intelectual property - a key factor in new business creation

8/3/2019 Intelectual Property - A Key Factor in New Business Creation

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Intellectual PropertyA Key Factor in New Business Creation

4 March 2011

Joana Mendona


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Research in natural sciences is always the securefoundation for technical progress, and a countrys industry

will never be able to gain and sustain a leading position if thecountry is not at the same time a leader in scientific

progress.

1890

Baron Werner von Siemens


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Introduction

IDEAS

new ideas

new products new services

value to the economy

encouraging people to buy or competitors to invent new

invest in new developments products in order to regain market share .

better way of doing somethingFor example, Apple, an

established technologycompany, developed the iPod.Many ideas come fromentrepreneurs who go on to startup new businesses.


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What is an entrepreneur?

An entrepreneur is someone that creates a new business

- high risk

- no insurence if it will give a return on investment

- good understanding of their markets

- good ideas

Matt Stevenson and Goldfish bowls - designed a new environment to give fishmore access to clean water.

- He registered his invention

- was granted a patent

- marketed his fish tanks under the biOrb name.


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Entrepreneurial process

To set up a new business, an entrepreneur needs to followseveral steps:

Develop new products and services

Check that ideas are new .

Investigate if there are any barriers to setting up the business

Raise finance for the business


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Why do entrepreneurs protect their ideas?

For entrepreneurs, the idea is often the entire basis for the new business.

It is essential that entrepreneurs safeguard this investment.

Intellectual property (IP) rights provide entrepreneurs with many benefits.

- IP rights provide protection against a competitor directly copying the idea.

- helps the entrepreneur to recover their costs in developing the idea.

- maintain competitive edge. - Registered IP ensures that entrepreneurs get all the financial benefits from their ideas.

Registered IP is an asset . It helps convince financial institutions to invest in a business, enabling more money to beraised for development.

Registered IP gives consumers confidence that products meet appropriate standards and quality .

By being able to profit from their IP, entrepreneurs are rewarded for taking risks and developing new innovations. Theycan invest profits in work on new ideas.

Ownership of the IP enables entrepreneurs to license or franchise ideas to others without risk.This means entrepreneurs are able to expand the market for their products and services more easily,and can increase revenue for the business.


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Diferent rigths for the same business

Often, more than one type of IP may apply to the same creation. For example,the Harry Potter books, films and merchandise are covered by:

copyright for the books and films

design for some of the Harry Potter scarves and clothes

trade marks for the Harry Potter range of toys, games, etc.

An inventor who has a new idea should keep it secret until the idea is

registered. If an idea is discussed in public, then it cannot be protected. Thereis no worldwide legal protection. IP has to be applied for in each country.


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Problems and solutions about IPand your company


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Trademarks

Problem

You provide goods or services in a distinctive way.

Examples: Joes Pizza , Cisco routers, shoes with a swoosh symbol,pink fiberglass.

Someone provides their own goods or services copying that distinctiveway.

Examples: Franks Cisco routers , Cisco pizza, Francisco routers,cisco.com.


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Trademarks

Solution

Trademarks protect your right to provide your goods or services in adistinctive way.

Details

Can be cheap (or expensive)

Be less descriptive and more distinctive.

Study your market before you adopt a mark.


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Copyrights

Problem

You sell original creative works.

Examples: Books, scripts, movies, software, legal forms, paintings,sculpture, photographs.

Someone copies your creative works and sells them.

Examples: Verbatim copies, selective copying, derivatives.


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Copyrights

Solution

Copyrights protect your exclusive right to copy your original works.

Details

Cheap until you need to sue someone.

Keep records of your creative activities, and who gets copies.

Be careful when you copy other materials, especially open source


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Patents

Problem

You develop a new and inventive product or process and want tocommercially exploit it.

Examples: Windshield wipers, spreadsheet software , mutual fund sharepricing, crustless PB&J sandwich.

Someone provides that same product or process.

Not necessarily copying.


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Patents

Solution

Patents protect your exclusive right to make, use, or sell new andinventive products and processes.

Details

Expensive Consider reviewing existing patents before development.


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Trade Secrets

Problem

You develop a product or process that is easily copied , but cant easilybe reverse engineered, and you keep it secret.

Examples: Coca-Cola, investment strategies, packet routing algorithms.

Someone steals your secret and uses it to compete with you.


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Trade Secrets

Solution

Trade secrets give you an exclusive right to your confidentialinformation and processes.

Details

May be better than patents.

Must keep things secret: internal controls, nondisclosure agreements,etc.


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IP and Start ups


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Background

Ninety percent of the scientists and engineers that have ever lived in thehistory of mankind are alive today.

D. B. Merrifield

Semiconductors (e.g. Fairchild)

Integrated Circuits (Intel)

Biotechnology (Genentech)

Internet (Akamai)


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How Important Is Intellectual Property ForStartups?

So with the focus on execution, and trying to go faster, better and smarter thaneveryone else, how do patents fit in? And more importantly, what are investorsexpectations when it comes to intellectual property and patents?

Whats your IP and patent strategy? - We dont have one, this is an execution play.

Its fair to say, I dont know, but Im interested in working with you on figuring it out.

So a reasonable answer might be, I dont see a lot of IP opportunity initially, but down

the road when we get to building X, Y and Z, I think we could sit down and come up witha good IP and patent strategy.


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Investors and Intellectual Property

Rights:

- If the rights are protected

- what rights of others might be infringed upon

- an ideal investment would be in a company that has plenty ofprotected and documented IP

- should also have clear rights to all of its IP and not infringe upon anyother companys IP

- venture capitalists and private investors are eager to find companiesthat have true IP

*Institutional investors will perform a due diligence before

investing and IP rights will be a key feature of that investigation.


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Startup Companies Need

1. Best and brightest willing to take risk

2. Willingness to share success

3. Willingness to work hard with passion

4. Quality investors


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A Strong Intellectual Property Estate:

1. Makes it easier to attract the best and brightest

2. Increases the value of stock options (sharing success)

3. Increases the teams passion

4. Makes it easier to attract quality investors


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Conclusion

Develop IP strategy with experiencedIP attorney


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Case studies 2 start ups


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Jonathan Smith and Wave Dispersion Technologies

Motivated by the need for erosion protection for an oceanfront condominium development inNew Jersey, Jonathan Smith and his father Dennis developed an erosion prevention productthat is a modular and highly engineered marine floating breakwater system. This product ledthem on a venture that would become Wave Dispersion Technologies (WDT).

- advantage of an unintended market opportunity having realized that the same productworked well as a line of demarcation for security purposes


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Ray Gunn and Somanetics and Clarity

- Raymond (Ray) Gunn

- has spent a career as the principal financial and strategic architect to build hightechnology innovations into commercial ventures/companies

- Two of the companies that resulted from Ray Gunns efforts were Somanetics and Clarity

- Somanetics develops, manufactures, and markets the INVOS Cerebral Oximeter which isa noninvasive patient monitoring system that continuously monitors changes in theblood oxygen levels in the brain.


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Matt Younkle and Laminar Technologies TurboTap

- While a student at the University of Wisconsin Madison (UW-M), Matt Younkle was frustrated by the slow-moving beer line in the student union

- He spotted an opportunity, teamed up with few friends, and entered an innovation contest

- The team won that contest, and went on to create TurboTap, a beer dispensing apparatus whichcombats the head-producing effects of gravity and turbulence to quickly dispense perfectglasses/pitchers of beer with no waste


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Dennis Carmichael and OnSite ERT - OnSite ERT provides tracking and monitoring of first responders at incident scenes such as fires andaccidents

- The venture was co-founded by John Ellis (an experienced firefighter and incident commander) andDennis Carmichael (a successful information technology entrepreneur).

- They developed a fully automated and easily deployable system that keeps track of the location of allfirst responders, both inside and outside of buildings

- OnSite ERT has won a number of awards, and is included on the Department of Homeland SecurityAuthorized Equipment list, thus making it eligible for grant funding


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Martin Fisher and KickStart International

Martin Fisher is a social entrepreneur

Applied his passion for improving things to the challenge of eliminating poverty in ruralAfrica.

Fisher invented low-cost, human-powered irrigation pumps and other simplemoneymaking tools that enable subsistence farmers to double or triple their annual netfamily incomes

He also pioneered a sustainable supply-chain model for his products that allows for theirmanufacture and service in or near the communities where they are used

Fisher has been recognized for his inventions and work as a social entrepreneur, and hasbeen awarded the IDEA Design Gold Medal, TIME Magazines 2003 European Hero

award, the 2005 Skoll Award for Social PEER-REVIEWED PAPER


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Aarun Crumm and Adaptive Materials

Adaptive Materials, Inc. (AMI) is an innovator in the development of portable power generated by solidoxide fuel cell technology

Unlike the more familiar hydrogen-powered fuel cell technology, AMIs products use readily-availablefuels such as propane, and provide organizations and individuals with clean, compact, long-lastingportable sources of electric power

AMIs fuel cells have been field tested by the military and could soon replace batteries in many portablepower applications


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Paul Angott, Serial Entrepreneur

Paul Angott is an engineer turned serial entrepreneur

He has invented and brought many innovative products to market,including programmable thermostats, wireless door chimes , belt-driven ceiling fans that enable use of small motors, wireless home

security systems, wireless ceiling fan controls, and self-guided lawnmowers. He is currently working on a breast cancer diagnostic tool


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Buying electricity from a mobile phone In 1991, three lecturers in the Electronic Engineering Faculty of the Universityof Pretoria started Expertron as a consulting company.

In 2000 the lecturers resigned from the university to run Expertron as a full-time business.Expertron Group (Pty) Ltd (Expertron) develops Information and Communication Technology (ICT)solutions, focusing on problems in South Africa.

For example, one of Expertrons services, called Cell Power, enables consumers to purchase electricityfrom a vendor using a mobile phone.

Cell Power combats a developing country problem of lost revenues from electricity distribution, a problemthat was not a priority for ICT companies in developed nations.

Dr Walter B. Smuts of Expertron describes Cell Power as a prepaid electricity vending solution that usesmobile telephones as point-of-sales devices . Expertron developed the Cell Power system to assistmunicipalities to reduce their lost revenue through the difficult task of managing electricity usage.Cell Power enables a municipality to take control of its electricity distribution and increase revenues.

Expertron uses hi-tech solutions to enable the informal sector in developing countries. Cell Power, forexample, allows consumers without access to either bank accounts or mobile phones to purchaseelectricity, whereas previously they would only have had access to pirated power.

Lessons learned include:Business happens between

people. Relationships areimportant. Partners arecrucial. Building long-termrelationships with clients iscritical to success


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Infringement cases


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Google Trademark Keywords

In April 2009, the 2nd US Circuit Court of Appeals issued a ruling stating thatGoogle must continue in a trademark infringement lawsuit brought on byRescuecom. In the lawsuit, Google is accused of selling the trademarkedname "Rescuecom" as a keyword to Rescuecom's competitors. The keywordsare used to deliver Google's sponsored search results, therefore allowingcompetitors to appear on the results page when a user searches for"Rescuecom." The lawsuit was originally filed in 2006 and dismissed by thelower courts.

This isn't the first time Google has found itself in the same legal predicament.Both American Airlines and Geico have sued Google over selling theirtrademarks as keywords. Google's trademark policy has gone through severaliterations as the company attempts to find a balance that protectstrademarks, yet allows retailers to advertise the trademarked goods they sell.


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The Da Vinci Code Case

In the famous Da Vinci Code court case of MichaelBaigent and Richard Leigh vs. The Random HouseGroup Limited, Baigent and Leigh alleged that DanBrown, author of the bestselling Da Vinci Code ,infringed on the copyright of their non-fiction work,Holy Blood, Holy Grail . Because Brown had not copiedthe text of the earlier book, the claim was based on"non-literal" copying Baigent and Leigh asserted thatBrown told his story in the same "manner" in whichthey had expressed historical facts in their book.

The claimants' case was dismissed in 2006 with the judgment stating in part that "...there is no copyrightinfringement either by textual copying or non textualcopying of a substantial part of HBHG..."


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Bratz Dolls vs. Barbie

In 2008, Barbie was finally declared the winner in the long-runningintellectual property rights battle between Mattel, Inc. and MGAEntertainment Inc., the makers of Barbie dolls and Bratz dolls, respectively.

In the lawsuit, Mattel sued MGA claiming that MGA stole the concept and thename of the Bratz doll from them.

Carter Bryant, designer of the Bratz doll, was an employee of Mattel, but alsoworking as a consultant for MGA when he designed the doll. A few years afterMGA began selling Bratz, Mattel sued both Bryant and MGA alleging copyrightinfringement. Because Bryant was on the Mattel payroll when he created thedoll, the Bratz name and design are considered trade secrets. The courtssided with Mattel and ordered MGA to pay $100 million in damages.


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Study cases


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Apple Sues Nokia in U.K. in Continuing Patent FightLate last year, Nokia [NOK] sued Apple [AAPL] for some alleged technology patent infringements.

Apple countersued, saying Nokia copied the enormously popular and patented iPhone interface frameworks .

Nokia responded by filing a complaint with the U.S. International Trade Commission in late December 2009, requesting ithalt the import of not only the iPhone, which it saw as the original patent offender, but also the rest of Apples computersand music players.

Then Apple filed a similar ITC complaint on January 17.

Popular opinion seems to be flowing Apples way; the Nokia suit comes off as jealous, and brings into stark relief Nokiascomparatively craptastic smartphone lineup . But poke around the intellectual property blogosphere, and youll quickly findthat Nokia may actually be justified.

Apple says its the one whos innovating, and that Nokias E71, 5310 and N900 handsets are the patent freeloaders.

Among Nokias 13 alleged infringements against the iPhone: power -saving software, GUI patterns and colors, and syncingconfigurations.


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CopyrightDisney, CBS, Fox Sue Ivi for Streaming Shows on Web

Walt Disney Co.s ABC, CBS Corp. and other broadcasters sued Ivi Inc., an online subscription service, forstreaming television programs over the Web without authorization.

The companies, which also include News Corp.s Fox, General Electric Co.s NBC and the PublicBroadcasting Service, today accused Ivi and its founder, Todd Weaver, of copyright infringement in afederal court complaint in New York.

Defendants have launched their infringing Internet TV service to coincide with the start of the new falltelevision season, the broadcasters said in the complaint.

Ivi, based in Seattle, began streaming TV stations there and in New York 24 hours a day to Websubscribers worldwide on Sept. 13, according to the lawsuit. Viewers would pay $4.99 a month after a 30-day free trial, the complaint said.


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Trade Secrets/Industrial EspionageAstro Unit Leaked Confidential Data, AV Asia Claims

Measat Broadcast Network Systems Sdn., a unit of Malaysian billionaire T. Ananda Krishnans Astro All Asia Networks Plc.,illegally used confidential information in a tender for new satellite dishes with reduced signal loss during rainstorms, AVAsia Sdn claimed in a lawsuit.

AV Asia, a Malaysian television equipment provider, sought $420 million for damages in the suit.

Closely held AV Asia sought help in 2008 from Maspro Denkoh Corp., a Japanese television-receiving equipmentmanufacturer, to help it develop a satellite dish less susceptible to existing rain fade problems, a characteristic which lendsto transmission interruptions during bad tropical weather, according to the suit.

AV Asia and Maspros engineers met with Measat in August that year to discuss their ideas and exchanged data aftersigning non-disclosure agreements, AV Asia said in the court documents:

The rights of the rain fade solution were given by Maspro solely and exclusively to my client,

Measat used the information in a bid on a contract with satellite dish suppliers and to help it start the Astro B.yond, the firsthigh-definition television service in Malaysia, AV Asia said.


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Formula One Group lost a court challenge of a decision thatgave another company European Union-wide rights to a

trademark that includes the words F1 - Live.The EU General Court, the 27- nation EUs second -highest tribunal, yesterday rejected the appeal, rulingthat there is no likelihood of confusion between the mark applied for and Formula One Licensings marksgiven the low degree of similarity.

Racing-Live, a motor sports website based in Montpellier, France, won a challenge in 2008 when the EUtrademark agency backed its bid to register an image with the words F1-Live in it as a trademark. That

was the same year the company, which had been seeking that trademark since 2004, was acquired byWalt Disney Co.s ESPN Inc.

The group in charge of licensing for Formula One, the worlds most -watched motor sport, in 2005challenged the French companys application and won the EU trademark agencys backing for the claimthat such a trademark would be confused with the groups existing F1 marks. Formula One appealed tothe EU court when the agency overturned that ruling in 2008.

In yesterdays ruling, the Luxembourg -based EU court said that the regions trademark agency wascorrect in finding that F1 in ordinary typeset has a weak distinctive character. People wont make aconnection between the two trademarks because of its totally different layout, the court said.


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Apple Seeks Patent on Dual Use Data, Power-CordTechnology

Apple Inc., maker of the iPad and iPhone, applied for a patent on a cord for anelectronic device that will both supply power and permit transmission of data.

The patent covers a power and data adapter that permits dual use for onecord.

The aim would be the increased use of a portable device on a desktop. Thecurrent battery capacity of portable devices doesnt meet the need fordaylong computing.

To avoid potential damage to a device when a cord is pulled, the applicationenvisions a connector that will easily disengage when pressure is put on thecord. The connector system could use magnets, Apple suggested in its

application.

I f i i h i h f hi K F P d P


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Infringing the copyright for his Kung Fu Panda Powerworks.

According to the complaint filed Feb. 16 in Boston, Gordon first

created his Kung Fu- fighting panda in the early 1990s andregistered his copyright in 2000. He began selling clothing itemsfeaturing his characters through a retail store in the 1990s andhad costumes made depicting some of his characters. Thecharacters appeared at promotional events in and aroundBoston and were displayed on his website, luckylizard.com, hesaid.

Gordon claimed that DreamWorks King Fu Panda films andother products feature characters, character depictions,character personality traits, illustrations, expression, settings,story elements, plot and sequences of events that are unlawfulcopies and derivatives of his Kung Fu Panda Power work.

Gordon said he sent his illustrations and stories to theanimation division of DreamWorks in the 1990s. He received arejection letter in October 1999 acknowledging receipt of thework, according to his complaint.

He asked the court to order DreamWorks to pay him moneydamages, attorney fees and litigation costs and to acknowledge

he is an author and creator of the Kung Fu Panda products.


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intelectual property - a key factor in new business creation

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