublicensing and AssignmentSublicensing and Assignment Concerns with ExclusiveConcerns with Exclusive Concerns with NonexclusiveConcerns with Nonexclusive



FeesFees How and when paidHow and when paid MinimumMinimum TerminationTermination



ConfidentialityConfidentiality An ongoing concernAn ongoing concern Confidentiality managerConfidentiality manager Involve individualsInvolve individuals



SupportSupport Consider the costsConsider the costs



RelationshipRelationship Is it a joint venture?Is it a joint venture? WarrantiesWarranties IndemnificationIndemnification InsuranceInsurance



Trademark LicensingTrademark Licensing Trademarks differ from patentsTrademarks differ from patents

Requirement to keep in useRequirement to keep in use Quality controlQuality control



ADR?ADR? ComplexityComplexity Consider excepting IP from ADRConsider excepting IP from ADR

Preserve ability to seek injunctionPreserve ability to seek injunction



AntitrustAntitrust Nature of IP will always make this a Nature of IP will always make this a

difficult areadifficult area



Hotspots to BewareHotspots to Beware M & AM & A Package Licenses/Tying ArrangementsPackage Licenses/Tying Arrangements

Competitive efficiencyCompetitive efficiency Market powerMarket power

Resale Price MaintenanceResale Price Maintenance GrantbacksGrantbacks Expired PatentsExpired Patents



Generally “Safer” IP Antitrust AreasGenerally “Safer” IP Antitrust Areas Refusal to licenseRefusal to license Territorial and Field-of Use RestrictionsTerritorial and Field-of Use Restrictions Time/Quantity RestrictionsTime/Quantity Restrictions



Infringement Issues in Licensing:Infringement Issues in Licensing: Who has standing to enforce?Who has standing to enforce? Who pays?Who pays? Who recovers?Who recovers?


Budgeting PitfallsBudgeting Pitfalls

Remember to budget it!Remember to budget it! Learn basic patent procedure so that Learn basic patent procedure so that

you can supervise outside counselyou can supervise outside counsel Foreign protection is both Foreign protection is both

inexpensive and very expensiveinexpensive and very expensive


Trademark TroublesTrademark Troubles



Applying for a trademark is easy – Applying for a trademark is easy – tens of thousands get rejected every tens of thousands get rejected every yearyear



Trademarks can be as valuable for Trademarks can be as valuable for products as patents, at 1/20 the costproducts as patents, at 1/20 the cost Crock-PotCrock-Pot Hula hoopHula hoop



Trademarks are the only effective Trademarks are the only effective means of protecting certain types of means of protecting certain types of IPIP Brand recognitionBrand recognition Service BusinessesService Businesses Good-willGood-will



“ “actual use” v “intent to use”actual use” v “intent to use” ““specimen”specimen” Class systemClass system Domain namesDomain names



Getting is not keeping in trademark Getting is not keeping in trademark lawlaw Failure to use in commerceFailure to use in commerce ““Naked” licensingNaked” licensing GenericideGenericide


Copyright PitfallsCopyright Pitfalls



Copyright is born the moment a work Copyright is born the moment a work is “fixed” in formis “fixed” in form



Buying the work without buying the Buying the work without buying the copyrightcopyright



WebsitesWebsites © your client’s website© your client’s website Make sure your client, and not the Make sure your client, and not the

website developer, owns the copyrightwebsite developer, owns the copyright



Fair UseFair Use Commercial use is the most limited of all Commercial use is the most limited of all

“fair use” “fair use”



Statutory DamagesStatutory Damages Available only to federally registered Available only to federally registered

copyrightscopyrights Columbia Pictures v KryptonColumbia Pictures v Krypton



Because of the availability of Because of the availability of statutory damages, copyright can statutory damages, copyright can have the biggest dollar for dollar have the biggest dollar for dollar payoff of any form of IP protectionpayoff of any form of IP protection


The Bottom LineThe Bottom Line

We may do the formal IP work, but We may do the formal IP work, but your client looks to you for guidance your client looks to you for guidance and with trust!and with trust!

Documents

Copyright 2003, Gallagher & Dawsey Co., LPA IP Pitfalls The role of the general business attorney in IP The role of the general business attorney in IP