Startups & IP Risks: Trademarks, Patents, and Valuation

Business Sense • IP MattersBusiness Sense • IP Matters Attorney-Client Privileged & Confidential 1
Santa Clara – Startups & IP
Law
Kent Richardson
July 1, 2014

Business Sense • IP Matters
Agenda
IP Overview
Entrepreneurs and IP Risk
Patent Buying, Selling, Valuation
Attorney-Client Privileged & Confidential 2

IP Context
• IP is the right to exclude others
• Specific right, specific scope, specific point in time, specific party
Excluding others
• “They ripped me off!” “Yes, they did…”
• Owner must enforce
How to use the IP rights?
• Not the right to a profit
• Not the right to a market
• Not the right to blanket product protection
What IP isn’t
• Trade Secret, Trademark, Copyright, Patent
• We’re covering the common uses; this is not a treatise
Types

IP Overview - Categories
• Information which is not generally known or reasonably attainable, and provides business advantage
• Business plan, customer lists, most IP in companies!
• Right: protected under contract to not disclose the information without authorization
• Requirement: not otherwise legally revealed and contractual obligation
• Duration: indefinite
• Cost: Free
• Lifetime cost: $2K (all overhead)
Trade Secrets
• Recognizable sign, design, or expression which identifies specific sources of goods or services
• McDonald’s arch, Apple’s apple
• Watch out for web domains
• Right: to be exclusively identified with the mark as a source of good or service
• Requirement: mark distinguishes the goods or services and will not confuse or deceive consumers
• Duration: indefinite, but owner must actively police the mark
• Cost: $3K to register, some common law rights
• US only costs – international can be $100K’s
• Lifetime cost: $20K-$M’s
Trademarks

IP Overview - Categories
•Works of authorship
•Songs, drawings, programs, plays, books
•Right: to make copies
•Requirement: minimal level of originality
•Duration: ~life of the author plus 70 years or ~95 years for corporations
•Cost: Free (except costs for registration)
•Lifetime cost: $1K
Copyrights
•Inventions, designs, plants
•How many patents in an iPhone?
•Good engineering, good products, does not guarantee good patents & vice versa
•Rights: make, use, sell, offer for sale, and import
•Requirements: new enough, not obvious, and proper subject matter
•Duration: ~20 years
•Cost: $10K-25K
•US only cost. International $100K-1M+
•Lifetime cost: $50-100K
Patents

Agenda
IP Overview

Startups & Risk – Entrepreneur Psychology
Characteristic Running a Business Attorneys Reframing
Courage/willingness to take
risks
Consciously and unconsciously
take risks
“I look for opportunities, not risks
– live by 80/20”
Itemize all risks. “80/20 is insufficient and
unacceptable”
(i) Prepare them – “let’s discuss a few not fun
things,” acknowledge that this will be uncomfortable
(ii) Discuss the big rocks first; itemize the low
probability- extinction level events
(ii) Watch their eyes
Positive attitude “We are going to change the
world!”
No! Here are the risks you need to understand and
address (1)…; (2)…
“Yes you can! I can see how that solves the problem.
And, here are some additional thoughts…”
Self confident “We have the best solution.
Massive company X is
incompetent”
Company X has >100 patents… “Great!”
Creative/innovative “Let’s take peanut butter and
combine it with chocolate; it’ll be
perfect!”
“Peanut butter and chocolate. That’s crazy talk; the
contracts clearly prevent that.”
Use more than just the law to solve problems. “Hey,
we spend $500K with the peanut butter supplier,
and more than that with the chocolate supplier. Let’s
point out that these provisions aren’t helping us
grow our business and ask them to change the
contracts”
Decisive/results oriented “We are going to do X and get Y
result”
“On the one hand, it could go this way, on the other
hand…There is no guarantee of a result”
(i) Cut off the hands!
(ii) Give odds: 60/40 +/- 15%, but not 50/50
“We will do X and X is the best way to achieve Y…”
“When we’ve done X in the past, we’ve achieved Y
result. This situation has a couple more issues...”
“Guarantee? Sure, when the VP Sales guarantees
revenue two years from now”
• Entrepreneurs and lawyers have different communications styles
• Adapting to their communications style leads to successful IP advice
Communications styles

Communicating with Entrepreneurs
• Differentiate between “I don’t know” and “It is unknowable”
• “I don’t know” versus “I will have an answer for you by tomorrow, noon”
• Give the answer first, then the explanation
• Risk presented as uncontrollable sounds more threatening than risks that
appear controllable
• Keep your credibility – if every risk is a 10 out of 10 on the importance
scale, you are not credible
Communications with entrepreneurs/clients
• Client will want you tell them what to do
• Many times you can do that, with care, but other times the framework for
evaluating the risk is what you can deliver
• Don’t be afraid to differentiate between the two situations
• Outside versus inside counsel roles
Your role

Startups and IP
•Specific – reduce the risk of someone preventing us from using our name, search and register our trademark on our business name,
monitor for similar marks
•Measurable –no one tried to prevent us from using our name
•Assignable – attorney X is responsible for searching, preparing the registration, and monitoring the mark
•Realistic – we have budget and the time frames are reasonable
•Time-related – file, register within 24 months, over the next 3 years monitor our mark
Try for SMART IP goals
•Address operational challenges of a startup
•IP is not the focus of the startup; they will lose track of their IP unless the actions required by the startup are really, really easy (even
then they may lose track)
•Differentiate between what are good ideas and what actions drive value
•Should the software startup register their copyright?
•Don’t stop at “I’ve eliminated that risk,” keep going and ask “How does that drive value today?”
IP advice for startups
•All companies
•Goal: reduce risk of early IP mistakes
•Secure basic rights in trade secrets and trademarks
•Biotech & medical device
•Patents drive value and investments
•Consider international IP implications
•High tech
•Open source disorganized can drive away an investment
•Patents drive credibility, but not significant value
•Patents often not needed for 5-8 years
•Consider international IP implications
Pick your IP strategy for the technology sector

Typical IP Decisions for Startups
Characteristic Biotech & Medical Device Information and Communications
Technology
Other
Trade Secrets 1. Pre-signed one page NDA
2. Employment agreements
3. Consulting agreements
4. PowerPoint template has
“Confidential” on it?
5. System for keeping
agreements (Dropbox folder,
Drive)
Same Same
Copyrights Consider whether “Do Nothing” is
appropriate – it may be!
1. Open source organized Case specific. Consider whether
“Do Nothing” is appropriate – it
may be!
Trademarks 1. Search the one or two key
marks
2. Consider registering the mark
for the most important
product or service
3. Provide use guidelines
Same Same
Patents 1. File patents immediately
2. File as provisional to get the
extra year
3. Revisit for new inventions
monthly/quarterly
4. Project near term budgets
5. Involve senior management in
claims review
1. Consider whether filing is
appropriate
2. File a larger application first
3. Rank order inventions
4. Revisit for further inventions in 3-6
months
Case specific

Putting a Price on Risk
•Insurance industry does this all the time. Legal risk is another kind of risk
•Risk can be defined as a combination of probabilities and amounts
•What’s the price of the “unlimited liability clause”?
•What’s the price of patent infringement? What if someone else infringes?
•Learn to put a risk number and $ number on the decision. Embrace Excel
•Use spreadsheets to define inputs, assumptions, probabilities, and outcomes
•The model is not the “right answer” or the “final answer”
•The model is the framework for how the risks arise and how they can be addressed
Risk can be priced
•Once you have a sense of the risk, you can consider mitigation solution costs
•$ - handshake – most transactions
•$$ - contract
•$$$ - TM, copyright
•$$$$ - patents
•$$$$$ - litigation
•$$$$$$ - change the laws (lobbying)
Expected price of risk drives your solutions

Agenda
IP Overview

Patents – Buying, Selling, Valuing
•Apply some of the risk analysis, pricing and modeling discussed above to a specific example – reduced patent risk
Goal
•Prepare to be uncomfortable, but this is very much like writing a memo
•What are the facts upon which you will rely?
•What assumptions are you making?
•What methodology are you following for making your calculations – very similar to what legal precedents and laws are
you applying
•What is your conclusion? What are your caveats?
•Price is different than value
•Price – what will the payment be for the patent? (How much did you pay to buy your dog?)
•Value – the value to you when you hold the patent? (How much is your dog worth to you?)
Yes, you can put a price on a patent!
•Based on industry norms, Web2Co expects to be the target of a patent infringement claim in the next few years
•Web2Co grew fast so has a smaller portfolio
•Web2Co believes that buying patents allows it to reduce its IP risk
•Specific opportunity
•“Digg had been a very popular social news website, allowing people to vote web content up or down, called digging and
burying, respectively. Quantcast had estimated Digg's monthly U.S. unique visits at 3.8 million. Digg's popularity
prompted the creation of copycat social networking sites with story submission and voting systems such as Reddit,”
Wikipedia, June 30, 2014
•Portfolio: 1 issued patent, 17 applications, social networking, 2006 priority date
•How do you value and price the patents?
Defining the scenario

Patent Buying Overview
•Imagine that Web2Co had bought a patent(s), how would they measure whether that purchase was successful?
•Web2Co has purchased patents that are then used to turn away, or substantially reduce, the asking price of a known
corporate patent asserter
•Web2Co avoided being sued on the patents
•Key questions
•How would Web2Co know what the value of this success would be today?
•How much should Web2Co pay for those patents?
Start at the end – defining a successful patent purchase
•Private markets and brokered patent markets combine to make the patent buying and selling market
•Small group of patent brokers around the world represent inventors and companies to help sell their patents
•Annual patent sale transactions: $100-350M/year (excluding a handful of massive deals)
•Typically 30-50 new patent deals per month
The patent market
•Useful in counter assertion against specific companies?
•Known corporate patent asserters exist
•Litigation quality? Licensing quality?
•Issued versus pending?
•US or international?
•High tech generally. Specific technologies of interest?
•Open market or closed market transaction?
•Other characteristics: Age? Price? Existing licenses? Standards committees? Reputation? Pioneering?
Type of patent assets

Patent Value
• Problem: no one can agree on what the value of the patents should be
• Board members think $1M - $100M, with limited facts and no ability to
compare/discuss pricing
• No way to make a business decision
• How do we herd the cats?
• Without a valuation model, we have no framework for discussing how
much one should pay, what are the key facts and assumptions driving value
$10/100/1000 problem
• Commonly, estimate the current value of all potential future royalty
payments derived from the patents
• It is messy
• Specific scenario modeling
• Reduces the complexity
• Tied to a specific scenario so the client can relate (remember SMART IP
goals)
Many different models for valuing a patent

Simplified Components of Patent Value
•What is the value today of being able to assert the patents against a known assertion company
•Components of value
•Expected value to Web2Co in the counter assertion
•Time until used
•Probability that we would be able to use these patents
Value in counter assertion?
•Once the patents are bought, Web2Co has removed the need for Web2Co to take a license
•Components of value
•Who would I need the license from?
•License amount (or litigation costs)
•Time until payment
•Probability of payment
Remove need to license?
•Add value of counter asserting to the value of removing the need for a license
Value to Web2Co is the combined value

Counter Assertion Value Example
Input Description Example
Value
% chance corporate
asserter infringes
At the time of infringement, what is the chance
that a corporate asserter will infringe the patents
5%
Time to counter
assertion
How long before the counter assertion is
needed?
5 years
Value of counter
assertion
Assuming the corporate asserter infringes the
patents, what would the value of these patents
be in the negotiations? Consider size of portfolio
and likely other assets
$20M
Cost of capital The cost of funds used for financing a business 10%
Counter Assertion = present value (% chance * value of the assertion)
= present value (5% * $20M)
= value today of $1M, 7 years from now, 10% cost of capital
= $0.62M

License Value NPE Example
Value
% chance NPE will
assert
At the defined future date, what is the chance
that Web2Co infringes the patents
15%
Time to assertion How long before the NPE asserts? 2 years
Value of NPE
assertion
What is the value of the settlement, litigation
costs, and corporate distraction? Consider size of
portfolio and likely other assets
$1M
NPE License = present value (% chance * value of NPE assertion)
= value today of $.15M, 2 years from now, 10% cost of capital
= $0.12M

License Value Corporate Example
Value
% chance corporate
will assert
At the defined future date, what is the chance
that Web2Co infringes the patents
5%
Time to assertion How long before the corporation asserts? 7 years
Value of corporate
assertion
What is the value of the settlement, litigation
costs, and corporate distraction? Consider size of
portfolio and likely other assets
$25M
Corporate License = present value (% chance * value of Corporate assertion)
= value today of $1.25M, 7 years from now, 10% cost of capital
= $0.64M

Components of Patent Value
Counter
Assertion Value
=
$.62M
Pick the Greater
of (NPE or
Corporate
License) =
$0.64M
Value of Patents
= $1.26M

Components of Price
•Now you know what the patents are worth to Web2Co ($1.26M), how do we know what
price we should offer?
Price vs. Value
•Yes, you can find comparable patents
•Information and communications technology patents are somewhat fungible…
•This is not intuitive
•Find similar packages and compare the asking price
Comparables in patents
•# of assets
•# of US patents
•# of international patents
•# of patent families
•Priority date of key patent (or average priority date)
•Open continuation?
•Claim charts? How many families charted?
Similar patent package components

Patent Selling
• Asking price is defined by two elements
• Value to expected buyers
• Market pricing
• Building a value proposition is important
• Who would use the technology?
• What time frame?
• How much revenue is impacted?
Similar to buying
• 12 months from start to close represents about 50% of the sold
packages
• Few active bidders on any one package
• ~50% do not sell
Time to money is long

Pricing Models and Use
• Per issued US patent = # of US issued patents * $300K
• Digg = $300K
• Per asset = # of assets (pending and issued) * $200K
• Digg = $3.6M
• Per charted family = # of charted families * $750K
• TBD
• Bulk pricing = # of assets * $35K
• Digg = $630K
Example pricing models
• Bid at market price, adjusted for current market conditions
• Bid < Value?
Bidding

Conclusions Patent Buying, Selling, Valuation
• Ensure that the price you pay is less than the value to you
Value is different than price
• Choose the model appropriate to the scenario (modifications are expected)
Different valuation and pricing models exist
• Models provide a way to discuss key assumptions and facts that drive value
• Applies to both buying and selling
Models provide more than a number
• Value of future counter assertion PLUS
• Value of obtaining a license
Typical components of patent value

Business Sense • IP Matters Attorney-Client Privileged & Confidential 25
BUSINESS SENSE • IP MATTERS
ROL Group has over 60 years of IP strategy and execution
experience. We ask the business questions first. We
blend in-house and large law firm experience to create
clear steps for success.
We guide companies through unique IP challenges—like
buying and selling patents, developing licensing
programs, defending against patent assertions, and
creating a value-driven IP portfolio. We give direction to
businesses that share our passion for new ideas, creative
problem solving and forward motion.

Business Sense • IP MattersBusiness Sense • IP Matters
Stanford Ignite
Sara Harrington, LinkedIn
Kent Richardson, ROL Group
June 30, 2014

Intellectual Property for Start Ups
June 2014
Sara Harrington
Sr. Dir. Legal – IP, Product and Privacy, LinkedIn
Kent Richardson
Partner, Richardson Oliver Law Group

Intellectual Property Rights
¤ Copyrights
¤ Patent
¤ Trademarks
¤ Trade Secrets
¤ And more… Trademark!
Copyright!
Patent!
Trade secret!
Intangible rights that can be bought, sold and licensed

Types of IP (lawyer’s view)
Trademark Copyright
Trade
Secret
Utility
Patent
Design
Patent
Subject
Matter
Word,
symbol,
sound, shape
to identify
source
Expression
(not ideas)
Information:
process, list,
formula, etc.
Useful
apparatus,
process,
composition
Ornamental
design for
article of
manufacture
Must Be Distinctive Original,
creative
Secret New and
non-
obvious
New and
non-obvious
Obtaining
Rights
Use
(registration
optional)
Fix in
tangible
medium
(notice and
registration
optional)
Reasonable
efforts of
secrecy
Application
with U.S.
government
Application
with U.S.
government
Lawyers see the world in Times New Roman font
MBAs would put this into an Excel spreadsheet

Why care about IP?
¤ Shields and Swords!
¤ Protect an innovation/business advantage
¤ Create Value
¤ Happy Staff*
Investors will expect you to be competent in
the strategy and risk assumption around IP.

You Don’t Need to Choose One
A single product may utilize all forms of protection such as a
software program that:
¤ has its overall method covered by a patent
¤ has copyrights in the source code/displays
¤ has source code that is kept secret
¤ has a name that is protected by a trademark
¤ holds information that is protected by database rights*

What is the ROI for IP? It Depends.
Copyright
Trade Secret
Trademark
Patent
Cost
Protection
Copyright
Trade Secret
Trademark
Patent
Cost to Obtain
Protection
Provided

When does it Matter?
Defense and Diligence.
¤ To defend your business from competitive threats and
¤ Smaller angel financing
¤ IP due diligence may be minimal
¤ Industry specific
¤ IP in software, brand or patent filings
¤ Larger institutional financing (VC/Series A)
¤ More extensive IP due diligence
¤ Substantive review of IP documentation, patent filings
¤ Ownership, chain of title
¤ Open Source reliance
¤ Possible landscape / competitive analysis
¤ How defensible or patentable is the IP
¤ Review of key in-licenses

Top 10 IP Tips for
Early Stage Tech Companies

Tip #1: Leave the Past Behind
(Keep it Clean)
¤ Clean separation from prior employer
¤ No using prior employer’s equipment, confidential
information or time
¤ Terminate employment first, esp. if new company
relates to prior employer s business – clean timeline
¤ Don t use university or government resources
(personnel, labs, equipment, etc.) without
understanding IP consequences

Tip #2: Get it in writing10
¤ Founders agreements
¤ Employee agreements
¤ Consulting agreements
¤ University and Government
¤ Ownership of IP
¤ Don t rely on work for hire doctrine
¤ Obtain express written assignments
¤ Record assignments, perfect chain of title
(KEEP THE WRITING – Cloud is fine)

Employees or Consultant? It matters!
¤ Employees: IP assignment agreements for employees
¤ At-will employment
¤ NDA
¤ Invention assignment (exceptions CA Labor Code 2870)
¤ Excluded IP (if any) – should be carefully reviewed with counsel
¤ No transfer or use of prior employer information
¤ Back-up license and waiver of moral rights
¤ Consultants: written consulting agreements
¤ IP assignment and NDA
¤ Misclassification - avoid control over consultant, to keep consultant
from being treated as a de facto employee
¤ University faculty (limits on time and activities)
¤ Work for Hire issue
¤ License to pre-existing works
¤ Outsourcing to far off lands

Tip #3: Timely File for Patents
¤ Have a strategy! (appendix)
¤ U.S. patent applications
¤ Public use or disclosure
¤ Sale or offer for sale
¤ One (1) year grace period but risk of any delay
¤ First to File change in U.S. law (effect. 2013)
¤ File early
¤ Describe lots of vertical applications, alternatives
¤ Ask the “What Else” question
¤ International patent applications
¤ Absolute novelty – no grace period for most countries

Patent Filing Example Timing
and Trade Offs
Event Good Bad
Initial idea • Earliest filing date • Idea isn’t entirely thought
through
• $ are most expensive
• No feedback
Code & test complete • Early filing date.
• More robust patent
application – more
inventions - more details on
implementation
• Later filing date
• $ still expensive
• No feedback
Post launch - public feedback • Feedback used to improve
the ideas
• More details and
implications understood
• Lost some international
rights?
• $ expensive
Version 2 • Spent early money on
development
• More feedback – traction
on the big idea?
• Cannot patent the big
idea?
• Only can pursue Version 2
improvements?

Tip #4: Avoid the Provisional Patent Pitfall
¤ Same legal standard for technical disclosure and detail
as regular patent applications
¤ Often treated as a short cut
¤ May give false sense of security and protection resulting
in loss of rights and opportunity

Tip #5: Joint Custody is Messy
¤ Joint Ownership is Messy.
¤ Different rules for different IP (e.g., patent vs. copyright)
¤ Different rules in different countries
¤ Different owners = Different Goals
¤ Hard to enforce
¤ Do you need to own it?

Tip #6: Deal with it.
-Manage Infringement Risks
¤ Don t ignore threats or accusations of infringement
(that includes open source)
¤ Notice imposes legal duties and obligations
¤ What will you tell investors?
¤ Even if you are right, consider avoiding the fight
¤ Willful patent infringement
¤ Patent opinions

Freedom to Operate (FTO) = $$
¤ Assess if you do or may infringe the patents of others
¤ Scope often varies by area of technology (and investors)
¤ Tech: usually just a check of direct competitor patents before fund
raising or as part of IP due diligence
¤ Biotech:
¤ NewCo must determine if there are issues
¤ If you don t do it, the investors often will
¤ Search public databases
¤ Uspto.gov; freepatentsonline.com; googlepatents.com
¤ Search key words, structure, assignees and inventors
(competitors)
¤ Freedom to Operate is never certain and requires on-going
inquiry – new patents are published every day

Tip #7: Don’t Get Contaminated or Blocked
¤ Consider feedback or residual clauses
“Residuals” = what you can remember
“Feedback” = what you share
¤ Consider license to improvements and modifications
¤ Disclosure to partners/customers may enable blocking
improvements to be developed and patented
¤ Anticipate use of technology by partners/customers and file
patent applications in advance
¤ Copyleft

Open Source 101
¤ Potential pitfalls of Open Source Licenses:
¤ Typically no warranties/indemnities, so no remedies if:
¤ Code isn t owned by licensor(s)
¤ Code infringes other intellectual property
¤ Code doesn t function as intended
¤ Typically no support or maintenance
¤ Comes with strings attached ( e.g., GPL):
¤ All modifications to open source must be distributed
¤ All third parties must be permitted to make unlimited copies, modify
and make derivative works, and redistribute for free
¤ If any GPL code is combined with another program, the entire
program may become subject to the GPL ( viral effect)
¤ Distribution of GPL code may result in inadvertent license grant
under other Company IP (e.g. patents)
¤ Obligations may apply to SaaS – Affero GPL

Tip #8: Avoid Restrictions and Grant Backs
¤ MFN, ROFR, Options, Notice Obligations
¤ Exclusivity
¤ Covenant Not to Sue
¤ Feedback and Improvement Licenses
(These can be in places where you least expect it– did you read
that hosting agreement? Amazon AWS agreement?)

Tip #9: Exit Options in Contracts
¤ IPO or Change of Control
¤ Assignability in mergers
¤ Spin-outs

Tip #10:
Keep it Secure and Respect Privacy
¤ Using cloud services?
¤ Who can use it?
¤ Is your data secure?
¤ Can you get it back when you leave?
¤ Uptime? Redundancy?
¤ Giving free license?
¤ Providing a cloud service? You customers will need assurance on all of the above.
¤Web or app business?
¤ Privacy by design: settings, consents, tracking, de-personalization
¤ Data: “need it” or “nice to have” or “might need” or “more is better”
¤Privacy policy– you need to understand it! You need to live by it.

Appendix of Useful IP Stuff
¤ Should I sign that NDA?
¤ I want to see more words about IP!
¤ Patent Filing Basics
¤ More on IP
¤ Trade secrets
¤ Trademarks and Domains
¤ Copyrights and Databases
¤ Patents

Should I sign that NDA?
¤ Non-disclosure agreements
¤ Mutual NDA
¤ Company Disclosing
¤ Company Receiving
¤ Confidentiality clauses in other types of agreements
¤ NDA considerations:
¤ Definition of Confidential Information/marking
¤ Scope of Permitted Use– is there a limit
¤ How long do the Confidentiality Obligations last?
¤ Even if you didn’t sign, there may be an obligation of confidentiality under
the circumstances
¤ The world will not end if you do not sign their lobby NDA– READ IT!
¤ Investors may not sign
¤ Be careful what you disclose

Trade Secrets
¤ Definition:
¤ Formula, Pattern, Complication, Program, Device, Method, Technique,
or Process
¤ Independent Economic Value
¤ Value from Not Generally being Known
¤ Must Use Reasonable Efforts to Maintain Secrecy (if you aren’t
trying to keep it a secret why should a court think you are damaged by its
use or disclosure?)
¤ Reasonable Measures: Employee training, Security (sign-in, badges,
restricted access, locks, fences), Marking documents; NDAs
¤ Right to be seek redress for misappropriation
¤ Rules vary by State (MA, NC, NY, TX have NOT adopted Uniform
Trade Secret Act)

Trademarks and Domains
¤ Mark is a word, name, phrase, symbol, design, or combination
¤ Other distinctive items can be marks
¤ Sounds, scents, colors
¤ Non-functional aspects of trade dress
¤ Identifies and distinguishes source
¤ Symbolizes goodwill of source
¤ Right to prohibit others from using same or confusingly similar mark
¤ Registration optional
¤ Confusion means infringement
¤ Domain Names are not always trademarks, likely just an address

Copyrights and Databases
¤ Protects works of authorship
¤ software is a work of authorship
¤ Must be original expression (low threshold of creativity)
¤ Must be fixed in a tangible medium of expression
¤ Cases say RAM is sufficient
¤ A competitor can copy the idea, but not the expression
¤ Exclusive rights: reproduce, distribute, prepare derivative works,
perform, display
¤ Registration: Not mandatory, but required to enforce
¤ Database Rights are distinct rights in some countries “sweat of
brow”

Patents
¤ Government-Granted Right
¤ For Inventions
¤ New and useful
¤ 20 year term from filing
¤ Exclusive right to stop others from making, using or selling
¤ Issued by individual countries and have only national effect
(Filing in the US doesn’t help you against someone making and selling in
China)

Patent Strategy
¤ Your market and IP
¤ How will you make money now, 5-10 years from now? Products, services, partnerships?
¤ What does the TAM look like?
¤ How will you want to use your patents?
¤ How much does freedom to operate matter? When?
¤ For most start ups, patent strategy = executing to a couple tasks
¤ Most common high tech patent strategy
¤ File a very descriptive patent application
¤ Includes your big ideas and lots of variations
¤ VARIES BY CIRCUMSTANCES and INDUSTRY
¤ Medical device, biotech, chemical have different strategies
¤ Budget 12 months
¤ 1-2 filings, including 1 big one
¤ Best Start Up Patent Strategy
¤ Be phenomenally successful in your business and, oh yeah, have a couple patent filings

Patent Filing Basics
¤ What should be in my patent application? How broad should it be?
¤ Important aspects of your invention
¤ Cover not only your expected use, but also extensions, alternatives,
permutations, vertical applications
¤ Future protection available for what was written in the application
¤ Must have enough description to enable one of skill in the art to practice your
invention (but not every conceivable step or detail)
¤ Data increases likelihood that you will obtain a patent
¤ Potential partners may file their own improvement applications
¤ Fequently the commercially important embodiments
¤ See above – IP Due Diligence and Confidentiality
¤ Attorney explains what you are claiming before filing
¤ Claim 1, element by element review

Startups & IP Risks: Trademarks, Patents, and Valuation

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