nyu startup school: protecting your idea or invention

Startup School:FoundationsProtecting Your Idea orInventionMichael J Kasdan, Wiggin and DanaFebruary 28, 2017

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o Mike Kasdan is a Partner in the IP Practice Group of Wigginand Dana LLP, with a background in electrical engineering,computer science, and technology consulting. He works with abroad range of technologies, including software, consumerelectronics, wireless devices, computer architecture andnetworks, semiconductor chips, Internet and ecommerceapplications and platforms, and medical products and devices.

o After graduating from University of Pennsylvania and NYUSchool of Law, Mr. Kasdan has been on the ground floor ofefforts to turn New York City and State into a hub forinnovation and entrepreneurship in technology, Internet, e-commerce and new media. He counsels new companies onlegal, financing, business, and particularly intellectual propertyand contact-related issues.

o He also now serves as Chairman of the Board of Directors ofCityScience, a nonprofit organization promoting science,engineering, and math education in NYC schools, and writeson varied topics – including social justice, sports, politics, andmental health – for The Good Men Project.

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� There has been a fundamental shift in the role of IP asa corporate asset in our information economy.

� In 1975, 83 percent of value of S&P 500 companies wastangible assets

� By 2015, this dynamic has more than flipped, with 87percent of value now residing in intangible assets

The Value of IP is Growing

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Over the past several years, the value of U.S. IP hasbecome acknowledged to be enormous:

IP-intensive industries accounted for $6.6 trillion invalue added in 2014, up more than $1.5 trillion (30percent) from $5.06 trillion in 2010. Accordingly,the share of total U.S. GDP attributable to IP-intensive industries increased from 34.8 percent in2010 to 38.2 percent in 2014.

Intellectual Property and the U.S. Economy: 2016 UpdateU.S. Patent and Trademark Office

Value of IP is Acknowledged

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� IP should now viewed as a strategic asset with thepotential to generate revenues, and an entry-point intonew markets and opportunities, in addition to itstraditionally understood role as legal protectionagainst competitors.

� Successful sophisticated companies are expected tounderstand and have a strategic plan not only forobtaining IP, but also for how to use that IP.

IP Is a Strategic Asset

That being said. . . IP does not make the businesson its own!

• Business strategy drives IP strategy

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Business Plan, Venture Funding,Corporate Formation Phase

Ongoing

Establish business valuepropositionDemonstrate whatdifferentiates company andproduce from competitors

Grow business and product

Build value in IP

Reduce risks to business

Intellectual Property IssuesProtecting own inventionsand brandNecessary third partyIP/licensingSteps to reduce IP riskwhen launching newproduct/service/brand orentering new market

Contractual Issues– Employment agreements (non-

competition clauses, confidentialityprovisions, ownership of IP clauses),NDAs, IP licenses, in-licenses, out-licenses, cross-licenses

Intellectual Property Issues– Protecting own inventions and brand– Accessing IP of others– Steps to reduce IP risk when launching

new product/service/brand or enteringnew market

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Types of Intellectual Property

Utility Patents:

A grant by the USPTOof the sole right tomake, use, and sell aninvention for a limitedperiod of time.

“Utility Patents” refer toa new, useful, and non-obvious process,machine, manufacture,or composition ofmatter, or any new anduseful improvement.

Copyrights:

Original worksof authorshipfixed in anytangiblemedium ofexpression.

Trademarks:

Word, name,symbol ordevice used toidentify thegoods of amanufacturer ormerchant anddistinguishthose goodsfrom the goodsof others.

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� Copyright

Original works of authorship fixed inany tangible medium of expression.

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� Trademarks

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Words, symbols, logos, slogans, or productpackaging/design that identify source.

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Other Types of Intellectual Property

Contracts:

Private agreementsbetween parties

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Misappropriation�

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Trade secrets:Formula, pattern, deviceor compilation ofinformation kept secret

Design Patents:Ornamental appearance of an article of manufacturesuch as product configuration or fashion design

– lasts 14 years, protects design not functionality

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Patents

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A social contract between an inventor and society: theinventor discloses their invention to the public and inreturn the inventor is granted a temporary right toexclude others from making or practicing theinvention.

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Patents are the strongest form of IP protection,but also the shortest in duration and the mostexpensive to obtain.

What is a Patent?Patent Protection Basics: What Is a Patent?

“To promote the progress of science and useful arts, bysecuring for limited times to authors and inventors theexclusive right to their respective writings and discoveries.”

- U.S. Const., Art. I, Sec. 8

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Utility PatentsA patent is a right to exclude others for a limited time from making, using or

selling an invention.

Pointer: This is not a right to practice the invention because your inventionmight implicate someone else’s patent.

Which means that even if you have a patent covering a sail to power aboat, your product may still infringe a patent covering a boat

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The life of a patent begins with an invention.

It ends with the invention entering the public domain.

Application Issuance Expiration

Prosecution Enforceable ��

Patent Term (20 Years)

Invention Public Domain

Patent Protection Basics: What Is a Patent?

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� The U.S. is now a First-to-File system

• This gives priority to the inventor who first files a patentapplication, no matter when you invented the invention,creating a “race to the patent office”

� Delays in pursuing patent protection can result in forfeiture ofpatent rights or even result in those rights being obtained byothers

� Take away point: Important to be cognizant of the patentprocess early in the innovation cycle

The U.S. Is a “First-to-File” System – Early FilingPatent Protection Basics: What Is a Patent?

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Provisional: A provisional remains pending for one year, afterwhich a non-provisional must be filed. Provisionals provide atemporary stake in the ground and memorializes an early filingdate --relatively quicker and less costly to prepare and file.Not examined by USPTO

Non-Provisional Utility: Application most frequently thoughtof when the word patent is used. Includes claims to protectthe utility of an apparatus or process that are examined by theUSPTO.

Design: Protects the aesthetic design of an object.

Types of Patent ApplicationsPatent Protection Basics

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The Parts of a Patent: Front Cover andAbstract

Patent Protection Basics

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The Parts of a Patent: DrawingsPatent Protection Basics

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The Parts of a Patent: SpecificationPatent Protection Basics

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The Parts of a Patent: ClaimsPatent Protection Basics

“The name of the game is the claim”

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� Novelty - 35 U.S.C. �102: to be patentable, aninvention must be new.

� Non-Obviousness - 35 U.S.C. �103: to bepatentable, an invention must not be obviousover what came before it.

� Eligible Subject Matter - 35 U.S.C.�101:Governs what can be patented

Requirements to Receive a U.S. PatentPatent Protection Basics: Can You Get a Patent?

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(a) A person shall be entitled to a patent unless—

(1) the claimed invention was patented, described in a printedpublication, or in public use, on sale, or otherwise available tothe public before the effective filing date of the claimedinvention; or

(2) the claimed invention was described in a patent issuedunder section 151, or in an application for patent published ordeemed published under section 122(b), in which the patentor application, as the case may be, names another inventorand was effectively filed before the effective filing date of theclaimed invention.

� 102 – Anticipating Prior Art – Statute TextIs the invention “novel”?

Patent Protection Basics: Can You Get a Patent?

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Exceptions to 102(a)(1) [Limited to 1 Year]

(A) Any “disclosure” coming from the applicant (“directly orindirectly”) [inventor sourced disclosure]

(B) Disclosures by others made after a “public” disclosure bythe applicant. [grace period disclosure]

Exceptions to 102(a)(2) [Limited to 1 Year]

(A) Not prior art if the 1st filer derived invention from 2ndfiler. [inventor-sourced disclosure]

(B) Not prior art if the 1st filer filed after "public" disclosureby applicant / 2nd filer. [grace period disclosure]

(C) Common assignee

� 102 – Anticipating Prior Art – ExceptionsPatent Protection Basics: Can You Get a Patent?


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A patent for a claimed invention may not be obtained,notwithstanding that the claimed invention is notidentically disclosed as set forth in section 102, if thedifferences between the claimed invention and theprior art are such that the claimed invention as a wholewould have been obvious before the effective filingdate of the claimed invention to a person havingordinary skill in the art to which the claimed inventionpertains.

� 103 – Obviousness – Statute Text

Is the invention “non-obvious”?


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“Whoever invents or discovers any new and useful process, machine,manufacture, or composition of matter, or any new and usefulimprovement thereof, may obtain a patent therefor, subject to theconditions and requirements of this title.”

Historically, there are three judicially-created exceptions to patentablesubject matter:

(i) laws of nature,(ii) natural phenomena, and(iii) abstract ideas are not eligible for patent protection, even ifnew and not obvious.

� 101 – Patentable Subject MatterIs the invention eligible for patent protection?


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Software Patents/Apps and Genetics/Biotech• Three traditional exceptions to patentable subject matter are not eligible

for patent protection :(i) laws of nature;(ii) natural phenomena, and(iii) abstract ideas.

• In 2014, the Supreme Court in Alice Corp. v. CLS Bank International struckdown the previous standard for what constitutes an abstract idea andinstead gave vague guidelines less favorable to software patents

• The last two years have produced profound uncertainty, with thousandsupon thousands of software patents being struck down

• Business method patents largely defunct

• Recent cases have begun to highlight areas where patent eligibilityremains, particular technologies that improve computer function, solvecomputer-only issues, or solves problems related to particular pieces ofhardware


� 101 – Patentable Subject Matter

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� The legal test of Alice:

1. Determine whether the claim at issue is directed toan abstract idea. If it is not, then the claim passesthe�101 patentability requirement.

2. If it appears that the claim is directed to anabstract idea, consideration must be given to eachclaim limitation (both individually and as anordered combination) to see if the claim covers an“inventive concept” that is significantly more thanjust the abstract idea, i.e., a patent eligibleapplication of the abstract idea.

ALICE� 101 – Patentable Subject MatterPatent Protection Basics: Can You Get a Patent?

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Protect Against Competition

Period of exclusivity Barrier against competitors forkey products/features

Compensation and injunctionsIf others practice your invention

(infringe your patent)

Raise Revenue

Patents make ideas tangible Value as an asset(collateral for a loan)

Pending patent applications(“patent pending”) Marketing and fundraising tool

Defensive/Cross-licensing Deter/avoid lawsuits, tradingchips

Licensing Licensing revenue

Enhance industry recognition Marketing opportunities

Patent Protection Basics – Why Get a Patent?

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Facebook Patents the News Feed

http://www.cbsnews.com/8301-505124_162-57425130/facebook-patents-stories-about-online-friends/

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Patent Protection Basics (Case Studies)

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Patent Protection Basics (Case Studies)

“System and methodfor providing location-based and time-basedinformation to a user ofa handheld device”

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• Protect ornamental features.• Shorter duration: 14 years• Simple to get• Can be very useful

Lululemon - yoga pant Apple- iPhone

Design Patents

Design Patents

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� Used to be thought of as a weaker, less preferred typeof patent (but this is changing . . .)

� What are they?• A patent that protects the Ornamental Design of an

Article of Manufactureo “Ornamental Design” – shorthand for the look and

feel of somethingo “Article of Manufacture” – a product

• The patented aspect must not functional

What exactly are design patents, and how arethey different from utility patents?

Design Patents

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� 35 U.S.C. 171 Patents for designs.� (a) IN GENERAL.—Whoever invents any new,

original, and ornamental design for an article ofmanufacture may obtain a patent therefor, subjectto the conditions and requirements of this title.

� Requirements of novelty and non-obviousness, aswell as those of 35 USC� 112

� Term: 15 years from date of grant (pre-May 2015, it is14 years)

Design Patent DetailsDesign Patents

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� 1 Claim – describing variousviews of the product inreference to the drawings

� Drawings - the focus of theapplication• Painstaking attention

should be paid to detailssuch as curves and edges,as well as broken/dashedlines

What is in a Design Patent?Design Patents

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� Jewelry

� Furniture

� Car grills

� Electronics

� Clothing (shoes)

� Appliances

� Consumer health products

� User Interfaces

What types of designs can you patent?Design Patents

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� Design patents are able to provide a quicker andcheaper than utility patents

� 15 years of protection, no maintenance fees

� The GUI can be patented – this protects the look andfeel of an app, not its function• Allows you to protect the “user experience” where

you are functionally no different than othercompanies

� Must be careful to include quality drawings thatproperly claim the scope of the invention

� Can be used as a “gap filler” until develop “secondarymeaning” for trademark or trade dress protection.

Considerations– Design PatentsUtility Patents

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� Disclose publicly• Publish a white-paper• Publish on a registry

� Follow competitor patent applications• Submit a third-party prior art submission to the

Examiner

Other AlternativesAlternatives to Patent Protection

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Defensive: Other Due DiligenceDefensive; Protecting Selves Against the Patents of Others

� Protecting your business against the patentsof others.

• You do not have to copy to be liable for patentinfringement

• Clear key products/features for use

• Conducting right to use/freedom to operate searches

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� Trade Secret• Guard your code – don’t share it• Don’t grant an open source license• No government office to register with• Lasts forever; as long as keep secret• No protection is someone independently develops or

reverse engineers

� Copyright• Don’t need to register it (but preferable)• Protects your code• Very narrow protection (actual copying), but strong• Registration is cheap and relatively quick (Less than a year)

Other Available Forms of IPAlternatives to Patent Protection

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� Trademark/Trade Dress• This will protect your brand• Covers Words, Symbols, Logos, Slogans or product

packaging that identify a source of origino Can be a sound (Nike Swoosh)o Color (UPS Brown)

• If you gain name recognition from first moveradvantage, trademark allows you to protect that

• Very important for app space• Relatively inexpensive (About $2,000 to register

depending on classes)• Relatively quick (under a year if no Office Actions)

Alternatives to Patent Protection

Other Available Forms of IP

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� User Agreement/Terms of Service• Blended legal/customer-facing document• License to company to use content• Provisions to address inappropriate content/IP issues• Notice and takedown procedures

� Privacy Policies• Blended legal/customer-facing document• “Clearly and concisely” inform users how you collect and use

data• Tailor to users and business

� Data Security

Other IP-Related Considerations(Apps/Online/Software)

Alternatives to Patent Protection

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Agreements to Protect IPUse written agreements with employees and third parties:

Employment Contracts• For new employees. Include provisions for: confidentiality, non-

competition, ownership of inventions, best-efforts, and exclusiveemployment.

Assignments• To transfer an employee’s interest in any IP asset to the employer

during the period of employment.Licenses

• To generate revenue for the licensorwithout transferring ownership in theIP asset.

Non-Disclosure Agreements• To protect trade secrets and other

confidential information from being disclosed.

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� Patenting should be business driven, to claim somethingcommercially viable and having economic value

� Protecting your commercially significant products/features withpatents (or other IP) is important, but it doesn’t make thebusiness on its own.

� Remember to also think about reducing risk and avoiding the IPof others.

Take Away Points

Some Take Away Points

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Take Away Points

QuestionsWhere do I go for help:

1. NYU Entrepreneurial Institute

2. Office of Industrial Liaison (NYU)

3. Counsel with expertise obtaining patents andother forms of IP in your space

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Take Away Points

NYU Entrepreneurial Institute

• The University's team of startup expertsoffer educational programming and events,industry-specific resources, and fundingsupport to help inspire, educate, connect,and accelerate entrepreneurs from acrossNYU.

• Visit us at entrepreneur.nyu.edu to learnabout all the programs, events, andresources NYU offers aspiring and veteranentrepreneurs, and to discover what otherNYU entrepreneurs are working on.

NYU welcomes the opportunity to talkwith YOU about your research & startupideas!

[email protected]

@nyuentrepreneur

entrepreneur.nyu.edu

16 Washington Place

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Take Away Points

NYU Office of Industrial LiaisonIf you are working on projects that are funded with federalgrants OR use NYU resources

– File an invention disclosure form with OIL

If you would like to learn more about IP policy at NYU,contact OIL

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Take Away Points

Today’s Speaker: IP Counsel, Mike Kasdan

Contact Information:

Michael J. Kasdan, Esq.

212.551.2843

[email protected]

@michaelkasdan

Helping startups start up

Wednesday 3/1, 4pmStartup School Fundraising:The Anatomy of a Term Sheet

1 Attend Tomorrow’sStartup School:

bit.ly/nyustartupschool

We value your feedback! �

Please take three minutes to completethe survey sent via email.

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Say you went to Startup School!


4 Get Tix to 6th NYUEntrepreneurs FestivalMarch 3-4

2 days of NYU startups, workshops& networking with entrepreneurs,VCs, startup lawyers & more…

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Questions?

[email protected]

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nyu startup school: protecting your idea or invention

Small Business & Entrepreneurship