1. IP Essentials Stephanie Adamany Associate General Counsel WARF October 15, 2013

2. What we will cover today Intellectual Property What is it? How do you get it? How do you protect it? How does it add value? 2

3. What makes your company? 3 IP Assets Products & Services Ideas & vision People

4. IP Assets Your IP could be: – Created by your team – Created with others – Created by others/Licensed from others 4

5. Types of Intellectual Property Types of Intellectual Property, with varying protection, may include: – Patents – Copyrights – Trademarks – Trade secrets and/or know-how – Designs – Materials 5

6. Patents – Overview A patent is a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time, in exchange for the public disclosure of the invention. To pursue a patent: – file a patent application – go through the patent prosecution process Potential for high value, but also for high cost 6

7. Patent Rights U.S. Patents give you the right to exclude others in the U.S. from: – Making – Selling – Offering to sell – Using Freedom to Operate 7

8. Patent Anatomy A patent is made up of several sections, notably the following: – The “specification” – The figures – The claims The claims define the metes and bounds of the protected invention 8

9. Patentability Patentable inventions must be: – Novel – Non-obvious – Useful – Enabled or described adequately Can include: – Processes/Methods – Machines – Articles of manufacture – Composition of matter – Improvements to any of the above – Plants (plant patents) – Designs (design patents) 9

10. Should you invest in a patent? Consider: – Upfront costs – The fact that your invention will become public (therefore not a trade secret) – The likelihood you will get the claims you desire – Continuing costs: patent maintenance, potential enforcement – More costs: foreign filings – Value: the right to exclude, the right to license or cross-license, increasing your asset list, investor appeal 10

11. Patent filing and life cycle 1 st Step: File an application with the U.S.P.T.O. (Patent Pending) – Provisional Patent Application (1 year to convert) – Non-provisional Patent Applications – Design Patent Application – Plant Patent Application 2 nd Step: “Prosecution” (3-5 years, average) 3 rd Step: Issuance – Claims issue that define the patent rights to the invention – Term is 20 years from U.S. filing date 4 th Step: Maintenance – Fees – Marking – Challenges & Enforcement (potentially) 11

12. Housekeeping – Patents Ownership – Who are the inventors? Are they obligated to disclose and assign? By what contract? Each owner has the right to make, use, sell and license under the U.S. law Inadvertent disclosure – File early (first-to-file) – Preservation of rights and the public domain Blogs Conversations Offers for sale – Confidentiality agreements 12

13. Costs – examples AIPLA Economic Survey 2013, for Chicago Area: 13 Type of Application (U.S.) Application Preparation Amendment/ Argument (no appeal) Post IssuanceTotal (appeal can add 6-16K) Provisional App (prep & filing) Mean $4,799 Original Utility App, minimal complexity Mean $7,399Mean $1,928$877$10,204 Original Utility App, Complex bio or chem Mean $13,575Mean $4,257$877$17,832 Original Utility App, Complex electrical or computer Mean $13,205Mean $3,836$877$17,918

14. Cost of Enforcing a Patent AIPLA Report of the Economic Survey (2013): Patent Infringement - Enforcement 14 Dollars at riskCost through Trial Less than 1 M909,000 1-10 M1,882,000 10-25M2,247,000 > 25 M5,025,000

15. Trademarks The term “trademark” refers to any of the four types of “marks” that are able to be registered with the U.S.P.T.O. – Trademarks identify the source of goods – Service marks identify the source of services – Can be words, designs, colors, even sounds (NBC’s® 3 tone chime) – Have elected relevant classes (categories) from the U.S.P.T.O. list (if registered) 15

16. Thinking about trademarks What might you trademark as a business? – Your company name – Slogan – Product names – Design/logo ® versus ™ 16

17. Choosing a trademark – searching It is not a bad idea to do a preliminary search on the U.S.P.T.O. website, www.USPTO.gov 17

18. Choosing a trademark – searching Here’s a snippet from the search page: 18

19. Choosing a trademark – searching From the list of items that came up, I clicked on Coke Zero 19

20. Federal Trademark Registration Why? – Federal Registration provides certain advantages: – Notice – Evidence of ownership – Potential to enforce in federal court – Potential to prevent importation of infringing foreign goods How? – Hire an attorney – File it yourself online (could run into problems and end up hiring an attorney anyway) What? – Completed application form (identify classes) – Fee – Mark, drawn out, and examples of use in commerce if you have them 20

21. Trademarks – cost The cost of applying to register a trademark is $325 for a single class Maintenance costs: – In about 5 years, the owner must submit an affidavit of continuing use and pay a fee of $100 per class – On the 10 th anniversary, $400 plus another $100 continuing use affidavit – And so on… since the life of a registered trademark is not limited so long as the owner properly maintains the mark 21

22. Copyrights: What is eligible for copyright protection? A copyright can cover literary, dramatic, musical and artistic works, and software, and can protect that expression against copying. 22

23. Copyright Protection Copyright protection gives the owner the exclusive right to: – Reproduce the work – Prepare derivative works – Distribute copies – Perform the work publically – Display the work publically – Permit others to do any of the above (license) Exceptions: – The most major and notable exception or limitation is the doctrine of “fair use” 23

24. Copyright protection and registration Copyright protection exists from the time the work is created, but federal registration provides advantages. Registering a copyright is relatively straightforward. To preserve rights by providing notification, mark the work by: – Adding the copyright symbol – The year of publication – The name of the owner of the copyright or its abbreviation – For example: © 2013 WARF All rights reserved. 24

25. Housekeeping – Copyrights Ownership – Who are the authors? – Are they obligated to disclose and give up their ownership rights? Work for hire? – Scope of employment or specially ordered/commissioned? Contract? Is it clear? What about follow-on authors who may work on the project subsequently? Registration? – $35 for electronic registration – See www.copyright.gov 25

26. Trade Secrets A trade secret is: – a formula, practice, process, design, instrument, pattern, or compilation of information – not generally known or reasonably ascertainable – by which a business can obtain an economic advantage over competitors or customers – for which reasonable efforts are made to maintain its secrecy Uniform Trade Secrets Act addresses misappropriation of trade secrets, relief available and damages. 26

27. Housekeeping – confidentiality Businesses with valuable trade secrets take actions to maintain them. – No registration process – Contracts Examples: employment, confidentiality agreements, non-compete – Clear processes and procedures for managing – Potential for irreparable harm if not maintained in confidence 27

28. The value of IP I’ve got IP! Now what? 28

29. What can your IP do? It is a company asset It can protect your business from competitors You can sell it or license it to generate revenue – Field limited licensing is an option – Even if you sell it, you can negotiate a retained license You can use it to get rights you need by cross-licensing in some cases It is considered in the valuation of the company 29

30. Due diligence Keep good records – Consider maintaining an updated list of all of the company’s IP Make sure your company has proper paperwork in place – Assignment Pre-company founders’ inventions or other IP Employee agreements with follow-on express assignments (all IP) Work for hire (all IP) – Confidentiality obligations (especially patents, trade secrets) – Internal Disclosure processes (if you aren’t aware of it, you can’t decide whether to protect it) Have processes and procedures in place for maintaining IP Know the relevant IP landscape defensively Know the business IP landscape offensively 30

31. The end Please stay with us for the panel discussion! 31