You've got an intellectual property strategy, and you've been following it diligently. Now you have to decide what to protect and how to protect it. Also, avoiding infringing the IP of others is a sound investment for your company. An IP dispute can be time-consuming, expensive, and distracting. It is something you want to avoid.
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.
Field, Thomas G. Jr. IP Basics: Avoiding Patent, Trademark and Copyright Problems
McDermott, Peter D. Intellectual Property Basics
"Companies that make $10M or less in revenue are the majority of unique defendants [in patent suits brought by Non-Practicing entities or "Patent Trolls"]. Startups are particularly vulnerable." Testimony of Prof. Colleen V. Chien, Santa Clara University School of Law on April 16, 2013 to the Congressional Subcommittee on Courts, Intellectual Property and the Internet.
Questions for You
Not all forms of intellectual property are important to every company. Review your business plan and identify the key information, technology and market differentiators (referred to here as “IP Assets”), including both those currently in-hand and those yet to be developed or acquired, to achieve the business objectives. Outline an IP strategy that supports the business plan.
Questions for Your Team
Are you familiar with the relevant portions of the company’s business plan?
Are you familiar with the relevant portions of the company’s IP strategy?
Do you understand your responsibilities under the IP strategy?
What records will you need to prepare and submit?
Do have responsibilities in the management review process for determining which developments warrant the expense of IP protection?
What suggestions can you make to your founder and team about the forms of IP that you believe are or could become important to this company? Why?
How can you help to avoid infringement of the intellectual property of competitors or others? Are you expected to be familiar with the IP landscape relevant to your area of activity?
Tools and Exercises
An IP strategy should generally include conducting a periodic IP audit. The thoroughness and particular focus of an IP audit will depend on the particular circumstances of the company, including its technology area, market space, stage of development, available budget, and other factors. There are a wide variety of sample IP audit checklists and guides available online. The following few are just a sampling and should be used in consultation with IP counsel.
IP Audit - A "How to" Guide, available from the World Intellectual Property Organization (WIPO).
Sample IP Audit Checklist, available from the Utah Bar Association
IP Audit and Management (PDF), presented in June 2013 by M. A. Yafi at the WIPO Training of Trainers Program on Effective Intellectual Property Asset Management by Small and Medium-Sized Enterprises