This presentation addresses the why, what, and how to protect inventions from the vantage point of the early-stage, pre-financing, start-up company that is interested in patenting its inventions and developing an intellectual property portfolio that maximizes the company's valuation and sets it up for success during the intellectual property due diligence that accompanies financing rounds, corporate partnerships, commercialization, and merger and acquisition.

1. Protecting Inventions of Start-ups
Icogenex Corporation
Adda C. Gogoris
Partner
Gary M. Myles, Ph.D.
Of Counsel
June 27, 2013

2. Topics
• Why Should a Start-up Invest in Patent Protection?
• Developing a Sound Strategy for Identifying and
Protecting Inventions
• Do You Own Your Patents?
• Guarding against Challenges to Validity/Enforceability
• Guarding against Infringement of Third-party Patents
• Two Words about Our Firm

3. Why Should a Start-up Invest in
Patent Protection for Its Inventions?

4. Why Patent Your Inventions?
• Some Simple Truths
– Patents Provide a Right to Exclude
– Patents DO NOT Provide a Right to Practice
– Patent Protection is Expensive
• Expensive to obtain patents
• Very expensive to enforce patents
• So, why invest now in patent protection?

5. Why Patent Your Inventions?
• Financing
– Angel Funds
– Venture Capital
– Bank Loans
• Corporate Partnering
– Big Pharma
– Big Biotech
• Product
Commercialization
– FDA Approval
• Exit
– Merger or Acquisition
– Initial Public Offering
Patents are Tools that Help a Company
Achieve its Business Objectives

6. Why Patent Your Inventions?
• During Due Diligence before a Deal, the Following are
Scrutinized:
– Management Team
– Financials
– Commercial Market
– Product Development, Regulatory, and Manufacturing
– Patents
– Exit Strategy

7. Why Patent Your Inventions?
• Issues to Address Prior to IP Due Diligence
1. Develop sound strategy for identifying and protecting inventions
that aligns with your commercial objectives
2. Ensure that you own your patents
3. Guard against challenges to validity/enforceability
4. Guard against infringement of third-party patents
5. Obtain patent licenses to gain freedom-to-operate

8. Developing a Sound Strategy for
Identifying and Protecting
Inventions

9. Developing a Sound Strategy for
Identifying and Protecting Inventions
• Patents vs. Trade Secrets
– Patents
• Exclusive rights
• Easy to reverse engineer or independently develop
• Medium length useful life of technology
– Trade Secrets
• No exclusive rights
• Difficult to reverse engineer
• Very short or very long useful life of technology
• Value in not being generally known

10. Developing a Sound Strategy for
Identifying and Protecting Your
Inventions
• Focus patent protection on commercial products
• Adjust patent strategy to accommodate changes in
the commercialization plan
– Periodically vet R&D activities
– Open dialogue among technology, business, and legal
– Keep outside counsel informed

11. Developing a Sound Strategy for
Identifying and Protecting Your
Inventions
• Create Barriers to Entry
– Patent claims should “read on”
• Your commercial product
• Your competitor’s commercial product
– Claims should be difficult to circumvent
• Claim scope
• Claim variety (e.g., compositions, formulations, and methods)
– Extend patent protection through life-cycle management
• Patent term is 20 years from date of filing
• Continue to add to portfolio as R&D activities progress

12. Developing a Sound Strategy for
Identifying and Protecting Inventions
• Seek Patent Protection in Key Commercial Markets
– Consider commercial markets of potential acquirers
and partners

13. Developing a Sound Strategy for
Identifying and Protecting Inventions
• Don’t Over-invest in Patent Protection
– Focus on obtaining a few well-drafted, properly claimed,
thoughtfully prosecuted patents that protect commercial products
– Avoid pursuing patents if the primary goal is to generate a
revenue stream
• Out-licensing for profit is unlikely to generate value and, instead, will
likely be a distraction to a young company

14. Developing a Sound Strategy for
Identifying and Protecting Inventions
• Adopt Rigorous Systems for Memorializing, Identifying,
Communicating, and Protecting Inventions
– Employment and consulting agreements
• Early assignment of inventions
– Laboratory notebooks
• Maintain daily
• Countersign periodically (weekly or monthly)
– Invention disclosures
• Communicate new inventions from scientists to legal
– Publication/public disclosure policy
• PATENT FIRST
• Publish, disclose, sell later
– Confidentiality
• Systems to ensure secrecy (especially for trade secrets)
• CDAs and other third-party agreements

15. Do You Own Your Patents?

16. Do You Own Your Patents?
• Take Care in Determining Inventorship
– 35 U.S.C. 262 Joint owners
In the absence of any agreement to the contrary, each of the joint
owners of a patent may make, use, offer to sell, or sell the
patented invention within the United States, or import the
patented invention into the United States, without the consent of
and without accounting to the other owners.

17. Do You Own Your Patents?
• Take Care in Determining Inventorship
– Ethicon, Inc. v. U.S. Surgical Corp. 135 F3d 1917 (Fed. Cir. 2001)
• Ethicon was exclusive licensee to patent naming one inventor
• Ethicon sued U.S. Surgical for patent infringement
• U.S. Surgical and intervenor-defendant (“Choi”) filed motion to
add Choi as co-inventor; District Court granted motion
• Federal Circuit upheld District Court finding that Choi
contributed to subject matter of two of 53 patent claims
• Choi licenses his rights to the patent U.S. Surgical
• Ethicon’s infringement action against U.S. Surgical dismissed;
licensee does not infringe

18. Do You Own Your Patents?
• Take Care in Determining Inventorship
– Beware Ethicon trap for the unwary
• The two claims to which Choi had contributed were NOT the
subject of the Ethicon infringement action against U.S. Surgical
• When Choi was added as a joint inventor, his ownership rights
were in the patent as-a-whole, including the 53 claims to which
he made no inventive contribution
– Lesson of Ethicon
• Take care to properly assess inventorship
– In internal joint research efforts
– In collaborative research efforts with a third party
– Inventorship ≠ authorship
• Inventorship is a legal determination based on “conception”

19. Do You Own Your Patents?
• Obtain (and Record) Inventor Assignments
– Stanford v. Roche, 563 U.S. __ (S. Ct. 2011)
• Stanford post-doc “agrees to assign” inventions resulting from
employment
• Post-doc collaborates with [Roche] and signs agreement “will assign
and does hereby assign … ideas, inventions and improvements”
made “as a consequence of [his] access” to [Roche]
• Post-doc discloses inventions to Stanford
• Stanford obtains patents and sues Roche for infringement
• Supreme Court upholds Federal Circuit that Stanford’s “agrees to
assign” language is not an assignment but [Roche’s] “does hereby
assign” is
• Stanford did not own patents asserted against Roche

20. Do You Own Your Patents?
• Obtain (and Record) Inventor Assignments
– Beware the lessons of Stanford v. Roche
• Present day “does hereby assign“ trumps “agrees to assign”
• DO NOT DELAY in obtaining (and recording) assignments
• Former employees, especially disgruntled employees, are
often reluctant to cooperate by assigning inventions
• Consider incorporating “does hereby assign“ language in
employment agreements

21. Guarding against Challenges to
Validity/Enforceability

22. Guarding against Challenges to
Validity/Enforceability
• Perform Searches of the Patent and Scientific
Literature to Identify the Closest Prior Art
– 35 U.S.C. § 102, novelty
– 35 U.S.C. § 103, non-obviousness
• Pursue Patent Claims Taking into Account that Prior
Art

23. Guarding against Challenges to
Validity/Enforceability
• America Invents Act
– First-To-File System
• Inside U.S. -- 1-year grace period
• Outside U.S. -- Absolute novelty
– More Prior Art Available
• Disclosures before “effective filing date”
– NOT date of invention
– U.S. and PCT patent applications filed before “effective filing
date”
» Even if not in English
» Even if never filed in the U.S.
• No geographic restrictions
– Public uses and sales outside US are prior art
– Exceptions to prior art are very narrow

24. Guarding against Challenges to
Validity/Enforceability
Prior Art Exception Exception Description
35 USC 102(a)(1)
Publications, public
uses, on sale,
otherwise publically
available
102(b)(1)(A) Public disclosure was by inventor
(or derived from inventor) during 1-
yr grace period
102(b)(1)(B) Public disclosure was by another
after disclosure by (or derived from)
inventor during 1-yr grace period
35 USC 102(a)(2)
US-related patent
applications filed by
another
102(b)(2)(A) Subject matter of application was
obtained from inventor
102(b)(2)(B) Subject matter of application was
publicly disclosed by inventor (or
derived from inventor) before the
application was filed
102(b)(2)(C) Subject matter of application was
commonly owned or pursuant to
joint R&D agreement as of
inventor’s application effective filing
date

25. Guarding against Challenges to
Validity/Enforceability
• Disclose Material Prior Art to the Patent Office
– Duty to disclose to Patent Office information known to be
material to patentability of any pending claim, including:
• Closest information over which individuals associated with the filing or
prosecution of a patent application believe any pending claim patentably
defines
• Prior art cited in search reports of a foreign patent office in a counterpart
application
– Duty to disclose extends to individuals associated with the filing
or prosecution of a patent application, including
• Named inventors
• Attorneys/agents preparing/prosecuting application
• Everyone substantively involved in preparing/prosecuting application and
associated with the inventor, assignee, or person to whom there is an
obligation to assign
– Breach of duty renders a patent unenforceable for inequitable
conduct

26. Guard against Challenges to
Validity/Enforceability
• America Invents Act
– File early and file often within the first year
• Do not rely on grace periods
– File provisional applications, but beware the trap of a poorly
drafted provisional
• Ensure that disclosures support the claims according to the
requirements of 35 U.S.C. § 112, first paragraph
– Enablement
» Teach how to “make and use” the claimed invention
– Written Description
» Demonstrate that applicant had “possession” of the
claimed invention
– File subsequent provisional applications as R&D progresses
and/or commercialization objectives change
– File if an invention is inadvertently made public

27. Guarding against Infringement of
Third-party Patents

28. Guarding against Infringement of
Third-party Patents
• Remember that a Patent Does NOT Provide
Freedom-to-Operate
– Become familiar with the patent landscape
• Identify potentially relevant patents that correspond
to art identified in searches of the scientific
literature or patent databases or cited by the
Patent Office
• Review for claims that “read on” any aspect of your
commercial products

29. Guarding against Infringement of
Third-party Patents
• Become Familiar with Patents of Your Competitors
– Identify problematic claims and consider options for
• Narrowing during prosecution
– Third-party prior art submissions
• Invalidating after issuance
– Post-grant review
– Inter-partes reexamination
– Address letters from third parties that identify their patents
– Consider licensing options
• To obtain freedom-to-operate
– Non-exclusive license is sufficient
• To obtain right to enforce
– Need exclusive license
– Consider obtaining opinions of non-infringement/invalidity

30. About Our Firm

31. About Our Firm
• Intellectual Property Boutique
– Patent
• Chemical & Life Sciences
• Electrical & Software
• Mechanical
– Trademark, Domain Name
– Copyright
– Licensing
– Unfair Competition
– Litigation
– Post Grant Patent
• Established 1900
• Eight Offices Nationwide
– Minneapolis (Main Office)
– Denver
– Atlanta
– New York
– Seattle
– Madison
– Washington DC
– Knoxville

32. About Our Firm
• Broad Range of IP Services
– Patent Drafting and Prosecution
(Domestic & Overseas)
– Strategic IP Analysis and
Planning
– Portfolio Management and
Evaluation
– Counseling and Opinions
– Negotiation/Drafting of IP
Agreements
– Litigation/Dispute Resolution
– Contested Administrative
Proceedings (PTAB, TTAB,
UDRP)
– IP Due Diligence Investigations
• Broad Range of Clients
– Individual Inventors
– Academic and Not-for-profit
Research Institutions
– Start-up Companies
• Biotechnology (Large Molecule)
• Pharmaceutical (Small Molecule)
• Telecom
• Software
– Domestic and Overseas Mid-Market
Science and Technology Firms
– Fortune 500 Companies

33. About Our Firm
125 Attorneys, Agents, and Technical Advisors
>20% with Advanced Degrees in Science and Engineering
12 Ph.D. and D. Pharm, 2 M.D., 7 M.Eng and PE
Representative Ph.D. and M.S. degrees
Biochemistry and Biophysics
Biomedical Sciences
Bioorganic Chemistry
Cellular and Developmental Biology
Chemical Engineering (M.S.)
Chemistry
Food Science
Mechanical Engineering
Medicinal Chemistry
Microbial Engineering (M.S.)
Microbiology
Molecular Biology
Organic Chemistry

34. Thank You!
Adda C. Gogoris
agogoris@merchantgould.com
(212) 223-6653
Gary M. Myles, Ph.D.
gmyles@merchantgould.com
(206) 342-6226

35. About Our Firm
Representative Life Sciences Attorneys and Agents
Seattle
Gary M. Myles, Ph.D., University of North Carolina Chapel Hill
•Biochemistry and Biophysics, Post-doc Fred Hutchinson CRC
Minneapolis
Katherine Kowalchyk, Ph.D., University of Minnesota
•Microbiology
Mark Skoog, Ph.D., Indiana University
•Biochemistry
Tchao J. Thao, M.D., University of Minnesota
Eric DeMaster, M.S., University of Minnesota
•Microbial Engineering
Madison
Edward J. Pardon, M.D., University of Wisconsin Medical School
Denver
Paul Prendergast Ph.D., University of Colorado Health Sciences Center
•Experimental Pathology

36. About Our Firm
Representative Chemistry Attorneys and Agents
New York
Adda C. Gogoris, Cornell University
•Chemical Engineering
Andrew Larsen, Ph.D., University of North Carolina
•Organic Chemistry, Post-doc Boston College
Atlanta
Daniel R. Evans, Ph.D., Mississippi State University
•Bioorganic Chemistry, Post-doc U.S.C., Assistant Professor U. Md.
Denver
Ryan Fletcher, Ph.D., University of Colorado Health Sciences Center
•Biochemistry, 2005
Minneapolis
Randall Hillson, Ph.D., University of California at Berkeley
•Chemistry
Heather Kroona, Ph.D., University of Minnesota
•Medicinal Chemistry, Post-doc University of Michigan