Intellectual Property for the Entrepreneur (BMA 347) Jonathan LA Phillips Shay Kepple Phillips, Ltd. 456 Fulton St., Ste. 255 Peoria, Illinois creativecommons|attribution-noncommercial-sharealike 3.0

Why?  The basis for intellectual property is to help the country, not individuals. Incentivize R&D or creativity and prevent consumer confusion.  Intellectual Property has become one of the most valuable assets of today’s business.  A major factor in securing capital.  Missteps on either side (not protecting or infringing) can be more devastating than things like a breach of contract

What Will Be Covered Basic law and practical applications and ideas for the entrepreneur regarding:  Patents  Trademarks  Copyright  Trade Secret Protection and what you should do to protect your fledgling business

Patents  Provided for in the Constitution (Art. I §8(8))  Novel, non-obvious, invention, having utility. Anything “under the sun” made by man  Not laws of nature  Terms of art  Trade trade secret protection (indefinite, like Coke) for a 20 year monopoly  “Best” of intellectual property rights, and you pay for it  You get what you pay for. Recent quote on a moderately complex mechanical invention was $15,  Retainers for enforcement ~$300,000

Patents (cont.)  What I see as typical patentability issues  Subject matter – not yet an invention  Novelty – not new  Obviousness – combining of obvious ideas  KSR International v. Teleflex  Usefulness – not having the use thought out, or it being a non-final product

Patents (cont.)  Incentive theory – You will research because you get a 20 year monopoly then share with the world. You won’t be ripped off  Is this the case? See, High Technology Entrepreneurs and the Patent System. Available athttp://  Biotech still values monopoly but not predominant incentive  Capitalization  First mover advantage - software

Patents (cont.)  What should you do as an entrepreneur?  Utilize provisional patents  Do not cut out patent searches  DO NOT TELL ANYONE UNTIL YOU HAVE CONSULTED WITH COUNSEL  Make use of Non-Disclosure Agreements  Ensure that you have assignments for any employees or others  Keep track of everyone working on a project and their contributions  Truly examine your reasons for protection and see if worth cost.  Am not covering software/business methods as patentable in detail. See, e.g. Bilski

Trademarks (includes servicemarks)  A word, logo, or phrase that identifies the source of goods or services.  Protect your brand and in turn, most importantly, protect consumers from confusion  Levels of protection  Federal  State  Common Law ( §43(a) of Lanham Act)

Trademarks (cont.)  Prosecution  Use “in commerce”  Word marks v. logos v. trade dress  What should the entrepreneur do?  Common law search as part of branding strategy  Use mark in commerce as soon as possible  Secure rights as soon as possible – or risk wasting great amounts of capital in re-branding  Lock up all domains & accounts possible, because UDRP cannot save you  Police your mark – including in licensing

Uniform Dispute Resolution Process  ICANN forced UDRP upon all domain sellers  Process for resolving registration of domain names (not social media accounts)  Kick a “squatter” off of your domain  Identical or confusingly similar to your mark  Other side has no interest or legitimate interest  Registered in bad faith

Copyright  Protects the expression of an idea, not the idea  The idea is that of a hobbit and dwarves, the expression is the Hobbit.  Once fixed, now creates a set of exclusive rights for the creator  Modicum of creativity, but no sweat of the brow doctrine  Duplicate, develop derivative works, distribute, perform publicly  No moral rights in the USA  From artistic works to computer code  Not functional design though, that’s patents or design patents.

Copyright (cont.)  Works for hire  Community for Non-Violence v. Reid  Employee? Done w/in scope of employment?  Commissioned? Has own tools? Makes own rules?  Joint Works  Joint ownership  First sale doctrine (§109), Fair use (§107), parody (Campbell v. Acuff-Rose Music, Inc.)

Copyright (cont.)  What should you, the aspiring entrepreneur do? Switching gears from the usual idea  Don’t worry about registering at first, as soon as fixed, protection in place  DO NOT INFRINGE, I repeat, do not infringe  It doesn’t need a ©  You almost certainly will not be engaging in fair use  Ensure your agents are not infringing  Secure assignments  If web-based and user generated content DMCA concerns

Trade Secrets  Anything that gives you a business advantage by being secret that you try to keep secret  This versus patents – think Coke  But also, ability to reverse engineer  This versus copyrights – facts can be protected  Common & Famous trade secrets  Recipes – Coke  Customer lists & pricing formulas  Software – e.g. Google algorithm  This is the cheapest, easiest to procure, and in most instances, most essential form of IP, even if not well- regarded

Trade Secrets  What should you do?  Think big to determine what your secrets are  You must take reasonable steps to secure rights  The courts will only take your fence, and make it higher  Reasonableness is determined by the value and difficulty of procuring the secret  Common steps  Employee handbooks  Non-disclosure agreements  Enforce in courts  Limit access  Page 526 of your book is a great list

General Tips  Work for Hire Doctrine  Automatic in copyright; Inventorship in patents  Hash out all IP matters in employment agreements  Along with everything else  Illinois Employee Patent Act  Use a lawyer who practices in the area  Check out as much as possible before utilizing a picture, an invention, or branding anything

Questions?  Feel free to me at