Transcript of: Layered Intellectual Property (LIP) Protection
So today’s webinar is presented by Mr. Martin Medeiros. Mr. Medeiros
focuses on providing value to clients by solving their biggest problems
and helps them avoid losses. At ScienceDocs, he helps entrepreneurs
and start-up companies with their most high stakes and risky negotiations and counsels clients on the
science of persuasion, influence and negotiation. He also helps them get their company off to the right
trajectory and helps with course corrections. So without further ado, I’d like to hand it off to Mr. Medeiros.
Thank you for being here today. All right. Thank you very much. It’s an honor to be here. Today, we’re
going to talk about a method that I canned. It’s called, “The LIP method.” In other words, Layered
Intellectual Property. What this means is we want to look at intellectual property not as an event, not as
an it, but as a process and also a sub-process when we are looking at what we want to do in the world
and certainly for intellectual property. The first question I often get asked especially when I teach is,
“What is the value of intellectual property?” Or even before that, “What is the value of an idea?” I will give
you a true story. Once a client came in, they had a patent, newly issued patent, brand new patent. I said,
“This is interesting. You got a new patent. What is it worth?” They said and it’s a direct quote, “A billion
dollars.” Then I said, “Hmm, billion dollars? How long will it take you to reach that billion dollar mark?” He
said very straight faced, “One year.”
The issue I’m getting at is intellectual property, ideas aren’t worth anything unless you have an
organization and system behind them. I reminded him that in the whole history of capitalism, there has
never been a company to go from zero to a billion revenue in one year based on one patent. The long
story short is ideas do not have value unless you do something with them, unless you have a system to
go with them, and unless you layer some of these ideas on.
We love our stuff. You may be having a long product development. If you’re in pharmaceuticals, you
have human trials, you have all these things going on. At the end of the day, you’ve got to figure out
what is it that actually creates value and how long is it going to take and what am I wrapping around
that? I’m going to put up a survey, and what I’d like to do is ask what your level of knowledge is around
intellectual property. Are you an expert? Do you know a lot about it? Do you not know a lot about it?
Then we can get into more of the high level overview and then get into this layered system that I think
will work for your company as it has its … It’s my go to for my clients.
Why don’t we put that survey up? Maybe we can get some feedback. Let’s see. Let me get to my polling.
Okay, vast majority have some understanding and it looks like a very few have no understanding.
Nobody says they’re an expert on it, so which is good. We will hopefully give you a very simple way to
remember each of the major flavors, if you will, of intellectual property by these three different
definition, icon, bullet points that can hopefully cement them in your memory as to what type of
intellectual property is being talked about, and what I should do to protect it or not protect it, because
you may not want to protect it.
Back to my thing. At the end of the day, ideas aren’t worth a lot, because there’s a lot of ideas. They are
if you have a system process and actually think about a form of intellectual property that works with
them that you can actually get protected. Ocean Tomo, this is an IP, intellectual property brokerage firm
in Chicago. Estimates that approximately 81% of the standard and poor’s market cap is S&P 500 market
cap is intangible rights intellectual property.
When I saw that number I was like, “That can’t be right,” but when you think about it, what would Nike
be without their brand presence or logo? What would Intel be without patents? What would Coca-Cola
be without trade secrets? Some of these things that we think can’t possibly have value, they do. If I
cannot differentiate my product in the work, in the marketplace and it becomes generic, it’s hard for me
to compete if people can’t tell the difference, if what I do is special, if there’s a certain level of quality, a
certain level of vigor in my research and my development, then those products generally have a lot
more value than just a more generic effort. So, layers. That’s what we’re going to talk about. We’re going
to explain about this concept of layers. It’s something that I want you to get familiar with and see intellectual
property as a very broad spectrum, because a lot of people think, “Intellectual property, that’s a patent.”
Yeah, patent is a type of intellectual property. So with these other things that can actually help you compete
that are much more effective at helping you compete than just one strategy, let’s say, “Hey, patenting is going
to be our strategy and it certainly should be if you’re in biotech or engineering or certainly electronics, but there’s
a lot of other layers we’re going to put in. “We’re going to go into the IP review right now and then I’m going to go
one by one on the five layers. There’s five layers we’re going to cover today that your organization should probably
have a pretty good handle on. So there’s only four things that provide value from the intellectual property perspective.
They are utility has to do something. Expression, I’m saying something or expressing myself in any new and
exciting and different way. I have a identification of something, a source identifier of whether or not
that’s my technology, whether or not that’s my service, my good, myself or whatever. Fourth, I have a
competitive advantage. I want to protect by doing certain things.
Certainly, the law really protects these things or it gives us tools to protect these things. This all goes
back to some interesting things that happened at the founding of American US Constitution. Long story
short, Thomas Jefferson went abroad and found how backwards America was. He said, “What do these
countries do to incentivize people to make a better mousetrap to innovate more, to have better art?” In his
travels to France, he’s very impressed with the art.
In America he said, “We have to have something like that.” In the constitution early on, there are
incentives. There’s a lot of discussion about, “Do we want to give people a limited monopoly?” America
is about freedom, should we just make it free for everyone? It was decided, “No, we like property.” Then
there was a labor theory where we don’t want people to work for free. So if you spend a lot of time
inventing a device or making a painting, or composing that symphony or an opera, we want to protect
you from a labor standpoint to get something back. That’s where a lot of these intellectual properties,
their resent was absolute property right and this labor theory about we don’t want people to work for
Next in the idea on intellectual property, I want to talk about the four major flavors. Now, there are
more intangible rights broadly and I’ll briefly hit on those, but there’s four basic intellectual property
rights most companies have got to be really good about after flow, not only to workforce knowledge of
what these are, but also into your processes, how you protect them. Because each intellectual property
flavor is not protected the same way.
Contractors have different rights than full-time employees. If you acquire something from another
company, there are things you have to do to ensure that those rights come unencumbered. So let’s go
into it. Right now, I’m going to give you three basic things that we need to know about each of these
major flavors. We’re going to some minor ones as well, but right for now, let’s talk about copyright.
Copyright. There are three things I want you to remember at copyright. Their original works of
authorship. Now, they’re original, new, someone made them, employee, maybe a contractor, maybe
yourself at fixed and tangible form and creative expression is protected not utility. For example, there’s
a famous case regarding a bottle that had a ornamental shape and ornamental top. The court said,
“Well, that top that you’re trying to enforce has a registered copyright as a piece of sculpture because
copyright protects anything in tangible form.”
What is tangible form? It can be sculpture, it can be written word, it can be movie, sound, it can be fixed
in your random access memory of your computer and that’s when litigated. Anything that you can recall
that’s tangible form and people can perceive by their senses including music, that is a copyrightable
event, a copyrightable piece of property.
So with this, back to this bottle case, the court said, “Well, that bottle top did not have sufficient
expressive content. It was more useful and functional. Therefore, you cannot own a copyright in that
bottle top. It is simply useful.” Theoretically, you could patent it, probably not, because bottle top
openings are pretty much any monopoly is probably going to expire, but that is a differentiation.
Copyright can’t be useful. It’s expressive content. It is not something that does anything.
Here is patent. The three things that we have to remember about patent are pretty straightforward. It
has to be something noble, something new. It has to do something. I’m not going to talk about design
patents, which are articles of manufacturer whose shape and form you can protect. We’re not going to
talk about that. It’s our cane. Its caused a copyright law, but utility patents, which most medical device
manufacturers, pharmaceutical companies, certainly anyone doing electronics or any type of
transformative technological computational devices, they have to do something. They have to be useful
at that utility.
They have to be non-obvious. This means that no general person can just figure it out. This is important.
The important point here is not obvious to someone or nearly skilled in the art. In other words, if I had a
say, circuit, diagram and my diagram requires 10 ohms and I didn’t have any 10 ohm capacitors and I put
two five ohm standard unit for resistance. If I back up those two, that’s obvious. I mean, putting two
capacitors in a row to equal the total amount of resistance you need is obvious to anyone doing
electronics assembly, non-advancement over the art. So that would be refused. That would not be
allowed on the patent office.
This means you have to have a certain skill. If I’m developing a new pharmaceutical, it would have to be
someone who is a biochemist theoretically. If it’s obvious to them, not patentable. If it’s really creative
and innovative, essentially a better mousetrap where they put some brain power into it, some figuring,
some sweat of brows well as it were, that is allowable for patent protection.
Yeah, patents, there are strong patents and weak patents. There’s claim writing, all that science are art
of patent prosecution is something that determines the strength of a patent. We’ll talk about how
they’re used in our layering system. This is a source identifier. It has to be unique. In other words,
people have to differentiate it in the marketplace, has to form a different mental picture in the person’s
head. That’s to identify. It has what we call, “Secondary meaning.” In other words, what’s the meaning
that the person assigns to that?
For example, I have gone to Starbucks in yeah, New York, in San Francisco, in LA, in Indonesia, in
Singapore and I know Starbucks has a very consistent product. I generally know what a Starbucks cup of
coffee will be like. If I’m not feeling risky and I don’t want to go to a local shop, I just want something
where I know, that’s what the mark means to me, the Starbucks mark, the meme and logo. That has a
secondary meaning in my head. Standard product quality. I know what I’m getting, low risk buy, maybe
some things I may want to do when I look to that mark for what I do.
The first mark ever was the, if any of you drink beer, the best triangle mark, which was affixed on the
casts of ale in England. People didn’t need to be literate. They knew if they saw the red triangle, they
probably would not get dysentery from drinking that beer whereas the triple X barrel, you may be at
risk. So the very first trademark was a source identifier. It was unique, people saw it. It had secondary
meaning. You can have a monopoly on that shape, that logo, that color, the overall view what we call,
All trademarks are not equal. Some are stronger. Some are weaker. Let’s look at this little continuum for
what the strong marks are. They’re basically stuff that’s as I say, fanciful or stuff made up. If you make
up a word, and you associate it with your good or service, that is a strong mark. For example, Intel
Centrino. That’s not a real word, they made it up. Trademark registration. They filed with the US Patent
and Trademark Office, got the trademark. It can be arbitrary.
Okay, Amazon is a river in Brazil. I use it for an online retailer. That’s a strong mark because I have an
association what Amazon means. It doesn’t mean the river. When I’m online it means I want to buy
some whatever, good, a book maybe. A suggestive mark is the mashup of the trademark world. This has
to do with taking two things that’s suggestive of it. Microcomputer software, mash it together in
Microsoft, that’s a great mark.
Now, we get into the sketchy marks, the ones that aren’t very strong as far as federal trademark law.
Federal trademark law. One is descriptive. Intel Inside was in market until tried to get a registered mark.
The Patent and Trademark Office said, “You are telling us what’s inside the computer. That’s descriptive.
Descriptive, you are not allowed federal registration, but you can use common law, which is superscript
TM.” Anytime you use the mark, you have certain common law rights, judge-made law rights that will
protect the mark. You don’t get all the bennies of federal registration.
Generic marks, these are things that are descriptive, totally descriptive or they may have even fall out.
For example, pharmaceutical company there or chemical company at the time. Salicylic acid was aspirin.
They had the trademark aspirin. Eventually, other people started using it until it became generic. Aspirin
to me now and to most people doesn’t mean Bayer aspirin. Bayer is a trademark. Aspirin is no longer,
because they let it go, and recovering a generic mark is very hard. It can be done.
Kimberly Clark recaptured the word Kleenex. Kleenex, the facial tissue was used generically. It lost the
market in 50’s as the stories told. They were able to recapture it. These are some different things we
think about with the area of source identification, how I know quality based on a word. We will give you
a monopoly in that word for as long as you want it. As long as you use it and comply with the law,
trademark potentially is perpetual.
A patent, just to back up, 20 years copyright, 70 years plus the life of the author or in the corporate
world about a hundred years. Trade secrets. We’re going to talk about how this layer is really important,
but there’s three components to the trade secret. It’s something you keep secret. You’d cover with a
nondisclosure agreement. It has to have actual or prospective economic value, and it has to give you
some type of competitive advantage. It doesn’t have to be actual. It can be prospective. I hope this will
help me compete, but if you don’t keep it secret, if you don’t have evidence of keeping that mark secret,
you will really struggle with maintaining a trade secret.
I have been in federal court and the first thing the judge will say is, “Where is the evidence? Or they’ll
look to where is the evidence of you keeping what you’re claiming secret and is your secret?” If you do
not have evidence of nondisclosure agreements of contracted bonding people not to talk about this
formula or whatever, that is not a secret.
If someone on your staff is a PhD professor in biochemistry and he wants to tell the world in a
symposium on how awesome this technology is and how it’s useful, that’s public disclosure. You
basically have a year to file the patent or it’s in the public domain, which is attention between academia
and innovation. You have to have that evidence of keeping it secret above all. The rest of this stuff is
speculative. Economic value or competitive advantage.
The next thing I want to talk about or the more general things of intangible rights that may apply to you
one or moral rights, certainly I just did an agreement today in Canada. Canada and the EU protect the
rights of affiliation association integrity of artworks and certainly the right to be associated with an
invention. These moral rights. Section 106A in the copyright or copyright law as part of the law in
America as applied but it’s less of the deal in United States as it is in those areas I mentioned.
There’s other intangible rights. Domain name, social media, phone. This has to help people finding you
when you transfer rights. You want to make sure that’s clean, brand present. Sometimes if you have an
architecture, if you are a known brand, you have a certain layout, you may want to prevent people with
the same layout, the same color scheme going into that. Even if you don’t have what they call a trade
dress trademark. You may want to stop people.
For example, if I had a doughnut shop with a pink theme and I had a very strong brand and my lease ended
and I couldn’t come to terms, I may even put in the lease that the next person can’t be a doughnut shop or
can’t use my pink color scheme or whatever. So those things are negotiated even in things. These are
intangible rights. They’re really not in the four core IP copyright trademark trade secret, but they are
part of your intangible mix.
I want to talk briefly about creative commons. This is not free stuff. It is licensed, technology, licensed
creativity in a creative common. So that means you have to follow the license. If you don’t, you will be
named as a defendant in a law suit. What that happens is organizations, nonprofits like the Electronic
Frontier Foundations, EFF will sue you if you are commercializing something that the author say you
can’t commercialize. So you have to read the license.
I recently helped a subscription company, software service company do a license. We use 12 different
pieces of open source software to make that service available. We had to of course review the licenses,
disclose them to our users, and make sure that they have links to refer so they can police our use on the
software. Those are some considerations when you’re using open source. It can interfere. It can taint
pejorative some of your technology, but you’ve got to just figure out what’s yours, mine, ours and theirs.
Once you separate those rights and know them, find out what the terms are and then you’ll have
cleaner, as we say, IP in your company. Generally, we’ll have a higher valuation if you use these systems.
So, let’s get to the systems. By the way, you can interrupt me anytime with a question. I have my little
question? A screen here. I speak very fast and the of course, sweetest sound to an attorney’s ears are
the sound of his own voice. So please stop me and ask if you have some questions.
So layer one has to do with the leadership of the organization. This is important for the C level to know,
do they “get it?” Do they understand what the intellectual property program means? Do they know
what intellectual property is at a pretty deep level and how it can drive to that 81% value of their
company? Now, this is what I call a culture of intellectual property valuation. What do I mean by that?
It’s very simple. We are talking about getting everyone from the C level on down to be aware of
intellectual property is.
How do you become aware? You have to look in your own house. That begins with an IP audit. What
potential inventions we have? What systems do we have? What are we trying to do in the marketplace
right now? I see a question from Michael. I’ll answer right now. Anyway, any answer, I have to say that
nothing I say today is intended legal advice. This is educational. You should engage competent council in
your jurisdiction to help you with these specific questions.
The question is please talk about noble algorithms for analysis of commonly available data. For example,
I develop an algorithm for analysis of personal genetic information and will sell it as a service. Is this the
best strategy to protect its use? There’s a lot of issues there. One of which is what is patentable subject
matter is the core of the question? Facts of nature are not. Things that mathematical formula are not
application of them. How you process the data, if it has a conscious supreme court case fairly recently,
it’s probably a decade old now, but if it transforms the information in some way, that can help get your
that patent if you want to prosecute it.
That patent is a public record. 18 months after you file that patent, it is public record. We let everyone
see it. We open the file and say, “You can make a better mousetrap.” Here’s what this guy did. If you
want to innovate, you can do that. Sure if the next inventor if she comes along and has a better
mousetrap and she discloses, “Hey, I was inspired by this article. Mine is nothing like it.” Let me tell you
how, she will have a patent that may run parallel to that. It all depends.
Collections of data, how you use data, your processes. A lot of these is best kept for a lot of trade secret
is what I would use is one of the layers. I would also look at patent vignette as far as the public interface.
What’s the utility that the person, the user sees about that genetic information? There’s also a lot of
regulation analysis and certified privacy law. So you have a lot of the identification you have to do for
that information. There’s not only HIPAA. There’s a lot of other different privacy regimes you have to
comply with when you start. Writing algorithms and using data to sell its use for aggregated data.
There’s different levels of an anonymization that work in my firm’s newsletter. We just published an
article on a blog post on this probably a couple months ago. So a lot of issues in that question, but let’s
get on. Thanks for the question. Awesome, Michael. Hope that helped. The first thing you need before
you talk about what IP do I want to go for is this confidentiality program where I want to make sure
people know not to talk to people about everything that goes on, because they could be out, a
competitor could be at the table. It could be something else.
I represent a lot of couples that are in the tech community. They may work for very different companies.
They may work for competitors. They’ve got to have some type of formality with the confidentiality to a
professional prerogative. This is a true story. Once I had a client over for dinner and my wife says, “Oh,
that’s great. Someone’s going for dinner.” At the end of it she said, “So who are those people?” I never
told her that it was a client that I had over for dinner, because disclosing that your client is actually the
client’s right, it’s not your right.
You have to think about that level of professional confidentiality when you’re thinking about company
trade secret. You owe it to your employer, your shareholders, the people who are investing in that tech.
You may even owe it to yourself for self-respect. On leadership, you can take very different approaches
to a culture of intellectual property. I’d give this example. Jack Ma of course is the CEO, the owner,
innovator of Alibaba, which is a large search engine, marketplace in China.
They have a pretty structured intellectual property enforcement provision for it where you put stuff up
and things are enforced. I noticed some take down, so that’s similar the US model left [inaudible
00:31:00] doesn’t work as well let’s say Amazon or section 512 with the copyright code and take down
provisions, but he knows about it. He tries to comply with it not always successfully. That’s a way to
manage intellectual property protection of people who use your platform.
Let’s look at Elon Musk who use intellectual property in a very different way in 2014. This is Tesla. Let’s
talk about Tesla for a minute. He had the whole of patents, you see a lot of companies and their front
entry where they have all the bronze patents. In 2014, he basically gave away. He said, “I’m going to put
this in the poll domain. Anyone can use them because I want people to use this technology a lot.”
Probably done for PR, which we’re going to talk about in a minute why you would do that. By the way,
Tesla still files an enforced patents, but for that set, it was a very different approach. At the time, Tesla
thought that was a good idea. The board said, “This is good for us to do,” and so they did it. That has to
speak to culture. What culture? For example, I do represent some companies that do sell on Alibaba.
They have very low expectations of enforcement whereas that’s like one culture that you know.
If I’m a shareholder of Tesla, and I feel like, “Hey, I really want to enforce these patent rights and collect
all these patents,” for example Boeing has tens of thousands of patents. You may not want to invest in
that company, because it doesn’t fit your personal culture as an investor. So that’s why I mentioned
these, whatever the culture is in your investment community, in your worker community, you’ve got to
think about how that reflects in what I’m doing, on how my leadership is going to communicate these
intellectual property protection regimes and imperatives.
Next, I really want to tell you about capture, because level one is what’s your confidentiality program?
Next, you’re going to have to say, “Okay, you keep being a secret, but what is it?” If I don’t know what it
is, I am not going to be a candidate for any type of registration. So what do I have to have in place for
employees, vendors or customers is first of all employees and contractors who I employ to invent or any
some such contractual or relationship.
I’m going to have some they call it an invention disclosure venture agreement. It’s a process. Through
the years, my friend has developed one. It’s very structured because whatever you use, you have got to
memorialize that something cool was done and that somebody, somewhere in the organization’s going
to say, “Hey, how do we want to protect this? What type of an IP should we layer on this?” Do we want
to do it? Do we want to invest the time, money and resource through this patent or is this more like a
trade secret? Is it not useful at all? Is it more expressive copyright?”
That’s a really cool mashup of a word you’re using, using your literary license. Do we want to turn that
into a trademark and to describe this because those are issues you’re going to have to decide, but you
can’t decide them if you don’t have people reporting in, if you don’t have the intelligence of all the
people working in your company about, “Hey, I just can’t open with a better mousetrap. I came up with
an idea. I came up with a good mark.
Invention disclosure is a process you’ll really want to look into. That begins with a lot of contract review.
How you on board and off board people to your organization is pretty important including vendors,
contractors, because generally, when employees work for you in the copyright sense it’s a work for hire,
but in the patent sense, you do not have their inventions. They have got to assign those to you. If they
leave your company or left, which is called a, “shop right,” which means you can practice that invention,
that patent in your own shop, but you can’t sell it, you can’t use it for commercial purposes. You can
play with a little whereas that innovation generally moves with the inventor, absent and assignment.
So employees have got to assign their patent rights whereas copyrights are generally by default work for
hire. Vendors? They own what they build. The right generally stays with the vendor. So they’ve got to
have a different set of agreements. Just today this morning, I was reviewing a agreement. It said,
“Employment agreement,” but it was not an employment agreement. It was more like a contract
agreement and it did not have the requisite and also property transfer in conditions that lawyers love to
put in contracts.
Those are some of the things that you want to be cognizant of. Certainly, in the marketplace with your
customers, your customers start telling you how to improve your stuff. Well, who owns that? Who owns
a feedback? If you’re not clear on that, if your customer engagement piece is not clear and legally sound
you could be watching your intellectual property slip through your fingers like grains of sand.
For the last thing, you may acquire intellectual property by third parties who have proven it. They can’t
market it. They want to leave the market, and you buy it from them and that’s all great. The one thing is
once you buy a patent, you’re going to get a transfer agreement. IP transfer contract or copyright
transfer, trademark, whatever. That’s the private record. That’s what you hold. You own it legally. If
you’re in a public record, if you didn’t transfer that with and you have to file transfer docs with USPTO,
United States Patent and Trademark Office or other authority, or the copyright office, and someone
thinks you’re infringing.
Let’s say I’m the seller and I didn’t do this extra step of making the public record for private record, I will
be named as a defendant and I was in federal court in Seattle few years ago over this very thing. It was
an emanate deal, they did sloppy IP clearing. They did not make the public record with the patent office
reflect the private record between the party.
The IP was bought, but the world saw the public record that said it was not public, it was still owned by
the original innovator. They were named as a defendant and they had nothing … They had alienated the
property. So a public record, private record has to be captured. Maybe I should’ve named layer two
capture an alienation. Alienation giving up of intellectual property.
Our third layer is perhaps the most important. It’s what I call, “Sub-layer.” It’s what I call, “Layering
awareness.” This means, “Okay, where am I in this five layer system I’m rolling out? How do I get to the
next level to create an awareness?” When we come together, we have the invention disclosure. We’re
not telling anybody out. We’re deciding what type of IP we want to do. Do we want to monetize? Do we
have a licensing permit? These are things we want to look at.
Here, I have a cup of Starbucks as you can tell. I generally don’t get the cold drinks. I’m a coffee guy, but
I am a caffeine addict. You can look at this cup and say, “Oh, that’s some frappuccino. It’s like an icy
drink.” It has a logo on it. You may say, “Oh, it’s a trademark.” You could be right. They do have a
trademark on the mermaid. Then you take another look and say, “Well, is there any other IP that can be
associated with this?” The answer is absolutely. One piece of IP would be the artistic form of the
mermaid. That is expressive content. It’s a work of art. They could file that for copyright protection if
they do it within 90 days of publication. They are entitled to statutory rights as well.
Now, you can say, “Okay, that’s two areas. What about there’s a cardboard thing on it?” That’s an
insulator, so your hands don’t get frosty. Believe it or not that the cup holder, insulator thing was
patented. I believe it’s in the pallet domain, but there are new patents being filed on that same
technology that are better that they claim, if I wave the cardboard this way, it disperses heat better, it
has more insulating property. So you can actually file a patent on that ring.
Moreover, I may have a secret way on how to keep that top of the cup from sealing well. Years ago, I
represented a container maker who wanted to do a green, yeah, low carbon footprint containers. The
big trick was using these low carbon containers giving it to seal property. They didn’t file a patent. They
thought about it, but it required so much work, they decided just not to tell anyone trade secret. In this
little example, we have certainly the trademark logo. We have a copyright in the artwork of the logo. We
have the potential patent on the insulation ring, and we potentially have a trade secret on how the
article manufacture container was developed.
So this is what I call sub-layers. So once you have your system in place, you’re going to look at everything
that comes out of your company and make sure it is wrapped up in all the areas intellectual property
you care to enforce, that you care to use somehow and maybe for monetization and maybe for another
reason. We’ll get into those other reasons shortly.
Let’s talk about what those reasons maybe. Layer four is strategy. I have the intellectual property. I’ve
thought about what I want to do with that intellectual property as far as wrapping it, protecting it, sub-
layers on that innovation, what do I want to do next? You have options. You just have to be clear on
what business you’re in, because every company has limited resource, has limited investment, and you
have to plan your goal, and you have to monitor what’s happening in the marketplace.
Let’;s look at how we could use that. Let’s take a patent or any other right. You can use it as a sword. You
can say, “Have a monitoring services to look at your innovation.” They will say, “Hey, we think this
person is infringing. You can go after them in a lawsuit.” Here’s a defendant give them to stop. There’s a
whole other section. You may have barred some opportunity in the law if you go just directly for the
fight, it may have been a licensing opportunity, and you have to word those introductions very carefully.
This is an important case called, “Hewlett-Packard V Celeron” who was a patent, non-practicing entity,
NPE pejoratively known as a patent troll who went after HP for some type of technology in their servers.
Their letter was so aggressive. They gave HP the right, what’s called, “declaratory judgment right” to
attack the underlying patent right to federal court and undermine their claims. That’s exactly what HP
did. HP smacked Celeron for their aggression. So there’s a little bit of a dance you have to do before you
start using that IP sword and getting a bunch of defendants. Non-practicing entities, NPEs, trolls, it can
be a legitimate business thing. I don’t want to sound to pejorative, but there’s a lot of individuals who do
not belong in the tech business.
For example, one of my clients got a demand letter from a … It was a Los Angeles based person who had
this awful demand. I said, “Who is this person?”; I looked them up. They were a real estate agent who
somehow got a hold of the patent portfolio and started sending out these demand letters and didn’t
hire a council. We basically told him to pound sand and we never saw them again.
There’s pretty low threshold on what it takes to be a patent portfolio holder. The more professional
companies that do it, ignition partners in Seattle, they know what their business is. Because they’re
looking to own the technology eventually own the company. They’re looking a lot longer strategic not
just a shake down. In fact, one federal judge, her quote was, “You will not use my core for a racketeering
operation.” Very aggressive words to hear from a federal judge, but she knew that this person filed so
many lawsuits that she basically kicked him out of her courtroom.
That’s the sort of thing. The shield is when you have a technology and you just want to protect yourself
from other people, you want to practice. I’ll file a patent to my invention on this narrow thing and
someone says, “Hey, you’re infringing.” You can say, “Hold up your patent,” and say, “No, I’m not. I’m
practicing my patent,” which is the shield like initially issue there at the slide.
At the end of the day, that protector is what you need to be cognizant of rather than just getting out
there and doing stuff, and thinking that you’re not infringing, because you could be. Next one to that
market. Toothbrush story. I went to buy toothbrush the other day. The wall of toothbrushes in the
supermarket and this box said, “11 new patents over the existing technology.” This is a fuzzy stick. It’s a
fuzzy stick and they patent it. Somehow, probably there were a lot of design patents, but the brushes
went one way and they’re made to this material and they went the other way.
Somehow, they had this tribe of patent prosecuting attorneys get 11 new patents over a toothbrush.
Why? Are they suing other toothbrush manufacturers? Perhaps, but I think they just wanted to put on
the label. So if I saw old fuzzy stick, 11 new patents fuzzy stick, I’m going to buy the 11 new patents fuzzy
stick to brush my teeth.
That’s using patents in a marketing context. If you’re going for investment capital, the fourth area
actually we used some IP is to make sure we are being diligent. Yes, we have to file trademarks. Yes, we
have a patent for a photo. There’s some VCs and investors who just want to see patents. They actually
don’t evaluate them for are they good? Are they strong? Are they weak? They just want to see that,
“Hey, are you an innovation engine?” If you are, if you have this culture of innovation and I want to ride
with you, and here’s my money and I want to see you because you have that culture of innovation.
Really important for marketing purposes as well as marketing yourself to potentially invest yourself.
Want to get into layer five and wrap up. I want to hear any questions you may have. So please provide
them. Layer five has to do with the management. Once you have the culture, once you have the capture,
once you have all these layers in place, you’ve got to manage your IP. I basically have one rule on this.
Do not register every type of IP or have a huge system in IP if you can’t manage it. If you do not have th
resources to manage that IP to make sure your registrations are current, to yeah, every few years say for
a trademark you have to have an allegation of continuous use. Like, “Yeah, I have a monopoly on this
word or this picture, and I’ve been using it continuously for the last five years, pay your fee, and the
patent, the trademark office will let you use it exclusively for a number of tenures and then eventually it
can get into a much more valuable mark if it has secondary meaning that can stand the test of time.”
So at the end of the day, you want to be able to have only the elements of intellectual property that you
can manage and enforce, or consciously decide not to enforce. Don’t decide not to enforce something,
because you don’t have resources. That’s bad, because there is no intellectual property cop. The owner,
the creator has got it enforced their rights. You can’t call some government agency and say, “I’m being
infringed. Sue these people.” They’re not going to sue them.
Now, there is some issue. Somehow there’s certainly a kernel sanctions for piracy. You just certainly can,
for registered trademarks, you can actually shutdown, the customer service will shut down, ship
containers for that infringing product doesn’t make it in, but there’s no one to actually file a lawsuit for
infringement. That’s you. You’ve got to think about, “Do I have resources in the war chest to enforce my
rights?” Because if you don’t enforce them, you will lose them.
Latches, waiver, whatever you want to call it, you can lose your rights if you just let people walk all over
you. It’s a metaphor for life, I guess. You’ve got to enforce the produce, the product of your labor, but
only go hog wild on creating and registering IP that you can enforce. For example, I had a client. They
said, “I want trademark. I have these great ideas and I got the domain. So let’s do all these.” They give
me a list of 10 trademarks they want to register. This is a start-up.
I said, “Nope.” They have all this art, because art and words are different registrations, different marks. I
said, “Pick five and we’ll start there. If you don’t enforce me you’re going to lose them.” Much to my
surprise, this client was pretty savvy and they actually did get more than five trademarks because they
were very focused on their goal. Their goal was, it was a serial entrepreneur. He knew what he was
doing. How to IP portfolio, brought the value of the company up and sold and retired, now has a nice
vineyard in Napa.
At the end of the day, you can go into it with your eyes open. If I want five trademarks, am I actually
using those in commerce associated with the good or service as shipped or as advertised in an interstate
commerce. If you’re not new in it, don’t do it. If you think you’re going to use it and you’re pretty good,
you may want to file what’s called an ITU, an Intent To Use application, which give you six months of
runway to decide what you want to do.
That’s the rule. Only register as much IP as you can do. Just want to go for a quick review here. Layer one
is leadership. You’ve got to do your IP audit. You’ve got to make sure your business systems, your
culture are on board with what you’re doing in this new era you’ve discovered if you don’t already have
it of intellectual property.
Layer two is capture. I’m going to have to figure out in my contract language, in how I on board and off
board people both vendors, and how I’m going to relate with my customers if I am indeed capturing the
intellectual property I want so I can do something with it useful and provide some value or not if I so
Third layer, organizational awareness. Everyone has to be on board and look at everything they do in a
different way. How many layers of this do I want to work on? How many different flavors of this do I
want to surround this thing that I worked really hard on? Between initial to commercialization, you can
be 15 years in a pharmaceutical. It’s a lot of work. It’s billions of dollars. You’ve got to look at it in 3D.
You’ve got to have that awareness.
Next, what’s your strategy? Finally, have the IP. It’s all wrapped up. Are we going to enforce? Are we
going to just use it as a shield? Are we going to use it to its marketing potential? Are we going to use it
to fund raise or all the above? That certainly is a default position. So finally, management. Again, my one
rule, register and enforce the intellectual property you have resources for. Do not go over the
smorgasbord when you can only eat a small plate. Always focus on what you can do with the resources
If you want to get big, do more things well, that’s good, but start with doing few things well and then
you can scale once resources market, investment or anything else comes across your bell. I have a free
newsletter. One, if you want, I talk about these topics. I mentioned them a little bit. Feel free to sign up,
send me an email, give me a call if you have questions. I just want to thank ScienceDocs and university
partners for having me out today.
Does anyone have any questions?
I do have one question. Often times they’re start-ups, complimented resources. What is your
recommendation in regards to prioritizing as far as protecting IP?
I think you’ve got to get that confidentiality program in place and solid. That is the firewall, and I’ll tell
you why. Once you disclose a patent and you start talking about it, the clock is running. In the United
States, it’s first to file, which means even though I’m the first to invent, if someone in the bar hears me
talking about it and they file, they just jumped ahead even line. So you’ve got to have some type of
confidentiality obligation for your team.
So too, either great trademark. I don’t want to tell people until I publish that and start using it. When I
decide, “Yeah, we’re going to brand in this way,” then it’s fine. You can actually, prior to registering that
mark, you can put the superscript TM as for the common law, because when you do your application the
last for a first date of use anywhere and then first date, you used in interstate commerce.
Before you display and come out with all your brands, you don’t want people to scoop up on it who may
have a prior date of use which would put you as a junior user, generally the junior user mark loses. Also,
you can unpublish works, but the minute I publish them, I fix them into tangible form and show them to
someone else say outside the company that the clock is ticking on whether or not you get statutory
rights, which is not your date from publication.
So you’ve got to hold those things confidential first. There are no filing fees and keeping stuff secret.
There is internal work you have to do for your organization and get people on board. Does that make
Great. Thank you, Martin. Really appreciate that. I want to be cognizant on everybody’s time. So if
there’s any further questions, please feel free to send them over by email. We’d be happy to forward
them Martin and get those answered. So on behalf of ScienceDocs and ULP, thank you for joining us
today. We do have a part two with Martin next week. Key things you need to get heard in the market on
Tuesday. Save that time. Save that channel, August 25th at 1:00 PM. You can go ahead and RSVP on our
Again, thank you for joining us and please stay safe and healthy during these very different times. Take
care. Bye now.
Bye Kara. Thank you.