© 2012 Sean C. Crandall, all rights reserved. UTSA CITE Entrepreneurship Boot Camp Intellectual Property for Entrepreneurs Feb. 8, 2013 Sean C. Crandall Registered Patent Attorney Jackson Walker L.L.P

Objectives You want to make money Big Business has all the money, and you can’t compete with them Your assets are worthless EXCEPT –Patents –Copyright –Trademark –Trade Secret

Quiz A B

© 2012 Sean C. Crandall, all rights reserved. PATENTS

Patents What are they? –Right to exclude others from making, selling, using, or importing the claimed subject matter. –Does not grant a right to make, use, sell, or import. Duration –About 20 years

Subject Matter Statutory Subject Matter: –Machines –Compositions –Articles of manufacture –Software (sort of) “Everything under the sun made by man” (sort of)

Bilski Machine or Transformation Test –Tied to a “particular machine” Need guidance on whether a general-purpose computer is a “particular machine” –Transforms matter Transforming data that directly represent matter may be sufficient MoT is absolutely not the sole test for method claim eligibility. But it is the only test that matters.

Avoid Subject Matter Problems Designing Around Bilski –Tie in hardware where possible (“A method for removing red eye from a photograph comprising … receiving a digital photograph from a digital camera ….”) –Beauregard claims are now in question. (Cybersource Corp. v. Retail Decisions, Inc., No (Fed. Cir. Aug. 16, 2011)).

Statutory Requirements Utility Novelty Nonobviousness

Utility (Family Values)

Utilitaire Haute Couture

Utility for the Gentlemen

Utility Catch 22

Utility (Get Rowdy!)

Novelty “A translating device comprising [A] a body of semiconductive material [B] having zones of opposite conductivity type [C] separated by a barrier, [D] an ohmic connection to each zone remote from the barrier, and [E] a rectifying contact on one zone closely adjacent to the barrier.” (U.S. Pat. 2,502,488)

Patent Claims Invention (Elements A, B, C, D, E) Subtract Prior Art: -ABC Subtract Obvious Improvements: -ABCD Patentable Claim: ABCDE –Note that ABC is a better claim if you can get it. If your attorney leaves “killer features” out of some of your claims, that may be a good thing.

Patent Infringement Claim No.ElementsAccused DeviceInfringes?Claim Value 1.AA AB ABC ABCD Yes Very High 2.ABA AB ABC ABCD No Yes High 3.ABCA AB ABC ABCD No Yes Moderate 4.ABCDA AB ABC ABCD No Yes Low

Patent Drafting Get a registered patent attorney Do not ever, under any circumstances, try to write a patent yourself. No, not even if you’re really smart. No, not even you. Your tax attorney can’t write a patent for you. You need a registered patent attorney.

You’re Doomed SMITH-LEAHY MARCH 15, 2013 YOU’RE DOOMED

Priority Senate passed Smith-Leahy “America Invents Act” Sept. 8, Written by Big Business, for Big Business.

Priority (35 U.S.C § 102(a)(1)) “A person shall be entitled to a patent unless the claimed invention was…” –the claimed invention was patented, –described in a printed publication, –or in public use, –on sale, or –otherwise available to the public before the effective filing date of the claimed invention

“First Inventor to File” (102(a)(2)) “Or…” in an application for patent …[that] names another inventor and was effectively filed before the effective filing date of the claimed invention.

One Year Grace Period (Sort of…) 102(a)(1) “disclosure” doesn’t count if— made 1 year or less before and –(A) …made by the inventor …or by another who obtained the subject matte disclosed directly or indirectly from the inventor …; or –(B) the subject matter disclosed had … been publicly disclosed by the inventor … or another who obtained the subject matte disclosed directly or indirectly from the inventor or[.]

When should you file your patent application? How long can you safely wait before filing?

Design Patents =$1e9

© 2012 Sean C. Crandall, all rights reserved. TRADEMARK

Quiz A B

Trademark What is it? –Protection for “source identifiers.” –Right to exclude others from riding the coattails of your good will. Duration –Perpetual if: Continual use Continues to be a source identifier

Hypothetical E incorporates under the name “Seraph Image Manipulation LLC” and receives an assumed name certificate. B starts selling a software program called “Seraphimage.” What result?

Priority Incorporation and Assumed Name Certificate HAVE NO TRADEMARK VALUE

Priority Acquiring Priority –Use in commerce –File federal TM application Including Intent to Use Knowing junior user loses –Actual notice –Constructive notice

Genericization Victim of your own success All of the following used to be trademarks: –zipper –thermos –escalator –linoleum –aspirin –heroin –butterscotch –netbook

Genericization Trademarks in Danger: –Xerox –Kleenex –Vaseline –Band-Aid –Rollerblade Saved by Timely Obsolescence? –Polaroid –Walkman (but…) If it ceases to be a source identifier and instead comes to identify the goods themselves, it is no longer a trademark.

Trademark Strength Generic –“Hammer” (for hammers) –Image Editor (for image editing software) –Zipper (even though it used to be a strong trademark) Descriptive –“Delicious Tamales” –“Alamo [Anything]” (if in San Antonio) –Can be protectable if you use it long enough –Initially weak/narrow –But … “McDonald’s”

Trademark Strength Suggestive –“Rhino” (hardened bed linings) –“Pier One” (sale of retail imported goods) –“Panda Express” (Chinese restaurants) –Protectable Arbitrary and Fanciful –“Oracle” (Does not actually predict the future) –“Kodak” (Doesn’t mean anything in any language) –Protectable and legally strong –Initially weak from a marketing standpoint –With time, can become practically invincible (Exxon), except genericization

Infringement Elements of a Lawsuit –Priority –Protectability –Likelihood of Confusion

Infringement Likelihood of Confusion –Jury Question Do you find by a preponderance of the evidence that potential customers are likely to confuse “Sign of the Beefeater” (restaurant) with “Beefeater” (gin)?

Action Steps Promptly file a federal application –Nationwide priority –Helps make the mark protectable –Trumps state registrations

Action Steps Investigate junior users before sending nasty letters –If mark is not registered, may have territorial rights. –If junior user has rights, your nasty letter makes his case for him

© 2012 Sean C. Crandall, all rights reserved. COPYRIGHT

Copyright What is it? Right to exclude others from copying the protected work. Exclusive right to make derivative works.

Duration Life +70 (individual author) 95 – 120 years (works for hire) Created before Jan. 1, 1978 = different rules (very messy). Published in U.S. before 1923 = public domain.

Acquiring a Copyright When you play God, the result is copyrighted –Except: Ideas, methods, functional products, de minimis creativity ProtectedNot Protected ExpressionIdeas and Facts FormFunction and Content CreativityEffort and Aggregation

Ownership Individual—Vests automatically Employee & Works for Hire—Vests in employer if in the course and scope of employment. Contract Work (esp. s/w)—Vests immediately in contractor. Software is not work for hire unless by an employee.

Hypothetical E swears a blood oath to convey copyright to B in the presence of a Catholic Priest, Jewish Rabbi, Mormon Bishop, Protestant Pastor and Baptist Preacher. Result?

Assignments and Licenses Assignments must be in writing Exclusive licenses must be in writing Non-exclusive licenses may be in writing, oral, by course of performance, or implied by the circumstances.

Tiers of Protection Automatic –Attaches at moment of creation Notice –(c) 2012 Your Name, All rights reserved. Registration –Online form at –$40 filing fee –Easy Peasy! (Except maybe software)

Hypothetical E writes software. B hires E’s former employee, who copies code (abt. 1%). Total sales = $50M. E registers and sues. Defenses –No knowledge. –Prior non-infringing version successful. –Can’t prove lost sales. What result?

Damages (w/out Timely Reg.) Losses$0 Infringer’s Profits$0 Statutory Damages$0 Attorneys’ Fees$0 Nominal Damages$1 Total Damages$1 Attorneys’ Fees Incurred: $350,000

Hypothetical Same as before, but E registers one day before B starts infringing.

Damages (Timely Reg.) Losses$0 Infringer’s Profits$0 Statutory Damages$30,000 ($150k if willful) Attorneys’ Fees$350,000 Nominal Damages$0 Total Damages$500,000 Attorneys’ Fees Incurred: $350,000

Infringement There must be copying. –Substantial similarity + access. Compare allegedly infringing work to registered work (not necessarily the work copied). Abstraction –The state operates games in which people kill each other to entertain the elite citizens. –A girl named Katnip volunteers to participate in the annual Anger Games to save her sister, and a boy named Peter, who is in love with Katnip, is also selected. Katnip and Peter form an alliance and defeat the others, but then decide to take their own lives rather than kill each other …

Hypothetical E requires online activation (stops working after 30 days). H purchases a legal copy but hacks around activation key. Has H violated E’s copyright?

DMCA DMCA § 1201: “No person shall circumvent a technological measure that effectively controls access to a work protected under this title.” No copyright infringement is required Ownership and fair use are not valid defenses –Maybe—see MGE UPS Systems Inc v. GE Consumer and Industrial Inc, et al., (5th Cir. Jul. 20, 2010).

Benefits Why use “effective technological measures”? –May get attorneys’ fees and statutory damages even without timely registration Up to $2,500 per act of circumvention. –Stiff criminal penalties

DMCA Exceptions Examples: –Breaking CSS on DVDs for criticism or commentary (notably, not to just watch a DVD that you lawfully own). –Jailbreaking your iPhone. –Obsolete or damaged dongles.

© 2012 Sean C. Crandall, all rights reserved. TRADE SECRET

Trade Secret Elements –It’s a SECRET. –Confers a competitive advantage –Reasonable efforts to keep it SECRET Examples: –Formula for Coca-Cola –The Colonel’s 11 herbs and spices –Your source code

Trade Secret Protecting a Trade Secret –No registration –KEEP IT A SECRET! –Non-disclosure agreements (get an attorney) –Employee confidentiality agreements (the more draconian, the better) –Posted notices Duration –As long as you KEEP IT SECRET

Security Think ahead –Which story do you want the infringer to tell the jury? “There were hundreds of copies of the process just lying around everywhere. I didn’t even realize it was considered secret.” vs. “After agreeing to the $10,000 penalty for disclosing the secret process, I disabled the armed guard with a drugged dart. I had to wear an insulating body suit to defeat the heat sensors, then climb up into the air duct. Getting around the laser grid took some time, but the real problem was the motion sensors. I spent hours getting across the room. Since the safe was impossible to crack, I had to bug the CEO’s bedroom and listen to him talk in his sleep for months. Then I had to painstakingly copy the process by hand, since it was on blue non-copy paper. Once I had my copy, I had to carefully replace the wax seal and mark it with the duplicate signet ring I had carefully constructed from the putty impression of the real signet ring I’d gotten when I …”

Hypothetical E develops red eye removal algorithm. E hires 10 programmers. Signed confidentiality agreements. Copies of process individually water marked. Policy is to keep process in locked drawers. Flow chart posted by receptionists desk. Weekly meetings to discuss security program. What result?

Security Designing a Security Program –Put Everyone on Notice –Signed Confidentiality Agreements –Restrict Access –Log Access –Termination Procedures –Non-compete Agreements –Periodic Audits

© 2012 Sean C. Crandall, all rights reserved. Questions?

© 2012 Sean C. Crandall, all rights reserved. Support Materials Protecting Software: IP Basics: A Practical Guide to the GNU GPL: