1. MGMT 3710 Entrepreneurial Foundations Chapter 2 The Opportunity Intellectual Property

2. Intellectual Property: The Story of CDs Came out in mid-80s as a replacement for flat- selling vinyl and cassettes Phillips Corporation came up with idea for new storage  75 minute playback time allowed for Beethoven’s 9 th to be stored on it! Artists still being paid royalties based on album prices ($9-10 versus $16-18 for CD)  Record companies pocketed the profits!

3. Intellectual Property: The Story of CDs Record companies stopped process of allowing returns on vinyl that didn’t sell  “Forced” record stores to carry CDs to avoid risk  Stopped carrying old recordings on vinyl Cost of making a CD dropped to around $0.80 each The consumer revolted!!

4. Intellectual Property Knowledge, information, and ideas that are critical to success “Any product of human intellect that is intangible but has value in the marketplace” Take the eToys storyeToys  KB bought them for $14 million at a bankruptcy sale  Logo, design, customer list  Management bought assets from KB  eToys still operates KBtoys.com under licensingKBtoys.com

5. When Should We Protect Our Intellectual Property First, we have to identify what it is  Do we have intellectual assets?  What is it about them that we don’t want others to have? Design? Logo? Name?  Can we protect that? Then, we have to decide if that asset gives us a competitive advantage and if the market places value on it!

6. Examples of Things that We Might Want to Protect Brand name Slogans Ads Brochures Customer lists Procedure handbooks Training materials Newsletters Web site design Domain name Computer code for programs Inventions Improvements in process Lab notes

7. From Intellectual Assets to “Intellectual Property” Four Types of Intellectual Property  Patents  Trademarks  Copyrights  Trade Secrets Why Protect?  For the firm  For the consumer

8. Patents Federal government states that no one else can make your product for a certain period of time The owner of the patent can only make the product IF no one else has the right to do so FOR THAT USE.  Microsoft vs. Apple on the iPod patent

9. Patents Problems with patents?  Loopholes  Time from filing to ruling (27.7 months!) Three types of patents  Utility patents  Business method patent  Design patent

10. Utility Patents Inventions that are useful, novel, and not obvious to an ordinary Joe of the field Term of 20 years Drawings and technical specifications must be submitted – the USE is protected Cannot have been mentioned or sold in U.S. for more than a year before it is patented or patent cannot be filed

11. Other Patents Business method patents  Process improvements  Amazon’s one-click ordering system  Netflix’s rental list system Design patents  Good for 14 years  On design of manufactured product Plant patents  (Hybridization protection)  20 year time span

12. How to Apply for a Patent Make sure you’re the inventor, a legal assignee of the inventor, or the purchaser of the invention Make sure the product is useful Document all activities of invention Hire a patent attorney to write the application (1 to 2 months) Conduct a patent search (get attorney to) File application ($5000 ) Meet with examiner on decision

13. Trademarks A word, name, symbol, device used to identify products with their maker Renewable every 10 years Service mark  Same as trademark, but for service companies Collective marks  Used by groups Certification marks  Serves as mark of quality UL Good Housekeeping Seal American Board of Pediatrics Seal

14. What Can Be Protected By Trademarks? Words  Slogans, phrases Numbers and letters  U2  1-800-FLOWERS Designs and logos Sounds Fragrances  As long as the product is not used for its scent!! Shapes and packaging Colors ***When a characteristic affects the way the product is used, that’s more of a utility patent issue!****

15. To Register Your Mark… Stop first – once a mark is used in commerce, it’s protected by the government BUT… if you register,  You get priority in use (in case someone in WA starts using it, too)  You get protection from imports using it  You get the little ® symbol  Around $1000-2000 for the process

16. Copyrights On original works of authorship  Literary works  Music  Dramatic works  Choreography  Pictures and art

17. To Obtain a Copyright Like trademarks, protection begins when work is made tangible But, if you copyright..  You get the copyright bug - ©  For $30 filing fee, you scare off would-be copiers  Protection for the life of the author plus 70 years or 95-120 years for something created in a business!

18. But Is It All That Useful? Think of the Internet and all of the pages that have the same cut and pasted information on them.  All of this is intellectual property right violation! Case must prove that the violator saw this work before “copying” it

19. Trade Secrets Things that need to be protected, but don’t fall under copyright, patent, or trademark protection  Formulas, patents, patterns, physical devices, ideas, processes, or information that gives you a competitive advantage  Varies from state to state!  Must be something that the company doesn’t let out (no one could get it legally)

20. Protecting Trade Secrets Label things as “Confidential” Restrict access to important information Maintain logbooks for visitors Make people log out sensitive material Shred drafts Ask employees to sign nondisclosure/noncompete agreements

21. Get Into Groups!!! Analyze the following business ideas for possible intellectual property issues and present what you would do to address them.  You and your division create a new method of developing innovation within the firm  You invent a method of recording video with a remote control keychain  You write a new song that the Omaha Royals adopt for their team song  You write a policy manual that the rest of the company wants to adopt for their locations  You develop a consulting plan for start-up businesses  You want to start a coffee shop  You start an organization to help disadvantaged children set career paths

22. Parts of an Intellectual Property Audit 1. See what is currently protected, and how 2. See how works in progress are being protected 3. Figure out anything else that is of competitive value and describe how that is being protected/come up with a plan of protection