1. Why do entrepreneurs need to protect their technical and scientific innovations?
If you start a grocery store, you probably are not selling a technical or scientific innovation, so your goal is to execute better than the grocery store down the street. You likely will compete on price, quality, and service. Businesses that develop technical and scientific innovations, such as Tesla, Apple, and Novartis, as well as startups, spend enormous sums of time and capital developing the next big thing. These companies directly capitalize on that innovation. Ideally, nobody other than the entrepreneur who developed that innovation can commercialize it, giving the entrepreneur the exclusive right to own and potentially build the protected market/product. Think of it another way—why spend all this time and effort to move the market forward just to let a competitor use it…and reap the benefits of your hard work!
Indeed, parties looking to acquire an innovative company (or analysts for an IPO) take a hard look at whether the technical and scientific innovation of that company is adequately protected. Unfortunately, poorly protected innovation can kill enterprise value and even kill a deal. Venture capitalists, private equity, angel investors, and others will make similar analyses because they strive for a positive return on their investments through an acquisition or IPO.
We live in challenging times, yet we have the opportunity and the means to flourish, and should do so.
In 1966, Senator Robert F. Kennedy faced the challenges of his era and recalled an ancient curse, which says “May he live in interesting times.” Senator Kennedy observed “Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of mankind. And everyone here will ultimately be judged - will ultimately judge himself – on the effort he has contributed to building a new world society and the extent to which his ideals and goals have shaped that effort.” Senator Kennedy saw opportunity in adversity.
Although we face different challenges than those faced by Senator Kennedy, we can draw from the Senator inspiration to flourish in our own interesting and uncertain times. We too live in the most creative of any time in history, and our management and shareholders will judge us on how well we continue to contribute to the business.
Updated August 3, 2020
The coronavirus seems to be exerting itself upon all phases of life, and your intellectual property is not immune. While you, your families, your friends, and your colleagues are getting comfortable with the new normal of social-distancing, intellectual property (IP) offices worldwide have also been grappling with how to handle the impact of coronavirus (also referred to as COVID-19). Responses from IP offices around the world are varied and evolving, as the landscape changes in each individual country and on a global scale. For example, some offices, such as the European Patent Office (EPO), India, and the United Kingdom, have automatically extended deadlines, while others have refrained from any extensions but permit, under certain circumstances, remedial action for rights lost due to effects of the coronavirus. While the U.S. Patent and Trademark Office (USPTO) has not provided for automatic extensions, certain deadlines associated with patent and trademark filings and fees may be extended for small and micro entities provided the delay in filing or payment was due to the COVID-19 outbreak. Additionally, the USPTO will waive the petition fee to revive certain lost rights resulting from a failure to take action due to effects of the coronavirus.
Building upon our recent note concerning general international intellectual property protection considerations, this article describes how foreign IP expansion efforts might play out in a case study format. The company, a hair restoration lotion manufacturer named WonderFlo Tonight, is fictional, but the fact pattern is derived from real world situations encountered by businesses as they seek to establish and protect their intellectual property in foreign markets.
In recognition of the high interest level in the program, the PTO recently announced it is increasing the annual limit on Track One Prioritized Examinations from 10,000 to 12,000, effective September 3, 2019, to prevent exceeding the limit this fiscal year, which concludes on September 30. 12,000 will be the new limit going forward as well.
Businesses must balance the desire for intellectual property protection throughout the world with budget management goals. There is no “one size fits all” approach for achieving that balance, but there are certain considerations that all business that hope to operate on the global stage should be aware of and think through.
Global IP portfolio management strategy should be driven by the need to be positioned to take aggressive action in commercially important markets, while at the same time staking out a more defensive position in markets of less immediate commercial importance but that might become more important. IP filings in places known as havens for opportunists who might interfere with your business plans in those places through bad faith filings also might be warranted.
In the case of patents and trademarks, pre-filing diligence in the form of patent “freedom to operate” searches and trademark availability searches should be considered. While blindly filing abroad and simply waiting to see whether issues are encountered at the various registries is an option, the pre-filing searching might uncover details about potentially conflicting third-party rights and allow for strategic adjustments. Turning to considerations specific to categories of IP:
Patent applications often are filed directly at the national level, but there are numerous regional patent offices that provide regional patent registrations. These include the European Patent Office (EPO), the African Regional Intellectual Property Organization (ARIPO), the African Intellectual Property Organization (OAPI), and the Eurasian Patent Organization (EAPO). Through these organizations inventors can file a single application that will receive protection in the regional “member countries”.
Moreover, under the Paris Convention, an inventor’s patent application filing date can be retained in other countries party to the treaty (most commercially significant countries are included) provided that the foreign patent applications are filed within one year of the U.S. filing date (or six months in the case of design patents).
Whether applying for a patent in a given country or jurisdiction makes sense should be determined by evaluating whether the subject matter is likely to be considered patentable in that country, whether the short-term and long-term legal costs are justified relative to the business value of protection, whether preserving the technology or methodology as a trade secret instead of patenting it makes more sense, and how difficult and costly it is to enforce a patent there.
Trademark protection also requires taking specific action for each country or jurisdiction (e.g., the European Union is one jurisdiction for purposes of registering a trademark). The two types of action are: (1) filing a trademark application directly with that country’s trademark registry through local counsel; or (2) using a home registration as the basis for securing an International Registration through which one designates rights to the various countries of interest.
The International Registration approach avoids the local counsel service fees associated with direct filings, but usually means doing without pre-filing advice that could improve the chances of a successful outcome. The International Registration approach also entails limitations that are beyond the scope of this article but that will be addressed in a future blog post, including the requirement for U.S. companies that the International Registration mirror the scope of the underlying U.S. registration (which often results in more narrow registration protection than otherwise would be available).
Trademark protection standards vary from country to country. What is required or makes sense in one country might not be the best approach in another. For example, in the U.S. a trademark application must be supported by a declaration under oath that the applicant intends to use the mark in relation to all listed products and services, which usually requires a narrow approach. In certain other countries, however, broader filings are possible and generally recommended because there is no such limitation (although in the future a resulting registration in that other country could be cancelled by a third party on the basis of the mark’s non-use).
Let’s not forget copyrights. Legal protection for copyrights, like patents and trademarks, is territorial, but protecting copyrights generally entails less in the way of formalities. In fact, the U.S. is one of only a few countries that have copyright registration systems. There are international treaties that the U.S. and virtually all other commercially relevant countries have joined, most notably the Berne Convention, that reduced formality requirements and provides that works shall be protected in countries other than the author’s country of origin in the same way that the foreign country protects works of its own authors.
So, for example, if a German business without authorization were to publish in Germany and profit from a U.S. business’ content authored in the U.S. and protected by U.S. law, a German court would recognize and enforce those U.S. rights as if German rights (not applying U.S. law, but treating the rights as valid rights under German law). The same would apply for works authored in Germany, e.g., which would be recognized as protected under U.S. law if infringed in the U.S. Certain benefits associated with U.S. copyright registration, however, such as statutory damages, are not automatically afforded to foreign works under that scenario absent registration.
Copyrighted expressive content often is misused by other organizations with which your business has a relationship and should be managed contractually. While having rights recognized by a foreign country’s courts is desirable, there are inherent challenges and increased costs associated with taking legal action in a foreign country. U.S. companies should make a point of imposing contract provisions upon foreign distributors/partners through which they carefully define limited purposes for which copyrighted content can be used and through which the other organization consents to jurisdiction in the U.S. for lawsuits.
[The considerations highlighted above will be addressed in greater detail in future blog posts.]
The importance of patent term, or the period of time during which the exclusive nature of a patent is in effect, cannot be overstated. The patent term for an issued patent, which is currently set at 20 years from the filing date of the earliest U.S. non-provisional application, can drive business and investment strategies, dictate allocation of technological resources, and impact financial valuations.
Late last week, the Federal Circuit issued Power Integrations, Inc. v. Semiconductor Components Indus., LLC and Regents of the Univ. of Minnesota v. LSI Corp. These two precedential decisions bring further clarity to who is subject to the time bar for filing petitions for inter partes review (“IPR) and whether sovereign immunity protects patents from being subject to IPR challenges. The key takeaways are:
- Consider the impact of mergers and acquisitions on IPR petitions, including those that have already been filed; and
- Patents owned by states (including, state universities and research institutions) can be challenged in an IPR.
In a case that could have a significant impact on the interpretation and drafting of patent licensing agreements, a patent licensee filed an appeal for an en banc proceeding at the Federal Circuit to challenge the court’s finding that a forum selection clause governing disputes that “arise out of and under [the Master License Agreement]” and does not explicitly allow proceedings at the Patent Trial and Appeal Board (PTAB) prevents proceedings from being initiated at the PTAB. If this holding remains intact, many licenses having forum selection clauses that are silent about PTAB proceedings may be able to be successfully relied upon to prevent PTAB proceedings.
As the 2018-2019 Supreme Court term nears its end, several consequential patent law petitions still await certiorari rulings before the Justices recess for the summer, while other patent cases are scheduled to be briefed and ready for oral argument when the Court reconvenes for a new term in October. To mark the end of this term, here’s a list of 5 Patent Law Petitions to Watch at the Supreme Court as we look ahead to 2019-2020.
Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.