The document outlines the top 10 intellectual property mistakes made by emerging companies, including failing to properly assign intellectual property rights to contractors, not filing patent applications within statutory deadlines, and underestimating the importance of freedom to operate analyses and trademark registrations to protect the value of a company's innovations and brand. It emphasizes the need for startups to develop an intellectual property strategy and budget that focuses on commercially valuable intellectual property and properly establishes ownership of employee and contractor work.

1. IP 101 for Entrepreneurs: Top 10
IP Mistakes Made by Emerging
Companies
NC State University, Dr. Ted Baker’s Entrepreneurship Class
February 28, 2012
Randy Whitmeyer, Whitmeyer Tuffin PLLC
www.whit-law.com

2. “Starting companies is like having
babies–fun to conceive but
hell to deliver.”
- Anonymous

3. The Backdrop
• Increasingly, the value of companies, especially tech companies, revolve around intangibles and goodwill, ultimately
expressed in the strength of their IP: Their trademarks, patents, copyrights, trade secrets/know-how, software, and
domain names
• Ubiquitous use and reliance on Internet, IT, social media and other technologies have increased the stakes
• Global markets for in-provision of services and sale and out-licensing of products and services complicate matters
3

4. What is Intellectual Property?
• Intangible property rights associated
with creations of the mind, namely:
• Patents  Trade Secrets
• Copyrights  Trademarks
• Compare with “real” property and “personal” property
• Limited to specific country/territory

5. America Invents Act
• Fundamental Shift in American Patent System, passed on September 16,
2011
• Most changes take effect in 12 or 18 months from effective date
• First to File instead of First to Invent (takes effect 3/16/2013)
• 9-month Post-Grant Review Period
• Prior Use defense expanded from business methods to other areas
• Other changes: Best Mode no longer a defense; virtual patent marking
5

6. Requirements to Patent
• Valid Subject Matter
• Best Mode
• Useful
• Written Description
• Novel
• Enablement
• Non-obvious

7. Patent Prosecution Process
• Draft Patent Application (time is variable)
• Describe state of the art, problem solved
• Include drawings/flow charts/etc.
• Prepare “Claims” = metes and bounds of the invention
• File Provisional or Non-Provisional Application
• File Foreign counterparts and U.S. Continuation-in-Part Application
• Patent Term – 20 years from Priority Date
• U.S. prosecution may take 3-5 years

8. Trade Secrets
• Business or technical information
• Derives actual or potential value from
• Not being generally known
• Not being readily ascertainable
• Can last forever if secrecy is
maintained & reasonable steps are
taken to preserve secrecy

9. Maintaining Secrecy
• Take affirmative steps to maintain secrecy
• Mark documents as confidential; put employees and business
partners on notice
• Use Confidentiality Agreements
• Restrict facility and computer access (secure facility; computer
passwords; etc.)
• Perform exit interviews with departing employees (reminder of
obligations; whereabouts of information)

10. What Can be a Trade Secret?
• Formulas • Processes
• Compilations of information • Project launch dates for new
products
• Patterns
• Marketing plans
• Methods
• Computer programs
• Devices
• Negotiated price lists in a
• Techniques contract
• Programs • Customer lists

11. Copyrights
• Original works of authorship
• Fixed in a tangible medium of expression
• Perceived, reproduced or otherwise communicated
• Directly or with use of a machine

12. Types of Copyrightable Works
• Textbooks, magazines, plays, brochures, software
• Visual Works: photographs, paintings, icons, graphics
• Sound: sound recordings, song words and music
• Motion Pictures: films, videos
• Others: mask works, blueprints, etc.

13. Not Copyrightable
• Idea
• Procedure • Principle
• Process • Mere facts
• System • Lists
• Method of operation • Names, slogans, short phrases
• Concept

14. Rights of Copyright Owner
• Copyright owner has the exclusive right to:
• Make copies
• Prepare derivative works (e.g., translation, book from
screenplay, modified work)
• Distribute or sell copies
• Publicly perform or display

15. Trademarks
• Trademark law is aimed at consumer protection – preventing
companies from deceiving customers and taking advantage of the
good will built by others
• The good will inherent in company and product names, and other
identifiers of source, is often a company’s most important asset.
• For example, Red Hat doesn’t own any software, but jealously guards its
trademarks

16. Types of Trademarks
Levels of
Characteristics
Distinctiveness
Arbitrary or Fanciful Little or no
No secondary
Strong relationship to
(Exxon, Kodak) meaning required
goods and services
Suggestive Suggests some
Secondary meaning
Somewhat weak feature of goods
(Ultracath) may be required
and services
Descriptive Secondary meaning Describes the
Weak
(ATMVerify) required goods and services
Generic
Unprotectable No TM significance Generic
(Aspirin)

17. Benefits Of Federal TM Registration
• Obtain constructive nationwide use
• Establish priority over other users
• Recover additional damages, attorneys fees
• Obtain access to customs/import remedies
• Protect and establish rights in domain names
• Use “®” for US registered marks only (“TM” can be used for
common law rights)

19. Number 10
“We can save money by using contractors for IP
development and not worrying about agreements”
 Generally, without an express assignment, IP is owned by the independent
contractor, not the party who paid for the work

20. Number 9
“We are excited that our scientifc founder
published a paper on a really important
improvement.”
 1 year grace period in US to fle for patent protection; NO grace period
overseas

21. Number 8
“We signed a great long-term partnering agreement!
Their agreement looked well-written so we used it”
It is very hard to notice what clauses are missing in a contract that might be
crucial!
Default rule is that each party can exploit jointly developed copyrighted work
and share profts 50-50

22. Number 7
“Open Source software and other materials on the
Internet are saving us a lot of time. It’s great that
they are so easy to download, and it’s just like
public domain materials”
 Much open source software has a “viral” quality and can infect software
that is intended to be proprietary

23. Number 6
“We fled our provisional patent application on our
own. We can hire a lawyer to clean it up when we
fle a non-provisional based on this provisional”
 A provisional must contain a full description of the invention to support the
non-provisional

24. Number 5
“Since we were able to incorporate our company
name and obtain a domain name for our company
and products, there is no reason to worry about
trademarks”
 Federal trademark will trump rights in corporate names and domain names

25. Number 4
“We patented our technology, so there is no need to
worry about freedom to operate”
 A patent does not provide the patent owner with the right to practice the
invention, only the right to prevent others from practicing the invention

26. Number 3
“We don’t need an IP Plan –
Let’s fle on everything (or nothing)”
 Many patents are too narrow and do not focus on commercially valuable
components. Many trademarks cover logos, slogans and styles that change
within a few years.

27. Number 2
“We are moving so fast –negotiating and signing
Nondisclosure Agreements will just slow us down”
 Trade secret and patent protection is predicated on maintaining secrecy.

28. Number 1
“We set aside $10K in the budget for IP – we want
to protect everything, everywhere, plus we need a
freedom to operate opinion.”
 Companies should not overspend but also should not underspend on IP
protection

29. Conclusions
• Enter
Into Proper Founder, Contractor and Employee
Agreements
• Determine and establish your business goals, and identify
what key IP will support those goals
• Engage in appropriate patent and trademark searches,
including freedom to operate
• Prepare
applications for registration (patents and
trademarks)

30. Conclusions, continued
• Properly mark and attribute materials
• Protect trade secrets and copyrights
• Use care in entering into license, development and other IP-
related agreements

31. Any questions?
Randy Whitmeyer
Whitmeyer Tuffin PLLC
randy@whit-law.com
919-880-6880