Christopher A. Brown

Ounce of Prevention for Business IP Assets Worth Pound of Cure By Chris Brown

April 18, 2018

It may sound exhausting. Your client is focused on starting a new business and of course, they have plenty on their plate. Purchasing equipment and inventory, leasing premises (if not operating from home), arranging sales and/or other business development opportunities, as well as getting the word out on the new business will take every bit of a 24-hour day.

However, the fruits of labor will pay off. Indiana offers an easy online filing system as well as access to many other resources. Organizing a business structure may just be the easiest step.

Your client needs strategies and concepts regarding the intellectual property assets encompassed in the new business even before the articles of incorporation are filed. Many pieces may already have been created and others will be developed as the business grows. Remember, as with any other task, an ounce of prevention in the form of planning for intellectual property is worth at least a pound of cure, especially when the client is engaged with the day-to-day efforts of running the business.

Trademarks and Trade Names

Clients may not understand that adopting a company or corporation name (even one not used as a brand) can result in unfair competition claims under the federal Lanham Act (e.g. 35 U.S.C.§ 1125) or state law.

I’ve seen clients that have incorrectly assumed that registration of their company name is without consequence. I’ve also experienced that similar misconceptions arise with domain names. Most states, Indiana included, do not have a process to evaluate the likelihood of consumer confusion among corporate names. If Indiana does not find a match with an existing corporate name, it will usually go ahead and register the name. The same goes with domain names. If a registrar does not find a match with an existing domain name, the registration will proceed. Only later may the client discover that there is a non-identical, yet potentially confusing domain name, corporate name or trademark that has already been registered by another entity.

Indiana has a searchable database of registered business names: https://bsd.sos.in.gov/publicbusinesssearch. Once your client has decided upon a company name, guide them to take the simple step of searching the Indiana database to review any similar names and the business they conduct. Note that this review is not comprehensive. However, it can be utilized to locate and avoid specific pitfalls. Your client can also arrange for more in-depth searches. Again, before the corporate articles are filed, a basic, quick search is highly recommended.

Trade Secrets

If the client has no employees, trade secret issues may be minimal. The new businessperson always needs to be aware of what business information is valuable and safeguard that information. The easiest step is to keep such information locked away when not in use, whether digitally (separate server or drive) or physically.

When employees, investors, or corporate officers come into the picture, the small-business person needs to consider who needs access to valuable information and how to compartmentalize it. A good practice is to get written agreements from employees and others involved with the business that include clauses requiring them to use such information for the business, and not for themselves. Also, keep a log of people admitted to nonpublic areas of the business’ premises, and have them sign a short agreement not to divulge what they observe or learn.

Patents

Not all new businesses will include an inventive product, method, or device as part of its plan. However, a new businessperson needs to know that the clock starts ticking on applying for a patent in the United States when an invention is “ready for patenting” and non-confidentially disclosed or otherwise made public. Once that happens, the client has one year from such publication to file a U.S. application. Accordingly, as a new business is formed, Quick decisions concerning a patent search or application and secrecy agreements (preferably written) with investors, employees or others may be needed.

Copyrights

Copyright automatically exists in an “original work of authorship” as soon as it is “fixed in a tangible medium of expression.” A copyright is initially owned by the author unless (1) assigned by the author, or (2) a “work made for hire,” i.e. made by an employee in the scope of employment.

When others are the authors, the new businessperson must be aware that he or she may not own, and may even have limited rights to, materials created for the business. Web designers, for example, may retain ownership of copyright, and while the new business may use material created by the web designer, the businessperson may have limited ability to alter or add to the material. The new business needs to be aware of, or negotiate away, any such limitations.

The number of people who assume that material on the internet or posted on social media is free for anyone’s use is remarkable. Informational sites frequently allow a license to use material for noncommercial or educational purposes. However, know that the new businessperson (your client) needs to investigate and observe such licenses, where they exist. Fair uses are permitted by statute (17 USC 107), but are generally not associated with commercial use of copyrighted material. It is vital for a new businessperson to remember that photographs, text or other online material are rarely free for the taking.

Winding it Down

As with life in general, whether a business is large or small, it does not last forever. Intangible property should be treated with as much care as tangible property. Hoosiers may remember when the Roselyn Bakery chain ceased operation, but the trademarks and associated goodwill were valuable assets that continued in use.

Intellectual property can pass by assignment or by operation of law. In a bankruptcy, patents, copyrights, trademarks (with associated goodwill) and trade secrets may be sold or assigned for the benefit of creditors. In the winding up of a corporation or limited liability company, intellectual property must be considered in the disposition of all property. While it may seem that there need be little or no concern for intellectual property in a soon-to-be defunct small business, potentially valuable rights are at least in ownership limbo and may be lost if provision for them is not made in the winding down.

In a noncorporate business, where any intellectual property owned by the “business” is in fact owned by the individual proprietor, winding down the business may have little effect on the property of the business — it remains owned by the proprietor. However, in such cases any intellectual property — which can include copyright in personal and business papers — transfers on the death of the owner occur according to a residuary clause in his or her will, or according to the applicable law of interstate succession.

To view the article in The Indiana Lawyer click here.


Firm Sponsors the Indiana Medical Device Manufacturers Council’s 2014 Exhibit Breakfast

February 19, 2014

Woodard, Emhardt, Moriarty, McNett & Henry LLP was pleased to sponsor the Indiana Medical Device Manufacturers Council’s 2014 Exhibit Breakfast at the Indiana Statehouse on February 12. The event brought together small and large medical device manufacturers from all over the state, including Cook, Zimmer, and Roche, as well as suppliers for the industry. Legislators, administration officials including Lt. Governor Sue Ellspermann, and representatives from Congressional offices had the chance to meet and speak with members of one of Indiana’s key industries.

The focus of the Breakfast was to show innovations and demonstrate the importance of the medical device industry to the state. “We are delighted once again to be a part of this event and to support the IMDMC and its members,” said Christopher Brown, a member of Woodard Emhardt’s Management Committee and the Firm’s representative at the Breakfast. “These manufacturers and the companies that provide them with equipment, materials and services are some of the most forward-thinking businesses in our state. Our long-standing exclusive focus on intellectual property is dedicated to helping Hoosiers create new ideas, new products, and new businesses, and these companies are right in the forefront of that effort.”


January 2013 Patent Prosecution Group Luncheon

January 21, 2013

Patent topics covered in this month’s prosecution group luncheon include: a discussion on the PTO’s request of comments regarding improving patent quality, technical amendments to the AIA, and a review of recent federal circuit cases In re Owens, and In re Chevalier.

To download a copy of the presentation click here.


October 2012 Patent Prosecution Group Luncheon

November 5, 2012

Topics covered in this month’s patent group presentation include information about the current backlog of patent applications at the United States Patent and Trademark Office (USPTO), new rules regarding derivation proceedings, a practice tip for releasing search results to the European Patent Office, proposed USPTO ethics rules codifying with the ABA rules, patentability of computer software, and recent cases about inter partes reexamination. To download a copy of this presentation click here.


Woodard Attorney Participates in Entrepreneur Summit

March 5, 2012

Well-established entrepreneurs and alumni of Wabash College gathered at the school on February 11, 2012, for the Second Annual Entrepreneur Summit.

A panel of entrepreneurs and Wabash alumni which included Woodard Emhardt partner Chris Brown, ’89, educated members of the Crawfordsville community and students from Wabash and other nearby colleges about becoming an entrepreneur.  Chris primarily discussed the legal aspects of entrepreneurship including various intellectual property considerations.


November 2011 Patent Group Luncheon

November 22, 2011

Topics covered in this month’s patent group presentation include prioritized examination, discussion of a case regarding the De Novo standard of review, and discussion of recent case law following the Bilski decision.  To download a copy of this presentation click here.


October 2011 Patent Group Luncheon

October 28, 2011

Topics covered in this month’s patent group presentation include proposed federal trade secret legislation, recent case law regarding the presumption of irreparable harm, and recent case law regarding factual findings and new grounds for rejections.

To download a copy of this presentation please click here.


September 2011 Patent Group Lunch

September 28, 2011

Topics covered: America Invents Act

-Effective Dates

-Major Changes to 102 & 103

-Derivation Proceedings

-Post Grant Review Citation of Art

-Prior Use Defense

-Miscellaneous Provisions

Click here to download a copy of the presentation.

 


A Summary of the America Invents Act

September 15, 2011

On September 16, 2011, President Obama signed into law the “America Invents Act”which makes sweeping changes to the U. S. patent system. Congress’s primary goals were to further enhance opportunities for innovation and entrepreneurial investment, to better harmonize U. S. patent laws with those of other countries, and to streamline patent office procedures. Over the next 18 months, the U. S. patent laws will change so that by the spring of 2013, there will be new issues and new proceedings for patent practitioners, inventors and businesses to consider. The most important of these new issues and procedures are:

Moving to a “first-to-file” system: The United States has always had a “first-to-invent” system, meaning that deciding whether an invention was new or not obvious involved determining the state of the art at the time the invention was conceived, not at the time the application was filed. Most other patent systems around the world consider the state of the art when the application was filed. The America Invents Act changes the U. S. system to likewise require that applications be examined against prior art dated before an application’s filing date (with some exceptions for inventor disclosures). The date of invention will no longer be relevant in determining what is prior art against future applications.

Assignee prosecution opportunities: Traditionally, a patent application is filed on behalf of an inventor, and the resulting patent is issued in the inventor’s name. Inventors can assign (e.g. sell or transfer) their patent rights to a third party such as a business or another person, for example the inventor’s employer. Traditionally these third parties (assignees) could move the application through the Patent Office with certain authorizations from the inventor. The new law still requires the original inventor be identified. However, if the inventor is required to assign the invention to a third party, the assignment can authorize the third party to take control the application as it moves through the Patent Office. The resulting patent would issue in the third party’s name.

Personal infringement defense based on prior use.The act provides a broader “prior use” defense, for use in cases in which a business is using a process or machine as part of a process, and has been doing so for more than one year prior to the effective filing date of a patent that would cover the process or machine. The defense is personal to the user, and can only be transferred with the business to which the process or machine relates. The defense addresses situations in which private first-users have been accused of infringement of another’s later-filed patent, where the non-public first use cannot be used to invalidate the patent.

Post-grant review of patents.: Perhaps the most anticipated aspect of the new act creates proceedings in the Patent Office to challenge issued patents. Two separate proceedings are created by the new law: An “inter partes” review and a “post-grant” review. The “inter partes” review permits allegations of invalidity over prior art. The “post-grant” review permits allegations of invalidity on any ground in the statute, and must be filed within nine months of the patent’s issuance. The Patent Office will be creating rules to govern these procedures in the coming months.

Supplemental examination: The act provides a procedure for supplemental examination of a patent by the owner. The supplemental examination is not a re-examination. However, if the Patent Office discovers a substantial new question of patentability during a supplemental examination, a re-examination will be ordered using the current re-examination procedure. A supplemental examination can be used to “cure” what might be inequitable conduct in the original prosecution, if the previously unconsidered or incorrect information was considered or corrected in the supplemental examination.

Filing fees: In addition to the existing large entity and small entity patent fees, the act creates a “micro entity” fee structure, which will most commonly be used by independent inventors. A “micro entity” is any small entity that has filed no more than four applications, and has an income that is less than certain specified limits. Micro entities are charged significantly lower fees that are only 25% of the large entity fee (i.e. $250 for filing, examination and search fees).

Other provisions remove the ability to invalidate a claim or patent based on failing to disclose the best mode of carrying out the invention, permit “virtual” marking of a patent number, limit suits based on claims of false patent marking, and codify the principle that failure to obtain, or choosing not to disclose, advice of counsel cannot be used to prove willful infringement.

Most of these provisions will take effect within the next 18 months, although some will take effect immediately. Regardless, it is not too early to consider how these sweeping changes to the U. S. patent system will affect your innovation strategies and business practices. If you have questions regarding how best to protect your ideas under the new patent laws, contact our experienced patent attorneys at Woodard, Emhardt, Moriarty, McNett & Henry LLP.


August 2011 Patent Group Lunch

September 5, 2011

Topics covered in this month’s presentation included:

 – Federal Circuit “computer readable medium” claim eligibility

 – Update on patent eligibility of isolated DNA

 – USPTO’s Ombudsman Program became permanent

 – USPTO just issued Patent No. 8,000,000

To download a copy of the presentation click here.

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