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Kauffman Founders School, Peter D. McDermott, Intellectual Property, I.P. Protection & Avoiding
Infringement
>> You've got an intellectual property strategy
that's terrific. And you've been following it diligently, even better. And the result,
of course, is that you've identified a number of different technological points that might
be worth protecting. Might be worth getting intellectual property protection for. So now
what? Well, now we have to make some decisions. Now we have to decide what to protect and
how to protect it. First of all, most expensive and powerful
protection would be a patent. If you decide you don't want to pursue a patent, either
it's too expensive or not the right kind of technology for a patent protection, you might
decide to keep it as a trade secret. If you do that, you still have to protect it. You
still have to remember that there are steps to take, basically keeping a trade secret
secret. Well certainly copyright protection is terribly important in a lot of industries.
Software industries certainly it's one of the central I.P. protections. And if you're
in an industry that looks to copyright protection you will want to pay attention to that of
course. You're probably going to want to pick a trademark
that somehow conveys to the marketplace what your product is all about or what your service
is all about. So with all of these wonderful opportunities, all the different forms of
intellectual property that are available to you to protect the technology that your team
is developing, pick and choose carefully what you're going to use to integrate them together
into an I.P. portfolio, an arsenal of I.P. assets that you can use for competitive advantages
in the marketplace. Really you want to think about the fact that
all of your intellectual property probably could be put on a thumb drive and walk out
the door at the end of the night. You have to take active steps to protect it. And that
means the mechanical things like locking doors. And certainly not having important documents
out on your desktop when visitors come through. No one should be allowed into your facilities
without an obligation of confidentiality. And frankly, no one should be allowed into
your facilities that really don't have to be there.
Beyond the obvious mechanical facets there's your IT side. It goes without saying you've
got to have terribly robust firewalls to prevent hacking, in and out logs for your computers.
Talk to your IT department and to your patent lawyer and decide just how much access to
it you need to have. You need access for your team to work together effectively, but too
much access can cost you a trade secret. Another point on protecting your technology,
when an employee leaves have that exit interview. Remind them about their obligation of confidentiality
with respect to the trade secrets that they learned while at the company. Even if they
invented the trade secret they still owe an obligation to the company to leave it behind
and not bring it forward to new employers. Now the truth is you're going to have to disclose
your technology pretty routinely as you go through day‑to‑day business activities.
You're going to have to disclose some of your technology probably to suppliers. And you're
going to have to disclose some of your technology to your customers or your potential customers.
I think what you want to do is have a confidentiality agreement with the supplier. This is often
referred to as an NDA, Nondisclosure Agreement. What it says is you're going to disclose the
technology, disclose something to the supplier, they agree to keep it confidential, typically
for a term of years, maybe five years maybe ten, depends on your particular circumstances.
Now the important thing here is that it's protecting patentability. If you ever decide
you did want to the seek patent protection that confidentiality obligation on the part
of the supplier means that your invention was not available to the public. You preserved
that absolute novelty that we talked about. What about your customers? You can go to customers
and ask them to sign a confidentiality agreement. They probably won't depending on how big they
are, how important your technology might be to them, maybe they will. If they will, good,
do that. Because the truth is that an awful lot of potential customers take your idea
and run to their established suppliers and see if they can get it cheaper. Hard fact
of life. So confidentiality agreements with even your customers when you can get them.
Probably the more common practice is to limit to the bare minimum what it is you have to
tell your customer. Tell them what the performance is, don't tell them how you do it.
How about ideas that are coming into you from outside? Can be valuable. Can be dangerous.
Beware. Perhaps they have intellectual property that applies to the idea. Perhaps they would
simply make the assertion it was disclosed to you in confidence and you should have known
that. So what do you do? Well anyone that brings you an idea, you don't want to be contaminated.
You tell them that you're happy to listen to the idea, but first, before they say it,
they need to sign a confidential disclosure waiver agreement. And what it typically says,
we'll accept your idea, we'll take a look at it, but we will not provide any confidentiality.
If you have a patent, of course, we'll honor it. Other than that we're free to use the
idea you're about to disclose to us. You know, you've got competition out there.
They are working hard too. They are collecting I.P. assets as well. And they're going to
use those to defend their market space and to try and take your market space. So you
need to avoid infringing the intellectual property assets of other people. You need
to avoid infringing their patents and their copyrights and their trademarks and their
trade secrets. So how do we go about doing this? You've got plenty on your plate already
and now you've got to worry about the other guy. Being on the wrong side of an I.P. infringement
suit is a bad place to be. You know, there's an old joke in patent law that if you find
yourself in a patent lawsuit try to be on the side with patents. But sometime it might
happen that you're on the wrong side. So let's try to minimize that risk. How do we do that?
At the very front end of a project you can have your patent lawyer do a patent clearance
search, sort of a state‑of‑the‑art search. Find out what's out there. It's not that you're
looking to duplicate their work, it's that you're looking not to. Find out what patents
are out there that might get in your way and avoid them. There's a little bit of a chicken
and the egg problem here. You want to ask your patent lawyer what can I do safely. And
your patent lawyer wants to say well what is it you want to do. Well what I want to
do is whatever I can do safely. Certainly before you get to the end of your development
project and preferably well before have it cleared. Have a clearance study done to make
sure you're not going to invest in marketing and capitalizing and all the sweat and blood
and tears that go into launching a product or a service only to find out you've got a
problem. That's late. Do it earlier. If you have to redesign, you redesign. If you have
to get a license you get a license. You might hear the expression freedom to operate.
It is what it sounds like. It's a study of intellectual property in the field that you're
in to see whether you have freedom to operate. The freedom to operate study is typically
done by the patent attorney working with you and your engineers. And it involves looking
at the technical details of your product or your service and looking at the intellectual
property that's out there with other people's patents.
So how much do you devote to a freedom to operate study? How often do you do one? How
early in the process? This is, this is a fairly complex issue. What you want to take into
account are all the usual things, what are your resources. Obviously you can't overspend
your budget. You have to put some budget to this, but it's limited. What's the risk? Is
this a central product for your company? Is it the key product of your company? In that
case it's probably deserving of a little bit more time and attention and money than if
it's a me to product, a peripheral product for you. Other factors certainly worth your
consideration are the magnitude of exposure. If your exposure is going to be very low,
then it deserves obviously less time and attention and budget. If this is going to be a very
short‑term event, well frankly, that might deserve less budget toward freedom to operate
than if it's going to be a core product for years and years.
If we do identify a potential problem in the course of a freedom to operate study we're
not done. We're not going to go home and we're not going to stop producing our product or
designing our product. There are several things we need to look at and we will. We're going
to look at whether we really do infringe that patent. Remember that there are millions of
dollars spent routinely in patent litigation. The patent donor firmly believes that the
patent is infringed and the defense side firmly believes that it isn't. So there can be a
difference of opinion. And there often is. Even if you come to the conclusion that the
claims of the patent do seem to describe what you're doing, we're not done. Maybe that patent
is invalid. Lots of patents are invalid. The patent office does a very good job, they really
do. The examiners are dedicated and they work hard. But their limited resources mean that
sometimes patents issue that are invalid. The patents that issue have claims in them
that cover the prior art, cover what's gone before.
So what does that mean? That means you don't have to worry about that patent. You look
at that patent you say well, even if the claims cover what I seem to be doing, I'm not going
to worry about that. So what does that mean? That means that effectively you can ignore
that patent. They may come after you and it might cost you money to defend. But what you
would do is show them the prior art you identified and hopefully they go away and they often
do. Of course, even if you can't find invalidating prior art, even if you think the claims probably
do cover what you want to do, a license might very well be available. A license on terms
that are reasonable. And that might be the least expensive way to move forward. Of course,
as we say, there's always the possibility of redesigning your product if all else fails.
So put this altogether. We have an integrated intellectual property strategy. You're looking
at your budget. You're looking at your defense needs. You're looking at your technology.
And you're deciding what forms of I.P. protection can you afford that are the most sensible
and that work together with each other to support your business plan in the marketplace.
On the one side you're developing your own arsenal of I.P. assets. And on the other side
you're making sure that you don't wander into somebody else's I.P. assets. By doing your
due diligence, by doing your clearance studies by finding the problems before they arise
and getting them out of the way. In the end, avoiding I.P. infringement, having
strong I.P. of your own, is a very worthwhile investment. Investing what you can in your
own I.P. arsenal is a sound investment. And investing in not infringing other people's
intellectual property rights likewise is a very sound investment. Putting these two together
you should have a strong I.P. position and few I.P. worries.