mHealth Intellectual Property 101

mHealth Intellectual Property 101

August 07, 2012 2:00 pm

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A free educational webinar on mHealth Intellectual Property 101 with Christopher A. Mitchell, Attorney with Dickinson Wright and April Sage, Director of Healthcare Vertical and Marketing at Online Tech.

When: August 7, 2012 @ 2 P.M. ET
Who: Christopher A. Mitchell, Attorney with Dickinson Wright and April Sage, Director of Healthcare Vertical and Marketing at Online Tech.
What: mHealth Intellectual Property 101
Description: A primer on the major types of intellectual property (IP), their different characteristics and utilities, and their costs/benefits to businesses in the healthcare and medical device space.

 

 

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April Sage: Hi, everyone. Thanks so much for joining us again today. We're here with Chris Mitchell, esquire at Dickinson Wright, specialist in intellectual property law. Chris has joined us today to give us a high level overview about intellectual property. With no further ado, let me turn it over to Chris.

Chris Mitchell: Okay, great, thank you.

Thank you, everyone. As April said, I'm here today to offer a high level overview of intellectual property, cover just the basics and the fundamentals and with the hopes of laying a foundation for, perhaps, some future discussions on some more detailed aspects of patents, trademarks, and copyrights.

With that said, let's move to the first substance of slide. What is it that we're talking about today? Of course, I guess, I just gave it away a little bit. We're talking about patents, copyrights, and trademarks. Those are the three most significant areas of intellectual property. Patents cover inventions. They represent the government grant of limited duration for an invention. Copyrights cover for a limited duration but much longer than the duration of a patent. Creative works, works of authorship such as writings, artwork, graphical user interfaces which are faceted artwork, and software code, which are considered to be a facet with of rights.

Then, finally, today we're talking about trademarks. Trademarks are essentially a brand identifier such as a name or a logo to take simple examples that you use to identify your goods or services commercially. They are also protected under the law. Next slide.

In overview, those are the essential categories of intellectual property and the ones we're talking about today. Why should we care about those things? Well, for competitive advantage for one, intellectual property because it's a "property right" can be used to protect against unlawful competition. Intellectual property provides value, can add significantly to your company's bottom line, and can attract investment.

Infringement with the flipside of the coin, a failure to care about these things ca result in liability for intellectual property infringement whether knowing or not, and as we'll discuss later on, it doesn't generally matter at least in the patent and trademark context whether or not you know.

Just a few other words about why you should care, trademarks in particular -- I'm just going to go back to my notes here briefly ...

April: Give us your favorite example of a common trademark that go and love or no one hates. Take your choice.

Chris: Microsoft, Coca-Cola, Apple, those are easy examples of trademarks - those are the ones which were almost familiar names or products or services - Kentucky Fried Chicken. Other things that are less traditional can be trademarks. For instance, the Intel jingle, the Intel Inside jingle is a trademark as are the NBC Chimes, virtually anything that's distinctive of your goods or services that search to set you apart from competitors that can potentially serve anyway as a trademark.

Trademarks have - since we're on the topic - a number of virtues. A strong brand can protect your business volume. When customers buy your product as if there is no good substitute for the brand they prefer, then you're insulated in some respects against losing sales to competitors who can't use your trademark. Strong brand can boost your margins. If people have a strong preference for your brand, they may buy your product irrespective of external circumstances. A strong brand, a strong trademark can protect you from market downturns and other negative external circumstances. Apples, whose mark we just mentioned, is a great example both of the value of trademarks and the value of patents.

The economic downturn that we have seen since 2008, people have rushed to buy every iteration of the iPhone or whatever other product Apple may put out on the market. That's showing in parts of the strength of their patents but also to the strength of their brand and the goodwill that it has for customers. It's certainly not because the tech sector, as a whole, has been insulated from the market downturn. There are numerous examples of companies that have fallen by the recession since 2008. Apple's a great example of what the strength of a trademark can do for you.

April: How do you decide at what point trademark protection makes sense? Because I think the trademark's we're most familiar with are all for large companies. Is trademark protection something that's only for large companies or is it something that small and medium-sized companies may think about as well?

Chris: That's a good question. That's something that everybody should be thinking about from both side of the coin, and something - as we'll discuss in a moment when we get to the trademark section - everybody can afford. We get hold the rest of that answer first in a few minutes.

April: We will hope everything you had.

Chris: I will, right, because you're going to throw me up when I pay. All right, so let's move on then. Let's dive into patents with a little more particularity. What is a patent? As you see on the screen, again, as I mentioned before, it's a property grant from the US government and specifically from the US Patent Trademark Office - the USPTO as the acronym you see on the screen - that gives the owner a limited duration right to keep other people from making, using, offering for sale, or selling the invention that's covered by the patent in the United States or from importing that invention into the United States.

It's easiest to think about a patent just like you would, a D for real property. Just like if you're a land owner, the D to your land defines the metes and bounds, we call it at law, but the specific geographic area that you own and defines the limits of the area you own and essentially specifies where people can encroach without trespassing. A patent does essentially the same thing, but instead of dealing with the metes and bounds or the limits of real property, it deals with the limits of intellectual property and more specifically with your invention.

Patents are territorial. Each country issues its own patents under its own laws as a general rule. There's no such thing as an international patent, which is a pretty common question. There is such a thing as an international application, but at the end of the day that application has to be turned into a patent in individual country where you might want protection. The laws of most countries are relatively comparable even more so now that the US is changing to what we call a first-to-file system, and I'll touch more on that in a moment. With respect to this territoriality issue, the important takeaway is that the rights that you get under a patent generally stop at the borders of the country where you have a patent.

Take a concrete example, if you have a US patent and a US competitor who's making and selling your invention in this country. That's an act of patent infringement. If you have an overseas competitor who's making the invention and trying to bring it into the United States to sell, that's an act of infringement. As noted on the screen, importing that invention into United States constitutes a trespass of intellectual property, but to take the contrary example, if the overseas competitor makes and sells the product entirely overseas, there's no infringement of the US patent. To cover that act by the competitor, you would need to have patent protection in one or more foreign countries where that activity may be taking place.

April: It sounds like international companies are dealing with the reality of multiple patent applications and probably adjusting those to meet the various rules of the various countries that are doing this with them.

Chris: That's right, and more and more that that reference is to just about every company. Most people are doing business outside of just the United States as the world continues shrinking, so nowadays, I would say the majority of companies with we deal, anyway, are securing patent protection in one or more countries outside of the United States generally depending on where either is your markets are and where you want to protect against competition or where the source of greatest infringing activity is taking place. In other words, if there's a country where there is a competitor making on an infringing product to ship to the rest of the world where there are big markets for the product, but the country where that infringer is located is not itself a great domestic market, you may still want to get a patent in that country so that you can use the courts of that country to stop the infringement and then effectively keep that party from shipping products to the countries where they can sell it rather, say, pursuing patent protection every country in the world. The analogy would be akin to going to the faucet to turn off the water rather than trying to stop the leaks in 100 different places.

Economically, that's a good strategy because as you can imagine - and we'll touch on it in a moment - getting a patent is fairly expensive. It's the most expensive form of intellectual property protection, and when you multiply it by a multitude of foreign countries where you may want protection, the costs quickly escalade from tens of thousands of dollars to hundreds of thousands of dollars. It's not an expensive ... it's not necessarily for the faint of heart, and like anything else, whether or not you pursue it, it's part of a business strategy.

All right, so next slide. Let's talk just briefly about the basis for patents. What does it take to get a patent in terms of what qualifies, right? I mean, I mentioned before, inventions, okay? Generally speaking, when we say inventions, we're talking about a patentable subject matter, which is the last entry on this particular slide. That's something of a nebulous term these days as we move into the information age, but traditionally, most people will have no trouble appreciating that patents will cover inventions in the nature of machines or processes, things of that nature, things that are usable. You'll see in the second entry. To be eligible for patent protection, the invention has to have utility. It has to be a useful thing, and it has to be a useful machine or a compound or process of doing things or a business method or a system. There's certainly no shortage these days of patents that comprehend systems for achieving certain results or affecting certain outcome systems that are based and implemented entirely on computers or computer networks. Generally speaking, that constitutes patentable subject matter that that ball is still a little bit in play, if you will, and adapts. The cords are entirely sold on what the scope of that is, how far you can push the envelope of claiming protection of something that is divorced entirely from some tangible structure.

As a general rule, those inventions are also protectable. Your invention also has to be new and it has to be an obvious, which are the last two entries on this slide. Those are two of the most frequently encountered and the biggest hurdles to getting a patent. In terms of new or novelty is as we call it in the trade, your invention can't have been done before at least to the extent that that's provable. You can't get a pattern for the same thing twice whether you're trying to do it personally or whether somebody else has come out with the same invention, say, as might be described in a printed publication, a public patent application, or a published patent, somebody's already invented it. You can't go back and make an application for the same invention in a later patent.

Also, in a little more ambiguous, your invention has to be non-obvious. Meaning, that somebody who's knowledgeable in the technical subject matter to which your invention relates, you can't have been deemed to being able to come up with the same thing as a matter of an exercise, or the routine skill, and judgment, right? Your invention has to be a little more than just a combination of what was already out there.

Now, what exactly that means is a real big question, and even lawyers can't settle on that. It's open for some degree of debate, but as a general rule, combining things that are already known, a matter that would have been prompted by the general state of knowledge in the particular technical area or b market forces, there was a known demand to have something done and you took existing pieces and parts and did that thing, then your invention will probably deem to be obvious. If that's not the case, if you really hit upon a new combination of things or something entirely new, then you'd most likely passed the obviousness hurdle.

April: It sounds like patent is really known to reward and protection innovation, something that is unique, something that will change something for the better, something that wouldn't necessarily be the natural next step that everybody rather might come up with by themself.

Chris: I think that's well said. That's exactly right.

Briefly, there are some things turning to the next slide. There're some things to keep in mind in terms of activity that may disqualify what would otherwise be a patentable invention from protection at a high level. This is an important takeaway especially with respect to organizations where you need to control the activities of your employees and inventors, otherwise, you run the risk that you've made worth the ability to go after patent protection later on by deemed of mistakenly running a file with one of these statutory bars. What are the statutory bars?

Generally speaking, in this country right now, if you make a public disclosure of your invention or you offer your invention for sale, you start a one-year clock ticking, and when that clock runs down, if you haven't filed the patent application somewhere, you're essentially out of watch and you can't file patent application. Legally, you can't. Now, technically, you could but if you go through the investment of pursuing that application and ultimately end up in court over it, it will in all likelihood be invalidated. Of course, if you pursue that application knowing that you haven't run a file with that statutory bar, you would potentially be liable for a patent misuse, anti-trust violations, a whole linear things that you don’t want to be involved in. We'll take it as rip that if you make the public disclosure off you’re going to venture for sale and more than a year ticks by, you should just give it up as lost. But I mentioned it today so that you ... if you have inventions and you’ve made disclosures, you’re cognizant of those bars so that you can take advantage of the opportunity to pursue a patent, if you wish. Again, if you’d make a public disclosure or an offer for sale of your invention in the United States, you have a year in which to file an application. Now, I add the qualifier United States because it’s ... the last entry on the slide notes their implications for foreign patent protection. Most countries outside the United States are not so forgiving. In most countries, if you make a public disclosure before you file an application for your invention, you will be barred from pursuing patent protection. Most countries in the world don’t offer any sort of a grace period, like the one, your grace period that I’m discussing right now.

If you have any interest in pursuing protection for your invention outside the United States, it’s best to file an application before any sort of public disclosure is made. Now, as a caveat, I note that a lot of these will change in March of next year, and this is an important takeaway as well, the United States has changed its law and that law is being implemented on a rolling basis, and finally and absolutely, it goes into effect next March where we will be, like most countries in the world, a country where the first person to file an application for an invention which they actually invented is the person entitled to the patent.

That changes the nature of these statutory bars so that essentially, any activity, anywhere in the world with limited exemption will defeat your ability to pursue a patent application. That’s a significant change for this country in the 200 years since we’ve had the patent office and it represents a real need to shift strategy on the part of innovators so that they pursue patent protection sooner rather than later. While I mentioned statutory bars and these other aspects of the grace period, they will be changing in the next few months so it’s important to bear that in mind as we move from one regime to another.

April: It seems like that we really forced the hand on some of the younger startup companies who ... we’ve been thinking a lot about mobile labs because those have been on very recently and getting a lot of press. When you have companies that are trying to get subtraction, maybe doing some market testing, trying to test design and workflow, that kind of really hard decisions to make as far as at what point they’re going to get ... in that, in patent protection.

Chris: That’s right. That puts a lot of pressure on all innovators to file patent applications sooner rather than later, especially in competitive markets, like the market for developing mobile apps and anything that touches on the health care field or software applications more generally, where there is a great deal of competition and a lot of significant players who have the wherewithal to pursue significant amount of patent filings. It puts a lot of pressure to smaller companies to make those big decisions early on to pursue that patent protection lest they run the risk after March 16th, that somebody else has come up with the same thing and already filed the patent application.

Next slide, ownership is an important issue at a high level and questions arise about that all the time with respect to patents. Inventorship and ownership aren’t necessarily the same thing, in fact ... well, they aren’t necessarily the same thing. Under U.S. law, the inventor is the default owner of an invention but that doesn’t have to be the case. That’s simply the default. Inventions are just like any other kind of property and they can be transferred by assignment. They can be licensed, they can be sold, they can be given away. Generally speaking, that obligation is created by contract so … where you have employees who may be coming up with inventions, you need to take care of that. They have that contractual obligation to make those assignments to the company.

They are not necessarily obliged to do that just by virtue of being your employee. Although, you may have a limited right in their intellectual property because they are your employee, it tends to be very limited, so you want to ensure that the obligation to transfer that ownership is apparent at the onset so that there is no bickering about it later on. Another issue about ownership that can arise is with respect to joint inventorship where two or more people contribute to the thing that is claimed as the invention. They are both entitled to ownership of the entire thing.

Even if a joint inventor makes only a modest contribution to what is ultimately set under a patent as the invention and the other party makes the lion’s share of the contribution. They’re both equal owners in the invention and are free to do with it what they want. Particularly in the case of businesses working with outside employees, I mean, contractors or working with other businesses in a joint venture relationship caution has to be exercised upfront to decide what the parties are going to do with any resulting intellectual property in terms of potentially patentable inventions.

April: If you hire an outside programmer to develop an iTunes app and you don’t have anything in your contract with them stating otherwise, then they have equal ownership as the developer as you do as the person who hires them to develop that product?

Chris: It ultimately will turn on a question of whether or not there was a contract and what that contract says, expressly your, or by implication but if it is not clear or if it’s resolved in favor of the outside contractor and they’re the party who invented the thing, then they are the party who would own the patent. It doesn’t matter if you hired that person, if you didn’t contribute to the thing that’s claimed as the invention then you have no ownership claim.

April: That’s regardless of who files, is that correct?

Chris: I don’t want to confuse this point. The only person who can file an application, at least presently, is the inventor so you have to file an application in the name of the person who actually invented the subject matter. Although, technically, behind the scenes, it may be the employer but the inventor always has to be named and he will have, by virtue of that, some interest in the application. If, in your circumstances, if the employer were to go off and file an application, they would have to name the independent contractor as the inventor and if there was a dispute over ownership, then the inventor is going to nominally be deemed the owner unless there is another putative inventor that’s named on the application, in which case the parties are going to end up in a fight over who invented what, but if it’s only the outside independent contractor who was named, then the dispute would be over whether or not the inventor ever assigned anything or had an obligation to assign something to the employee part. Okay?

Okay, so quickly, the patent process. We’ve still got ... we’ve got a couple more to get through. Just from a high level, quickly, what the patent process looks like. If you have, in a given circumstance, an employee who comes up with an invention, for instance, and you’re curious whether or not it’s patentable or if it is patentable you want to pursue protection for it, the process proceeds generally as outlined in the slide. The first thing that you typically want to do is search the invention to determine whether or not it is novel, as we talked about before. If it turns out that somebody else has patented the same thing already or is working on a patent for the same thing, then there’s no sense in spending the money that’s required to file and prosecute the patent application, so that’s the third chase. That’s not required under the law but that is a very common practice and an economical one as a search will typically cost, depending on the complexity, around $1500 or maybe $2000.

Now, that’s contrasted with the ... generally, $7000 to $12,000 to prepare and file a patent application, only to have the patent office do their own search and determine that your invention has already been done. If you can make that determination for $1500 before doing anything else, that’s a good business decision. Presuming your invention clears the search and is deemed at least to be novel as far as the search can practically tell you, you prepare and file the application. I’d say that, generally, the expense there is $7000 to 12,000, you file that with the U.S. Patent Office and then you wait. I put that in there purposely because it’s a long wait. Right now, it takes anywhere from a year to three years before you hear anything back from the Patent Office so it’s not like going to the DND.

April: Wow. In the fast-moving technology world, you might be getting a patent just as it’s becoming obsolete.

Chris: That’s right.

April: That has got to factor in to the economical decision of what it turns up when the patent turn up.

Chris: Right. Yes, absolutely correct. For sure, that has to factor into the decision process, especially for smaller companies as you and I were discussing before we got started here. If the technology is likely to be obsolete before the patent process is over and there’s no other long term value in holding that patent, then it may make no sense to pursue the application in the first place but as we were also discussing beforehand, some companies do that nonetheless , where they can afford it to build a large patent portfolios for offensive and defensive purposes.

Google is a good example of a company that files applications on anything and everything. There are plenty of examples in the popular media of companies who built up humongous portfolios over the years such as Kodak or Motorola. Even though those companies are on the way out, the portfolios that still have considerable value to other people who want to move in and pick them apart and take what patents they have left. Even if the technology becomes obsolete or is never even put into the market, there’s still a consideration of what residual value the patent may have some time down the road so that has to factor into the process as well.

After you’re done waiting, then you prosecute your application. That is a back-and-forth discussion with the Patent Office over the merits of your invention where, generally, you consider those issues of novelty and obviousness that we discussed at the offset. Presuming you are successful in making those arguments and changing what you claim as your intellectual property to get around objections from the Patent Office, then the patent will issue, all right? That’s the end of the process. Going back ... to the next slide, if you get that patent, it’s good for 20 years from the earliest filing date. You file your application, it will be good for 20 years from that time. If it take you three, four or five years to prosecute the implication then it will essentially be enforceable for 15, 16, 17 years.

April: Too bad that wait time isn’t headed on, right?

Chris: That’s right. That’s right. Your patent is only ... it’s only enforceable against your competitors once it’s actually granted by whatever government applies. Once the U.S. government, for instance, gives you a U.S. patent, then you’re deemed to have a protectable invention and you can enforce other people. There’s nothing protectable while you’re in the application process, okay? Let’s move ahead. We spent a good amount of time talking about what entitles you to patent protection and the things from a more than authentic nature, so consider briefly the ‘flip side” why you may look at intellectual property in terms of its value to your company offensively, it’s also important to consider the defensive angle since, of course, your competitors are going to be looking at their own intellectual property the same way. Here, it doesn’t matter if you know or not what your competitors are doing because patent infringement is a strict liability tort. If I wander drunkenly under my neighbor’s yard, that’s a trespass, even though I didn’t know what I was doing. If you wander unto your competitor’s patent then you’re going to be liable for infringement even if you had no notion that you were doing something that’s ultimately wrong. From the “flip side”, it’s just as important to consider what your competitors are doing and what they may have patented as it is to consider what you may want to protect yourself.

Now, if you trespass unto your competitor’s intellectual property knowingly, willfully, then you really expose yourself to enhanced liability. If the matter is egregious enough, you may be facing three times the damages you otherwise would end up paying. That in and of itself is expensive and then you need to tack on the cost of litigation and as the last entry in the slide notes in capital letters, litigation is expensive. The minimum cost for intellectual property for patent infringement litigation is probably in the order of a quarter to a half million dollars.

From there, you’re going up into the millions depending on how many patents are issued so, truly, this is a case where an ounce of prevention is worth a pound of cure. Much better if you have any concerns about what your competition is doing or whether what you intend to do, be encroached on your competitor’s intellectual property to investigate that beforehand rather than run the risk of getting yourself involved in litigation.

April: Due diligence being your friend seems to be a common theme these days.

Chris: That is very true.

April: We did a quick question on this segueway into future topics so if we need to hold off, just let us know. The question is, you mentioned mobile apps, I thought that software falls under copyright. How do we contrast that to patent?

Chris: Right. That’s a good question, and we will maybe have some time off to touch on copyright but, in answer to that specifically, protection is available for software under both copyright and patent. Probably the best way to think about it is like this, copyright protects, as I mentioned in the beginning, it protects the actual work of authorship so … a book, for instance, if I were to sit down and write a book, the words on the page that I’ve chosen are protectable from copying. Software is essentially the same thing. The software code is words on a page and so, that is protected against somebody coming along and copying what you have written down.

Patent doesn’t cover just what you’ve written down. Patent covers the methodology that may be embodied by the software, right, or the system of architecture, or the implementation of an algorithm and its effect. That’s the scope of patent protection. It doesn’t matter in the patent context, as I say, whether or not somebody knows they’re doing something wrong. Patent protection is much more comprehensive of the invention including multiple iterations, right? You can write software in different ways to affect the same results. A patent would protect you in those regards, whereas a copyright is just going to protect you against somebody having access to your code and reproducing it substantially, so copy, right? If we get to it, we’ll discuss … copying is essentially an implementation of the rule from second grade where you keep your eyes on your own paper.

April: Interesting. Okay, moving on.

Chris: Okay, so moving on to trademarks. Here are some examples of trademarks, right? Trademarks are a lot of fun from the intellectual property context because everybody can relate. Everybody does grocery shopping, everybody goes to BestBuy to buy electronics, everybody is familiar with trademarks. Trademarks, as I mentioned, are an extremely powerful tool. They are a great shorthand for the quality of your goods or services, or the source of your goods or your services. Even if people don’t know the source, right?

Kentucky Fried Chicken is a very powerful brand. Does everybody know who is actually the business source behind that? What is it? Youngbrand or something like that, right? Nobody knows Youngbrand, that’s just a corporation. Kentucky Fried Chicken, that represents the place you want to go if you like their food, a particular quality of food that is going to be replicated every time you go to some place who says Kentucky Fried Chicken and it represents that you’re getting quality stuff from the same source every time you see the mark, even if you don’t ultimately know what corporation is behind putting that stuff out.

Details, and we’re all ... we don’t all have time to completely educate ourselves on everything behind the products when we go shopping. We look for and use that shorthand which is why brands are so powerful and so valuable. Trademarks are very territorial, by which I mean, in the patent context, you get a patent and you’re protected in the United States against the acts that I mentioned before. Trademarks are a little bit different in that we have multiple levels of protection. This segues to your question from earlier, what are the costs to get a trademark? Who can afford to get one, et cetera? Everybody can afford to get a trademark. If you put a name on your product or service, if you offer it to customers under a particular name, you have a trademark. You don’t have to do anything more than that, right?

Trademark ... the trademark law is all about protecting you and me as consumers, to make sure that we don’t get defraud, right? To make sure that when we go to Kentucky Fried Chicken to buy a chicken, we’re getting the real deal and not somebody’s knock off. For that reason, you don’t have to do anything special, as a general rule, to claim some trademark protection but while you can do that, those rights are very territorial. They don’t extend to the boundaries of the United States, they extend to where you do business, okay? Now, that’s kind of a beautiful concept anymore because of the indebt ... because of the nationwide scope of advertising in other media but it still holds true to a significant extent that when all you do is put your name on your product or service and you go out there and sell it you’re going to have rights where people recognize your trademark, where you service consumers, okay, and that’s the extent to which you can go in and ask a court to stop a competitor from using your trademark or a trademark that is confusingly similar to it, right?

In effort, somebody comes in not with exactly the same trademark but something close enough that people can’t quite tell you apart. They think maybe you’re related in some way, that’s a no-no. That causes confusion and that’s what we try avoid. Those would be the limits of your rights. We have an elevated tier of protection available from the U.S. Patent and Trademark office which is the Federal Trademark Registration. That’s covered by federal law. That entitles you, at least presumptively, to the right to use your trademark throughout the United States, even if you’re not actually there, okay? That can be very beneficial especially for companies that are starting up, because you may be working on building your business just in the Midwest and you may have plans to cover United States at some point, but it’s not going to happen overnight. If you pursue Federal Trademark Registration and you’re successful, then you avoid the potential circumstance where somebody, without knowing who you are, never having heard of your business, picks the same trademark or the same ... or maybe related goods or services out in California, for instance, thinking that’s a great trademark and they’ll go, ‘I’ll call my product or service that.’ Then one day, down the road, you expand your business to California only to find that somebody is already there using the same mark right? Yes, exactly so ... and under those circumstances, if you don’t have a Federal Registration, there isn’t anything you can do about it. You have trademark rights, but they stop basically at the California boarder.

April: Interesting. Is the investment in trademark protection significantly different than the investment in patent protection?

Chris: Yes, right. It is. That slides a couple down the road but, yes, let’s just cover it right now since we’re getting short on time. The process is somewhat similar in that you search your trademark to ensure that most especially, you’re not taking as your name for your product or services something that somebody else has already got, right? This is for the reason we already discussed, that’s going to be problematic. If it turns out that you’re in the clear, you file your application, the Trademark office looks at it, they may have some issues, at the end of the day, you get your registration, nine times out of ten. Then, you’ve got a protectable right in that registration for 10 years.

That’s renewable as long as you continue using your trademark for additional 10-year terms. That process, the registration process typically takes maybe a year at the outside, sometimes less ... and is significantly less expensive. Generally speaking, if that’s an eventful process, you’ll probably spend about $2500, so well worth the investment, to be sure, especially if you have designed as a business on expanding outside of a particular state or a particular region of the country. All right, so ... if you see the slide that’s up, the requirements to get a trademark, commercially used, we’ve already mentioned that. That’s really all you have to do, as long as you’re using your mark, you can claim a protectable interest in it. You can ... that provides also a basis for registration and a basis for maintaining the registration.

The sooner you stop using the trademark then ... for all intents and purposes, if you stop using it for any significant period of time, you’ve given it up, okay? It goes to ... as a general rule, it goes back into the pool for other people to adopt to their own use. All right? Ownership, briefly, just like with patents, trademarks are a kind of property that you can transfer or license. Unlike with patents, trademarks belongs to the party who uses them, that’s the original owner so, in most circumstances, that’s going to clearly be your business, okay? Unless you happen to be in the business of franchising or having some other people using your mark for you as a sort of proxy, like the franchise situation, in which case, you’re still the owner of the trademark, it’s just that the use by your proxy comes back to your benefit.

Scope and term, we’ve already mentioned. A quick word on scope. The scope of your trademark rights is dependent on what the mark is and what the goods and services are in connection with which you use that mark, okay? We’re protecting against people getting confused into thinking one mark is another so, it’s only marks that look like yours or sound like yours, or both look and sound like yours, they are going to be problematic if somebody picks a completely different mark, then obviously that can’t be an issue. Nobody is going to confuse Microsoft and Google or Google and Yahoo!

Also, considered in that next are your goods and services. If somebody picks a mark that’s just like yours, and you use, for example, your trademark for a mobile healthcare app and somebody adopts the thing in the exact same trademark for diapers, that’s probably not going to be an issue because the expectation, just postulating among consumers. They’re not going to think that healthcare mobile apps and diapers are related goods, right? That’s the registration process. We covered that briefly. As you can see, we’ve got a little bit of a wait but not nearly as long.

We go to the next slide, the “flip side”, just like with apps, right? Your competitors are going to be doing the same thing in your interest as you are. Again, due diligence or that an ounce of prevention is a good investment whenever you are on the verge of adopting a new trademark or service mark for product or service to make sure that you’re not picking a mark that is too close to something one of your competitors is using because as with patents, this is a strict liability tort and it can cause confusion. It doesn’t matter if you intended to or not although you’ll pay more and enhance damages if you did intend to.

April: Ignorance is not a protection.

Chris: Right. Okay, so that brings us quickly to copyrights, so next slide, please? Copyrights, as I mentioned before, any work of authorship such as artwork, photograph, GUIs, textual works, which includes website content, instructional manuals, software code, sound recordings are also a protectable subject matter of copyright. These are the sorts of things that are protectable under the copyright laws, provided ... and the word is emphasized on the slide, that they are original to the author, okay? Now that doesn’t mean that the same thing wasn’t necessarily done before, it just means that the author didn’t copy it, all right?

If I ... living in a cave my entire life happened to write Romeo and Juliet word for word, having never been exposed to any of Shakespeare’s plays that would be a copyrightable work on my part because it would be original to me, I had not copied it from something else, okay? Copyrights are territorial, but only sort of. A copyright exists as soon as you make the thing that is protectable under copyright, so as soon as I write that book, as soon as I write that code, or create that graphical user interface, or take that photograph, I have a copyrightable subject matter that I can protect and that will be recognized against infringement in any country that is ... that recognizes copyrights as we do in the United States, which is most countries.

Some countries have requirement that you go out to register your copyright in order to protect it or at least try to register it in order to protect it but having or not having the actual registration will not defeat the existence of the copyright or at least the attempt to argue that it is a protectable subject matter.

April: This will protect you against pretty much outright theft but if two people create a product that does exactly the same thing but, perhaps, by a different way, maybe two different apps, hand location engagement in a very similar way, but if they are written on entirely different code basis, copyright wouldn’t give you a basis of protection in the same way that patent protection might.

Chris: That’s right. That’s exactly right. Copyright is not ... and that’s apropos of the next slide ... it’s the thing that you’ve created in a fixed and tangible medium of expression that’s protected. It’s not the idea behind it. That is ... I’m running a little bit of foul on legal terminology but that’s more of the domain of patents. Patent protects broader concept and more sweeping notions of what the app does and what results it achieves. If somebody works at an app and says, ‘This is a great idea,’ and then runs off and hires a programmer to write some program that executes on the same idea without copying the code, coming up with a different interface, that’s not copyright infringement. Now, if on the other hand they get your codes somehow and they essentially appropriate it in significant part, that’s copyright infringement, or if the interface looks just like your interface, if they have taken that expression, that’s copyright infringement.

April: This actually leads us to an interesting question here, the Apple-Samsung litigation has highlighted the backwater of design patents. Could you discuss design patents?

Chris: Yes, sure. I meant to mention this when we were touching on patents. That’s a species of patent protection. It’s a little bit different than what most people are used to, right? Most people are used to patents, as I’ve mentioned, machines or processers for doing things, an automobile engine, a break system, a method for handling and scheduling his employees via a global network or things of that nature, things that are more clearly utilitarian. There is protection of the patent laws for the ornamental appearance of things that are utilitarian, and that takes us right to the Apple litigation. Apple has a slew of design patents for the ornamental appearance of the products, of the iPhone, of certain elements of the interface, even the graphical elements, because those are part of the useful article, i.e., the phone, or of the appearance of the iPad.

No matter how simplistic those things seem to us, they have the patents and so they are enforcing against Samsung the claim that they have essentially infringed the aesthetic appearance of these types of products, so that is a species of patent protection that is available. Now, to say those ... those are very simplistic looking designs in hindsight, and there seems to be a question that leads in that litigation, whether or not Apple, in fact, came up with them and that really goes to, at least in part, to a question of whether or not those designs are new or not obvious, because they are so simplistic in appearance. It may be that those patents get invalidated but at least when they presented them to the Patent Office in the first place, they deemed that they were protectable.

Now, interestingly, and perhaps interesting to the listeners, the design patent process is much more abbreviated than the regular utility application process, the examination is far less rigorous just because designs tends to be more unique in any given circumstance than … and more focused than just written claims that verbally describe some sweeping concept of system architecture or something. They tend to be relatively allowed by the Patent Office because there are so many different ways to present the ornamental appearance of a given thing that, generally speaking, patents, design patents, applications, aren’t rejected as being too close to some design that somebody else already did so, examination tends to be less rigorous and much more swift.

You can secure a design patent from start to finish in six to nine months, maybe a year at the outside, right now, but far quicker than utility application process. It’s a real viable alternative if you have a physical product that you’re selling, that you believe is going to have at least a couple of years of fight in the marketplace, to have some measure of protection that you can sort against competitors just like the utility patents, its infringement is strict liability, it doesn’t matter if they knew about your design or not. Although, if they did and they will infringe that, that’s even worse for the infringer.

The only difference in terms of scope is that where a utility patent will protect essentially any iteration of the inventive concept that runs a file of the way you describe your invention in writing so, if somebody finds a different way to achieve the same result that’s covered by your claim, for instance, then they’d still be an infringer, whereas in the design patent context, what we’re really looking at is when somebody is presented with the accused design and your design, are they going to think that they look alike? That’s really the test. Do they look confusingly similar? Consequently, there’s not as much breath to a design patent. They really have to be knocking off your product as it were.

April: Okay.

Chris: Ownership. Let’s see, did we pass over that one yet? Go back one slide if you would. Ownership is different in every species of intellectual property and copyright is an important one. Ownership is to the author. The author can be the person who actually does the work or it can be the employer of the person who does the work, or a party who commissions the person to do the work in limited circumstances, right? A lot of people may be familiar with the term work for hire? That gets thrown around far too loosely outside of the legal context and it’s important to remember that works for hire doesn’t apply to every circumstance where you employ somebody or hire somebody to do work for you. If you’re the person who actually does the writing, you’re the owner. If the person who actually does the writing is, for instance, your W2 employee, you’re the owner, okay?

If you just contract an outside party to do the work for you, to write the software, you’re not necessarily the owner, okay? That’s not a work for hire. There are very limited categories of things that you can contract with on an independent contractor basis that will be deemed works for hire because of the nature of what they are making and software is not one of them, so it has to be explicit in the agreement that whatever they come up with, they’re going to transfer it to you, the copyright interest, okay?

It’s also important to know that with patents joint authorship can be a problem. If you have a party on the outside who’s doing contribution towards the work and a party on the inside that’s doing contribution towards the work, both will be owners of the entire thing and they’ll be entitled to go out and do with it what they want. They can go out and take advantage of it themselves. They can make it and sell it. They can license other people to do it. The only caveat and this is an additional entitlement for both parties is, you have an obligation to account to each other for the money you make from it, right?

April: That could get interesting, right?

Chris: Right. Right. It could be very problematic and a lot more headache than most people want to deal with when they work collaboratively with somebody on the outside who may end up being an owner. It’s important to consider these issues in advance before the thing actually gets made so that you won’t have to extricate yourself from the briar-patch after the fact. Scope and term, quickly, as I said, the scope is just like from the second grade, you can’t copy. That’s essentially the bottom line.

If you have access to something and you turn around and make something that’s substantially similar to what you have access to, that’s going to be deemed to be copying. The scope is a little more limited than with patents or trademarks in that they are … obviously there has to be some sort of knowledge of the thing that’s being infringed in terms of your having had access to the copyright protectable material in the first place. But if somebody copies insignificant part, then there’s a course of action against them.

The term of copyright is practically forever. It depends a little bit on who the author is but it will exceed all of our lifetimes so it’s ...

April: Now, do we have Disney to thank for that? Be honest.

Chris: Yes. In fact, we have Disney to thank for this. The Copyright Act is a real tribute to special interest lobby but, right, the term is not even worth committing to memory because it will outlive almost all of us. Copyright registration, as I say, it’s required to ... that you, at least, try and get rejected in order to bring a suit in the United States for infringement of a copyright but it’s not required to be able to claim copyright. As soon as you make the thing that is your work of authorship, then right there you have a copyright. Importantly ... and this is probably the ... essentially the last point.

Registration is important for the following reasons other than prosecuting infringements; to recover attorney’s fees and to recover statutory damages. You want to have a registration before the infringement takes place, okay? You register after the horse has left the barn, it’s too late to recover attorney’s fees or to claim statutory damages. Just like with anything else, litigation is expensive so if you have your registration in advance and somebody then starts infringing, then you have a very powerful negotiating tool in terms of your ability to recover attorney’s fees. If negotiation fails, you have the ability to request recovery of your attorney’s fees in any copyright infringement action. That alone is worth the price of admission and copyright registration is extremely inexpensive. It’s hundreds of dollars, very inexpensive.

Statutory damages, not quite as important but, of course, if somebody damages you by a copyright infringement you can always recover your actual damages and, or the profits of the infringer but as an alternatively measure of damages, the Copyright Act arrives for the court to set damages between a minimum and a maximum, and the maximum is ... I can’t remember off the top of my head. I want to say, maybe $150,000 for each act of infringement and that can be enhanced if the infringement was willful so it’s certainly useful to have that in your arsenal but if for no other reason than recovery of attorney’s fees, it’s well worth getting a Copyright Registration in any subject matter that you think is sufficiently important that a competitor might take it and try to reproduce something.

April: Just part of the normal due diligence.

Chris: Yes. Then, in closing, the “flip side” is the same as the “flip side” for trademark and for patent as well. It’s always a good idea to do your due diligence and take care that you’re not infringing a competitor’s copyright. In this context, it’s easier in that your business and your employee should have some knowledge of what they are working with and where there’s any question that should be a flag to investigate the providence of the material you’re working with to ensure that it doesn’t belong to somebody else.

April: Makes sense.

Chris: That’s all I have.

April: Chris, thanks very much. I know that we asked you for a very broad scope of info today and you’ve given us a great foundation. Thank you for comparing those various aspects of intellectual property. For those of you who have any additional follow-up questions, we will send our contact info along with a copy of this webinar recording.

Don’t miss our next two webinars, next week Tuesday, we have “Using Cloud’s EMRs to Achieve Meaningful Use on a $0 Budget” with Tom Gomez. On August 21st, we have “Implications of Recent Medicare Announcements on Trends in Physician Payment Methods” with Ralph Levy, another attorney from Dickinson Wright.


christophermitchellChristopher A. Mitchell, Attorney, Dickinson Wright

Mr. Mitchell focuses his practice in the areas of consumer products, life sciences and medical devices. He has represented biochemical producers, manufacturers of food products, sporting goods and building products, food service franchisors, consumer product companies, medical device manufacturers and online service providers.

Mr. Mitchell's industry experience includes working in a research capacity with the UpJohn Company in the department of Bioprocess Research and Development.

Mr. Mitchell counsels clients in adopting and leveraging intellectual property beginning with the earliest phases of product development and continuing beyond commercialization. He has significant experience in the areas of patent, trademark and copyright procurement and litigation, including administrative proceedings. He frequently handles the international procurement of intellectual property, including PCT applications before the World Intellectual Property Organization.

Mr. Mitchell has handled numerous copyright, trademark and patent infringement lawsuits, representing the interests of plaintiffs as well as defendants.

Mr. Mitchell is admitted to practice before the U.S. Patent and Trademark Office and the Canadian Intellectual Property Office.


AprilSage

April Sage, CPHIMS, Director Healthcare Vertical, Online Tech 
April Sage has been involved in the IT industry for over two decades, initially founding a technology vocational program. In 2000, April founded a bioinformatics company that supported biotech, pharma, and bioinformatic companies in the development of research portals, drug discovery search engines, and other software systems.

Since then, April has been involved in the development and implementation of online business plans and integrated marketing strategies across insurance, legal, entertainment, and retail industries until her current position as Director Healthcare Vertical of Online Tech.

Contact: asage@onlinetech.com



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