1. Wolf, Greenfield & Sacks, P.C. | 600 Atlantic Avenue | Boston, Massachusetts 02210 | 617.646.8000 | 617.646.8646 fax | wolfgreenfield.com Intellectual Property for Startups presented by Ed Walsh Dan Young August 25, 2010

2. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 2 Presentation Team Edmund J. Walsh ewalsh@wolfgreenfield.com B.S., Electrical Engineering, Boston University M.S., Electrical Engineering, Stanford University J.D., Suffolk University Law School Daniel W. Young, Ph.D. dwyoung@wolfgreenfield.com B.S., Marine Engineering, Massachusetts Maritime Academy M.E., Biomedical Engineering, Worcester Polytechnic Institute Ph.D., Biomedical Science, University of Massachusetts Medical School J.D., 2012 Candidate, Suffolk University Law School

3. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 3 Desired Outcomes for Today  Intellectual property (IP) overview  Patent basics  IP issues in context of startup life cycle  Wrap up

4. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 4 Major IP Tools  Patent  Protects inventions  Trademark  Protects identification of source of good/services  Copyrights  Protects expression  Trade secret  Protects secrets; can be inconsistent with patenting

5. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 5 IP Summary Trademark  Rights - use  Term - registration 10 years, renewable  Remedy - injunction, damages (infringer’s profits, costs, destruction of items bearing infringing mark) Copyright  Rights - reproduce, distribute, display, make derivative works  Term - life +70 years, or 95-120  Remedy - injunction, seizure, damages (actual and infringer’s profits, statutory) Trade Secret  Rights - use/disclose  Term - indefinite  Remedy - injunction, damages Patent  Rights - exclude others  Term - 20 years from filing  Remedy - injunction, damages (lost profits, royalty)

6. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 6 IP Strategy Perspective – Offensive Leverage Innovation  Block competition in product sales  Support joint ventures or other cooperative arrangements  License or sell IP  Marketing advantage  Increase corporate value for buyout, spinouts or investments

7. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 7 IP Strategy Perspective - Defensive Freedom to Innovate  Promote awareness of IP risks  Position for cross license  Formal  Informal  Block others from patenting  Increase corporate value for buyout, spinouts or investments

8. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 8 Building Your IP Toolbox  Costs  Direct monetary costs  Indirect costs (e.g. opportunity cost of diverting creative individuals)  Vary widely among different types of tools  Timing  Cannot create property right in idea once it enters public domain  IP tools must be created before they are needed  Can be critical for securing protection

9. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 9 Reducing IP Risks  Damages for IP infringement can be substantial  Clearance search (“Freedom to Operate”)  Patents and trademarks are cataloged  Adopt procedures to avoid infringement  Trade secret and copyright infringement requires affirmative actions

10. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 10 Utility Patents Ball Point Pen

11. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 11 Design Patents

12. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 12 Plant Patents – Go Sox!

13. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 13 Patents  Utility Patents:  Issued for the invention of a new and useful process, machine, manufacture, or composition of matter, or a new and useful improvement thereof  ~90% of all patents  Plant Patents:  Issued for a new and distinct, invented or discovered asexually reproduced plant  Design Patents:  Issued for a new, original, and ornamental design for an article of manufacture

14. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 14 Patent Basics: The Claims  Claims define blocking right  Infringement, freedom to operate, design around, license  Describe useful, novel, and non-obvious invention  Prior art constrains claim scope  Supporting specification  Written description  Best mode  Enable others to make and use

15. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 15 Patent Process CONCEPTION 0 YEARS PROVISIONAL APPLICATION REGULAR APPLICATION EXAMINATION RESPONSE(S) ALLOWANCE PATENT ISSUED WITHIN 1 YEAR PAY FEE MAINTENANCE FEES TERM: 20 YEARS FROM EARLIEST FILING DATE PUBLICATION

16. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 16 Novelty as to the Invention Date  Idea must be “new” relative to when you make invention  Known or used by others in U.S.  Patented or described in printed publication  Subject of patent application  Invented by someone else

17. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 17 Novelty as to the Filing Date - Statutory Bar  Idea must be “new” relative to when you file patent application (1 year grace period):  Patented or described in printed publication - anywhere  In public use or on sale – in U.S.  Different in other countries

18. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 18 Provisional Patent Applications  Cannot issue as patent  Not examined by USPTO  Automatically becomes abandoned 1 year after filing  Utility application can claim “priority” to provisional  Cannot claim priority to another application provisional application non-provisional application patent one year or less examination by USPTO

19. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 19 When to File a Provisional Application  Ongoing product development  Ongoing market research  Risks:  Inadvertent disclosure  Inadequate, non-enabling disclosure  Must convert to utility and foreign application within 1 year

20. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 20 PCT Process PRIORITY APPLICATION PCT APPLICATION SEARCH REPORT SEARCH CH. II DEMAND EXAMINATION WITHIN 1 YEAR NATIONAL STAGE APL’s IPER 0 12 18 19 20 28 30+ WRITTEN OPINION RESPONSE

21. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 21 International Filing Issues  Where to file?  When to file?  What to file?  How much will it cost?

22. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 22 International Filing Issues: Where to file?  Manufacture locations  Competitor locations  Substantial sales  Future plans  Availability of protection for your invention

23. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 23 International Filing Issues: What to file?  Patent Cooperation Treaty (PCT) application  European regional application  Direct national application (Ger, Fr, It, etc.)  Utility model

24. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 24 International Filing Issues: Significant Costs  Filing fees  Translations  Prosecution costs  Grant/issue fees  Opposition  Annuities

25. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 25 Startup Life Cycle Formation Development Launch Funding Liquidity Event IP Needs

26. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 26 Formation  Fewest resources to devote to IP tools, but time when much IP is being generated and/or acquired  Most investment is ahead of you  Important time to know if you have right to use ideas

27. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 27 Development  May hire employees or consultants  Employment agreements to take ownership of IP and ensure confidentiality  Consulting agreements – may be even more important than employee agreements  May generate more IP  May need to disclose ideas  File patent applications, at least provisionals  Before disclosure is better  U.S. has one year grace period, so after is possible  Use NDA’s, if appropriate  What about investors?

28. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 28 Launch  Definite disclosure of ideas  Should have offensive IP strategy in place  Trade secrets may lose effectiveness  May be first opportunity for competitors to evaluate your product for infringement  Should have ideas about defensive strategy  Key point for “willfulness”

29. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 29 Funding  Investors care about:  Likelihood that you have sustainable advantage  Risk their money will be wasted fighting over infringement of IP  Degree of certainty required depends on amount and characteristic of investment  Smaller dollars and higher overall risk, less rigid  May accept plan and process being followed, without requiring protection  Amount done before funding versus done after can affect:  Length and cost of diligence period  Percentage of ownership you give away

30. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 30 Liquidity Event  Competitors will take notice  Defensive IP strategy should be in place  Greater opportunity to fund IP: backfill  Convert provisionals to ordinary applications  File patents on inventions disclosed within grace period  Patent new insights: picket fence approach

31. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 31 IP on a Limited Budget  Be selective  Offensive  Focus on what is new and key to your business  Consider patentability, protectability and enforceability  Defensive  Focus on issues most likely to be disruptive  Focus on known competitors  Use lower cost IP tools  Trade secrets

32. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 32 Be Selective Electrified Table Cloth (not every innovation is worth protecting)

33. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 33 Do It Yourself?  Permissible  Benefits  Lower cost  Drawbacks  Opportunity cost  Quality  Half and Half  Effective working relationship with professional advisors may allow you to provide inputs that reduce, but not eliminate need for professional services

34. © 2010 Wolf, Greenfield & Sacks, P.C. All rights reserved. 34 ? Questions