How to Avoid Losing Patent Rights

Russell Jeide & Scott Cromar
Thursday,July 25, 2013
TVE2 IP Series
Class 6: How to Avoid Losing Patent Rights

2© 2013 Knobbe, Martens, Olson & Bear, LLP all rights reserved.
TVE2 Intellectual Property (IP) Series
• Class 1: "What intellectual property is, and why it
may be important to your startup"
• Class 2: "How to enter the patent world strategically
and economically"
• Class 3: "How to file for a patent"
• Class 4: "The meaning of patent infringement and
patent litigation"
• Class 5: "How to use copyrights, trademarks, and
trade secrets to your advantage"
• Class 6: "How to avoid losing patent rights"

Russell Jeide
• Patent Attorney for 12 years
• Partner at Knobbe Martens
• B.S. Electronics Engineering
Technology
• Specializes in patent prosecution,
legal opinion work, and licensing
• Experience in telecommunication
systems, computer architecture,
computer software, Internet business
methods, and mechanical devices

Scott Cromar (absentee)
• Patent Agent for 3 years; Patent
Attorney for 1
• Associate at Knobbe Martens
• B.S. Electrical Engineering;
M.S. Electrical and Computer
Engineering
• Specializes in IP counseling and
patent preparation and prosecution
• Experience with software,
computers, electronics, and
semiconductors

Disclaimer
• This presentation is for information purposes only and
does not constitute legal advice.
• This presentation does not establish any form of
attorney-client relationship.

Today:
• Today’s Main Topic:
– How to Avoid Losing Patent Rights
• May Cover:
– What is Intellectual Property (Class 1 Redux)?
– Making Use of Trade Secrets (Catch-up from Class
5)

©2012 Knobbe Martens, Olson & Bear, LLP all rights reserved.© 2013 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 7
What Is Intellectual Property (IP)?
(Class 1 Redux)

Intellectual Property (IP)
• Refers to a category of exclusive rights created by
statute, including:
– Copyrights
– Trademarks
– Trade Secrets
– Utility Patents
– Design Patents
• Others: Trade Dress, Mask Works, …

Nature of the Exclusive Right
• Typically the right to exclude or prevent someone
from doing something
• Usually req. gov’t registration; Enforce it in court
• As business tools:
– Copyrights: protect content; expression
– Trademarks: enhance marketing strategies
– Trade Secrets: keep proprietary info confidential
– Patents: obtain exclusivity in your market niche
• Utility: functionality; Design: appearance

How to Avoid Losing Patent Rights

How Patent Rights Are Lost
• Premature disclosure
• Failure to recognize invention
• Problems with joint development agreement
• Employee disputes over IP

Example Scenario 1:
Conceive
of idea
Build
Prototype
Display to
Potential
Investors
Receive
Investment
Funds! 
File Patent
Application?
July 24,
2013
Jan. 14,
2012

Example Scenario 2:
Conceive
of idea
Describe
on Website
Positive Feedback from
friends and family
File Patent
Application?
July 24,
2013
Jan. 14,
2012

Accidental Disclosure
• If you disclose your invention before filing…
– Lose most (or all) foreign rights!
– Maybe lose U.S. rights!

Accidental Disclosure (cont.)
• As of March 16, 2013
– First to file generally entitled to patent
• Must file before first sale, offer for sale,
publication, or public use of the invention by
others, anywhere in world
– Uncertain 1 year grace period for filing in U.S.
• Must file within one year of first sale, offer for
sale, publication, or public use of the invention
by inventors, anywhere in world
• Must be same subject matter!

• Company or inventors “accidentally” disclose product
details before patent application filed
• Examples:
– Marketing department discloses details of new
product to potential customers
– Inventor includes invention in academic paper or in
a public presentation
– Company releases beta version of product without
NDA
– Invention is disclosed to potential investors without
an NDA (See sample NDA)

• How to avoid losing rights:
– Best course of action = file before you disclose
– Consider filing one or more provisional
applications
• Inexpensive
• Establishes a date of priority
• Need not be a “complete” patent application
• One year to file regular application

Example Scenario 3:
Conceive
of idea
Describe
on Website
Positive Feedback from
friends and family
File Non-
Provisional Patent
Application
Jan 10,
2013
Jan. 14,
2012
File
Provisional
Application
Jan. 10,
2012

Example Scenario 4:
Conceive
of idea
Build
Prototype
Display to
Potential Investors
(under NDA)
Receive
Investment
Funds! 
File Patent
Application?
July 24,
2013
Jan. 14,
2012

Sample NDA Confidentiality Language
• Recipient agrees to hold said Confidential Information, and any
previously disclosed Confidential Information, in confidence and
not to use the Information commercially for its own benefit or the
benefit of anyone else, and not to use the Information for the
purpose of developing or improving a product or method for
anyone except Discloser. Recipient agrees to limit dissemination
of and access to the Confidential Information only to persons
within Recipient’s immediate organization (and not to subsidiary,
parent or affiliated entities), and then only to those persons who have
a need for access to the Information for the above-described
purposes, and who have signed this Agreement.
• This is an EXAMPLE of only one portion of an NDA –You should
consult with an attorney for a suitable NDA for any disclosure you
need to make.

Provisional vs. Non-provisional
PROVISIONAL REGULAR (NON-PROVISIONAL)
• Not published • Published unless request for
non-publication is filed with
application
• Expires after 12 months • Remain pending until
reviewed by the PTO
• Cannot become a patent • Can become a patent
• No formatting guidelines • Strict formatting
• Claims not required • Claims required
• Costs from $500-$4,000 • Costs from $9,000-$20,000
• Contributors identified • Inventors identified based on
claims

Example U.S. Patent Prosecution Timeline
“Negotiate” with the
Examiner regarding
scope of the patent
claims (~ ½ -2 years)
Patent
issues
2-4 years
Application
Publishes
Office
Action(s)
(and
RCEs)
18 months
1 year
Prior Art
Search

Tips for Filing
• You can and should file a patent application as soon as
you can describe a valuable invention
• You don’t need to develop a product or a prototype
before filing
• You do need to provide an enabling disclosure
(only protects subject matter that is enabled)
• You can lose patent rights by waiting even when there
is no deadline
• When two inventors file for the same invention, the
patent office usually awards the patent to the first to
file

Patenting of Improvements
• A final note:
– If certain innovations are
time barred, there may still
be opportunities to protect
improvements to the
product/idea that have been
developed and are not yet
launched (or possibly
disclosed within the previous
year)

• Accidental disclosure

Failure to Recognize Invention
• Valuable patent rights may be lost if inventions are not
identified
• What can you do about it?

Failure to Recognize Invention (cont.)
• Be aware of the value of “minor” improvements on
existing technology
– These improvements are often patentable
– Patentability searches may help identify patentable
improvements
• Consider brainstorming sessions
• Consider using an invention “scorecard” to decide
what patents to pursue

Problems with Joint Development Agreement
• Joint development agreement may lack favorable IP
ownership terms
– May not address IP at all
• May not be an issue until company/product has some
positive track record…
– But then it can be very expensive (legal fees to
resolve dispute & possible loss of royalties to a joint
owner)

• How to avoid problems:
– Make the ownership clear in agreement
– Assign everything early

• Examples:
1. One party owns everything developed by both/all
parties
2. Parties jointly own any jointly developed IP
• Important terms: sublicensing; royalty sharing;
transferability; etc.
3. Each party owns IP developed by its employees;
jointly developed IP is jointly owned
• May be difficult to determine inventorship
• Could result in dispute down the road

Employee Disputes Over IP
• Myth: I paid for it, therefore I own it
• Make sure employee agreements have clauses
assigning inventions made for employer, to employer
• Make use of
– Employee Agreements & IP Assignments/Licenses
– NDAs & Confidentiality Agreements
– Independent Consultant Agreements

Russell Jeide
Scott Cromar
• russell.jeide@knobbe.com
• scott.cromar@knobbe.com

Trade Secrets
(Catch-up from Class 5)

Trade Secrets
• Tools for keeping proprietary information confidential
• Just keeping it secret
– NDAs, confidentiality agreements
• Make sure you can keep it secret!
– Once the cat is out of the bag…

Trade Secrets
• Any formula, pattern, device, or compilation of
information which is used in one’s business and gives
competitive advantage
• Comparison with other forms of protection:
– Trade secrets are immediately protectable.
– Uniqueness is not important; only competitive
advantage.
– Patent/copyrightable protection requires
disclosure of confidential information.

Requirements of a Trade Secret
• Have Value in your Business
• Not Generally Known
• Subject to Reasonable Measures to Maintain Secrecy

Creating Rights in a Trade Secret
• Did the owner take reasonable precautions to keep the
information secret?
– Notification: Imperative the program be written and
all key employees know. A Non-Disclosure
Agreement can serve as the basis for recovery.
– Identification
– Security
– Exit Interviews

Trade Secrets vs. Patents
• Considerations:
– Independent Development
– Reverse Engineering
– Duration
– Employees’ General Knowledge and Skill
– Federal Remedies
– Cost

Trade Secrets vs. Patents (cont.)
• Disadvantages of Patents
– Cost
– Publication
• 18 Months from Filing Date
• Can be prevented

Trade Secrets vs. Patents (cont.)
Protect innovative ideas,
but not all trade secrets are
patentable
Protect innovative ideas by
law
Confidential information
Public information
(If patent is filed
early enough)
Does not protect against
independent
development and use of
the idea by others
Can exclude others
from using same idea,
even if independently
developed
Trade Secrets Patents

General Recommendations
• Patent Technology of Any Value
• Use Trade Secret Laws to Protect Against Disloyal
Employees
• Use NDAs, Consultant Agreements (confidentiality &
assignment of IP)
• Combine Aggressive Marking and Use of NDAs with
Aggressive Patent Portfolio

Avoiding Liability for Misappropriation
• Situations:
– Hiring Employees from Competitors
– Leaving Employment and Starting a Competitive
Business
• General Principles:
– An Employee Can Take His or Her General
Knowledge, Skill, Experience
– Cannot Take Anything Tangible Belonging to the
Employer

How to Avoid Losing Patent Rights

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