Part of the MaRS Entrepreneurship 101 series.
http://www.marsdd.com/ent101
This presentation will take you through the maze of intellectual property law, introduce you to some common principles, and dispel some myths and misconceptions, relating to patents, trade secrets, copyright and trademarks. At the same time, we will discuss some real life scenarios around protecting and commercializing intellectual property.
This is also available as an audio presentation here:
http://blog.marsdd.com/2007/01/31/entrepreneurship-101-exploiting-your-intellectual-capital/
Yaroslav Rozhankivskyy: Три складові і три передумови максимальної продуктивн...
Capitalizing on Your Intellectual Capital
1. Capitalizing on
Your Intellectual Capital
Entrepreneurship 101 Lecture Series
MaRS Discovery District
Tuesday, January 30, 2007
Arshia Tabrizi, Esq.
B.A.Sc.Computer Eng. (Hon), Juris Doctor
Member of California and Ontario Bars
Tabrizi Law Office
Professional Corporation
2. Tabrizi Law Office
Overview
Intellectual Property (IP)
!
! IP Strategy
! Forms of IP
! IP Licensing
! Q&A
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3. Tabrizi Law Office
Intellectual Capital
Intellectual capital = intangible assets
!
! Ideas:e.g. algorithm for gene sequencing
! Know-how: e.g. manufacturing process
! Branding: e.g. Google, drug names
Innovation =
!
“Protecting + Exploiting Intellectual Capital”
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4. Tabrizi Law Office
Intellectual Property
Protect intellectual capital:
!
Rights through:
!
Use, Creation, Registration
!
Contracts
!
Enforcement
!
Exploit intellectual capital:
!
Sales (product)
!
Licensing agreements
!
Strategic Alliances
!
Mergers & Acquisitions
!
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5. Tabrizi Law Office
Intellectual Property
Right to use
!
Sometimes you may “assume” you have the proper
!
rights to use your intellectual capital:
e.g.: contract for software developed by consultants
!
e.g.: Infringement on a third party patent
!
Right to exclude
!
Even if you have the freedom to use, can you prevent
!
others from using your intellectual capital:
e.g.: registration of a patent prevents competitors from using or
!
practicing your invention
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6. Tabrizi Law Office
Intellectual Property
Patents
!
! Strongest form of protection for “ideas”
Trade Secrets
!
! Alternative to patent protection
Copyright
!
! Expression of idea
Trademarks
!
! Branding, market recognition
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7. Tabrizi Law Office
IP Strategy
IP Strategy as integrated business function:
!
What does a knowledge-based enterprise do?
!
“Protect and Exploit Intellectual Capital”
IP Strategy is at heart of any knowledge enterprise
!
Not an independent function or afterthought
!
IP team
!
Engineers, scientists, sales, managers, lawyers
!
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8. Tabrizi Law Office
IP Strategy
This “is” your business plan!
!
On-going process of assessing intellectual capital:
!
Competitive value, market differentiator
1.
Market research (your friends at MaRS)
!
IP Assessment (patent search)
!
Potential applications
2.
Productizing your intellectual capital
!
Potential customers/ revenue
3.
Exploitation strategy
4.
Result of 2 and 3; license, partner, sell
!
OR use it as an “internal differentiator”
!
e.g. manufacturing process, business methodology
!
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9. Tabrizi Law Office
IP Strategy
Protect intellectual capital:
!
Legal protection available?
!
Lawyer; forms of intellectual property protection
!
Legal protection desirable?
!
Intellectual property strategy
!
Which forms do I pursue and exploit
!
Do I “share” the information (e.g. open source, standards)
share”
!
Cost of protection
!
Some forms of IP are more expensive (patents)
!
R&D strategy
!
Partnering: option on results of research (license)
!
Internal development: broad/narrow patenting, industries
!
Business strategy
!
License, partner, funding, bootstrap, offensive patents
!
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10. Tabrizi Law Office
IP Strategy
Self-maintained monopoly:
!
Self-enforcement
!
Big Brother not always there
!
Risk of losing rights
!
By not taking proper actions
!
Elements of IP rights maintenance:
!
Government registrations and filings
!
Contractual measures
!
Monitoring infringement
!
Reverse engineering competitor products
!
Enforcement of rights
!
International, budget, results
!
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11. Tabrizi Law Office
Patents
Strongest form of IP protection:
!
Exclusive rights over inventions (ideas)
!
20 year monopoly from filing
!
What can be patented:
!
Patentable subject-matter:
!
Product, process, machine, composition of matter
!
Not scientific principles or formulae
!
Created problems for software patents
!
Not methods of medical treatment
!
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12. Tabrizi Law Office
Patents
Legal test for patentability:
!
New (prior art and patents)
1.
Not Obvious (skilled person in art)
2.
Useful (functional and industrial utility)
3.
Filing:
!
Patent database search
!
First to file system
!
Not first to invent; file provisional early
!
1 year grace period for publication
!
University academic research
!
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13. Tabrizi Law Office
Patents
Patents are valuable:
!
! Exclude competitors
! Secure market before selling into market
! Venture funding
! Generate royalties
Patents are costly:
!
! $10-100 K to secure a patent
! 2-5 years from filing to registration
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14. Tabrizi Law Office
Patents
Patents must fit with business strategy:
!
Offensive
1.
Exclude a competitor from a broad market segment
!
NTP v. RIM
!
Potential royalties (e.g. Qualcomm)
!
Industry (biotech, hardware, software)
!
Defensive
2.
Freedom of action (i.e. right to use)
!
Collateral for cross-licensing with competitors
!
Large companies arms’ race
!
Microsoft target of 3,000 patent filings each year
!
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15. Tabrizi Law Office
Patents
Only 5% of patents issued have any value
!
Disadvantages of patents:
!
Patents can be challenged (registration not validity)
!
Patents (claims) can be worked around
!
Scope if key
!
Monitoring can be costly
!
Infringement can be hard to detect
!
Disclosure and lack of secrecy
!
Value dependent on threat of lawsuit
!
Lawsuit may expose invalidity
!
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16. Tabrizi Law Office
Trade Secrets
Proprietary ideas and know-how
!
Protect by keeping secret:
!
Security measures
!
Employment agreements, policies
!
May lose rights if “lazy”
!
NDA (non-disclosure agreements):
!
Maybe first legal document
!
Large company forms pitfalls
!
Disclose trade secrets in confidence
!
Employees, consultants, customers/partners, investors
!
Pending patent filing
!
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17. Tabrizi Law Office
Trade Secrets
Advantages over patents
!
! Complete secrecy and no need to disclose
! Unlimited period of protection unless public
Disadvantages versus patents
!
! No protection against reverse engineering
! No protection against independent creation
National Bureau for Economic Research
!
! Patents less effective than trade secrets
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18. Tabrizi Law Office
Copyright
Protects category of “works”:
!
Literary, dramatic, musical, artistic
!
Computer programs (source/object code)
!
Most important form of IP in software/IT
!
Author is the owner of work
!
Exclusive right to copy and perform the work
!
Employees and consultants need contracts
!
Life of author plus 50 years
!
Industries
!
Software, Internet, music, content
!
Google library, YouTube, P2P music sharing
!
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19. Tabrizi Law Office
IP Licensing
IP Licensing = Exploiting Intellectual Capital
!
$45 billion licensing revenue in U.S.
!
$100+ billion worldwide
!
Small companies dependent on out-licensing
!
Key revenue generating contracts
!
Key relationship management
!
On-going obligations (support, updates, R&D)
!
Specialized counsel IP & corporate/commercial
!
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20. Tabrizi Law Office
IP Licensing
Most commercial agreements in knowledge-
!
based industries are IP licensing agreements:
Software license
!
Microsoft Word, OEM/Distribution
!
R&D or Co-development agreement
!
Biotech start-up with pharma (license, funding)
!
Technology license
!
IP Core license to ASIC manufacturer
!
Trademark license
!
Internet co-branding deal
!
Content license
!
License of sitcom to TV channel
!
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21. IP Licensing
Elements of licensing agreement
!
! Intellectual
property ownership
! Right to use intellectual property
! Payment terms
! Royalties, license fees, consulting fees
! Warranties
! Liability
of parties
! Termination
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22. Tabrizi Law Office
IP Licensing
Strategic Alliances
!
quot;Technology
#
Large companies position for future developments
!
Licensing a patent, technology or software
!
Standards development (patent pooling arrangements)
!
Money
2.
Selling or licensing a product and generating revenue
!
Funding your R&D with a larger partner/investor
!
Customers
3.
Access to new markets via distribution/manufacturing
!
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23. Tabrizi Law Office
Conclusion
quot; Your Business =
#
Capitalizing on Intellectual Capital
!
! Protect intellectual capital
! Exploit intellectual capital
$# Your Business =
Intellectual Property Strategy
!
! Registration, Contracts (Protect)
! Licensing, Alliances (Exploit)
%# Advisory Group
! MaRS Team
! Legal counsel
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24. Q&A
Tabrizi Law Office
Professional Corporation
30 Kern Road, Suite 103
Toronto, Ontario
M3B 1T1, Canada
T.416.444.9300
F.416.444.9343
www.tabrizilaw.com
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