06/07/22 Copyright 2001 - Robert A . Myers 1 Intellectual Property for Entrepreneurs Professor Robert Myers [email protected] [email protected]
Jan 19, 2015
04/10/23 Copyright 2001 - Robert A. Myers 1
Intellectual Property for
Entrepreneurs
Professor Robert Myers
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DevelopingManaging
ProtectingExploiting
Intellectual Property
IS WHAT BUSINESS IS ABOUT
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Intellectual Property - What Is It? Patents Copyrights Trademarks Trade secrets Other results of intellectual activity
–Know-how–Chip (and other) designs–Plant designs–"Ways of doing"
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Intellectual Property Is Property
Has value Can be sold or licensed Can be stolen Can be protected Subject to much of property and contract law
as well as to IP law
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Commercializing IP
The objective of the game Can demand most of the investment IP covers full gamut, from conception to operating
business Transition is a huge challenge Various critical milestones Need a "scientific" management process Even if you are a start-up Especially if you are a start-up
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Article I, Section 8:
Congress shall have the power...to promotethe progress of Science and useful Arts by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and discoveries
The United States Constitution
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Statutory Requirements for a US Patent Allowable scope?
–Law of nature? Novelty
–Prior art? Utility
–Good for something?–Must be “operable”
Non-obviousness–To one of ordinary skill in the art
Full disclosure Reduction to practice not necessary
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A Patent Only Enables You to Do One Thing
You can prevent someone else -- anyone else -- from practicing what you have claimed in a jurisdiction (country) where you have a valid patent
This is a legal monopolyWhich antitrust law and legal precedents can prevent you from exercising if you have “market power”
Or, you can license others to practice your invention You may nevertheless not be able to practice your own invention without licenses to patents owned by other parties
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Key Points
• A patent is an exclusionary monopoly
• The monopoly is defined by the claims
• Patent value is arrived at from a business case
• A patent is virtually worthless if no one else wants to practice the invention
• Lawyers are not optional
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Criteria for Filing a Patent Application Size of market affected by invention Novelty of the technical field covered How central is the invention to expected products Scope of broadest claims Portfolio needs in the area of the invention How easily can use of the invention be detected How easy is it to avoid using the invention What percentage of companies in the field may use the
invention Any value to current or anticipated alliance activity Any value to current or anticipated technology transfer
activity Likely enhancement of your (or your organization’s)
prestige
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Kinds of Claims Structure Process Method Use Combination Form of matter Software Form of life (gene, plant...) A single patent can have many claims, of different types
May be different in different countries
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Software Patents Currently are being (very!) freely granted Critical difference from copyright:
– Copyright protects form of presentation– Patent protects essential idea
Software patent must meet same statutory requirements as any other patent
– Useful– Novel– Non-obvious
Value still being established– Reluctance to pay for license (although some companies are paying)
– No useful court decisions other than “Hub and Spoke”– No proven infringements
It’s a jungle
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Patents on "Ways of Doing" Business Can make incredibly powerful patents Need very little "technical" substance Emerging and important trend
Particularly financial instruments E-commerce and Internet
Opportunity for clever "inventors" to stake out huge claim
Need to meet statutory requirements "Obviousness" seems less a problem
Various examples Freeny: Delivery of goods mediated by network
Often, Patent Examiner lets a questionable one through
Only courts can remedy USPTO White Paper: www.uspto.gov/web/menu/busmethp
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Some Statistics
• 2500 “Business Method” patents as of 1/1/00• Leader: Pitney Bowes!• Jay Walker (Walker Digital) has “patent factory”,
hundreds of patent applications• 2500 “Business Method S/W” applications per year• In 1999, ~1000 issued patents with “Internet” in
patent
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The Internet and e-Commerce Just because it's there, it may not be free Internet creators advertise they are free spirits
–Intellectual property is free as the air Downloading software or content creates big
exposures, such as–Use of the material infringes a patent–The material is copyright–The license terms are restrictive–The protected material will be inadvertently incorporated in a product
–Posting material may limit owner's rights–Posting material may reveal owner's missteps
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The “Single Click” Claim A method of placing an order for an item comprising: under control of a client system, displaying information identifying the item; and in response to only a single action being performed, sending a request to
order the item along with an identifier of a purchaser of the item to a serversystem;
under control of a single-action ordering component of the server system, receiving the request; retrieving additional information previously stored for the purchaser
identified by the identifier in the received request; and generating an order to purchase the requested item for the purchaser
identified by the identifier in the received request using the retrievedadditional information; and
fulfilling the generated order to complete purchase of the item
whereby the item is ordered without using a shopping cart ordering model.
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Protecting IP on the Internet The “Millennium Copyright Law”
Responds to fundamental Internet technology: Moving information around the Net creates all kinds of copies which were, prior to this law, illegal
Does not provide a whole lot of protection apart from this Bar the door!
Encryption License agreements Secure download technology Contract with your staff
Be brave -- Don’t hesitate to assert your rights The fundamental issues
Unless you are a content owner, the barriers to entry are porous
Even if you’re a content owner, the technical barriers to theft are flimsy
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Legal Action• Amazon.com sued Barnesandnoble.com for infringing its "single click"
patent.• Priceline.com (Jay Walker’s flagship company) sued Expedia.com (a.k.a.
Microsoft) for infringing its "on-line auction" patent. • Tom Woolston (a.k.a. MercExchange) filed to have Priceline's patent
declared invalid, claiming he invented it first.
• Sightsound.com sued MP3.com and CDNow.com for infringing its patent,
claiming it holds the patent on the entire concept of downloading music. • Audiohighway.com says their patent covers Internet music. • Ebay has been sued by Network Engineering Software for infringing their
patent covering an “automated on-line information service and directory, particularly for the Web”
• Ebay have sued Bidders Edge for violating their copyrights, among other assertions, for posting listings taken from the ebay site.
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Courts Have Ruled...
• Software patents are valid
• Business method patents (“ways of doing”) are valid
• Algorithm Patents (“ways of calculating”) are valid
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Copyrights The exclusive privilege of an author or proprietor to
make multiple copies of literary, artistic or intellectual productions and license others to do so
–The right to copy Protects the form, not the underlying idea The work must be original -- but may be a derivative
work It is created -- and therefore subject to copyright --
when it is fixed so it may be perceived, reproduced or otherwise communicated
Notice optional Registration optional -- necessary for statutory
damages–Otherwise, only actual damages
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Copyrights Exclusive rights
–Reproduce–Prepare derivative works–Distribute copies–Perform–Display–Each can be assigned separately
Fair use allows some exceptions First sale allows subsequent transfer Proof of infringement not always easy
–Insert bogus elements, lines of code, addresses, etc.
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Copyrights First strategy for protecting computer programs Patent Office refused patent protection Copyright easy and inexpensive
–Shrink wrap license Limited protection from infringement
–Modifications–Proof needed
Only in recent years has USPTO made software patents easier to get
–Still difficult to enforce–S/W culture negative–Discovery a challenge
Many (most) programs are not patentable
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Key Elements of US Law "Original" works of authorship
–Not necessarily "novel" "fixed in a tangible medium"
–Such as film, tape, disk...–An unrecorded game or performance not protected
"...of expression"–Limits protection to "expression", not "idea"–Separation of "expression" from "idea" no easy matter
How much change is necessary to create a "new" work?
–Not much
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Trade Secrets ...A secret formula or process, unpatented, known to a
limited number of individuals who use it, to competitive advantage, in the manufacture of an article of trade having commercial value..."
Relevant factors–How widely known–How protected–How valuable–How hard to develop independently
Can only be disclosed under confidential agreement Do not exist without a contract Can be licensed as IP Lasts forever -- unless no longer secret May be preferable to patent -- may not
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How to Protect Your Intellectual Property
Burglary is illegal, but you still lock your doors
Patents provide very strong protection and offer real sanctions
Patent if you canEnforce your patentsFind a good IP lawyer!
Register your copyrights and trademarksKeep it a trade secret if necessaryHave a non-disclosure agreement (NDA) handy and don’t hesitate to use it
Contracts are key
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Q and A Cost of a patent: Think “$thousands”, usually less than
ten Cost of suing to protect your patent: Think “$million”, at
least one A decision will take years If you’re lucky, you might get an injunction Expect to settle -- everyone tries to
Time to get a patent: About two years from file date It’s a secret while in the USPTO But you have no other protection until it issues
Life of a patent: Twenty years from date of file (very contentious)
Life of a copyright: Life of creator plus 75 years “Mickey Mouse extension”
Life of a trade secret: As long as it stays secret
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Internet SourcesIBM Patent Server: http://www.patents.ibm.com
US Patent and Trademark Office: http://www.uspto.gov
Copyright Resources On-Line:http://www.library.yale.edu/%7Eokerson/copyproj.html
IPWorldwide: http://www.ipworldwide.com
Inventors resource homepage: http://www.gibbsgroup.com
Hoover’s Corporate Information: http://www.hoovers.com
Thomas Register of American Manufacturers:http://www.thomasregister.com
Licensing Executives Society: http://www.les.org
Everything you want to know about SEC filings:http://www.10Kwizard.com
American Intellectual Property Law Association:http://www.aipla.org
Franklin Pierce Law Center: http://www.fplc.edu