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September Saper Law Seminar: “IP Valuation and Trade Secret Protection: What are your customer lists and ’special sauces’ really worth?”
By Saper Law | September 1, 2008
If you missed the September Saper Law Seminar on IP Valuation and Trade Secret Protection, you can view and download Daliah Saper’s presentation below.
What is Intellectual Property, and how do I establish such rights? How much is my Intellectual Property worth? What steps must I take to protect my trade secret, copyright, patent, or trademark? Find the answers to these questions and others in the presentation below.
Download: September Saper Law Seminar: IP Valuation and Trade Secret Protection
IP Valuation and Trade Secret Protection: What are your customer lists and “special sauces” really worth?
Introduction<!–[if !supportLists]–><!–[endif]–>About Saper Law:<!–[if !supportLists]–>· <!–[endif]–>Saper Law is an intellectual property and business law firm with significant transactional and both federal and state litigation experience. We primarily specialize in the following areas of law: <!–[if !supportLists]–>· <!–[endif]–>Trademarks<!–[if !supportLists]–>· <!–[endif]–>Copyrights<!–[if !supportLists]–>· <!–[endif]–>Trade Secrets<!–[if !supportLists]–>· <!–[endif]–>Corporate<!–[if !supportLists]–>· <!–[endif]–>Internet and Cyber Space<!–[if !supportLists]–>· <!–[endif]–>Entertainment<!–[if !supportLists]–>· <!–[endif]–>Defamation<!–[if !supportLists]–>· <!–[endif]–>IP Licensing<!–[if !supportLists]–>· <!–[endif]–>Advertising<!–[if !supportLists]–>· <!–[endif]–>Media<!–[if !supportLists]–>· <!–[endif]–>Sponsorship and Advertising Agreements Intellectual Property 101 <!–[if !supportLists]–>· <!–[endif]–>Identify<!–[if !supportLists]–>· <!–[endif]–>Register<!–[if !supportLists]–>· <!–[endif]–>Maintain/Protect<!–[if !supportLists]–>· <!–[endif]–>Exploit Step 1: Identify <!–[if !supportLists]–>· <!–[endif]–>Identify what intellectual property your business possesses.<!–[if !supportLists]–>· <!–[endif]–>Types of Intellectual Property<!–[if !supportLists]–>· <!–[endif]–>Copyright<!–[if !supportLists]–>· <!–[endif]–>Patent<!–[if !supportLists]–>· <!–[endif]–>Trademark/Service mark<!–[if !supportLists]–>· <!–[endif]–>Trade Secret Copyright <!–[if !supportLists]–>· <!–[endif]–>Applies to any work that is an original work of authorship fixed in a tangible medium of expression.<!–[if !supportLists]–>· <!–[endif]–>Copyright owners enjoy the exclusive right to <!–[if !supportLists]–>· <!–[endif]–>make copies of the work, <!–[if !supportLists]–>· <!–[endif]–>distribute copies of the work to the public, <!–[if !supportLists]–>· <!–[endif]–>prepare derivative works, <!–[if !supportLists]–>· <!–[endif]–>perform the work publicly, <!–[if !supportLists]–>· <!–[endif]–>and display the work publicly. Copyright - Software <!–[if !supportLists]–>· <!–[endif]–>What is copyrightable in Software?<!–[if !supportLists]–>· <!–[endif]–>Source Code<!–[if !supportLists]–>· <!–[endif]–>Look and feel of the interface<!–[if !supportLists]–>· <!–[endif]–>Websites can be copyrighted too You can not copyright FACTS, or LISTS OF GENERAL INFORMATION, TRADEMARKS, IDEAS (Patents) A note about Open Source <!–[if !supportLists]–>· <!–[endif]–>Don’t use Open Source software to create new software or modify your current software without reading the license. <!–[if !supportLists]–>· <!–[endif]–>You may find yourself in a situation where you can not monetize your copyright…. Patent <!–[if !supportLists]–>· <!–[endif]–>You get a patent if you invent something that is a:<!–[if !supportLists]–>· <!–[endif]–>New (no prior art)<!–[if !supportLists]–>· <!–[endif]–>Useful (has a function or purpose) and<!–[if !supportLists]–>· <!–[endif]–>Non-Obvious….(everyone didn’t already think of this)<!–[if !supportLists]–>· <!–[endif]–>Process or Program<!–[if !supportLists]–>· <!–[endif]–>Machine<!–[if !supportLists]–>· <!–[endif]–>Article of manufacture<!–[if !supportLists]–>· <!–[endif]–>Composition of matter (biological patents)<!–[if !supportLists]–>· <!–[endif]–>If you get a patent you earned the exclusive right to prevent or exclude others from making, using, selling, offering to sell or importing the invention. Note, it’s a right to “exclude”—not a right to use. Trademark/Servicemark <!–[if !supportLists]–>· <!–[endif]–>A trademark is a source identifier. It can be a<!–[if !supportLists]–>· <!–[endif]–>Word <!–[if !supportLists]–>· <!–[endif]–>Name<!–[if !supportLists]–>· <!–[endif]–>Tagline<!–[if !supportLists]–>· <!–[endif]–>Symbol/logo<!–[if !supportLists]–>· <!–[endif]–>Domain Name <!–[if !supportLists]–>· <!–[endif]–>Even smell or sound! <!–[if !supportLists]–>· <!–[endif]–>When a trademark is used in relation to services rather than products, it may sometimes be called a Service Mark.<!–[if !supportLists]–>· <!–[endif]–>To get a trademark, you need to USE IT in COMMERCE.<!–[if !supportLists]–>· <!–[endif]–>The law is primarily intended to protect the consumer from confusion. Trade Secret <!–[if !supportLists]–>· <!–[endif]–>A trade secret is information that:<!–[if !supportLists]–>· <!–[endif]–>Is not generally known to the public;<!–[if !supportLists]–>· <!–[endif]–>Confers some sort of economic benefit on its holder<!–[if !supportLists]–>· <!–[endif]–>Is the subject of reasonable efforts to maintain its secrecy.<!–[if !supportLists]–>· <!–[endif]–>A trade secret is information that is valuable to the owner as a secret, and therefore must be protected as such. If the owner’s competitors generally know or could easily discover the secret information, the owner could lose his competitive edge. Trade Secrets - Importance <!–[if !supportLists]–>· <!–[endif]–>Why are they important?<!–[if !supportLists]–>· <!–[endif]–>More and more companies are relying on trade secrets rather than other forms of IP.<!–[if !supportLists]–>· <!–[endif]–>Many trade secrets can be patented or copyrighted too, but those IP forms require disclosure and only give rights for limited durations.<!–[if !supportLists]–>· <!–[endif]–>Trade secrets endure as long as the secret is maintained.<!–[if !supportLists]–>· <!–[endif]–>Trade secret examples: Coca-Cola’s recipe; Google’s search algorithm. Trade Secrets - Why? <!–[if !supportLists]–>· <!–[endif]–>Why trade secret over other IP methods:<!–[if !supportLists]–>· <!–[endif]–>Advantages:<!–[if !supportLists]–>· <!–[endif]–>Protection can endure indefinitely, so long as secrecy is maintained and secret continues to provide a competitive advantage.<!–[if !supportLists]–>· <!–[endif]–>Do not have to share your knowledge with competitors.<!–[if !supportLists]–>· <!–[endif]–>Disadvantages:<!–[if !supportLists]–>· <!–[endif]–>Once information becomes public, protection is lost forever.<!–[if !supportLists]–>· <!–[endif]–>Remedies are more limited than patent remedies.<!–[if !supportLists]–>· <!–[endif]–>Requires continuous effort to maintain secrecy. ACTION ITEM <!–[if !supportLists]–>· <!–[endif]–>Look at your business and IDENTIFY what ….<!–[if !supportLists]–>· <!–[endif]–>Copyrights<!–[if !supportLists]–>· <!–[endif]–>Patents <!–[if !supportLists]–>· <!–[endif]–>Trademarks and/or<!–[if !supportLists]–>· <!–[endif]–>Trade Secrets….your business owns. Step 2: Register Yay, I have IP! Now what? <!–[if !supportLists]–>· <!–[endif]–>Take Steps to REGISTER Your Work<!–[if !supportLists]–>· <!–[endif]–>Copyright: www.copyright.gov<!–[if !supportLists]–>· <!–[endif]–>Patent: www.uspto.gov<!–[if !supportLists]–>· <!–[endif]–>Trademark: www.uspto.gov<!–[if !supportLists]–>· <!–[endif]–>No registration for trade secrets<!–[if !supportLists]–>· <!–[endif]–>Note: you may register your copywritten code as a trade secret by redacting important portions of it. Step 3: Maintain and Protect <!–[if !supportLists]–>· <!–[endif]–>Registration is not enough. You need to Maintain and Protect your IP portfolio. Maintain and Protect - Copyright <!–[if !supportLists]–>· <!–[endif]–>Once you register, you don’t have to worry about renewal fees or loss by abandonment.<!–[if !supportLists]–>· <!–[endif]–>However, you need to make sure you took the proper steps to own the copyright. Maintain and Protect - Copyright <!–[if !supportLists]–>· <!–[endif]–>Copyright Work Made for Hire Contracts are crucial<!–[if !supportLists]–>· <!–[endif]–>Make sure you license your rights—don’t assign your rights away!<!–[if !supportLists]–>· <!–[endif]–>(We’ll discuss licensing and assignment in more detail later.) Maintain and Protect - Trademark <!–[if !supportLists]–>· <!–[endif]–>File periodic affidavits and fees<!–[if !supportLists]–>· <!–[endif]–>Ways to lose protection:<!–[if !supportLists]–>· <!–[endif]–>Abandonment—ie, make sure you keep USING your trademark.<!–[if !supportLists]–>· <!–[endif]–>Improper licensing or assignment (lack of adequate quality control or supervision by TM owner)<!–[if !supportLists]–>· <!–[endif]–>Genericide - prevent TM from becoming generic—ie XEROX, or BAND-AID
Maintain and Protect - Patent <!–[if !supportLists]–>· <!–[endif]–>Before Patent is Issued:<!–[if !supportLists]–>· <!–[endif]–>Don’t disclose your invention or offer it for sale unless you have taken measures to file at least a provisional patent.<!–[if !supportLists]–>· <!–[endif]–>Talk to your patent attorney about Prior Art. Maintain and Protect - Patent <!–[if !supportLists]–>· <!–[endif]–>After Patent is Issued:<!–[if !supportLists]–>· <!–[endif]–>Pay maintenance fees<!–[if !supportLists]–>· <!–[endif]–>Go after infringers ASAP—otherwise you may be accused of “Laches”—-or sitting on your rights for too long. (That’s a defense!) Trade Secret <!–[if !supportLists]–>· <!–[endif]–>A trade secret is information that:<!–[if !supportLists]–>· <!–[endif]–>Is not generally known to the public;<!–[if !supportLists]–>· <!–[endif]–>Confers some sort of economic benefit on its holder<!–[if !supportLists]–>· <!–[endif]–>Is the subject of reasonable efforts to maintain its secrecy.<!–[if !supportLists]–>· <!–[endif]–>A trade secret is information that is valuable to the owner as a secret, and therefore must be protected as such. If the owner’s competitors generally know or could easily discover the secret information, the owner could lose his competitive edge. Maintain and Protect - Trade Secret <!–[if !supportLists]–>· <!–[endif]–>Reasonable means to ensure trade secret protection often includes:<!–[if !supportLists]–>· <!–[endif]–>Non-competition agreements<!–[if !supportLists]–>· <!–[endif]–>Non-disclosure agreements<!–[if !supportLists]–>· <!–[endif]–>Encryption of computer files<!–[if !supportLists]–>· <!–[endif]–>Firewalls and network security<!–[if !supportLists]–>· <!–[endif]–>Restricting physical access<!–[if !supportLists]–>· <!–[endif]–>Providing notice that information is a trade secret<!–[if !supportLists]–>· <!–[endif]–>Security guards<!–[if !supportLists]–>· <!–[endif]–>Badges for employees and visitors Example <!–[if !supportLists]–>· <!–[endif]–>Imagine a clever software developer who writes a program that predicts the Stock Market with 99% accuracy. <!–[if !supportLists]–>· <!–[endif]–>If he patents his software, in 20 years, everyone can create, use, and sell similar software. However, if he keeps the software a trade secret, he can control the source code indefinitely and no one will ever know how he achieved such accuracy.<!–[if !supportLists]–>· <!–[endif]–>It is essential that he takes sufficient steps to develop a Trade Secret Protection Program for his software. <!–[if !supportLists]–>· <!–[endif]–>Reasonable means may include confidentially agreements, ensuring limited access to source code, having password protections, and limiting the number of people with access to sensitive information Maintain and Protect - Trade Secrets <!–[if !supportLists]–>· <!–[endif]–>Trade Secret owner has protection against Misappropriation–acquisition of the secret information by improper means.<!–[if !supportLists]–>· <!–[endif]–>Improper means includes:<!–[if !supportLists]–>· <!–[endif]–>Theft<!–[if !supportLists]–>· <!–[endif]–>Bribery<!–[if !supportLists]–>· <!–[endif]–>Misrepresentation<!–[if !supportLists]–>· <!–[endif]–>Breach of a duty to maintain secrecy<!–[if !supportLists]–>· <!–[endif]–>Espionage Trade Secrets - Remedies <!–[if !supportLists]–>· <!–[endif]–>Remedies:<!–[if !supportLists]–>· <!–[endif]–>Injunction<!–[if !supportLists]–>· <!–[endif]–>For actual or threatened misappropriation<!–[if !supportLists]–>· <!–[endif]–>Court-ordered actions to protect the trade secret<!–[if !supportLists]–>· <!–[endif]–>Damages <!–[if !supportLists]–>· <!–[endif]–>Actual loss<!–[if !supportLists]–>· <!–[endif]–>Unjust enrichment<!–[if !supportLists]–>· <!–[endif]–>Exemplary damages<!–[if !supportLists]–>· <!–[endif]–>If court finds malicious or willful misappropriation, damages may be doubled. Trade Secrets - Loss of Protection <!–[if !supportLists]–>· <!–[endif]–>Secret is disclosed<!–[if !supportLists]–>· <!–[endif]–>Even if it was an accident. e.g., describe a trade secret to another over drinks.<!–[if !supportLists]–>· <!–[endif]–>Reverse engineering of a product destroys protection.<!–[if !supportLists]–>· <!–[endif]–>Unless there is an End-User Licensing Agreement (EULA) expressly prohibiting reverse engineering. Trade Secrets - Loss of Protection <!–[if !supportLists]–>· <!–[endif]–>After a misappropriation: <!–[if !supportLists]–>· <!–[endif]–>Delay in seeking relief<!–[if !supportLists]–>· <!–[endif]–>Must act within 5 years of learning of the misappropriation. <!–[if !supportLists]–>· <!–[endif]–>If the secret becomes well-known as a result of the misappropriation<!–[if !supportLists]–>· <!–[endif]–>i.e., the owner did not contain the disclosure. Trade Secrets - Loss of Protection <!–[if !supportLists]–>· <!–[endif]–>Using the trade secret for illegal purposes <!–[if !supportLists]–>· <!–[endif]–>e.g., violating anti-trust laws. <!–[if !supportLists]–>· <!–[endif]–>The trade secret enters the public domain and there is no protection.<!–[if !supportLists]–>· <!–[endif]–>Parallel research: Another person independently creates or discovers the same secret.<!–[if !supportLists]–>· <!–[endif]–>Not a full loss of rights; instead they have shared rights.<!–[if !supportLists]–>· <!–[endif]–>Both people have trade secret protection.<!–[if !supportLists]–>· <!–[endif]–>Both people have to protect the secret as well.<!–[if !supportLists]–>· <!–[endif]–>Failure to maintain secrecy by either will destroy protection for both. General Protection/Enforcement Strategy for all IP <!–[if !supportLists]–>· <!–[endif]–>Determine an Appropriate Protection and Enforcement Strategy <!–[if !supportLists]–>· <!–[endi