1. Intellectual Property Overview for Startups
IP refers to Legal rights in creations of the mind
IP is the foundation of a Startup
IP Mistakes can kill it before begun
IP Issues for Startups
- Startups are cash strapped
- Lean Startup methodology: Talk to third parties early
Potential customers (validate hypotheses)
Potential investors (no NDA)
Conventional Legal Wisdom (limited disclosure)
Patents, Copyrights, Trade Secrets, Trademarks needed for Startups
April 16, 2015
BY CREIE Associate Director, Jeni Clark

2. UTEP Startups
American Water Recycling Nano filtration (NF) technology enables industries to discharge safe, clean, re-useable water. Their technology allows industries to eliminate expensive disposal fees, elaborate pretreatments and risky chemical treatments.
Atlas Regeneration An external sensor for water softeners.  It maximizes utilization of water softener capacity while minimizing salt and water consumption from regenerations.
Evolved Aircraft Systems, DBA EvoAir Innovative aircraft product lines for manufacturers seeking to improve safety, enhance flight handling, and customized solutions for vehicle operating procedures.
LIMBS high functioning, low cost prosthetic limb solutions that can be made and repaired locally, transforming the lives of amputees
PhotoKinetics tunable LED lighting systems targeted to relieve stress-related symptoms many of which are currently being treated with costly drugs that have undesirable side effects.  More economical, safer, and use body’s natural physiological mechanisms
Mayan Pigments
patented, hybrid organic/inorganic pigments inspired by Mayan frescoes. Not heavy metal-based and are manufactured in the USA using an eco-friendly process that produces only water as the by-product. Bold, new colors and enhanced properties.
TeVido BioDevices
Inkjet printers modified to print cells instead of ink. Deposit materials in exact locations, layer by layer, which results in custom tissue engineered product. Create microvasculature channels that allow the critical supply of oxygen delivered via blood flow and vascularization, a critical step in wound healing and graft “take” rates. Our focus is with skin and fat cells.

3. DISCLAIMER
The following presentation is provided for informational purposes only and should not be construed as legal advice for your particular legal needs.
Always consult an attorney for advice pertaining to your specific business and intellectual property needs.
All images and references to trademarked, copyrighted, and/or patented material in this presentation are for informational and educational purposes only.
Disclaimer: info provided for informational and educational purposes only and doesn’t constitute legal advise. You should consult your own attorney with specific questions and university employees consult OTT. Information is general in nature and doesn’t constitute specific legal advise, nor reflect views of any specific law firm.

4. IP Protection
Patents
Government granted IP property protection typically covers technology or inventions
Ex: a phone, type of computer, or composition of matter
Copyrights ©
Original expression
Ex: a story, a movie, a character, or source code
Trademark Rights TM,SM
Words, symbols or phrases tell a consumer the particular source of a good or service
Trade Secret Rights
Commercially valuable secrets that cover aspects of company’s technology or business
Ex: customer lists, profiles, formulas
Contracts
Contractually impose restrictions on other parties in terms of what they can/can’t do
Ex: Terms of use, IP, non-disclosure, license agreements
Kitcat example
Patent - Method of making, or new composition of matter that’s formed from ingredients
Copyright – phrases used in advertising, the commercials, the content of the website
Trademark rights – in name “KitKat”, name “Nestle”, in slogans used in advertising, in combination of colors & fonts used to package it
Trade secrets – distribution channels, specific ingredients in recipe, the advertising and business strategy in promoting this product
Contracts – impose other restrictions on manufacturer, on distributor on what people can or can’t do in manufacturing and distributing product/services of Nestle; terms of service on website too.

5. Patent System United States Patent & Trade Office (USPTO)
Satellite: Silicon Valley, CA; Denver, CO; Dallas, TX; Detroit, MI
7700 Patent examiners
Federal Court
Regional District Court
By act of Congress in 1983: One Court of Appeals (in Washington, DC) vs Regional Appellate Courts  Increased use of patents
Patent Law
Patent Acts & Amendments (Title 35 of US Code)
America Invents Act
USPTO – Alexandria, Virgina , 7700 patent examiners work there, receive and review it. 4 new satellite offices: Silicon Valley, CA; Denver, CO; Dallas, TX; Detroit, MI
Federal Courts – patent law created under federal law; To allege infringement must sue in federal court: District Court, Court of Appeals in Washington, DC.
Most federal cases: File in district court then appeal to regional appellate court; but in 1983 congress created the federal circuit to decide all patent appeals – probably leading to increased use of patents. One court decides patent law.
Patent Law Patent Act. Title 35 of US Code. First act in 1790, several amendments. America Invents Act signed Sept. 16, 2011 by President Obama. In effect: March 16, 2013
Most drastic revisions: First to file instead of first to invent, for ex.

6. What are patent rights? Nature of patent rights – set forth in claims
In 2005 federal circuit addressed patent dispute:
Gillette vs. Energizer Holdings – Gillette’s Mock 3 Razor
Patent Rights
Right to exclude others from making, using, selling or offering to sell product of service (limited monopoly)
Does NOT necessarily allow you to use it
Could be overlapping patent rights from earlier issued patents
Drawings & written description give idea of underlying technology
Claims of a patent define the scope of the patent, and one’s rights
Term is 20 years from filing date
Parts of patent
• Title – Generally very broad
• Inventors and Assignee (if applicable)
• Abstract
• Drawings – Required only if necessary
• Specification – Provides written support for the claims (must be sufficient to enable a skilled worker to make and use)
• Claims – Defines the scope of the exclusionary right and must distinctly claim what applicant regards as invention

7. An examination not a registration process
Patenting Process
An examination not a registration process
Expensive & lengthy!
File patent
Reviewed for completeness
Assigned to examiner
Options: Accelerated or Prioritized exam
Rigorous exam
Compared to prior art
Iterative process
Issues office action (likely 3-4 office actions before issues)
Response
Abandon, or
Explain & differentiate to prior art, or
Narrow scope, or
Appeal, or
File Continuation
1.Patent application drafting ‒Collaboration between patent practitioner and inventor(s)
2.Patent application prosecution
‒USPTO examiner completes review of claims and search of prior art and issues an “office action”
‒Iterative process and generally requires concession of claim scope by the applicant in view of the prior art
‒Average duration is 3-4 years from filing to issuance (3-4 office actions)
3.Patent issuance
4.Maintenance fee period
‒Every 3.5 years after issuance, each more expensive than the previous
5.Expiration
‒If maintenance fees are paid, patent will expire 20 years from earliest effective filing date
‒If regulatory delay, patent may be extended up to 5 years
Avg. 30 months from start to issue/abandoned - 18 mo for 1st office action.
$10,000 for initial but $25,000 - $30,000 for entire process
Issue fee and maintenance fees every 3.5 years (fee increase over time)

8. Criteria for patentability
Technology has to be eligible subject matter – usually can be met
Not eligible: laws of nature, naturally occurring phenomena, & abstract ideas
Eligible: Software applications & DNA technology
Useful – in minimal way must describe something. Low threshold. Denied if not credible. Ex: Perpetual Motion machine
New –Nothing in field that’s public knowledge that claims each and every claim
Examiner checks prior art
Non-obvious – difference between your new invention and public knowledge in your field and what it teaches
Sufficiently described: People in your field are enabled to use your invention without undue experimentation
Patent Trade-off: Powerful but must disclose all!

9. To patent, or not to patent?
Decide whether to patent
Is it solving a problem with commercial value?
Is it fundamental to the business?
Is it in line with your value proposition to your customer?
Drafting description, claims, and drawings is a collaboration:
Capture invention
Commercially valuable
Preclude others from designing around it
Don’t infringe on others’ inventions.
Discuss with patent attorney
Outline in enough detail to describe
Know who competitors are
Know what is state of art in your field
You & Attorneys can conduct Novelty Patent Search to determine closest best art
Prior art is used by both you & attorney:
To shape application (more robust patent, issued faster, and more cheaply)
To decide whether to go forward
• Provisional Applications ($200 – $12,000)
– Establishes “priority” for subsequent filings, only on information contained in the application
– Preserves right to obtain international patent protection
– Does not have to have claims
– Does not get examined
• Patent Cooperation Treaty (PCT) Applications ($8,000 – $12,000)
– Reserves right to file in the U.S. and many foreign countries at a later time (30 months from 1st filing)
• “Regular” U.S./Non-Provisional/Utility Applications ($5,000 $20,000)
• Foreign Applications ($$$$$$$$)
– Must be filed in each country or region of interest
– Often more expensive due to translation fees, annual maintenance fees, and foreign plus domestic attorney fees

10. Patent Filing Options

11. Patentability Hurdles & Prior Art
Prior Art – Knowledge or information existing (and publicly
available) at time of invention
Claims may not cover what is found in the prior art
Prior art includes: Presentations, publications, databases in public domain, websites (including blog posts, Youtube, etc.), theses published online, patents, sales/offers for sale, grant applications
With any public disclosure (such as a publication):
You lose international rights to patent immediately
You lose U.S. rights after 1 year
Avoid creating a public disclosure by:
Sign an NDA before a discussion with someone
Most Venture Capitalists (VCs) and some others may not be willing to sign an NDA.
Make certain patents are filed as soon as possible. Only disclose the essentials

12. Patent Rights & Remedies
Remedies against infringement:
1. Injunction – Court order for a company to stop doing certain activity
Protects & keeps competition out of its market place
2. Monetary – Prove lost profits
Damages: sales x profit margin
Reasonable royalty: Hypothetical negotiation at point of infringement (royalty rate, total royalty base)
Settlement – Agree to stop selling; upfront fee, royalty rate
3. Patent powers without lawsuit– deters competitors
Ex: Cross-license each others’ patents – agreement defining each other’s rights
Billion dollar razor market – leader: Mock 3: $300 million annual sales

13. Overview of design patents
Increasingly popular!
Utility Patents
Design Patents
Scope
Words form claims
Elements focus on functionality (How it is used and works)
Covers ornamental design (appearance)
One claim, and drawings
(Solid vs. dotted lines)
Time to issue
3 or more years
Easier to vet – can issue in about a year
Allowance rate
Much lower
About 90%
Infringement Compensation
Can only collect patentees’ lost profits (at most)
Can recover infringers’ profits.
Broadness of protection
Broad. Claims defines elements
Narrow. Strategy: File multiple
Each one focuses on one aspect of design
Only protects particular manifestation
Types of Patents
•Utility Patent (functional)
–Any new and useful process, machine, manufacture, or composition of matter (or any new and useful improvements thereof)
•Design Patent (ornamental)
–Any new, original, and ornamental design for an article of manufacture
•Plant Patent
–Any new and distinct, invented or discovered asexually reproduced plants

14. Copyright overview Much easier to obtain than patents:
Automatic – expression with low amount of originality, and reduced to writing.
Adding a copyright notice or registering gives ability to practice or to sue
Exclusive rights to reproduce, distribute, modify, publicly perform or publicly reproduce
Unlike patents, doesn’t prevent independent creation. Only have right to prevent someone from using something substantially similar if can prove they had access (to make a copy)
It doesn’t protect data or a database unless data is organized in some original way – then only covers the organization/ordering of that data. Ex: phone book
Can be used to protect: characters, graphics, stories, music, movies, source code.

15. Overview of trade secrets (TS)
Governed by State law:
TS have to be information
Can’t generally be known (reasonable efforts to maintain secrecy with procedures & policies)
proven economic value
Great for startups!
Is automatic, endures forever
Best for situations where can’t determine if others will use your IP – difficult to prosecute then!
Ex: customer lists, business strategies, schematics, source codes, manufacturing techniques

16. Trademark overview
Using your mark in commerce as an identifier of the source of your goods or service gives you trademark rights.
It’s the symbol, word, device or combo that distinguishes your product or service from another. Tells you that product or service attached to that brand comes from a particular source
Can also register this Trademark at USPTO.gov
Once acquired, no one else can use this mark or symbol in a way to cause customer confusion.
Trademark rights are an important business strategy for building brand Goodwill -- a monetary value!

17. Beyond patents
Intellectual Property gives businesses a competitive advantage!
Utility patent – on functionality. Broad, difficult to get, costly, lengthy. Gives broad monopoly on anyone making, using, selling or offering to sell in this country.
Design patent – on the ornamental design
Copyright – automatic on any form of original expression (graphics, lyrics, commercial)
Trade secret info – must keep secret through reasonable efforts where there’s economic value
Trade mark – a mark is an identifier of source of goods or service
Utility patent – functionality – using words to describe. Claims to illustrate new, non-obvious, and

18. Quiz How do I know if my invention is patentable?
Do I need to have built a prototype before I talk to a patent attorney?
How much will getting a patent cost me?
I’ve heard that software is not patentable any longer, is that true?
Is there any way to protect my user interface?
What type of protection is best for software?
What types of info constitutes a trade secret? How does a startup obtain trade secret protection?
If an idea is not patentable, can it still be basis of a successful company?

19. Intellectual Property Overview for Startups
IP refers to Legal rights in creations of the mind
IP is the foundation of a Startup
IP Mistakes can kill it before begun
IP Issues for Startups
- Startups are cash strapped
- Lean Startup methodology: Talk to third parties early
Potential customers (validate hypotheses)
Potential investors (no NDA)
Conventional Legal Wisdom (limited disclosure)
Patents, Copyrights, Trade Secrets, Trademarks needed for Startups
April 16, 2015
BY CREIE Associate Director, Jeni Clark