Technology-Business-Legal Technology-Business-Legal Some Critical IntersectionsSome Critical Intersections

Getting Started LegallyGetting Started LegallyIP ProtectionIP Protection

LicensingLicensing

Mark J. Sever, Jr., EsquireMark J. Sever, Jr., EsquireDeborah A. Hays, EsquireDeborah A. Hays, Esquire

Archer & Greiner, P.C.Archer & Greiner, P.C.

Getting StartedGetting Started

Great idea, technology, products, Great idea, technology, products, marketing, and management team marketing, and management team

are key ingredients for success. are key ingredients for success. Establishing your venture as a Establishing your venture as a

distinct legal entity is also important.distinct legal entity is also important.

3 Major Types of For-Profit 3 Major Types of For-Profit OrganizationsOrganizations

S CorporationS Corporation Limited Liability Company (LLC)Limited Liability Company (LLC) C CorporationC Corporation

The C-Corp structure is the usual The C-Corp structure is the usual choice for those that aspire to be choice for those that aspire to be large, high-growth businesses (e.g. large, high-growth businesses (e.g. more than 100 shareholders) or to more than 100 shareholders) or to attract VC funding.attract VC funding.

Obtain All Necessary Licenses, Obtain All Necessary Licenses, Permits and ApprovalsPermits and Approvals

Entity formationEntity formation Tax (employer ID no., sales and use tax, Tax (employer ID no., sales and use tax,

S-status, etc.)S-status, etc.) Qualification to do business in appropriate Qualification to do business in appropriate

jurisdictionsjurisdictions Environmental Environmental

Properly Document All Key Properly Document All Key RelationshipsRelationships

Equity ownersEquity owners Start-up fundingStart-up funding

– Gift ?Gift ?– Loan ?Loan ?– Equity ?Equity ?

EmployeesEmployees VendorsVendors CustomersCustomers

No. 1 mistake made by all new business No. 1 mistake made by all new business ownersowners

Intellectual PropertyIntellectual Property(Creations of the Mind)(Creations of the Mind)

InventionsInventions Literary and artistic worksLiterary and artistic works Company and product namesCompany and product names Product designsProduct designs Commercially valuable, secret business Commercially valuable, secret business

informationinformation

Types of Intellectual PropertyTypes of Intellectual Property

PatentsPatentsTrade secretsTrade secrets

CopyrightsCopyrightsTrademarksTrademarks

What is a Patent?What is a Patent?In the U.S., a registration granted to the owner of In the U.S., a registration granted to the owner of

an invention that meets the following an invention that meets the following requirements:requirements:

UsefulUseful Novelty / NewNovelty / New Non-obviousNon-obvious

A U.S. patent grants the inventor the right to A U.S. patent grants the inventor the right to exclude others from making, using, offering for exclude others from making, using, offering for sale or selling the invention in the U.S. or sale or selling the invention in the U.S. or importing the invention to the U.S.importing the invention to the U.S.

Examples of patentable subject matter:Examples of patentable subject matter: Machines/devicesMachines/devices Business methodsBusiness methods

Common Patent MistakeCommon Patent Mistake

Patents must be applied for in the United States Patents must be applied for in the United States within one year of publication (within one year of publication (i.e.,i.e., public public disclosure)disclosure)

Patents must be applied for in most other Patents must be applied for in most other countries prior to publicationcountries prior to publication

Solution: Provisional patent applicationsSolution: Provisional patent applications InexpensiveInexpensive Preserve rights for up to one year, after which Preserve rights for up to one year, after which

must be convertedmust be converted

What is a Trade Secret?What is a Trade Secret?Any formula, pattern, physical Any formula, pattern, physical

device, idea, process or device, idea, process or compilation of information that compilation of information that both:both:

Provides a competitive advantage in the Provides a competitive advantage in the market placemarket place

Is treated by the owner in a way that can Is treated by the owner in a way that can reasonably be expected to prevent the reasonably be expected to prevent the public or competitors from learning about public or competitors from learning about itit

Examples of information Examples of information protectable as trade secrets:protectable as trade secrets:

Engineering technologyEngineering technology Customer listsCustomer lists Novel laboratory processesNovel laboratory processes

Common Trade Secret MistakeCommon Trade Secret Mistake

Failure to take precautions to ensure secrecyFailure to take precautions to ensure secrecy

Solutions:Solutions: Confidentiality agreementsConfidentiality agreements

– Business partnersBusiness partners– Employees/consultantsEmployees/consultants

Physical measures to ensure secrecyPhysical measures to ensure secrecy– Computer system securityComputer system security– Segregation of secret informationSegregation of secret information– Limited disclosure of secret informationLimited disclosure of secret information

What is a Copyright?What is a Copyright?

Protects certain works that meet the following Protects certain works that meet the following requirements:requirements:

OriginalOriginal Sufficiently creativeSufficiently creative ““Fixed in a tangible medium of expression”Fixed in a tangible medium of expression”

Grants “author” of the work the exclusive right to:Grants “author” of the work the exclusive right to:– Make copiesMake copies– Make changes toMake changes to– DistributeDistribute– Publicly perform (Publicly perform (e.g.,e.g., choreographic works) choreographic works)– Publicly display (Publicly display (e.g.,e.g., sculptural works) sculptural works)

Examples of copyrightable works include:Examples of copyrightable works include: Literary works, musical works, sound recordings, motion Literary works, musical works, sound recordings, motion

pictures, sculptures, paintingspictures, sculptures, paintings

Common Copyright MistakeCommon Copyright Mistake

““Work for Hire” Doctrine - Absent agreement to the Work for Hire” Doctrine - Absent agreement to the contrary:contrary:

Copyright in work created by an employee within scope of Copyright in work created by an employee within scope of employment is owned by employeremployment is owned by employer

Copyright in work created by a third party is owned by the Copyright in work created by a third party is owned by the third partythird party

Solution: Written agreements confirming copyright ownershipSolution: Written agreements confirming copyright ownership Website developersWebsite developers Marketing/PR AgencyMarketing/PR Agency Software/technology developersSoftware/technology developers

What is a Trademark?What is a Trademark?

An indicator of the source of goods (trademarks) or An indicator of the source of goods (trademarks) or services (service mark)services (service mark)

““Any word, name, symbol, or device, or any combination Any word, name, symbol, or device, or any combination that is used to identify and distinguish the goods of one that is used to identify and distinguish the goods of one seller from goods manufactured or sold by others, and to seller from goods manufactured or sold by others, and to indicate the source of the goods.”indicate the source of the goods.”

Examples of trademarks:Examples of trademarks: Archer & GreinerArcher & Greiner Coca-ColaCoca-Cola ExxonMobilExxonMobil

Common Trademark MistakesCommon Trademark Mistakes Registration of a corporate name or domain name does not Registration of a corporate name or domain name does not

mean the name does not infringe a third party’s trademark mean the name does not infringe a third party’s trademark rightsrights

Existence of third party using same trademark in Existence of third party using same trademark in connection with different goods and services does not connection with different goods and services does not necessarily preclude use of trademarknecessarily preclude use of trademark

Solutions: Solutions: .. Trademark availability search Trademark availability search ..

– Review of registered and unregistered marksReview of registered and unregistered marks Trademark registration Trademark registration ..

– Helpful but not necessary for protection Helpful but not necessary for protection .. (like copyrights) (like copyrights) ..

LicensingLicensing

Powerful strategic toolPowerful strategic tool Outward licensingOutward licensing

– Source of incomeSource of income– Ability to exploit unfamiliar marketsAbility to exploit unfamiliar markets

Inward licensingInward licensing– Source of technologySource of technology– Ability to expand within your market Ability to expand within your market

faster and/or more thoroughly than you faster and/or more thoroughly than you could on your owncould on your own

Key Terms in License AgreementsKey Terms in License Agreements

License Grant (what is being License Grant (what is being licensed)licensed)– Exclusive/non-exclusiveExclusive/non-exclusive– Specific rights/usesSpecific rights/uses– TerritoryTerritory– DurationDuration– SublicenseSublicense– Transferable/non-transferableTransferable/non-transferable

Key Terms in License AgreementsKey Terms in License Agreements Payment termsPayment terms

– Initial paymentInitial payment– Royalties/fixed feeRoyalties/fixed fee– MinimumsMinimums

Confidentiality provisionConfidentiality provision Ownership of developmentsOwnership of developments Representations/warranties/disclaimersRepresentations/warranties/disclaimers

– How will the licensed material performHow will the licensed material perform– Non-infringementNon-infringement

Liability limitations (remedies in the event of a Liability limitations (remedies in the event of a dispute)dispute)

IndemnitiesIndemnities Termination provisionsTermination provisions

– For convenienceFor convenience– For breach/failure to meet royalty minimumsFor breach/failure to meet royalty minimums

ConclusionConclusion

Questions?Questions?

Thank you.Thank you.