Basics of Intellectual Property Law - David W. Holt (3 18).ppt

©Bradley Arant Boult Cummings LLP Attorney-Client Privilege.
Protecting Your Clients’
Creative and Valuable Ideas
The Basics of Intellectual Property Law
March 14, 2018
Presented by: David W. Holt

What is Intellectual Property?
 The protection of ideas
 IP = Idea Protection
 Originates from U. S. Constitution – “To Promote the
Progress of Science and useful Arts…”

The Vast Reach of IP Law
 Books
 Machines – cars, laptops, cellphones, aircraft
 Sporting goods – sunglasses, tree stands, laser sights
 Soft drinks
 Artwork
 Running shoes
 Remote controls – TV, garage doors, trail cams
 Full length movies
 Food – cookies, pop chips, tabasco
 Service mark sounds – NBC chimes

Why is IP Important?
 Advances human enjoyment
– Music, art, writings, innovations
 Intangible corporate assets - $$$$
– Licenses
– Royalties
– Trading Chips
 Provides protection from competitors
 How to go about protecting it?
 First - must identify

This Talk - Basic IP Concepts
 Patents, copyrights, trademarks, trade secrets – for
each one:
– What is it?
– What qualifies for it?
– How do you get it?
– How long can it last?
– “some” CAUTIONS

Basic Client Misunderstandings
 “I’d like to get a copyright on the new name for my
restaurant”
 “Can you get me a patent on my song?”
 “Let’s trademark the title of my book?”
 “I saw a new product in Canada, and I want to get a
patent on it in Florida”

Challenge in Identifying Valuable IP?
 Many Engineers and Scientists:
– Solve every day problems
– Don’t beat their own drums
– Are humble
– Are quiet
 The enterprise needs a way to identify IP

Tangible Assets – Identify and Inventory

Intangible Assets – Difficult to Identify

How to Identify Valuable IP?
 Corporate culture
 Awareness (e.g. “safety is everyone’s job”)
 IP protection – as everyone’s job
 Educate – expose to the law
 Empower – to issue spot
 Incent – share $$’s ?
 This talk is the educate piece

Types of Protection
 Copyrights
 Trademarks & Servicemarks
 Trade Secrets
 Patents
 Contracts
 Many situations will call for some combination of
the types of protection available

Craft Beer Example
 Trade Secrets – recipes, ingredients, etc.
 Trademarks – name, name of beer
 Copyright – web site, label/marketing artwork
 Trade dress – look and feel of packaging and label
 Contracts – covenants not to compete, assignments,
secrecy

Software Product Example
 Copyright
– The code itself
– Structure, sequence, organization
 Trademark – the name
 Patent – the process
 Trade Secret – keep the source code secret
 Contracts
– Assignments – with contributors
– Licenses – with users

Restaurant Example
 Trade Secrets – recipes, ingredients, etc.
 Trademarks – name, name of dish
 Copyright – web site, artwork
 Trade dress – look and feel of lobby
 Contracts – covenants not to compete, assignments,
secrecy

IP OWNERS – Wider Range than Usually
Contemplated (NOT Limited to “Tech” Companies)
 Restaurants – TM - Brand; TS – formulas; empl.agmts
 Ad Agencies – © ads – TV, audio, “contests”
 Govt – SPACE CAMP; agency programs – D.A.R.E.
 YMCA, Boy Scouts, Arts Council, etc. – programs,
education, lic’s
 Auto Dealers – copyright; TM; tag lines
 Radio Stations – call letters; DJ persona
 Musicians, Authors, Artists, Publishers, Bands
 Content Providers – web sites, authorship, free-lancers
 Food Products – marks; labels; distributor agreements
 Manufacturers – TS; inventions; trade dress; joint dev.
Agmts; indemnity
 Banks – S/W vendors; TM; contracts

Types of Intellectual Property
 Copyrights
 Trademarks & Servicemarks
 Trade Secrets
 Patents

Copyrights – Typical Basic Questions
 Where does protection come from?
 Who can obtain protection?
 What can be covered?
 What rights are granted?
 How long does protection last?
 What qualifies as “Fair Use” of another’s work?

U.S. Constitution
Article 1, Section 8, Clause 8
The Congress shall have power….
To promote the Progress of Science
and useful Arts,
by securing for limited Times
to Authors and Inventors
the exclusive Right
to their respective Writings and
Discoveries.

Copyrights
 Subject Matter:
– Works
– of original authorship
– Fixed
– in a tangible medium of expression
– from which they can be perceived, reproduced, or
otherwise communicated
– directly, or with the aid of a machine or device

Copyrights
 Works of authorship include:
– Literary works
– Musical
– Dramatic
– Pantomimes
– Pictorial, graphic, sculptural
– Motion pictures, other audiovisual
– Sound recordings
– Architectural works

Examples
 Books
 Sheet music, Recordings
 Photographs
 Paintings
 Software
 Company brochures
 Website content

Copyrights
 Copyright holder owns the EXCLUSIVE right:
– to reproduce
– to prepare derivative works
– to distribute copies
– to publicly perform
– to publicly display

Copyrights
 Term of protection:
– “rights” vest at moment of authorship/creation
• Copyright Registration not req’d for vesting
• Registration IS required for bringing suit
– for individual author - life, plus 70 years
– for corporation - lesser of:
• 95 years from publication, or
• 120 years from creation

Copyright – Registration Advantages
 Winning plaintiff – attorney’s fees
 Statutory damages
– $750 to $30,000 per work
– up to $150,000 if “willful infringement”
 Customs impounding of infringing goods

Copyright Law Will NOT Protect
 Ideas
 Procedures
 Processes
 Systems
 Methods of operation
 Concepts
 Principles
 Discoveries

Copyright – Non-employee as Author
 Employee authorship – in line and scope
– “Author” is the employer
– Employer owns the copyright rights
 Independent contractor author
– Ind. contractor owns the copyright rights
– unless otherwise agreed in writing
 Notice provision
– “Copyright 2018 Bradley Arant Boult Cummings LLP”

Copyright – Copyright Notice
 Notice no longer required for protection
– But a good idea to use one
• Keep the honest people honest
 Notice format
– Copyright 2018 Bill Jones
– © 2018 Acme Incorporated
 All rights reserved
– Refers to the exclusive rights, some may be licensed
away

Copyrights – Software Issues
 Software protected – defined in the Act
– Literary – source code
– Non-literal - Structure, seq., org., GUI, logic
 Joint work – merged, inseparable, interdependent,
unitary whole
– Co-owners of all rights
– Pro-rata accounting – if not otherwise agreed
– Obtain rights from all contributors
 Deposit code (redacted) to protect the trade secret

Copyrights – Fair Use
 Sec 107 – “Limitations on Exclusive Rights”
– Notwithstanding the [exclusive rights sections], the fair
use of a copyrighted work ….for purposes such as
criticism, comment, news reporting, teaching ….
scholarship, or research, is
– NOT an infringement of copyright.
 Factors
– purpose and character of the use, commercial vs
nonprofit, and transformative (changed, new, etc)
– the nature of the copyrighted work – (just facts, from
published work)
– the amount taken compared to the whole (less is more,
except in Parody), and
– effect on the potential market for the copyrighted work.

Typical Copyright Matters
 Registrations of all types of authorship
 Artwork
 Photography
 Software
– Joint works
– Derivative works
 Licensing of Works
 Assignments – by commissioned authors to the payor
 Architectural works
 Maps
 Music

Trademarks – Typical Basic Questions
 Where does protection come from?
 What are trademarks?
 Who can obtain protection?
 What rights are granted?
 How long does protection last?

U.S. Constitution
Article 1, Section 8, Clause 3
Commerce Clause
“To regulate Commerce
with foreign Nations,
and among the several States,
and with the Indian Tribes.”
Congress shall have power….

Trademarks
 VERY important IP right
 Brand identity – market niche protection
 Reduce clutter. Prevent confusion. Distinguish.
 Relatively inexpensive to protect (compared to patent
protection)
 Work well across borders, cultures, and languages
 Long-term protection while in use (QUAKER – 1895)
 Provide value for expansion beyond core business
 Assigned, pledged, licensed
 Registration is important

Trademarks & Servicemarks
 Indicates source of goods and services
 Word, name, symbol, device, sound, color
 Used to distinguish your goods and services from
those sold by others
 Brand identity

The Power of Trademarks
 Trademarks as full words – well known
 BUT – can a single letter or a small design element
serve to identify a particular product to a consumer?

Key to Logo Images
 Pez, Google, Mattel, Coca Cola
 Planters, UAH, NFL, Wheaties, Vanderbilt
 McDonald’s, Zaxbys, Rolling Stones, MasterCard,
Walmart

Basics of Intellectual Property Law - David W. Holt (3 18).ppt

A = All detergent B = Bubblicious gum
C = Campbell’s soup D = Dawn detergent
E = Eggo waffles F = Frito Lay
G = Gatorade drink H = Hebrew National franks
I = Icee drink J = Jello
K = Kool Aid L = Lysol cleaner
M = M&M candy (peanut) N = Nilla wafers
O = Oreo cookies P = Pez candies
Q = Q-tips ear swabs R = Reese’s cup candies
S = Starburst candies T = Tide detergent
U = Uncle Ben’s rice V = V-8 drink
W = Wisk cleaner X = X-14 cleaner
Y = York Peppermint Patty Z = Zest soap
Key to Alphabet Images

Examples
 NBC peacock, and chimes
 Logo and trade dress
 Color pink for insulation
 Nike “swoosh”
 Phrase “Intel Inside”

Music, Sounds, Voice, Scent
 3,034,331 – McDonald’s – “I’m lovin it”
– the notes A B C E D
 2,315,261 – Intel – Intel inside
– the notes D FLAT, D FLAT, G, D FLAT and A FLAT
 AOL
– rapid series of chime-like musical notes written on the
treble clef in the key of C major, comprising a
progression of the musical notes C, D, F, G, C, and the
combined notes A and D

 3,020,512 – Brown and Brown, Inc.
– insurance brokerage services
– sound of a wild cat growling
 916,522 – NBC chimes
Music, Sounds, Voice, Scent

Trademarks – Weak to Strong
 Generic words – pizza, shoe
 Descriptive – describe a feature of the goods
 Suggestive – requires mental connection
 Arbitrary – use word with different meaning
 Coined, Fanciful – totally made up

Trademarks – Weak
 Generic - common names not capable of exclusive
ownership (pizza, house, automobile)
 Descriptive - describe a characteristic, element,
function, of the product; very weak, but inexpensive to
put in use
Not protectable till acquire "secondary meaning" in
consumer's mind. “So associated with the product that it
identifies the source of the product and distinguishes the
product from those of others”. Jeld-Wen v. Dalco
Industries (8th Cir. 11/10/99)

Trademarks – Strong
 Suggestive - suggest something about the product,
but do not describe it
 Requires imagination, thought, and perception

Trademarks – Strongest
 Fanciful or "coined" – meaningless
 Arbitrary
– well-known words - arbitrary use

Trademarks
 Term:
– potentially perpetual
– must continue to use
– must exercise control over quality of goods or
services

Trademarks
 Infringement: Likelihood of confusion as to source or
sponsorship between two marks
– Many factor test
– Similarity of marks
– Similarity of goods / services
– Strength of mark
– Similarity of channels of trade
– Sophistication of purchasers (Lexus vs Lexis)

“Dead” Marks – Failure to Police
 Escalator
 Trampoline
 Cube steak
 High octane
 Raisin bran
 Cornflakes
 Shredded wheat
 Dry ice
 Lanolin
 Linoleum
 Mimeograph
 Yoyo
 Kerosene

Suggestions:
How To Protect Your Trademark or Servicemark
 Select – brainstorm, differing “strengths”
 Search – clearance, “knockout”, full name
 Register – federal, state, pharma
 Use it
– Correctly – as an indicator, not as a noun (Aspirin)
– Consistently – not different versions
– With markings – ®, TM, SM,
– Use or Lose – must use to keep rights
 Police – keep track of others’ uses
 Broaden – Int’l market needs? Logo? Design? Tagline?
 Maintain – perpetual, 5 to 6 year, renewal, $$

Trademarks – Typical Matters
 Registrations
 Infringement cases
– Radio stations
– Financial institutions
– Residential developments
 Domain name disputes
– Arbitration
– Worldwide
– Bad faith use
– Pro-rata accounting – if not otherwise agreed
– Obtain rights from all contributors
 Licensing

Trade Secrets
 Think : “Trade” PLUS “Secret”
 Information used in trade or business. Has significant
economic value
 Included in formula, pattern, compilation, computer
software, drawing, device, method, technique, or
process
 Has significant economic value
 Not publicly known
 Not generally known to trade or business
 Can’t be derived from publicly available sources
 Has been subject to efforts to keep it secret

Definitions - Misappropriation
 Misappropriation
– Acquisition of a trade secret by improper means; or
– Unauthorized disclosure or use by a person who
acquired by improper means, or who knew . . . it was a
trade secret or was acquired by improper means.
 “Improper Means”
– theft, bribery, misrepresentation, breach or inducement
of a breach of a duty to maintain secrecy or limit use, or
espionage through electronic or other means.

Basics of Loss of Trade Secrets
 Trade secret law will protect you from misappropriation
and theft.
 Trade secret law will not protect you from your
revelation of your trade secrets (purposeful or
careless).
 Trade secret law will not protect you from your failure
to protect in the first instance.

Misappropriation, Value, Secrecy
 Misappropriation or theft usually easy to identify
 Information, economic value, and advantage over a
competitor
 Secrecy – If a trade secret is not kept secret, then the
legal protections will be lost
 State and Federal causes of action for trade secret
misappropriation

The Unwanted Truth
By the time misappropriation
(use or unwanted and
unauthorized disclosure) of
trade secrets occurs, the case
already may be lost due to
failure to take steps to keep
them secret!

Plan for Protection
 Identify trade secrets
 Routine trade secret audits
 Steps for ongoing protection of trade secrets

Key People Identify Trade Secrets
 Manufacturing processes
 Computer programs
 Business know-how
 Formulas
 Business methods
 Vendor/Supplier/Customer Lists
 Marketing plans
 “Negative” information (what doesn’t work)

Potential Trade Secrets
 Is the process/invention/information a secret?
 Is it valuable to the company?
 Is it known generally in the industry?
 Is it obvious to others?
 Can it easily be reverse engineered?
 Be wary of temptation to claim “everything” is a trade
secret

Trade Secret Audit
 Are there measures in place to identify trade secrets?
 Are the measures effective or are others needed?
 Where are trade secrets maintained?
 Who has access?
 Are there written policies?
 Nondisclosure agreements?
 Further safeguards?

Efforts to Keep Secret - Examples
 Visitor logs
 Secure spaces
 Need to know
 Shredding discipline
 Garbage
 Cleanse old computer hard drives
 Markings
 Don’t release outside company

Steps to Protect Trade Secrets
 Segregate trade secrets from non-trade secrets
 Label trade secret documents
 Employees - manuals, training, exit interviews, notice
letters
 Physical and virtual barriers
 Restrict/control plant access
 Prevent dissemination to public
 Nondisclosure agreements

Use of Non-Disclosure Agreements
 Critical element of a successful trade secret program
 Very common business document, but rarely gets the
legal scrutiny it needs
 “Internal” NDAs with employees and contractors
 “External” NDAs with business partners and
transaction candidates
 One size does NOT fit all!

What is Covered by the NDA?
 Definition of “confidential information” should be
precise but manageable
 Usually should specifically list “trade secrets,” or
include the statutory definition as a type of information
that is covered
 List specific categories that are important (e.g.
customer lists, product formulas, etc.)

Labeling Requirements
 Labeling requirements (or follow-up requirements) are
often not followed
 Result = possibly important information not expressly
covered by NDA
 Very large companies use labeling for risk
management
– Reduces risk of either party’s unintentional
noncompliance
 If you are concerned about your own client’s ability to
comply with a marking requirement, make it a
separate obligation and NOT a part of the definition of
Confidential Information

Common Exceptions
 Publicly available through no fault of receiving party
 Independently developed without use of disclosing
party’s confidential information
 Received from a third party not bound by a duty not to
disclose
 Residuals – usually defined as “information retained in
unaided memory”

Obligations Under NDAs
 Obvious one = don’t disclose!
– Be careful of efforts limitations
– Restrictions on reverse engineering
 Less obvious but still important = don’t use it for
any other purpose

Permitted Disclosures
 Employees who “need to know”
 Representatives (e.g., attorneys, accountants) only if
bound by a similar duty of nondisclosure
 Court order or other legal obligation
– This should NOT be an exception to what is covered (but
often is drafted this way)
– Require advance notice and efforts to seal it

Term
 Term is ok for non-trade secrets
– Typically some period of time after relationship ends,
discussions stop, or last confidential information is
disclosed
 Exclude trade secrets
– Expiration with respect to trade secrets could be
problematic to efforts to enforce a trade secret that was
disclosed under expired NDA

A Final Thought on NDAs
 Self-Protection in disclosure
 Just because there is an NDA with a third party, there
is not an obligation to disclose “everything”
 Only disclose what is needed for success of the
venture/experiment/collaboration
 Be wary of disclosing “crown jewels” even with an
NDA

Summary
 Information that is not kept secret is not protected as a
trade secret
 Take steps on the front end
 Regularly assess what the company wants to protect
as trade secrets and the steps being taken
 NDAs are vital for dealings with third parties that may
require disclosure of confidential information or trade
secrets

Typical Trade Secret Matters
 Misappropriation cases
– Lack of secrecy measures
– Public info already
 Covenants not to compete
– Territory
– Time
 New employee / Ex-employee
– Retain information
– Lab books
– Software

If Info is Public, Then No Longer TS
(Mobile Medical Int’l Corp v. United States, No. 10-148C, Redacted version , 16Nov10, Fed. Cl.)

Use of Contracts for IP Protection
 Licenses
– Click-wrap
– Formal, negotiated
– Field of use, types of rights, territory
 Assignments – employees, independent contractors
 Non-disclosure agreements
 Non-compete agreements
 Terms of use agreements

What is a Patent?
 A patent is the right to exclude others from making,
using, selling, or offering to sell the patented invention
during the term of the patent

What a Patent is NOT
 A patent is not the exclusive right to practice (make,
use, or sell) the patented invention.
 In some cases, such as with improvement patents,
you may need a license from others to practice your
own invention.

Patentable Subject Matter
 What Is Patentable?
– “Any new or useful process, machine, manufacture, or
composition of matter, or any new and useful
improvement therefor”
 New, Useful, Nonobvious
 What is Not Patentable?
– Laws of Nature, Natural Phenomena, Purely
Mathematical Algorithms

Enforcement
 The patent owner is responsible for discovering
infringing activities and enforcing the patent against
the infringer, which may require initiating litigation in
federal court.
 The Patent Office does not attempt to detect or stop
patent infringement.

Why Seek Patent Protection?
 Exclude others. Without patent, others can copy with
impunity.
 Secure financing / funding
 Joint ventures or joint development
 Royalty revenue
 Cross – licensing
 Premium value when selling Company

Limited in Territory
 Applies to activities only in United States.
 Patent protection is available in other countries.

Government-granted Monopoly
 20 years from date of filing for currently issued
patents.
 17 years for patents issued before June 8, 1995.

Filing a Patent Application
 File Before Disclosure if Possible
 Beware of Invention/Patent Marketing Services
 Hire a Qualified Patent Attorney
 Mark Products with “Patent Pending” after Filing

Selecting a Patent Attorney
 Hire a only a Registered Patent Attorney
 Attorney should be experienced in the preparation
(“prosecution”) of patent applications
 Attorney should have experience and/or background in the
technical area
 An IP Attorney will be able to help you and your clients
develop a comprehensive Intellectual Property Plan that
includes:
– Patents
– Trademarks
– Copyrights
– Trade Secrets
– Licensing
– Enforcement

What and When to Patent?
 Patent Application should be considered when a
change is made to a product or process to:
– Solve a Problem
– Make an Improvement
– Increase Efficiency
 Invention may be an improvement on another party’s
product, even if that product is already patented
 Complexity of an invention DOES NOT equate with the
value of a patent

What Are Parts of Application?
 Abstract
 Specification
– Field of invention
– Background (problems solved).
– Summary
– Detailed description
– Drawings
– Claims (defines scope of monopoly)

Important Questions
 Can I design around someone else’s patent?
 What if my invention is just a slight improvement?
 How long after my filing will my application be
published?
Patent applications can be kept confidential.

Why A Patent Search?
 Helps inventor and patent attorney draft better
application
Increases likelihood of getting patent
 May reveal that the “invention” has already been
invented
Saves money!

Design Patents
 For ornamental features
 Important, unique, and worthy of separate protection
 Examples:
– Furniture
– Jewelry
– Christmas ornaments

Patent Markings
 After patent application filed, mark goods
“Patent Pending”
 After patent issues, mark goods with patent number.
EX: “U.S. Pat. No. 6,123,456”. Failure to mark, could
limit infringement damages.

America Invents Act
 The most substantial reform of U.S. patent laws in
over 50 years.

AIA - First-to-File Provisions
 U.S. has moved from a first-to-invent system to a first-
to-file system.
– first true inventor to FILE will be awarded the patent
rights.
 First-to-file system appliesto applications with priority
claims that fall 18 months after the date of enactment
(March 16, 2013).

Public Disclosure Grace Period
 The AIA retains an inventor’s one year personal grace
period for filing an application after disclosure, if the
public disclosure :
– Was made by the inventor;
– Was made by a third party that obtained the information
from the inventor
 BUT, no grace period for a third party disclosure of an
independently-created invention

Derivation Proceeding
 The AIA replaces the current interference system with
a derivation proceeding.
– Derivation proceedings will determine whether an
inventor named in an earlier-filed application derived the
claimed subject matter from the inventor of a later-filed
application.
– Derivation proceedings apply to applications having
priority claims that fall 18 months after the AIA’s
enactment (March 16, 2013).

Patent Prosecution Changes
 The AIA includes a mandatory 15% increase in all
patent fees, which became effective on Sept. 26, 2011.
– A $400 fee was also imposed for all non-electronic
patent filings, effective Nov. 16, 2011
 The AIA also created a new entity for fee calculation
purposes, the “micro entity,” which qualifies for a 75%
reduction in most patent fees.

Micro Entities
 To qualify as a micro entity an applicant must:
– Qualify as a small entity;
– Be named as an inventor on no more than 4 previously-
filed U.S. applications;
– Have less than three times the median household
income in the previous calendar year (as defined by the
IRS); and
– Have not granted or be under an obligation to grant a
license or other ownership interest in the application to
an entity that has three times the median household
income in the previous calendar year (as defined by the
IRS).
 Institutes of higher education, as defined by the AIA,
also qualify for micro entity status.

If ALL You Remember:
 Patents
– U.S. is now “First to File” – so FILE
– Establish a culture of IP awareness
 Trademarks
– If early – do a clearance SEARCH – (traction lost?)
– If “Intend” to use – file an “Intent To Use”
– Design mark – if change logo (a lot or a little)- REFILE
– ®, TM, SM – USE
– Foreign markets? Global economy – Foreign filing
 Copyrights – benefits to filing BEFORE the infrgmt
– Joint Authorship issues
 Trade Secrets – Keep it SECRET
 Use ALL available forms of protection
 Joint Dev. Contracts – decide who owns the baby

Questions?
David W. Holt
Dholt@Bradley.com
256-517-5191

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