–Fourth level »Fifth level HOW TO BUILD, MANAGE & MAXIMIZE YOUR INTELLECTUAL PROPERTY Presented to ACCA South/Central Texas Chapter March 5, 2008 BY William

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HOW TO BUILD, MANAGE & MAXIMIZE YOUR

INTELLECTUAL PROPERTY

Presented to ACCA South/Central Texas Chapter March 5, 2008

BY

William B. Nash

JACKSON WALKER, L.L.P112 E. Pecan Street, Suite 2400

San Antonio, Texas

(210) 978-7700

© 2008 Jackson Walker LLP

All Rights Reserved

Austin Dallas Fort Worth Houston San Angelo San Antonio

Member of GLOBALAW™

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The Good News

• Your Company is developing new products and/or services

• Your Company is increasing sales due to innovative marketing programs, slogans, or ideas

• Your Company is growing by acquiring another company

• Your Company may be bought by another company

William Nash – March 5, 2008 presentation to ACCA South/Central Texas Chapter

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The Bad News

• It is your job to make sure:– Nobody knocks off your product or service

– Competitors do not use your successful marketing programs, slogans or ideas

– Lenders are impressed with your IP assets – throwing money at you to keep growing

– As Business people keep rolling out new programs they do not give away IP

– Competitors do not hire away your key employees


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The Ugly News

• There is no easy way!• But, it is your job.• Need to:

– Identify– Organize– Document– Educate– Monitor


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The Solution

1. Conduct an IP audit1. To determine the origin of the company’s

intangible assets

2. The scope of the company’s rights in technology and related intellectual property law rights


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Purpose of an IP Audit

• To detect defects in existing intellectual property assets and the mechanisms and procedures for identifying, protecting, and perfecting the company’s intellectual property.

• To put in place systematic procedures for identifying, protecting, and perfecting intellectual property rights.

• To determine the scope of rights that third parties may have by license, ownership, or otherwise in the intellectual property used by the company.

• To determine, when considering IP litigation, whether all filings necessary for jurisdictional requirements have been satisfied; what clouds, if any, on the owner’s title may exist; and what defenses may be asserted against the owner.

• To avoid liability for third-party claims of infringement resulting from the development of new products or services.


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Examples of When to Conduct anIP Audit

• There is new responsibility for managing the company’s intellectual property;

• There is a merger, acquisition, or significant stock purchase;

• There is a transfer or assignment of interest in intellectual property;

• There is a significant change in the law;• There are financial transactions involving intellectual

property;• The company is considering a significant license either as

licensor or licensee; and• The company has a new program or policy.


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ABC Inc.

• Employees• Contracts• Common Law

Trademarks and Secrets

• Building, Equipment, Inventory

Ordinary soft assets

Hard assets


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XYZ Inc.

Hard assets

Ordinary soft assets

Extra soft assets

•Registered Trademarks•Registered Trade dress•Registered Copyrights•Business Method Patents•Utility Patents•Design Patents•IP assignments from employees and contractors•Protected Trade Secrets• Form contracts with suppliers and customers•Noncompete contracts


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ABC Inc. XYZ Inc.

Which would you rather be?

• Employee, Customer and Supplier Goodwill

• Common Law Trademark and Trade Secret protection

• Building, Equipment, Inventory

• Registered - Trademarks, Trade Dress, Copyrights

• Patents – Business Method, Utility, Design

• IP assignments and noncompetes - employees and contractors

• Formal Trade Secret Protection

• Form contracts - suppliers and customers

ASSETSASSETSSoft Assets

Hard Assets

Extra Assets


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YOUR BUSINESS

Customers

Employees

Competitors

Investors

PRODUCTS

SERVICES

RESOURCES

PROCESSES

Vendors

Independent Contractors

These are all constantly changing.


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Steps to Conduct IP Audit of Company’s

Intellectual Capital


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Overview of Steps of IP Audit

• The Audit Plan– Define areas of inquiry– Establish time schedules– Outline responsibilities– Define (preliminarily) documents to review and

personnel to interview


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• Objective of IP Audit

– Identify Trademarks, Patents, Copyrights, Trade Secrets

– Identify where each came from– Determine current ownership– Identify duties, restrictions, and encumbrances– Verify all requisite acts (use, registration,

maintenance, duties, etc.)


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Get Buy-in

– Have IP Capitalization briefing with management

• Overview of IP• Summarize results of IP Audit• Identify key areas perceived as important to

company’s competitiveness• Present research on what your competitors are doing

with patents, trademarks, copyrights• Present recommendations

– Conduct audit


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Educate the People Doing the Work

– Have IP 101 presentation • Explain basics of patent, trademark, copyright, trade

secret, and contract law

• Show what competitors are doing

• Summarize what company has done

• Explain need to implement procedures to build and maintain company’s intellectual capital


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• Information Gathering

– Assign a coordinator of document requests– Collect and review information concerning the nature of the property

and transaction to be investigated (see list of pertinent documents/information below)

– Identify issues regarding the laws of particular states or countries

• Written Report of Results of Audit

– Memorialize results in a report (taking into consideration whether such report will be privileged and not discoverable)

– Report should include:• List of assets, • Development history• Status of trademarks, copyrights, patents and other intellectual property• Intellectual property defects and remedial actions


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Procedure for IP Audit

• Give key people in each department an IP Brainstorming Checklist

• Give a limited amount of time to complete– Don’t make it too complex

• Provide incentive for completion


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Patent/Trade Secret Questions

• Considering mission statements, core values and key result areas, list programs or projects that Company has invested in, or spent significant resources on, over the last year that:

– have produced or contributed, or we expect to produce or contribute, a beneficial unique product or service.

– add significant value to Company.– have never been seen before.

• List programs or projects that:– over the past 3 years have cost a considerable amount of time, effort or expense.– have been initiated or implemented in the past 3 years to provide innovative, quality

products and services.

• Name what Company has done over the last few years to make itself more efficient, successful, or competitive.

• Identify the most valuable or noteworthy improvement to Company’s processes in the last 3 years.


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Patent/Trade Secret Questions

• Predict the most valuable or noteworthy improvements to Company’s processes, products or services in the next 3 years.

• Describe the most significant challenges from Company’s competitors.

• List inventions, processes, or improvements that you most fear Company’s competitors implementing.

• List what Company should do to meet competitors’ challenges now or within the next 5 years.

• List what Company does in your department that is different from competitors.


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Trademark Questions

• List Company’s most recognizable and important names, logos, or images.

• Describe any instances of competitors copying Company’s names, logos, images, products, or processes.

• List competitors most effective trademarks, logos, and images (describe why they are effective).

• List names, logos, or images that could help Company make more money if adopted.

• Specify Company text, images or graphic art that competitors should not copy.


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Copyright Questions

• List important project(s) that Company has sent out a bid or Request For Proposal.

• List any projects or programs that Company has invested in or spent significant amount of resources on over the last year, which had design specifications sent to an outside vendor.

• List projects or programs under development that have, or will have, design specifications sent to an outside vendor.

• Specify any third party developed improvements currently used by Company.


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Copyright Questions

• Determine any computer code written by third parties per Company’s direction (specify if Company owns the code).

• List any Company developed computer code based in whole, or in part, on computer code written by third parties.

• Describe instances where Company may use images or textual material created by third parties.


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Steps to Build and Maximize Company’s

Intellectual Capital


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Employee Agreements

• Prepare and have all knowledge employees sign short agreements – assigning their IP rights to company, – agreeing to keep company’s trade secrets secret

and agreeing to not use– agreeing to not compete or raid company when

they move on, and – to arbitrate all disputes with company


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Trademarks

• Select protectable mark– Generic, Descriptive, Suggestive, Arbitrary, Fanciful

• Conduct TM search before adopting and using mark– $1,500 to $2,000– Or for free at www.uspto.gov

• Ensure proper trademark notice being used– ® , ™

• File trademark applications– Federal – ITU or actual use– State– International – EU, Canada, Mexico


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Trademarks

• Must have your trademark registrations docketed– Failure to renew or file declarations results in

abandonment of registration• Between 5th and 6th year• Every 10 years

• Hire trademark watch service to protect us from others getting registrations in our relevant jurisdictions

• Monthly Google searches – free!William Nash – March 5, 2008 presentation to ACCA South/Central Texas Chapter

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Trademark - Remedies

• Under the Lanham Act, remedies for trademark infringement of a registered mark include:

– The defendant’s profits – only have to prove defendant’s sales. The defendant must prove all claimed elements of cost or deduction.

– Damages sustained by plaintiff, up to treble damages when appropriate.

– Court costs and Injunctive relief.– Attorney’s fees in exceptional cases.– Destruction of infringing articles bearing infringing trademarks.

• Prevent importation of infringing goods


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Copyrights

• Copyright rights exist upon the moment of creation– Do not use another’s or online material without

verifying okay to use

• Ensure Copyright notices are used on all company owned materials– © 2008 Jackson Walker, All Rights Reserved


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Copyrights

• Register significant materials with US Copyright Office to be able to recover– Attorneys’ fees

– Statutory damages

– Prevent importation of infringing goods

• Copyright registration – Life of author plus 70 years

– Company- 95 years after 1st publication or 120 years after creation


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Copyright - Remedies• ACTUAL DAMAGES

– Owner’s actual damages– Any profits of the infringer attributable to the infringement that are not

taken into account in computing the copyrights owner’s actual damages. In proving profits, owner only required to present evidence of infringer’s gross revenue. Infringer required to prove deductible expenses and the elements of revenue attributable to other than the copyrighted work.

• STATUTORY DAMAGES– May elect an award of statutory damages for all infringements involved in

the action, with respect to one work, in the amount of not less than $750.00 and not more than $30,000.00.

– If willful – Court may increase up to $150,000.00.– If innocent – Court may reduce to not less than $200.00.

• INJUNCTIVE RELIEF

• IMPOUNDMENT OF ALL COPIES


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Trade Secrets

• Consider implementing inexpensive trade secret program– Put Everyone on Notice– New Employee Hiring Procedures

• Signed Confidentiality Agreements• On notice to not bring in secrets of another company

– Restrict Access– Confidentiality Legends– Exit Interviews– Periodic Audits


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Trade Secrets

• PROPER TRADE SECRET NOTICE

COPYRIGHTED CONFIDENTIAL AND PROPRIETARY PROPERTY OF _____________.

DUPLICATION, USE OR DISCLOSURE WITHOUT EXPRESS WRITTEN CONSENT IS PROHIBITED.


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Trade Secrets

• Confidential Disclosure Agreements -- in Texas, nothing is “confidential” by law

• Example: if you tell or show an idea to another, there is no obligation for the other person to keep the information secret, unless a confidential or fiduciary relationship exists prior to the disclosure.

• So, before disclosing any “confidential” information it is best to obtain patent, trademark, or copyright protection.


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Trade Secret - Remedies

• As US economy on trend downward, IP attorneys are gearing up in anticipation of more work heading their way


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Contracts

• Put all technology agreements in writing– Need to be specific– Define deliverables through a detailed

statement of work– When new features are requested be certain to

document the changes and results of the changes


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Remedial Action Summary

• Undertake any necessary federal, state and international filings/recordations

• Execute ownership documents (i.e., assignments)

• Pursue infringers/correct infringements• Define prospective legal, marketing and

research strategy• Clarify employee/consultant ownership rights


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Recent Developments In Patent Law


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Seagate and Willful Infringement

• In re Seagate Technology LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), cert denied, (Feb. 25, 2008) -- intertwining issues of willful infringement, advice of counsel defense, and attorney client privilege.

– Seagate was charged with willful infringement and asserted an advice of

counsel defense. During discovery, plaintiffs requested work product relating to the opinion letter, including the trial counsel's work product. The district court determined that Seagate had completely waived the attorney client privilege by asserting the advice of counsel defense and issued an order to compel discovery.

– In past, following an accusation of patent infringement companies would typically obtain an opinion letter regarding the potential infringement from "opinion counsel." During trial, company could waive privilege and rely on the opinion letter in court to defend against the claim of willful infringement.


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In re Seagate Technology LLC

• CAFC overrules Underwater Devices, Inc. v. Morrison- Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983), and sets out three points of law.

– First, the court set an "objective recklessness" standard for willful infringement where a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions comprised infringement.

– Second, the court held that a potential infringer does not have an affirmative duty to acquire an opinion letter.

– Third, the court established that when an alleged infringer waives its attorney client privilege with respect to opinion counsel, waiver does not extend to trial counsel.


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In re Seagate Technology LLC

• Thus, court held the state of mind of the accused infringer is not relevant to the objective inquiry.

• It also held there is no affirmative obligation to obtain opinions of counsel.


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MedImmune and DJ Jurisdiction

• MedImmune v. Genentech et al., 764 (2007) (8-1 decision). – Licensee can file DJ to invalidate patent even without being in

breach– Following MedImmune, Fed. Cir. found jurisdiction over a DJ

claim in Sony Electronics Inc. v. Guardian Media Technologies, Ltd., 497 F.3d 1271 (Fed. Cir. 2007),where the parties, after failed licensing negotiations, had not even entered a license agreement.

• CAFC may abolish or change the reasonable apprehension of immediate suit test

– Be careful sending letters to potential infringers• “Thought you should know …”• “If interested please call to discuss …”


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KSR and Obviousness

• KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727 (2007) (8-0) (adjustable pedal assembly obvious where the patentee had combined elements in prior art to create new pedal assembly)– Rejected rigid application of CAFC’s teaching-suggestion-

motivation ("TSM") test in favor of the more flexible framework laid out in Graham v. John Deere Co., 383 U.S. 1 (1966).

• 1) the scope and content of the prior art, 2) the level of ordinary skill in the art, 3) the differences between the prior art, and 4) other factors including commercial success and long felt commercial need for the invention.

– Raised the bar for overcoming an allegation of obviousness. Faced with an obviousness challenge, a patentee must prove there is no "apparent reason" to combine references or modify prior art to create the allegedly obvious invention


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US Patent Office Enjoined !!!

• On Aug. 21, 2007, the USPTO issued final administrative rule changes affecting the patent application process, which were set to take effect on Nov. 1, 2007.

• The proposed rule changes would have limited the number of claims permitted within each patent application as well as capped the total number of related patent applications that can be filed. The USPTO referred to this as the “5/25” rule, allowing five independent claims and 25 total claims in each application.


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• On October 31, 2007, Eastern District of Virginia enjoined the USPTO from implementing the revised Final Patent Rules ("Final Rules").

• The Court noted at the outset that the Patent Office does not possess any substantive rule-making power and that Glaxo Smith Kline raised a "colorable question" as to whether the Final Rules are "truly substantive."

• The Court also found that GSK raised "serious concerns" as to whether the Final Rules comport with the Patent Act. – In particular, the Court considered GSK’s concerns over the

limitations on the number of continuing applications, – requests for continued examinations (RCEs), and – number of claims – as well as retroactivity of the Rules and the requirements for

examination support documents (ESDs).


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International Trade Commission Investigations of Patent

Infringement Claims


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What is a 337 ITC action?• International Trade Commission

– Not a court of law

• Do imports injure a US industry?– IP protection– Anti-dumping– Surging imports


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Why a 337 ITC action?

• Section 337– “Unfair methods of competition and unfair acts

in the importation of articles . . . into the United States”


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Recovery in 337 ITC action

• Order prohibiting entry

• Cease and desist order

• No monetary damages


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0

5

10

15

20

25

30

35

'90 '00 '06

Recent Section 337 Investigations

‘05‘95

~ 12/Year ~ 23/Year


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Section 337 Geographic Distribution

18% EUROPE

63% ASIA

3% MIDDLE

EAST

16% AMERICAS

Taiwan 27%

China 25%

Japan 16%

Japan 16%

Korea 9%

Hong Kong

9%

Other 14%1999-2005


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No Violation

18%

Settled47%

Violation23%

Complaint Withdrawn

12%

Dispositions 1999 – 2006


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Timeline for 337 ITC action 15-MONTH

Complaint Filed December 2007

Notice of Investigation January 4, 2008

Response date for January 28, 2008

Response date for February 4, 2008

Discovery Committee Meeting Week of January 14th

Target Date Set April 6, 2009

Discovery Ends TBD

Exchange Testimony and Exhibit Summaries TBD

Trial August 4, 2008

Briefs Within 14 days

Judge Decision NLT January 6, 2009

Briefs Within 14 days

ITC Order TBD

Presidential Review Within 60 days


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Hearing

• No jury

• Liberal evidence

• Short time limits

• Often more than 10 hours a day

• Enormous pressure to limit issues


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Issues

• Jurisdiction• Patent infringement

– No infringement of claims at issue

• Patent defenses– Invalidity– Unenforceable

• Domestic industry– Significant US activity (production, licensing,

R&D, etc)


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QUESTIONS?

• William B. Nash

• Partner

Registered Patent Attorney

(210) 978-7764

[email protected]

Jackson Walker L.L.P. www.jw.com

Austin Dallas Fort Worth Houston Richardson San Angelo San Antonio

Documents

–Fourth level »Fifth level HOW TO BUILD, MANAGE & MAXIMIZE YOUR INTELLECTUAL PROPERTY Presented to ACCA South/Central Texas Chapter March 5, 2008 BY William