Owning-Up To Entrepreneurship: Common Intellectual Property - PowerPoint Presentation

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Owning-Up To Entrepreneurship: Common Intellectual Property Issues Involving Software Start-ups

Patrick H. Gaughan, JD, MBAExecutive DirectorInnovation Practice Centerpgaughan@uakron.edu

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Outline

Why Do We Care?Types of Intellectual PropertyCommon ProblemsGetting Help On Proof of ConceptLearning More About Entrepreneurship & Commercialization2Slide3

Why Do We Care?

Apple v. Samsung - $US 1 billion patent verdict (last year)Apple v. Samsung - $US 2billion patent litigation (current). Samsung claims all android software came from Google!Lots of Little Guys Fighting Too – e.g. MyPOSGeeks.com sued for “false designation of origin and unfair competition, common law trademark infringement and state law unfair competition and dilution.”Patent Trolls

– Nonpracticing Entities

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Types of Intellectual Property

PatentsCopyrightsTrademarksTrade DressTrade Secrets4Slide5

Patents

A patent grants an inventor the exclusive right to exclude others from making, using, selling, offering to sell, and importing an invention for a limited period of time, in exchange for the public disclosure of the invention. Duration: Utility patents, 20 years from date of filing. Design patents, 15 years from date of filing.5Slide6

Patent Requirements

Patent eligibleNovelUsefulNonobvious to a “PHOSITA” (person having ordinary skill in the art)Adequately described6Slide7

Copyrights

A copyright gives the creator of an original work exclusive rights to it and derivative works, usually for a limited time.  Copyright does not cover ideas and information themselves, only the form or manner in which they are expressed.Duration: usually 70 years from after the author’s death.7Slide8

Copyright Requirements

Attaches automatically upon creation.However, formal registration provides documentation of assertion of rights and support of damages.“©” 2014 is optional after 1989 but still a good ideaFill out the form from the U.S. Copyright office.Send copy of the material and form in. The material will be in the Library of Congress

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Trademarks/Servicemarks

A trademark is any recognizable word, sign, symbol or design which uniquely identifies or distinguishes products or services. Provided protection by common law at the state level (use ™ ).Standard: Likelihood of confusion by consumers with preexisting marksFederal protection through registration (use ®).Duration: As long as used in commerce and defended against infringement

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Trademark Examples

T.Markee for shoes; Tee Marqee for shirtsSee Starbucks

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Other Previously Famous Tradenames that lost their protection

Aspirin – Bayer name (lost protection in U.S.)Escalator – Otis Elevator name (lost)Thermos – Thermos Gmbh name (lost)Videotape – Ampex Corporation (lost)

Zipper

– B.F. Goodrich (lost)

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Trade Dress

Trade dress is a legal term of art extension of Trademark law (through Lanham Act) that generally refers to characteristics of the visual appearance of a product that signify the source of the product to consumers.Product packaging can be inherently distinctive.Product design must have consumer secondary meaning linking design to the origin/source.

Key is confusion of consumers.

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Examples of Tradedress

The light blue Tiffany jewelry boxesThe shape of Coke bottlesThe color and design of Reeces Peanut Butter CupsGolden Arches outside of McDonalds restraunts.

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Trade Secrets

A trade secret is anything not generally known or reasonably ascertainable by which a business can obtain an economic advantage over competitors or customers. Holder of trade secret must take reasonable steps to preserve the secret (like non-disclosures from employees and reasonable efforts to limit employee access).Trade secret law is primarily handled at the state level under the Uniform Trade Secrets ActFederal law also potentially applicable under the Economic Espionage Act of 1996 

which

makes the theft or misappropriation of a trade secret a federal crime.

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IP Issues Impacting Software Startups

PatentsCopyrightsTrademark infringementOwnership of initial IPCo-inventorsORC 3345.14Work for HireNon-competition clauses

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Patent, Copyright and Trademark Issues

Does the software incorporate a patented design? [e.g. Amazon’s One-Click patent?]Does it use or integrate software components with asserted ownership in others? (no license?) [e.g. Napster’s copyright infringement?]Is the name, design, look and feel likely to confuse others as to the origin of the software?Is there “fair use”?16Slide17

O.R.C. 3345.14 (B)

(B) All rights to and interests in discoveries, inventions, or patents which result from research or investigation conducted in any experiment station, bureau, laboratory, research facility, or other facility of any state college or university, or by employees of any state college or university acting within the scope of their employment or with funding, equipment, or infrastructure provided by or through any state college or university, shall be the sole property of that college or university. No person, firm, association, corporation, or governmental agency which uses the facilities of such college or university in connection with such research or investigation and no faculty member, employee, or student of such college or university participating in or making such discoveries or inventions, shall have any rights to or interests in such discoveries or inventions, including income therefrom, except as may, by determination of the board of trustees of such college or university, be assigned, licensed, transferred, or paid to such persons or entities in accordance with division (C) of this section or in accordance with rules adopted under division (D) of this section.

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Work for Hire (Non-University)

Under copyright law, work product can be created two ways: Work produced by employees within the scope of their employment Work produced by independent contractorsEmployee work-product produced within their scope of employment is owned by the EmployerIndependent contractor work-product is owned by the independent contract unless there is a written agreement saying the work is to be considered “work for hire.”

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Application of Work for Hire Issue #1

You’re an employee at Company “X”.You’re asked to work on a software problem within the scope of your employment and you do a great job coming up with a solution.The solution is owned by Company “X”.If you subsequently open a new Company “Y” you need to prove that you did not use code from Company “X”.19Slide20

Application of Work for Hire Issue #2

You start and own Company “X”.You verbally hire a “friend” to work on a software problem and he/she does a great job coming up with a solution.The solution is owned by the friend – because there isn’t any written agreement showing the work was “for hire”.You subsequently want to extend the code into a new product. Your former “friend” can claim rights to royalties.

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Corporate Opportunity Doctrine

You’re an employee at Company “X”.You are NOT asked to work on any project. However programming is within the scope of your employment.Company “X” owns it. However, if, after presentation, they decide they do not want to pursue this, then you own it.21Slide22

Taking the Low Road

You’re a graduate student or faculty member at University of Akron OR you are an employee at Company “X”.You decide to “claim” that you developed the software on your own time, using your own equipment, and that the idea came to you while in the shower… at home.Problem: you’ll still have trouble passing any investor’s due diligence and potentially face a law suit if you eventually develop something of value (recall the guys who sued Zuckerberg claiming co-ownership of Facebook?).

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Better Route

Clarify the rights/duties in writing BEFORE you create anythingSave all the contracts and scan them.For UA, file a disclosure with Tech Transfer indicating that you do NOT believe UA has any interest (and explain why)Be careful to avoid using ANY UA resources including computers, software, etc.In some circumstances, document the development of the software.

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Non-competition/ Non-pilfer Clauses

Does not apply to the software but MAY apply to the creator or programmers hired by the creator.Based upon employment law. Usually prohibits competition or pilfering of employees for a period of less than 3 years.Usually restrictively construed by time, scope and geography to achieve the legitimate intention of the clause.24Slide25

Getting Help On Proof of Concept

iCorp ProgramProof of Concept Center – Gopal Nadkarni, Directory, gnadkarni1@uakron.eduArch AngelsYoungstown Business Incubator (YBI.org)25Slide26

Learning More About Entrepreneurship and Commercialization

Graduate Entrepreneurship, – Fall 2014, 3 Credits, Thursday Evenings 5:20-7:50. Course: Entrepreneurship 6500:608:801Graduate Commercialization – Spring 2015, 3 credits, time tbd.Graduate Commercialization Externship – Summer 2015, credits tbd.

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Any questions?

Patrick H. Gaughanpgaughan@uakron.edu27