"How to Secure Funding & Protect Intellectual Property for Life Sciences" webinar by Peter Weinstein. Covers patent law, trade secrets, & funding.

1. How To Secure Funding &
Protect Intellectual
Property For Life Sciences

2. About AppFolio SecureDocs
AppFolio SecureDocs is a virtual data room for sharing and
storing sensitive documents both internally and with
outside parties.
AppFolio, Inc. Company Basics:
• Founded by the team that created and launched GoToMyPC
and GoToMeeting
• Backed by leading technology companies and investors
• Web-based business software for financial and legal
professionals

3. About One3IP Management
• One3 IP Management is an intellectual property management company that acts as
your in-house IP counsel handling all of your company’s IP, licensing and other legal
needs.
• One3 IP views its clients as partners and does not nickel and dime them for every
task, but works with its clients in a cost effective manner that allows One3 IP to learn
and stay abreast of its clients current and future business needs and goals.
• One3 IP does not follow the status quo in building its clients value through the
obtainment of a broad patent portfolio and the protection of its clients trade secrets,
but has developed novel methods that are cost effective and result in an IP portfolio
that provides broad protection.

4. About Peter Weinstein, Ph.D., J.D.
• Nearly a decade as a scientist post Ph.D., including time at NIH, USAMRIID
and as a Sr. Scientist at ImmuCell
• Former Patent Examiner at the USPTO
• Nearly a decade in private practice as a patent and general civil litigator and
patent prosecutor
• Six years at Baxter Healthcare (Sr. Counsel, IP)
• Founder One3 IP Management

5. What is IP
• Intellectual Property is property that results from original
creative thought.
• Generally, there are two types of Intellectual Property
• Patents
• The exclusive right granted by a government to an inventor to
manufacture, use, or sell an invention for a certain number of years.
• Trade Secrets
• A secret process, technique, method, list, etc., used to advantage in
a trade, business, profession, etc.

6. Patents

7. Value Of A Patent
• A patent has multiple uses
• Protect your invention
• Keep competitors from making, using or selling your
invention
• Raise revenue through licenses
• Tender offers

8. Poll Question No. 1

9. The Major Myths About Patents And
Patenting
In 2008, three prominent U.S. IP professors published a survey
containing information gathered from over 10,000 companies in the
software-internet, biotechnology, and medical device sectors. The
survey results showed that many myths have arisen to support a
company’s decision to not adequately protect their IP.
Percent of Responders
Financial Cost of Getting A Patent 57
Believed Technology Was Not… 38
Competitors Could Invent Around… 45

10. Poll Question No. 2

11. The Status Quo
• Your company, university, or research institution
has been told to follow the status quo methods to
obtain a patent:
– hire an outside patent attorney whose job is to prepare patent applications based
solely on the data provided by your scientists
– to prosecute the patent application to obtain claims covering the invention
described by the data
– to file paper after paper in response to rejections from the patent office
– while paying high fees and taking many years to get a patent
– In spite of this, most companies fail to adequately protect their technology
The status quo is costly, time
consuming, inefficient and frequently results in
a low value return

12. Break Out Of The Mold
There is a Better Way
• Broadly covers your invention in a manner that you not only cover the use of your
company’s technology in its research and development space, but that of your
competitors and areas you can license
• Take advantage of opportunities to make patent prosecution more streamlined and
efficient.
– Prosecute your patent application in a more efficient and cost effective
manner that not only saves, time and money, but results in broader patent
coverage.
• Proactively Executed Prosecution (―PEP‖)
– Provides ability to ―horse-trade‖ with Examine
– Patent Prosecution Highway (―PPH‖)

13. Break Out Of The Mold
Comprehensive Patent Application
• Prepare broadly
• Include lists
• Molecules (all
proteins, metals, drugs, composites, etc.), concentrations, time, uses
, components, etc.
• Use prophetic examples
• Can enter data in U.S. and EP after file in support of claims
• Prepare comprehensive set of claims
• EP file in Specification; U.S. file and cancel with Prelim. Amendment
• A cookbook, not a story book

14. Proactively Executed Prosecution

15. How PEP Works
• File applications at earliest opportunity
• Quickly start prosecution in U.S.
• Take advantage of face-to-face interviewing opportunities as soon
as possible
• Result: Obtain first patent quickly!
• Put the issued U.S. patent into the ―Patent Prosecution Highway‖
and expedite prosecution to move your patent quickly around the
world
– File in countries that add value (sell, manufacture, tender)
• Perfect your ―Patent Estate Architecture‖ by obtaining additional
patents in the U.S. by adding claim elements that are common
components of your invention

16. Poll Question No. 3

17. Trade Secrets

18. Basics of Trade Secret
Protection
 According to the FBI, a trade secret is:
 Information with independent economic value, like blueprints, chemical formulas, research and
development, marketing strategies, and manufacturing processes that the owner has taken reasonable
steps to keep confidential.
 According to federal law, a trade secret is:
 (1) information; (2) reasonable measures taken to protect the information; and (3) which derives
independent economic value from not being publicly known.
 According to California state law Section 3426.1(d), a trade secret is:
 information, including a formula, pattern, compilation, program, device, method, technique, or
process, that:
 (1) Derives independent economic value, actual or potential, from
not being generally known to the public or to other persons who can
obtain economic value from its disclosure or use; and
 (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

19. Basics of Trade Secret
Protection
• In evaluating what is a trade secret, these
factors are analyzed:
– The extent to which the information is known outside the claimant's business
– The extent to which it is known by employees and others involved in the business
– The extent of measures taken by the claimant to guard the secrecy of the information
– The value of the information to the business and its competitors
– The amount of effort or money expended by the business in developing the information
– The ease or difficulty with which the information could be properly acquired or
duplicated by others

20. Basics of Trade Secret
Protection
Corporate Documents Represent Your Company’s
―Treasure Map‖ to Profitability
Corporate documents include:
• Patents and Trade Secrets
• Customer Acquisition Costs
• Lifetime Value Assumptions
• Product Road Map
• Profitability by Product and Customer
• Cash Flow, Burn Rate, Financial Models, Margins
• Client Lists and Contracts
• Overseas Manufacturing, Trials, Supply Chain
= all the information a current or new competitor would need to follow your
company’s path to profitability

21. Basics of Trade Secret
Protection
 California follows the Uniform Trade Secret Act
 The UTSA is followed by 46 states
 Only Massachusetts, New York, North Carolina and Texas do not follow the
UTSA
 California trade secret law is codified in Civil Code Sections 3426-3426.11
 Prosecutes “misappropriation” of a trade secret.
 Damages available
 May enjoin the party misappropriating the trade secret.
 Recover damages for actual loss caused by misappropriation.
 Statute of limitation
 Three (3) years following discovery of misappropriation or three (3) years
from when should have reasonably discovered misappropriation.

22. Basics of Trade Secret
Protection
 In 1996, the federal government passed the “Economic Espionage Act.”
 There are two main provisions:
 The first, 18 U.S.C. 1831(a), criminalizes the misappropriation of trade secrets
(including conspiracy to misappropriate trade secrets and the subsequent acquisition
of such misappropriated trade secrets) with the knowledge or intent that the theft
will benefit a foreign power.
 Penalties for violation are fines of up to US$500,000 per offense and
imprisonment of up to 15 years for individuals, and fines of up to US$10
million for organizations.
 The second section, 18 U.S.C. 1832, criminalizes the misappropriation of trade
secrets related to or included in a product that is produced for or placed in interstate
(including international) commerce, with the knowledge or intent that the
misappropriation will injure the owner of the trade secret.
 Penalties for violation of section 1832 are imprisonment for up to 10 years for
individuals (no fines) and fines of up to US$5 million for organizations.

23. Basics of Trade Secret
Protection
 In 1996, the federal government passed the “Economic Espionage Act.”
 Economic espionage can be committed by a U.S. citizen, but under United States
law, foreign nationals can also be prosecuted if their actions hurt U.S. citizens or the
United States in general.
 Economic espionage can entail stealing an idea or product, or simply conspiring to
do so. This law was designed to protect the proprietary secrets, products and
information developed by businesspeople from being exploited by others without
compensation.
 The Act authorizes civil proceedings by the Department of Justice to enjoin violations of
the Act, but does not create a private cause of action. Thus, victims or putative victims
must work with the U.S. Attorney in order to obtain an injunction.
 Unlike the Espionage Act of 1917, which is governed by Title 18 U.S. Code Sections 792
- 799, the offense involves commercial information, not classified or national defense
information.

24. Basics of Trade Secret
Protection
 Theft by Employees Prosecuted Under State T.S. Law
 FUHU v. Toys R’Us
 TRU sold FUHU Nabi children’s table for several years.
 FUHU provided confidential information regarding Nabi 2 tablet in the summer of 2012.
 In the fall of 2012, TRU released its own children’s tablet called “Tabeo.”
 FUHI filed suit alleging theft of trade secrets.
 Tekmira v. Alnylam
 The companies were partners for many years with Alnylan providing lipid nano particle delivery
technology and product to Tekmira, a company developing iRNA therapies.
 Tekmira alleged that Alnylan attempted to copy Alnylan methods for its own use and also shared
Tekmira technology with a third party without Tekmira’s consent.
 Side note, Alnylam provided over $45 million in funding, including equity purchases to Tekmira
and $6 million in manufacturing related funding prior to the lawsuit.

25. Basics of Trade Secret
Protection

26. Basics of Trade Secret
Protection
General Concept of T.S. Law
 The key is to show that you have made a concerted effort to identify and protect your trade
secrets
 The implementation of a “Know-How” database
 Secure location for documents
 Limited access
 Can retrieve many years later
 Can use with a partner

27. Poll Question No. 4

28. Basics of Trade Secret
Protection
Companies must share information internally and externally on a
regular basis:
• Investor communication/board meetings
• Fundraising
• Audits (409A, 401K)
• Client contracts, licensing, partnerships
• Collaborative R&D, IP development
• Legal review
• Consultant collaboration
Companies must balance the need to share
information while mitigating the risk of exposing
their treasure map

29. Basics of Trade Secret
Protection
SecureDocs—Real World Uses
• R & D Collaborations can result in transfer of trade secrets prior to filing of a
patent application
• How are these trade secrets protected?
• Need to satisfy legal standard for protection
• How are you protected in the future?
• People leave, documents lost, emails deleted, memories fade
• Trade Secret/Know-How database
• Technology has advanced to the point where all documents and information
can be stored for a reasonable price electronically
• Can set up own, but require IT support and purchase hardware
• Cost is in the $10,000’s

30. Financing The Growth Stage Life
Science Company

31. Sources of Financing
• Venture Capital
• Angels
• Strategic
• Government Grants
• Leasing
• Banks

32. Sources of Financing
• Angels
• Equity
• Very patient (sometimes altruistic motive)
• Small dollars
• Limited Headroom
• May have friends

33. Sources of Financing
• Venture Capital
• Equity
• Sophisticated and understand long term needs
• Understand space and have a network
• Many are bargain hunters
• If performance is not there, will replace
founders/management
• Not patient

34. Sources of Financing
• Government Grants
• Straight cash infusion; no equity dilution
• Limited involvement
• Can lead to repeat funding
• Long lead time
• ….Long lead time
• Some additional administration cost

35. Sources of Financing
• Leasing
• No dilution, less expensive than equity
• Focused on equipment purchased
• Usually very familiar with vendor
• Require repayment
• Need positive cash flow unless it is a venture leasing
firm

36. Sources of Financing
• Banks
• No equity; least expensive
• Offer long term debt or lines of credit
• Sophisticated but have many requirements
• Need positive cash flow and may require personal
guarantee
• Venture banks are an interesting alternative

37. Sources of Financing
Financing Matrix
Stage Angels Venture Strategic Grants Leasing Banks
Start-up ✔ ✔
R&D ✔ ✔ ✔ ✔
Revenue ✔ ✔ ✔ ✔
Positive ✔ ✔ ✔ ✔ ✔
Cash Flow
Growth ✔ ✔ ✔ ✔ ✔

38. Contact Us
AppFolio SecureDocs
50 Castilian Drive
Goleta, CA 93117
Phone: (866) 700-7975
info@securedocs.com
sales@securedocs.com
www.securedocs.com
@SecureDocsVDR
One3IP Management
1560-1 Newbury Road, #327
Newbury Park, CA 91320
Phone: (800) 478-2152
info@one3ip.com
peter_weinstein@one3ip.com
www.one3ip.com
@one3ip

39. Thank You!
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