1. Shad Valley MUN 1 Introduction to Product Design and Development Lecture 1: Intellectual Property (IP) Dr. Leonard M. Lye, PEng, FCSCE Professor of Civil Engineering Program Director, MUN Shad

2. Shad Valley MUN 2 Introduction Within the context of product development, the term intellectual property refers to the legally protectable ideas, concepts, names, designs, and processes associated with a new product. IP can one of the most valuable assets of firms. Unlike physical property, IP cannot be secured with lock and key to prevent its unwanted transfer. Therefore, legal mechanisms have been developed to provide an incentive and reward to those who create new useful inventions, while at the same time encouraging the dissemination of information for the long-run benefit of society.

3. Shad Valley MUN 3 What is IP? A contract between society and inventors. Encourage disclosure of powerful ideas. Encourage reduction to practice for society’s benefit. Provide incentives for the inventors. Protect the rights of the various innovators.

4. Shad Valley MUN 4 Why is IP Protection Important? Adds market value particularly for startups and small companies, sometimes > 50% of value. Source of income through licensing e.g. IBM earns approximately 1/9 of income through licensing). Permits blocking or hindering of competitors from practicing your IP. IP attracts investors, strategic partners, customers, and employees. Maintain product or service advantage Reduces risk of innovating Enhance branding, and market effectiveness. “Skills and knowledge have become the only source of sustainable long-term competitive advantage” – Lester Thurow.

5. Shad Valley MUN 5 Types of IP

6. Shad Valley MUN 6 IP Relevant to Product Design Patent: a temporary monopoly granted by a government to an inventor to exclude others from using an invention. In Canada and the USA, a patent expires 20 years from the filing date. Trademark: exclusive right granted by a government to a trademark owner to use specific name or symbol in association with a class of products or services. Registration is possible but not necessary to preserve trademark rights. Footworker ® = registered trademark. Footworker TM = unregistered trademark. Strength of trademark depends on its “nature”.

7. Shad Valley MUN 7 A Bit More on Trademarks In order of weakest to strongest Generic Descriptive Suggestive Arbitrary Fanciful Unprotectable “Brilliant” for a light “Stronghold” for nails “Apple” for computers “Exxon” for gas BMW may have purchased Rover primarily for their trademarks Landrover, Triumph, Austin, Range Rover

8. Shad Valley MUN 8 Trade secret: A trade secret is not a right conferred by a government. Choice of company not to share the information with others e.g. Coca-Cola formula. Copyright: Exclusive right granted by a government to copy and distribute an original work of expression, whether literature, graphics, music, art, entertainment, or software. Registration is possible but not necessary. A copyright comes into being upon the first tangible expression of the work and lasts up to 95 years (life + 50 years in Canada). Symbol used ©. Most of this lecture will focus on patents.

9. Shad Valley MUN 9 Overview of Patents Patent = open or exposed. Goal is to open or expose new advances in technology and promote science and the useful arts. In Canada and the US, patent law evolved from English law. Started about the mid 16 th century as an inducement for foreign artisans to introduce continental technologies into England. An important aspect of patent rights is that the patentee can only exclude others from making, using, or selling the invention throughout the country in which the patent is issued. E.g. Canadian patent is not enforceable in the US, or any other foreign country!

10. Shad Valley MUN 10 For most engineered goods: –Design Patents: legal right to exclude someone from producing and selling a product with the identical ornamental design described by the design patent. Limited value for most engineered goods. –Utility Patents: Relates to new processes, machine, article of manufacture, composition of matter, or new and useful improvement of one of these things. Not all inventions are patented e.g. Post-It Notes. Post-It is trademarked not patented.

11. Shad Valley MUN 11 Requirements for a patent The law requires that patented inventions be: –Useful: Must be useful to someone in some context –Novel: Not known publicly and therefore are not evident in existing products, publications, or prior patents. The definition of novelty relates to disclosures of the actual invention to be patented as well. In Canada and the US, an invention to be patented must not have been revealed to the public more than a year before the patent is filed. –Non-obvious: Must not be obvious to those with “ordinary skill in the art” who faced the same problem as the inventor.

12. Shad Valley MUN 12 Usefulness is rarely a hurdle to obtaining a patent. Novelty and non-obviousness are the most common barriers to obtaining a patent. An issued patent is not necessarily valid. It can be challenged in court by a competitor at some point in the future. E.g. RIM case. A patent is a property. It can be sold, transferred, or licensed. The inventor need not be the owner of the patent. A patent owner has the right to exclude others from using, making, selling, or importing an infringing product. Offensive rights – patent owner suing infringer. Defensive rights – Competitor cannot patent already disclosed invention.

13. Shad Valley MUN 13 Example: Beverage Container and Holder

14. Shad Valley MUN 14 Preparing a Disclosure Inventors pursuing serious commercial opportunities should consult a patent agent or lawyer after preparing their disclosure. It is best for the inventor to draft a detailed disclosure to communicate the inventor’s knowledge, even though in most cases a patent agent or lawyer will revise the disclosure to prepare the formal patent application. Help your agent or lawyer as much as possible to save money and to ensure an accurate disclosure. See handout on typical costs involved to get a patent (can be as high as $30,000!).

15. Shad Valley MUN 15 7-step process in preparing a disclosure 1.Formulate a strategy and plan 2.Study prior inventions 3.Outline claims 4.Write the description of the invention 5.Refine claims 6.Pursue application 7.Reflect on the results and process

16. Shad Valley MUN 16 Step 1: Formulate a Strategy and Plan Things to be decided by the product development team: timing, type, and scope. –Timing of patent application: Must be filed within one year of public disclosure. Example of public disclosures include magazines, journals, tradeshow, publicly accessible website, or test marketing a product. Class presentation is NOT public disclosure according to most experts. Use non-disclosure agreements when possible. –Best to delay for as long as possible. Need the time to gain as much knowledge as possible about the invention. In the US priority is given based on the first to invent, whereas the rest of the world (including Canada) is based on the first to file. Hence, in the US inventors should document the date of their inventions in a bound logbook and having each page witnessed and dated.

17. Shad Valley MUN 17 Type of Application: –Regular (Full) or Provisional (Minimum), domestic and/or foreign patents? –Minimum or provisional (US) application need not include claims or comply with the formal structure and language of a regular patent application. It needs only to fully describe the invention  cheaper and less effort to prepare. But must submit fill application within one year. Can put “patent pending” on products. There are pros and cons. –International patents are very expensive. Can file a PCT (Patent Cooperation Treaty) application. Foreign patents require absolute novelty – absolutely no public disclosure!

18. Shad Valley MUN 18 Scope of Application: –Team should evaluate overall product design to decide which elements of the invention can be patented. i.e. which part of the product is novel and non-obvious. –For complex products, it may be possible to file multiple patents. –Who are the inventors? No limit to the number of inventors – anyone who participated in concept generation and design activities could be considered as inventors. –Failing to include a person who is an inventor can result in a patent being declared not valid.

19. Shad Valley MUN 19 Step 2: Study Prior Inventions By studying prior inventions (prior art), the design team can learn whether an invention may infringe on existing unexpired patents. If it is not expired, you need a license, or else you get sued! By studying the prior art, the inventors get a sense of how similar their invention is to the prior inventions and therefore how likely they are granted a broad patent. The team will develop background knowledge enabling the members to craft novel claims. E.g. The cup holder patented by David Coffin made references to 19 other US patents, and a book. Make sure you do adequate patent searches!

20. Shad Valley MUN 20 Step 3: Outline Claims Claims describe certain characteristics of the invention; they are written in formal legal language and must adhere to some rules of composition. What is unique about the invention? Outline the claims and don’t worry about the legal language yet. The outline of claims provides guidance about what to describe in detail in the description.

21. Shad Valley MUN 21 Example: Coffin’s Cup Holder An outline of claims might be: –Use of corrugations as insulation, in many forms On inside surface of the tube On the outside of the tube Sandwiched between two flat layers of sheet material Vertical orientation of flutes »Flutes open at top and bottom of holder Corrugations with “triangular wave” cross section Corrugations with “sine wave” cross section Tubular form with openings at both ends –In shape of truncated cone Recyclable materials –Adhesive –Sheeting »Cellulose material Biodegradable adhesive Surface to print on Holder folds flat along two fold lines

22. Shad Valley MUN 22 Step 4: Write the description of the invention The description must present the invention in enough detail that someone with “ordinary skill in the art” could implement the invention. The description should also be a marketing document promoting the value of the invention and the weaknesses of existing solutions. The description must convince the patent examiner (who will search and study prior art), that the invention is useful, novel, and non- obvious. Patent law requires that inventors disclose what they know about the invention, but in exchange they are granted the right to exclude others from practicing the invention for a limited time period.

23. Shad Valley MUN 23 Elements in a typical description Title: A short descriptive title for the invention. E.g. “Recyclable corrugated beverage container and holder”. List of inventors: All inventors must be listed. Field of invention: Explain what type of device, product, machine, or method this invention relates to. E.g. “This invention relates to insulating containers, and especially to those which are recyclable and made of cellulosic materials”. Background of the invention: State what problems the invention solves. Explain context and what is wrong with the existing solutions, and why a new solution is needed, and what advantages are offered by the invention. Summary of invention: Substance of the invention in summarized form. Brief description of the drawings: List the figures in the description along with a brief description of each drawing. E.g. Figure 10 is a perspective view of the preferred embodiment illustrating internal flute portions in breakaway views”. Detailed description of the invention: Provide detailed description and explain how the various embodiments work.

24. Shad Valley MUN 24 Preferred and alternative embodiments

25. Shad Valley MUN 25 Step 5: Refine Claims The claims are a set of numbered phrases that precisely define the essential elements of the invention. The claims are the basis for all offensive rights. A patent owner can prevent others from practicing the invention described by the claims only. Although claims must be expressed verbally, they adhere to a strict mathematical logic. Almost all claims are formulated as a recursive expression of the form: – X = A + B + C, where A = u + v + w, B = r + s + t, etc. e.g. An X comprising an A, a B, and a C, wherein said A is comprised of a u, a v, and a w and wherein B is …

26. Shad Valley MUN 26 Example: Coffin’s cup holder Claim 1: –A beverage container holder, comprising a corrugated tubular member comprising cellulosic material and at least a first opening therein for receiving and retaining a beverage container, said corrugated tubular member, comprising fluting means for containing insulating air; said fluting means comprising fluting adhesively attached to a liner with a recyclable adhesive. Claim 1 is an independent claim. Claim 2 is dependent on claim 1. Claim 2: –The holder of claim 1, wherein said tubular member further comprises a second opening wherein said first opening and said second opening are of unequal cross- sectional dimensions.

27. Shad Valley MUN 27 Logical structure of claims 1 and 2

28. Shad Valley MUN 28 Consider the competition If a competing cup holder does not have everyone of these elements, it does not infringe upon this claim. E.g. if holder is made of polystyrene (no cellulosic material). Consider a patent by Jay Sorensen filed after the Coffin patent. Available at Costco. Sorensen’s patent is for a cup holder with a dimpled surface. It does not have “fluting means” hence does not infringe upon Coffin’s patent. Both inventions were successful. Had Coffin thought of using dimpled surface as possibility, it would have prevented Sorensen from obtaining a patent, because it has been prior art.

29. Shad Valley MUN 29 Cup holder by Sorensen (Costco)

30. Shad Valley MUN 30 Guidelines for crafting claims Writing great claims is tricky, so get the advice of an experienced patent agent/lawyer or IP officer. Always make a claim as general as possible. E.g. “tubular member” and not a “tube”. Avoid absolute definitions by using modifiers like “substantially”, “essentially” and “approximately”. Attempt to create an invention that does infringe on the draft claim, and then try to rewrite the claim or add an additional claim such that the hypothetical invention would infringe.

31. Shad Valley MUN 31 Step 6: Pursue Application In most cases, the inventor will deliver the draft application to a patent agent or lawyer for refinement and formal application. It is possible to do it yourself. CIPO provides a tutorial to help you, and there are books and software to help with patent applications (mostly for US patents). Once the team has prepared the disclosure, the team can proceed in 4 different ways. –File a provisional or minimum application –File a regular patent –File a PCT application –Defer application indefinitely – opportunities might be lost forever. An application can take several years before the patent is granted. This usually means big bucks.

32. Shad Valley MUN 32 Step 7: Reflect on the results and process What are the essential and distinctive features of the product concept, and therefore the invention? Are they described in the best way? What is the timing of future required actions? Did the process go smoothly? Are there valuable technologies that might be licensed from existing patent holders? Are competitor’s patents expiring, possibly allowing the team to use a convenient solution to a long-standing problem? Can the patent be challenged? How strong is the case? Will the team be legal trouble?

33. Shad Valley MUN 33 Documentation – Lab Notebooks Log books are essential records of events leading to a patentable invention Log books help establish who are the inventors and when was it invented.

34. Shad Valley MUN 34 Reality Check 10 million patents <2% recover costs <10% of patent applications make it to issue Concentrate on the 0.2% of potential applications Copyright © 2001-2002 Kittiwake Economic Development Corporation

35. Shad Valley MUN 35 Summary A patent is a temporary monopoly granted by the government to exclude others from using, making, or selling an invention. Patent law is intended to balance an incentive for invention with the free dissemination of knowledge. An invention can be patented if it is useful, novel, and non-obvious. The final invention that is patented is defined by patent claims. The rest of the patent application just serves as background and explanation in support of the claims. A 7-step procedure is recommended for pursuing a patent: formulate a strategy and plan, study prior inventions, outline claims, write the description, refine claims, pursue application, and reflect of the results and process.

36. Shad Valley MUN 36 Advice for Individual Inventors A patent by itself rarely has any commercial value. An idea by itself has even less value. To extract value from a product opportunity, an inventor must typically complete a product design, resolving the difficult trade-offs associated with addressing customer needs while minimizing production costs. Once this hard work is completed, a product design may have substantial value. In most cases, pursuing a patent is not worth the effort except as part of a larger effort to take a product concept through a working prototype. If the product is proven, a patent can be an important mechanism for increasing the value of this intellectual property. Licensing a patent to a manufacturer is very difficult. Better to pursue commercialization of your own product on your own or in partnership with a small company.

37. Shad Valley MUN 37 Exercises What are some of the common mistakes made with regard to patenting an invention? Should software and mathematics be patentable? Patents stifles competition hence hinders improvements and innovation. True or False.

38. Shad Valley MUN 38 Useful References CIPO – link given in course website Coffin, David: US Patent No. 5,205,473, April 27, 1993. Sorensen, Jay: US Patent No. 5,425,497, June 20, 1995. Pressman, David (9 th Edition): Patent it Yourself, Nolo Press, Berkeley, CA, 2002. Lo, Jack and Pressman, David (3 rd Edition): How to Make Patent Drawings Yourself, Nolo Press, Berkeley, CA, 2001.