Intellectual Property 102 – Identifying, Securing, Capitalizing, and Early Stage Enforcement

Legal mistakes can doom even the best startup concepts and founding teams. It is important to know who owns the IP, the proper timing for registration, and how to enforce your legal rights. This presentation gives you a legal road map to successfully safeguard your product or idea.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Yuri Eliezer heads the intellectual property practice group at Founders Legal. As an entrepreneur who saw the importance of early-stage patent protection, Yuri founded SmartUp®. Clients he has served include Microsoft, Cisco, Cox, AT&T, General Electric, the Georgia Institute of Technology, and Coca-Cola.

yuri

 

Source: Smartup Legal

How Long Does It Take to Register a Trademark?

The length of the U.S. Federal trademark registration process can vary. Once filed, an application is typically assigned to an Examining Attorney within about 3 months. The Examining Attorney will firstly review the application to make sure that the applied-for mark can be registered at all. The Examining Attorney will then review the selected classes and sub-classes in the application, make sure that the specimens are acceptable, and that ‘use’ of the mark is proper. Finally, the Examining Attorney performs a search to find possible conflicting marks – including those that look or sound substantially similar to the one in the application.

If the applied-for mark can be registered, no issues are found in the application itself, and if no conflicts are found, then the Examining Attorney will issue an ‘allowance’. An allowance simply means that the mark has passed the USPTO’s internal review, which is oftentimes the biggest hurdle for registration. It is not atypical for this process to take 1-4 months after the application is assigned to an Examining Attorney.

Once the mark is allowed, the application is published for opposition – a period of 30 days during which third parties can ‘oppose’ the mark, if they reasonably believe that registration of the mark in the application will harm them. If no third party opposes the application, then a registration is typically issued 1-2.5 months after that.

Therefore, a period of approximately 8 months from filing to registration is not unusual. There is a possibility that a registration may be granted within 6 or 7 months. It is also worth mentioning that a registration can require much more time (possibly years) if the Examining Attorney issues a refusal or if a third party files an opposition to the application.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

LLC or Corporation: What Is Best for Your Startup?

The most significant difference between an LLC and a Corporation is in a) structure and b) governance.

Generally speaking, the way a Corporation is structured and run is well-defined, with little room for variance. An LLC is structured and run by contract between the LLC and its owners (the Members), which makes it very fluid and adaptable.

A Corporation is very rigid – the way in which it is set up and run is defined by law and practice, so there is little room to change things. The benefit of a rigid structure is predictability – everyone involved (investors, lenders, advisors, employees etc.) knows exactly how a Corporation works. This rigid Corporate structure is also highly scalable.

An LLC, however, is a much newer type of entity, and it is designed to be very flexible. The state laws and rules that define LLCs are typically very broad – and purposefully so to allow for variation.

The LLC can be structured, governed and taxed exactly like a Corporation, but can be set up for the Members (owners) to run the LLC directly, without a board. The roles can be defined by contract (Operating Agreement) between the LLC and its Members.

The obvious benefit is that an LLC can be tailored to meet the exact needs of a specific business. There is however, a drawback: Since the baseline laws are broad, the governing documents must be very well done to avoid nasty surprises.

The most important document in an LLC’s toolbox is the Operating Agreement – which is the contract that defines how the company is run.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

Can You Add Another Person to Your Patent Application?

“If I filed for a provisional patent as the sole inventor, is it possible to add another inventor when filing for the nonprovisional patent if he makes a contribution to the invention?”

You may add additional inventors to your non-provisional application.  The non-provisional must have at least one inventor in common with the provisional patent application.

It is important to understand, however, that the inventors listed must correspond to the subject matter stated in the patent claims, not the patent specification.  An inventor is someone who contributed to the conception of a patent claim.  Patent claims are not required provisional patent application, but they are required in the non-provisional… so you must carefully assess who may or may not be listed as an inventor in the non-provisional patent application.

In addition, if you are adding an inventor because the inventor contributed additional subject matter after the provisional patent filing – you must be careful.  Adding new subject matter in the patent claims that was not covered in the provisional may cause the patent examiner to decline your priority claim to the provisional application.  This is because the provisional patent application must at least anticipate the subject matter claimed in the non-provisional application.

As such, you must file a non-provisional patent application with the same subject matter as the provisional and then, you must file a continuation-in-part application to cover the new subject matter not covered by the provisional.  This will enable you to preserve your priority claim to the provisional – else, you risk losing your claim!

I would strongly advise that you retain a licensed attorney for the non-provisional filing.  I have not met an inventor who has obtained enforceable and defensible patent protection without the support of a licensed patent attorney.  There is a high risk of abandoning your patent rights to the public domain.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Yuri Eliezer heads the intellectual property practice group at Founders Legal. As an entrepreneur who saw the importance of early-stage patent protection, Yuri founded SmartUp®. Clients he has served include Microsoft, Cisco, Cox, AT&T, General Electric, the Georgia Institute of Technology, and Coca-Cola.

yuri

 

Source: Smartup Legal

How Is Licensed IP from a University Affected During an Acquisition

If a startup company uses an exclusive licensed IP from a university, what usually happens if the company wants to get acquired by a larger company? Do large companies usually avoid acquiring a company with a licensed patent?

The question can be answered whether or not you have an exclusive license to the IP from a University, an Individual, or an Entity. We must first visit the terms of that license agreement to determine whether the agreement includes a Successors & Assigns clause. This clause states that if either party is acquired, the acquiring party is subject to the agreement just as if it were the original party to the agreement. It means that if someone were to acquire the licensor (e.g., the entity granting the license), then that acquiring entity would be required to honor the terms of the license. Similarly, it means that if someone were to acquire the licensee (e.g., you in this case), that the acquiring entity would be entitled to the same terms of the license.

In some instances, the Licensor writes in the agreement that the terms of the license should be renegotiated upon an acquisition of either the Licensor or the Licensee.

The next thing we should consider are the actually terms of the license and what it would mean to the entity acquiring inheriting the licensing agreement. If the entity subject to the license highly relies on the license agreement, then the acquiring entity will carefully scrutinize the terms.

For instance, when does the license expire? What happens when the license expires? Will the licensor be willing to renew the license to the acquiring entity? Are there any conflicts of interests between the licensor and the acquiring entity (do they want to do business with each other)? Will the licensee be able to provide his/her products/services without such license? Is it possible to design proprietary products/services to circumvent the license? How much of the company’s value/worth is associated with/relies on having the license? Can the acquiring party get such license themselves and thereby eliminate the need for your company altogether (exclusive licenses prevent this)?

In general, even large companies have many license agreements they are bound to themselves. They acknowledge that this is a normal part of business. However, if your company will collapse if such license agreement is not in place then it may be harder to be acquired.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Yuri Eliezer heads the intellectual property practice group at Founders Legal. As an entrepreneur who saw the importance of early-stage patent protection, Yuri founded SmartUp®. Clients he has served include Microsoft, Cisco, Cox, AT&T, General Electric, the Georgia Institute of Technology, and Coca-Cola.

yuri

Source: Smartup Legal

Can I Use a Competitor’s Name in Advertising?

Some of the most memorable advertising campaigns in history involve the comparative use of competing trademarks.

Coke vs. Pepsi; Burger King vs. McDonald’s; Bud Lite vs. Miller Lite… The list could go on and on.

If you are a major consumer brand, chances are you have thought about how to create your own consumer identity by comparison to or distinction from your competition.

But proceed with caution. A thoughtless ad campaign that carelessly namedrops another company’s trademark could land you in court.

The Quick and Dirty

In general, it is not illegal to compare yourself to your competitor in the advertising context, so long it is not untruthful, disparaging, misleading, or confusing to the public. Additionally, the use of a competitor’s trademark cannot lead the public to believe that the company is endorsing you.

But what do those generic rules look like in practical application?

 What You Can Say

1. Consumer Comparison Survey

Courts have held that it is legally defensible to conduct actual consumer comparison surveys and truthfully report the results. In short, anything you say about a competitor must be substantiated.

Remember the Pepsi Challenge? In its never-ending war against Coca Cola, Pepsi sought to prove its claimed superiority with an actual consumer taste test. At malls and other public locations, a Pepsi representative poured Pepsi and Coke into two blank cups and asked consumers what soda they preferred. Pepsi was lawfully entitled to publish its results, which it claimed showed that American consumers preferred Pepsi. But the takeaway is that anything you say about your competition that could be construed as “factual” (rather than obvious opinion-like statements that no consumer would take seriously) must be substantiated.

2. Brand References

Although a fine line should be recognized here between acceptable references and inappropriate endorsements, courts have held that the use of a trademark where there is no attempt to capitalize on consumer confusion or the commercial cache of a certain brand would be acceptable. For example, a court found permissible AOL’s effort to market to AARP membership with the following advertisement: “If you danced to the Beatles, cruised in a Thunderbird, or tuned into Dick Clark, you have earned . . . 100 hours free [Internet service on AOL].” Clark and Olive Enterprises, Inc. v. America Online Inc., 2000 WL 33535712 (C.D. Cal. 2000).

3. Compatibility Assurances

If your product serves as an accessory to another company’s product, you can advertise that compatibility. For example, compatibility advertising is frequently seen with i-Phone accessories – it is permissible for a company that makes i-Phone protective cases to mention Apple and its product the i-Phone in an advertisement about a protective case.

But caution should be taken here to ensure that compatibility advertising does not create an impression of endorsement or an affiliation between the two companies. For example, in a case between Stouffers and Weight Watchers, the Court found the following language likely to create consumer confusion: “Stouffers presents Weight Watchers exchanges for all 28 Stouffer’s Lean Cuisine entrees.” According to the Court, the use of the word “presents” between the marks “Stouffer’s” and “Weight Watchers” “creates the impression either that Stouffer owns Weight Watchers, or more likely that Stouffer is presenting these exchanges for Weight Watchers – in other words, that Weight Watchers gave Stouffer the exchanges to publish in the ad.” Weight Watchers Int’l, Inc. v. Stouffer Corp., 744 F.Supp. 1259 (S.D.N.Y. 1990).

Conclusion

With common sense and a good understanding of the legal parameters, companies can acceptably reference a competitor’s brand in an advertising campaign. But, given the heightened scrutiny trademark owners will give to the unauthorized uses of their market, caution should be taken to ensure that an advertisement avoids ambiguous language, which could cause consumers to be confused as to source, identity or sponsorship of the product or service. Anything even arguably deceptive or misleading must be avoided, and all direct factual comparisons must be substantiated.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Megan K. Johnson is a business lawyer with over 7 years of experience. She helped champion securities crowdfunding at the local level and worked with the first company to successfully close an equity crowdfunding involving everyday investors. She is a partner at Founders Legal and can be reached at [email protected]

megan

Source: Smartup Legal

Website Terms and Conditions, Why Do I Need Them?

Three Ways The Most Boring Page on Your Website Offers Critical Protection

Although web professionals spend almost no time on it, website terms and conditions govern the relationship between your company (or the entity running the website) and visitors, users and customers. So, as a founder, this page shouldn’t be ignored. Depending on the type of business you have, there are specific provisions you should include in your terms and conditions to make sure your company’s unique risks are mitigated. However, highlighted below are some general provisions that are a good idea for most companies with a web presence to address.

1. E-Commerce:

If you are selling goods through your website, your terms and conditions are especially important. You should make sure to include your return policy, whether you will make full refunds for dissatisfied customers, and what transit risk you are comfortable taking on – for example, will you be responsible if a product breaks when a customer is shipping back a return? Disclaimers on your liability and any warranty you make in reference to your product are also critical.

2. Protect Your Original Material:

When you put your work on the internet, you are literally making your hard-earned wisdom or recommendations available to the entire world. To protect against any improper third party use, you may need to prominently display notices regarding copyright or trademark. Additionally, to protect against a visitor who may use your content in a manner that you did not intend or who relies on the information you provide to his or her detriment, you should be sure to include appropriate disclaimers and limitations of liability.

3. User-Submitted Information:

If your site displays any information submitted by users (including standard “user profile” details), you should limit your liability from any libelous or offensive material, as well as any material that may infringe on the intellectual property of others. In addition to specifically disclaiming liability, you must also develop policies around when you will monitor and remove content and clearly state these policies in your terms and conditions.

To conclude, if given proper attention, you are entitled to largely ignore the terms and conditions of your website, so long as you initially make sure they adequately protect you and remain up to date. If so, the only time you’ll refer to them is to help you out of a jam. But if no attention is given to this boring little page, you may pay later with unmitigated legal exposure. Make sure to consult an attorney to ensure that your particular company risks are being appropriately mitigated.

 

If you are interested in more detail related to your situation it is best to speak with an attorney.

Megan K. Johnson is a business lawyer with over 7 years of experience. She helped champion securities crowdfunding at the local level and worked with the first company to successfully close an equity crowdfunding involving everyday investors. She is a partner at Founders Legal and can be reached at [email protected]

megan

Source: Smartup Legal

Do I Need to Know How to Make My Idea in Order to Patent It?

I have an idea that I think is/could be patent-able based on the requirements of patent-ability, but I do not yet know exactly how to make it. For example, I want to add a certain useful feature to a shoe, but do not know the best way to add that feature because I do not work in the manufacturing of shoes.

I believe I have found a company that could develop a prototype for me, but I am worried who would own the idea if they are the one’s adding expertise and deciding the best way to add the feature.

Would a provisional patent with general language about the feature and it’s useful benefit be enough to protect this idea while working with a manufacturer to develop a prototype, or would a specific description of how the shoe with the new feature is made be necessary (which I would not know until after the prototype is developed)?

Provisional patents, in large part, are designed to help the inventor secure their patent priority date while they take their invention from a ‘concept’ to a reality. During this process, you will be interacting with many parties: investors, engineers, developers, manufacturers. All of these parties may be better funded and better equipped than you are to bring your idea to market. Having a provisional patent on file will help ensure that, if anyone is entitled to a patent on your  invention, it would be you. This protects you against potential misappropriation of your invention by the parties you engage in helping you bring your idea to market.

That being said, how much do you need to know about actually making your invention for a provisional patent? Well – at the provisional level, you should be able to describe your invention conceptually. You may not know all the tricks, but the requirement is that you describe your concept such that an engineer will be able to derive how to make your invention based on your description. So, as an example, you don’t need to know how to be a programmer to patent a software application – you just need to have an understanding of how the software application what the software application should be built to do.

As another example, you don’t need to be a shoe-maker to patent a new feature/design on a shoe. You just need to describe your concept sufficiently to enable a shoe-maker, when reading your patent description, to make your concept into a reality.

So, I would agree that filing a provisional patent application is very important – and, if you know enough about your invention to describe it to someone who has the means to build it, then you have enough information for a patent application filing.

I will also add that it’s important that you should have good agreements in place with the manufactures/engineers during your work with them in creating your invention. Even if you have a patent filing, you make sure that  these manufactures/engineers sign IP Assignment agreements. These agreements require the people you work with to transfer their IP rights to any contributions they may make to your patent-pending invention during their work for you.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Yuri Eliezer heads the intellectual property practice group at Founders Legal. As an entrepreneur who saw the importance of early-stage patent protection, Yuri founded SmartUp®. Clients he has served include Microsoft, Cisco, Cox, AT&T, General Electric, the Georgia Institute of Technology, and Coca-Cola.

yuri

Source: Smartup Legal

When to Seek Legal Advice | The Pros and Cons of Acting as Your Own Attorney

Can you be your own lawyer?

Yes. Maybe. No. Sort of.

In truth, it really depends on the situation. For the easy stuff? Sure. For the more difficult things? Probably not. The big problem is how do you know what is DIY-friendly and what isn’t?

A good comparison that I like to use is this: Can you fix your own car? Well, it depends on your automotive know-how, general handiness, the tools and equipment you have, and the scope of your project. A lay person with a modern car can typically replace the wiper blades, top off some of the fluids, maybe even change the oil. However, if the repair requires replacing worn piston rings, most people would recognize that as a big job and seek out a technician who knows what he’s doing.

The same thing can be said about doing your own legal work – you can (and should) do some things yourself, but other, more complex procedures are best left to those with the right skills and training. While this seems very intuitive, knowing when to turn to an expert and for what is a hard task. In law, like in modern auto repairs, the help a layperson needs is twofold:

  1. Diagnosing the problem; and
  2. Proposing and implementing the right solution.

Knowing when to seek some help only becomes more difficult with the mounds of available online advice and with many popular self-help websites. Many of them promise solutions without having any way to know what the underlying problems are. To again use an automotive analogy, this is akin to a mechanic offering to sell you a part or perform a service without even seeing your car or knowing anything about it. This is one of the underlying reasons for Consumer Reports finding that legal DIY websites are no match for hands-on legal professionals.

So, what can you do?

  1. Find a lawyer who focuses on working with people like you. For example, if you have a startup, find a lawyer who mostly works with startups. He or she is more likely to deal with your specific issues and will know to provide doable payment options.
  1. Find a lawyer who is technologically savvy, and uses the latest efficiency tools. Look at it this way: If your attorney knows how to use technology to become more efficient, then he or she has the ability to provide services to you at a lower cost.  For example, sending documents by mail for review or signature is more costly and time-consuming than using a secure electronic file transfer service.
  1. Look for a trusted website that efficiently puts you together with a lawyer. A simple lawyer listing or referral service is the modern equivalent of a phone book and is not very useful. Look for a trusted website that will walk you through part of an intake process and then put you together with an attorney. That is money saved for you.  If you can arrange a free consultation through the site, that is a bonus.

In conclusion, you will be better off consulting with a lawyer, especially for things that are important to you – such as your business, which is your livelihood. The key is finding and working with the right lawyer in a way that works for your needs and your budget.

 

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

How to Protect Your Idea When Building a Team

An old African proverb comes to mind when writing on this topic: “By ourselves, we can move quickly. Together, we can go far.” Ideas aren’t meant to be confined to a single mind. They’re meant to be shared and formed into a common vision. I’ve seen many entrepreneurs with good ideas afraid to share their good ideas with others. They either believe that they can do it all themselves or, more often, fear misappropriation, loss of ownership, and competition.

As a result, they remain soloist amongst teams, undertaking the task of building a company with a fraction of the resources they need to realize their visions. Very few have succeeded as soloists… come to think of it, no one comes to mind.

This article hopes to provide those entrepreneurs with a means to ease and mange what I believe to be the most common cause of the soloist entrepreneur – the “I don’t want to share my idea mentality.”

Collaboration is a right of passage for entrepreneurs. It is the natural transition from a single person’s idea to a team mission of realizing a collaboratively improved idea. This right of passage represents the entrepreneur’s becoming of a leader.

As an Intellectual Property Attorney, I would encourage collaboration because it is a much more certain path to an ideas successful realization of an idea. But, as that same Intellectual Property Attorney, here is the order in which I would recommend your approach on – of course – an entrepreneur’s shoe string budget:

  • File for IP Protection – You can file these under your own name, claiming exclusive ownership. But a good strategy and incentive for building a company with committed team players is to license and assign the rights to the IP to your company. Now, everyone has some skin in the game and everyone is equally protected. Often times, you can first license the idea to your company, reserving the right to revoke the license if your team members don’t follow through with their contributions.
  • Don’t be afraid! Share your idea with those you trust. Get their feedback. Build their support. Start to build a team. So what if the idea ends up being not all yours and only yours? You’ve got a team! Now, I’m not saying to share your idea with big corporations. Rather, I’m suggesting that you reach out to your personal and professional network with your idea.
    • Pros: By adding more minds into the mix, you begin to build an idea into something worth protecting and pursuing. More importantly, in the process, you’ve enabled those collaborators to feel ownership in the idea – which I find to be the best motivator in getting people to help you realize the idea.
    • Cons: Your idea is completely unprotected at this point, and you aren’t asking ones you trust to sign a Non-Disclosure Agreement. Keep in mind though – this trustee may always betray your trust and steal away with your idea… and they law doesn’t provide you with any recourse to claim that idea as yours in such circumstances.
  • Solidify your commitment to the idea and, preferably, with a team sharing a common vision for the idea. Before spending money on forming a company and securing your intellectual property, you want to make sure you (and the rest of the team) are committed to realizing the idea. As a patent attorney, there is nothing that makes me feel worse than having my clients pay me for a patent on an idea that they don’t end up realizing.
  • Craft a Customized Non-Disclosure Agreement and IP Assignment Agreements – Not the template kind. But the kind that ensures that not only are your disclosures protected in confidence, but that any ideas that the recipient may derive from your disclosures are subject to your first right to use and ownership. Sometimes, this agreement is reached in exchange for reasonable compensation for the contributions. Having an NDA will enable you to reach out to individuals, contractors, and entities that you may need to contract with or employ in order to realize your idea. Without such an NDA coupled with an IP Assignment Agreement, you may reserve your IP rights, but will not have any rights to the contributions made by those who you’ve shared your idea with!

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal