Archive for the 'Patents' Category

What, exactly, does industrial design protect?

By Richard Stobbe

What, exactly, does industrial design protect? The recent decision Zero Spill Systems Inc. v. Heide, 2015 FCA 115, reviewed this question. In the trial level decision, Zero Spill sued a competitor for infringement of Canadian Industrial Design No. 86,793 (the ’793 Design), based on the competitor’s sales of a similar-looking tray. The ‘793 Design protected a fluid containment tray for use in oil field operations. The Federal Court decided that there was no infringement because many features of the ’793 Design were in some way functional, and were therefore unprotectable under the Industrial Design Act by virtue of section 5.1(a) of the Act. The court of appeal reversed in part and clarified:

1. First, the Court made it clear that the right to sue for industrial design infringement depends on registration. Without a registered industrial design, there can be no basis for infringement. With a registered design, the law recognizes a presumption of validity. In other words, a presumption that the registered industrial design complies with the Act.

2. Secondly, it is worth noting that this presumption favours the owner, and places the onus on the alleged infringer to plead invalidity. If invalidity is not raised in the defence, and evidence is not raised on the issue of invalidity, then the court cannot make a determination of invalidity.

3. Third, the Court said clearly that “functional features of an industrial design may be protected by the Industrial Design Act.” Looking at section 5.1(a) of the Act, it is clear that features that are dictated solely by a utilitarian function of the article are ineligible for protection. Therefore, “features may be simultaneously useful and visually appealing.” The Court went so far as to say that Industrial Design Act would serve no purpose if it did not protect functional features. Only those features whose form are dictated solely by function are not protected.

Talk to experienced IP counsel at Field Law for advice on exploring the possible advantages of industrial design protection for your products.

Calgary – 07:00 MDT

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Trade Dress Updates: “Beauty” does not cut it

By Richard Stobbe

A recent decision of the US Federal Court (see: Apple, Inc. v. Samsung Electronics Co., Ltd. May 18, 2015) reviewed the jury decision in Apple’s famous infringement lawsuit against Samsung. You may recall that Apple’s 2011 lawsuit alleged that Samsung infringed Apple’s utility patent rights, design patents, and trade dress rights.

See our previous posts here Pinch and Zoom: Apple vs. Samsung and here Apple and Samsung: The Design Patent Wars Continue.

In the latest decision, the Federal Court left the design and utility patent verdicts untouched, but knocked down the finding of trade dress infringement, on the basis that trade dress cannot protect functional elements of the design.

The court observed that “Apple emphasizes a single aspect of its design, beauty, to imply the lack of other advantages. But the evidence showed that the iPhone’s design pursued more than just beauty.” In its conclusion, the court noted: “Apple has failed to show that there was substantial evidence in the record to support a jury finding in favor of non-functionality for the unregistered trade dress … Apple fails to rebut the evidence that the elements in the unregistered trade dress serve the functional purpose of improving usability. Rather, Apple focuses on the ‘beauty’ of its design, even though Apple pursued both ‘beauty’ and functionality in the design of the iPhone.” Accordingly, the court reversed the jury’s verdicts on the unregistered and registered trade dress claims.

Watch for our upcoming updates on Canadian industrial design law.

Calgary – 07:00 MDT

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Patent Licensee’s Standing to Sue for Infringement

By Richard Stobbe

Although you might not think so, given the proliferation of litigation, courts are actually very particular about who can bring a lawsuit. In order for a plaintiff to file a lawsuit, it must have ‘standing’ or put another way, “A court may exercise jurisdiction only if a plaintiff has standing to sue on the date it files suit.” A recent US case examined when a patent licensee has standing to sue for patent infringement.

According to the US court in Luminara Worldwide, LLC v. Liown Electronics Co.: Even if the patent holder does not transfer formal legal title, the patent holder may effect a transfer of ownership for the purposes of standing in a lawsuit if it conveys “all substantial rights in the patent to the transferee.” One of those “substantial rights” must include an “exclusive license” to practice the patent in question. In the event that a licensee obtains an exclusive license and all substantial rights, then the licensee is effectively treated just like a patent owner, and has standing to sue for infringement in its own name.

When negotiating patent licenses, ensure that you pay attention to the grant of rights. Do you intend to grant rights to permit the licensee to sue in its own name, or should that right be reserved to the patent owner / licensor?

In Canada, compare the finding of the Federal Court in the copyright context in Milliken & Co. v. Interface Flooring Systems (Canada) Inc.(FC): “A non-exclusive licensee does not derive any right, title or interest in the copyright that could give it the standing to sue. It has no right to sue alone in a copyright infringement action.”

Calgary – 07:00 MST

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Apple Watch Design Patent

By Richard Stobbe

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As we reviewed in our previous post – Industrial Design as a Competitive Tool – the value of strategic industrial design protection (also called a “design patent” in the US) should not be underestimated.

Yesterday, the USPTO issued a registration for the Apple Watch, which provides protection for a term of 14 years in the US. US design patents which are registered based on applications filed after May 13, 2015 will have a 15-year term. That would be 10 years if registered in Canada, though this term is soon to increase to 15 years once the changes to the Canadian Industrial Design Act come into force. Remember, industrial design law in Canada protects the visual features of shape, configuration, pattern or ornamentation which are applied to a product. Functional elements are not protected. For protection, registration is required. While it is likely that Apple has filed a corresponding Canadian application, such a filing would most likely be based upon the US registration.

Will this be enforced against competitors? Probably – don’t forget that industrial design infringement formed the basis of successful recent claims by Blackberry (BlackBerry sued Typo Products LLC for infringement of U.S. Design Patent No. D685,775) and by Apple (Apple sued Samsung for infringement of Apple’s D504,889 design patent).

Talk to experienced IP counsel at Field Law for advice on exploring the possible advantages of industrial design protection for your products.

Calgary – 08:00 MST

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Privilege for IP Advisors in Canada

It’s budget time… therefore, time for changes to Canada’s IP laws!

No, there is no logical connection between the two, but that seems to be how the government functions these days (the last budget brought in major changes to Canada’s patent and trademark laws without any consultation, but hey, who’s keeping track of these things anyway?). The Intellectual Property Institute of Canada has noted that the latest budget bill has introduced statutory privilege for communications between IP advisors and their clients.

“With this,” IPIC notes, “Canadian businesses are better assured that they can speak openly with their intellectual property advisors in order to obtain the best possible advice, knowing that these conversations will not be revealed to their competitors through a court process or litigation.”

Calgary – 07:00 MST

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Amendments to Canadian Intellectual Property Laws by 2017

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By Richard Stobbe

The Canadian Intellectual Property Office has indicated that the amendments to the Trade-marks Regulations (and in particular the accession to international trademark treaties), the amendments to the Industrial Design Regulations and amendments to the Patent Rules will not be finalized until later 2016, and possibly as late as 2017.

A note on the CIPO website says that stakeholders will have the opportunity to comment when the proposed amendments/regulations are pre-published in Canada Gazette, Part 1 (expected late 2016). If the proposed regulations are published in late 2016, then the regulations will not be finalized until 2017 at the earliest.

 

Calgary – 07:00 MST

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Enforcing Keyboard Patents (BlackBerry v. Typo)

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By Richard Stobbe

A year ago, BlackBerry sued Typo Products LLC for patent infringement, based on the design of a snap-on keyboard. Typo’s physical keyboard was designed to attach to an iPhone, in order to mimic a BlackBerry-style QWERTY keyboard. The design was, in BlackBerry’s view, imitation that went beyond flattery and into infringement of U.S. Design Patent No. D685,775 and U.S. Patent No. 7,629,964 (Our original post Can BlackBerry Patent a Keyboard? gives more details).

A California granted a preliminary injunction (See: Ok… so BlackBerry Can Patent a Keyboard!) which took effect in April, 2014. Typo, after the preliminary injunction took effect, flouted the injunction by selling products, providing warranty replacements, and promoting products which were subject to the court order. In a judgement yesterday, the same California judge ordered Typo to pay BlackBerry $860,600 in sanctions, plus attorneys’ fees and costs incurred in connection with Typo’s contempt of court. See: BlackBerry Limited v. Typo Products LLC, Case No. 14-cv-00023-WHO for the full court order.The broader infringement issues have yet to be decided, and the litigation continues.

The interesting part of this case is how it illustrates the competitive use of IP protection for incremental improvements – in this case, an improvement to a basic QWERTY design (a design which has been around since the 1800s). It also illustrates the value of IP analysis in the competitive response by Typo. Their designers (undoubtedly working closely with patent counsel), have designed a “Typo 2” product which is not caught by the original injunction.  

Calgary – 10:00 MST

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An American Attorney in Canada (Part 3: Letters of Request in Patent Litigation)

By Richard Stobbe

A recent Ontario court decision (Arctic Cat Inc. et al. v. Peter Watson, 2014 ONSC 6874 (CanLII)) dealt with a foreign letter of request, or “letter rogatory” in a cross-border patent infringement case involving the invention of snowmobile prototypes. This type of request is used where a foreign (usually an American) litigant wishes to compel evidence and testimony from a Canadian witness. In this case, the testimony of the Canadian inventor was needed in the US litigation, but the Canadian individual falls outside the jurisdiction of US courts. The letter of request bridges that gap by requesting a Canadian court to order the individual to be provide evidence.

These are the factors which guide the court in Canada on whether to enforce such letters of request:

  1. the evidence sought must be relevant;
  2. the evidence must be necessary for trial and will be adduced at trial, if admissible;
  3. the evidence must not be otherwise obtainable;
  4. the order sought is not contrary to public policy;
  5. the documents are identified with reasonable specificity; and
  6. the order sought is not unduly burdensome, bearing in mind what the witness would be required to do and produce if the lawsuit was in Canada. 

After reviewing these factors, the Ontario court granted the letter of request, compelling the inventor to provide testimony in the US patent litigation.

If you need assistance with enforcing letters of request in Alberta, contact our Intellectual Property & Technology Group.

Calgary – 07:00 MST

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Patent Litigation Trends in 2014

By Richard Stobbe

A recent report  shows interesting trends in US patent litigation:

  • 5,002 patent infringement cases were filed in the US in 2014, up from 2,641 filed in 2010;
  • Of those cases filed, the majority (61%) were commenced by NPEs (non-practicing entities), which is a neutral term to describe what are commonly referred to as ‘patent trolls’;
  • Of those NPEs, the overwhelming majority (82%) are PAEs (patent assertion entities), which can be defined as “firms with a business model based primarily on buying patents and then attempting to generate revenue by asserting them against businesses that are already practicing the patented technologies;”
  • Most of this activity (patent litigation by PAEs) took place in the high-tech sector; in that sector, 83% of the patent litigation was related to NPEs of one kind or another, and involved claims against large (non-SME) companies. This figure shows the extent to which IT and software patents have become a fixture in a kind of parallel patent infringement economy, in which patent battles are not fought between market competitors (such as Samsung and Apple) but are essentially rearguard actions by legitimate businesses against entities whose only function is to assert patent rights.

 

Calgary – 07:00 MST

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CIPO – EPO PPH

By Richard Stobbe

Who can resist an announcement laced with nerdy acronyms? Last week, the Canadian Intellectual Property Office (CIPO) announced the launch of a Patent Prosecution Highway (PPH) pilot agreement with the European Patent Office (EPO). The initial pilot will run from January 6, 2015, to January 5, 2018.

Canadians can gain access to accelerated processing of patent applications, where the claims have been found to be patentable by either the EPO or CIPO, based on a WO-ISA (Written Opinion of the International Searching Authority) or a WO-IPEA (Written Opinion of the International Preliminary Examination Authority ) or even an IPRP (International Preliminary Report on Patentability). Applications filed after January 6, 2015 are eligible to participate in the pilot agreement.

Note that applicants should be prepared to move quickly, since the response periods are shortened and any requests for an extension of time can result in the application being shunted out of the PPH program, in which case the applicant is SOL.

If you want to participate in the CIPO-EPO PPH, contact our IP&T Group.

Calgary – 07:00 MST

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Is “One Dollar” Sufficient for a Patent Assignment?

By Richard Stobbe

You may have read the recitals or introductory clauses in a license or an assignment agreement. In most cases, these clauses are just skimmed, if they are reviewed at all. In a recent decision of the US Federal Circuit Court of Appeals, the court reviewed the impact of the so-called “consideration” clause in an assignment. In patent law, an assignment is a contract transferring ownership of an invention by the inventors. This permits the assignee (the party getting the invention, such as an employer or a purchaser) to file a patent application as the applicant and owner of the invention. This assignment document is a contract, and so it must meet all the requirements of contract law. One of those requirements is that there must be adequate “consideration” – in other words, something of value that flows to each party. It can be money, or something else of value.

In MemoryLink Corp. v. Motorola Solutions. Inc., (Fed. Cir. Dec. 5, 2014)(No. 2014-1186, N.D. Ill.), the court looked at the consideration clause in the context of a patent infringement lawsuit. Memorylink sued Motorola for infringement of a certain patent. However, both Memorylink and Motorola were joint owners of the underlying inventions by virtue of an assignment which was signed by all the inventors. Memorylink attacked the validity of that assignment, arguing there was a lack of consideration.

In June 1998, all four designated inventors signed the assignment, transferring their rights to both Motorola and Memorylink. The assignment begins with this statement: “For and in consideration of the sum of One Dollar to us in hand paid, and other good and valuable consideration, the receipt of which is hereby acknowledged..

There are variations of that clause – sometimes the sum of one dollar, sometimes five or ten dollars – but they are all designed for the same purpose: to remove the argument that the contract should fail for lack of consideration. In the context of the assignment and transfer of valuable patent rights, is one dollar truly sufficient to create a legally binding contract? 

Citing decisions that reach back to the 19th century, the US court said, yes, nominal consideration will suffice to support a contract, including an invention assignment. Courts will not inquire into whether or not the consideration listed in the agreement is adequate, unless the amount is “so grossly inadequate as to shock the conscience.” In this case, the amount of $1.00 did not shock the court’s conscience. The original 1998 assignment was valid, and Motorola was a joint owner of the patent. As a joint owner, Motorola could not be liable for infringement of the patent.

 

Calgary – 07:00 MST 

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USPTO Patent Eligibility Guidelines

By Richard Stobbe

What is eligible to be patented in the US? This week the U.S. Patent and Trademark Office (USPTO) released Interim Eligibility Guidance on patent subject matter eligibility. In this document, the USPTO summarizes the instructions for examiners on the following categories which are exceptions to patent eligibility:

  • abstract idea,
  • natural phenomena, and
  • product of nature.

This guidance is intended to synthesize the latest Supreme Court decisions in Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013), Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012) and Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014). According to the document, it supercedes prior instructions issued by the USPTO on this topic and “offers a comprehensive view of subject matter eligibility in line with Alice Corp, Myriad, Mayo, and the related body of case law, and is responsive to the public comments received pertaining to the March 2014 Procedure and the June 2014 Preliminary Instructions.”

This Interim Eligibility Guidance is effective on December 16, 2014, and applies to all applications filed before, on or after December 16, 2014. The USPTO is seeking public comment on this Interim Eligibility Guidance – comments must be received by March 16, 2015.

 

Calgary – 07:00 MST

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Intellectual Asset Management Best Practices – Part 2

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By Richard Stobbe

In Part 1, we looked at three important steps in starting an intellectual asset management process within your organization. “Intellectual assets” can include the know-how and intellectual capital within your organization together with registered and unregistered intellectual property (IP), inventions, trade-secrets, patents, copyright-protected works, trademarks, industrial designs, and other forms of IP.

As we reviewed in Part 1, intellectual asset management starts with (i) an internal IP audit, coupled with (ii) internal education about the strategic importance of intellectual property within the organization; and (iii) the organization should establish a screening process, to weigh the various factors that influence how to innovate through “make versus buy” decisions.

In Part 2, we take a deeper dive. An organization can be innovative without being commercially successful. In other words, there is often a gap between the creative process of innovating, and the successful commercialization of those innovations. By implementing the steps in Part 1, an organization becomes more sophisticated in its treatment and analysis of intellectual assets, and an organization will develop a culture in which IP is understood and valued. That helps close that gap. However, this does not necessarily mean that intellectual assets will become an engine of economic value. That requires the development of additional skills and competencies within the organization. Consider the following “next steps”:

  1. Strategic Alignment: Let’s be clear. IP should not drive the organization. Rather, the strategic goals of the organization should inform the intellectual asset management strategy. Ensure that IP policies are aligned with the strategic goals of the organization. Consider the organization in question: is this a university? A government research lab? A medium-sized for-profit business, or maybe it’s a growing business with markets in multiple jurisdictions.
    • How is success measured for this organization?
    • Are there immediate goals of raising capital?
    • Entering a new international market?
    • Attracting investors?
    • Making a strategic alliance or partnership?
    • Should the IP policy reflect a defensive or offensive position?

    All of these organizations will have different strategic goals and must ensure that their intellectual asset management strategy reflects and supports the overarching goals of the organization. IP is only one piece of the puzzle.

  2. Gap Analysis: An IP audit is focussed primarily on taking an inventory of the organization’s intellectual assets. A ‘gap analysis’ is the next step: it’s an assessment of what’s missing from the organization’s IP toolbox. What does the organization need in order to achieve its goals? And how can the gaps in the organization’s IP inventory be filled, considering the strategic goals involved. This internal analysis can lead to an external, “outward looking” review. What is available in the marketplace, either through acquisition, in-licensing or strategic partnership? See also the “make versus buy decisions” discussed in Part 1. In connection with the analysis of “gaps” in the IP portfolio, look at any gaps in the paper: How do employment agreements and consultant agreements deal with IP ownership issues and confidentiality? Do vendor or supplier agreements need to be bolstered to address IP issues? Perhaps standard-form end-user licenses or service agreements need to be reviewed to ensure that the treatment of IP is in alignment with the organization’s overall intellectual asset management policies.
  3. IP Exploitation: As mentioned above, an organization may be adept at innovating, and it may have a sophisticated process of cataloguing internal IP, and even assessing the gaps in that portfolio. IP commercialization and exploitation is the process by which an organization extracts value from its intellectual assets. This can be from product sales, or from out-licensing of IP-protected services and processes, as well as licensing relationships and franchise agreements, joint ventures and cross-licensing. An organization must understand the steps to market, whether through its own sales channels, or through distributorships or resellers. And the process of bringing innovations to market will be supported by a well-designed intellectual asset management system.

Richard Stobbe is an IP lawyer, trademark agent and Certified Licensing Professional. To discuss the importance of intellectual assets within your organization, contact Richard Stobbe in our Intellectual Property and Technology Group.

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Indirect Patent Infringement in the US

By Richard Stobbe

In a recent decision in the US (Riverbed Technology, Inc. v. Silver Peak Systems, Inc.), a company was found liable for indirect patent infringement even though the infringing features of its product were disabled when the product was sold. In the post-sale period, customers enabled the infringing features.  This was enough for the court to find the company liable for indirect infringement.

This case arose between two rivals in the wide area network market – Riverbed and Silver Peak. Riverbed sued Silver Peak for infringement of a number of US patents. Silver Peak counterclaimed, alleging infringement of three US patents. A jury trial eventually returned a verdict in favour of Silver Peak. Silver Peak asserted indirect infringement against Riverbed with respect to two patents. Specifically, the jury concluded that Riverbed “contributorily infringed” one of the patents and “induced infringement” of the other.

Riverbed challenged these conclusions, arguing that there was insufficient evidence of customer use of the accused features in the United States. Riverbed pointed out that the feature of its product that was allegedly infringing – a feature known as SDR-Adaptive – was disabled before the product was sold to consumers in the US. No-one disputed that fact. However, through user forums on the Riverbed website, as well as product manuals issued by Riverbed, consumers were taught how to enable and use this feature.

The court reviewed this surrounding evidence and concluded: “In sum, Silver Peak has offered evidence of Riverbed’s high sales volume, an instruction manual describing how to activate SDR-A, and several blog entries on Riverbed’s U.S. support forum from people who used their Riverbed devices with SDR-A enabled. Taken together, this circumstantial evidence is sufficient…” Riverbed was found to have indirectly infringed the Silver Peak patents.

Lessons for business? Canadian companies selling into the US should be aware that sales of their products may form the basis for liability in the US if used by customers in the US in infringing ways.

Related Reading: A Company May Be Liable for Indirect Infringement Where Its Customers Enable an Infringing Feature Even Though the Company Sells Its Product with That Feature Disabled

Calgary – 07:00 MST

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The Troubles with Patent Inventorship

By Richard Stobbe

Determining inventorship is answering the question: who contributed enough to an invention to be named as an “inventor” on the patent application? It’s critical, as reviewed by my colleague Shohini Bagchee in her article Whose Invention Is It Anyway? – Some Thoughts on Patent Inventorship and Ownership.

Although the US case Ethicon Inc. v. U.S. Surgical Corp. (135 F.3d 1456) is not a new decision, it’s worth reviewing since it neatly illustrates the troubles that can arise. In Ethicon, a first inventor, Dr. Yoon, obtained a patent covering a certain surgical device. The patent contained 55 claims. Yoon granted a license to Ethicon. On the stregth of this license, Ethicon turned around and sued its competitor U.S. Surgical for infringing two of the claims in the Yoon patent. U.S. Surgical in the course of preparing its defence found that Mr. Choi had contributed to the invention and he should have been named as co-inventor on the Yoon patent.

Mr. Choi contributed to only two of the 55 claims – two claims which were not at issue in the infringement action. In its defence, U.S. Surgical sought – and the court granted – an order that Mr. Choi be added as a co-inventor to the patent. Even though Mr. Choi had contributed to a small percentage of the overall invention (and had contributed to claims that were not at issue in the lawsuit), his status as a co-inventor permitted him under US law to grant a license to the whole patent. Ethicon’s patent infringement lawsuit was dismissed after Choi granted a retroactive patent license to U.S. Surgical.

Lessons for business?

  • Internal IP policies and invention-disclosure protocols should be designed to capture all inventors who contributed to inventorship.
  • In joint research agreements or joint development agreements, don’t ignore co-inventorship issues.
  • Remember that invention-disclosure and inventorship should dovetail with invention assignment agreements, as well as the IP provisions in employment agreements and consultant agreements.
  • Ensure you are getting legal advice regarding inventorship as it relates to the jurisdiction in which you are filing your patent application.
  • Remember that the law in Canada and the US differs on this point: A co-owner’s interest in a co-owned patent can be licensed without the consent of the other owner in the US and there is no need to account to the other owner for licensing revenue; but in Canada the patent cannot be licensed without the consent of the other co-owner.

Calgary – 07:00 MST

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IT Contracts – Conference in Calgary

By Richard Stobbe

On October 14 and 15, 2014, I will be presenting on “Drafting IT Agreements” at the Essentials of Commercial Contracts (Calgary) Conference. This conference will discuss the legal and business framework of commercial contracts, negotiations and practical drafting tips.

The session on information technology (IT) contracting will review key considerations in IT licensing and service agreements, various models for licensing software, the overlap between licenses and service agreements, service level metrics and remedies for non-compliance, the use of  Statements of Work in IT agreements, as well as related issues: privacy, vendor lock-in, third party and open source software.

For more information, contact me or click on the link above.

Calgary – 05:00 MST

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Intellectual Asset Management Best Practices – Part 1

By Richard Stobbe

Does your organization have “intellectual assets”? Regardless of what your organization does – whether it is a service-based business, or in the manufacturing sector, whether it is driven by cloud-based software or bricks-and-mortar locations, whether it is a multinational or a local start-up – chances are good that you can start to list the intellectual capital that has value in your organization. What do we mean by “intellectual assets”? There are many definitions, but one broad definition is simply “knowledge that has value in your organization”, and it can encompass:

  1. Human know-how and intellectual capital – the unwritten expertise, experience, concepts and technical knowledge that employees have in their heads; and
  2. Intellectual assets, including registered and unregistered intellectual property (IP) – this includes the codified or “captured” knowledge that adds to your organization’s value, such as trade secrets that might be captured in internal processes, manuals, design specifications, software source-code and other unpublished know-how, as well as the value represented by:
    • Patents (including Canadian and international applications and issued patents);
    • Copyright-protected works (including published and unpublished written works);
    • Trademarks (including logo designs, registered and common law marks);
    • Industrial designs, and other forms of registered intellectual property.

Some organizations are better at managing and obtaining value from their intellectual assets. What are the best practices for the management of these assets? In this series, we’ll review current best practices for management of intellectual assets as a competitive tool. Experts in the area of intellectual asset management have identified several layers or tiers of sophistication in the handling of such assets. Therefore, while a start-up inventor may certainly learn from the approach of Apple, Inc., each organization must look at best practices from the perspective of their organization, their resources and their stage of development. As a starting point, the following three steps lay the groundwork for future steps of IP management and value creation:

1: Conduct an Audit

The first step in any organization that is new to intellectual asset management is to conduct a review of existing assets. This is also a great exercise for organizations whose IP portfolio may be evolving – perhaps through recent growth, acquisitions, internal research and development (R&D) or divestiture. This step seeks answers to issues such as:

  • What does the organization own, and what is merely licensed? What are the gaps in intellectual assets?
  • Review unpatented inventions, patent applications, issued patents.
  • Review software developed by or for the organization.
  • Identify trade-secrets, focusing on non-public information that adds specific value to the organization, including intangibles such as customer lists, processes, early-stage prototypes, and strategic plans.
  • What non-disclosure agreements or confidentiality obligations has the organization agreed to?
  • Is the organization party to any IP licenses (in- or out-licenses)? Are there any co-development or joint venture agreements that involve IP creation?
  • Identify the organization’s trademarks, logos and brands. Note registered and unregistered marks in use by the organization in different jurisdictions.

This audit or portfolio review process may start as a simple list, and may evolve into a more detailed table or spreadsheet. It may involve more sophisticated tracking systems which are maintained with IP counsel, to track patent maintenance fees and deadlines.

2: IP Education

An organization must also educate its personnel on the strategic importance of intellectual property within the organization.

This is a process of raising awareness and providing education about the different types of intellectual property and the organization’s policies related to these assets. This must involve the leadership of the organization and it may even trickle down to “front line” personnel. It should involve the integration of intellectual property strategy into overall business strategy, or if that IP strategy is already in place, it may involve internal education sessions and policies, such as confidentiality and invention disclosure policies. In some cases, it involves a process of educating professional advisors about the strategic role of IP in the organization.

IP counsel can play an important role to provide education, and to be a resource for developing internal policies, reviewing agreements, and drafting contractual provisions.

3: Implementing “Make versus Buy” Decisions

The next step can certainly happen in tandem with the other steps of IP portfolio analysis, and IP education. Many organizations are continuously innovating in their industry as they seek to gain and maintain their competitive advantage. However, not all organizations have the capacity to innovate internally. A medium-sized company may not have the R&D strength of its competitor, but it may still use strategic decisions to leverage the value of intellectual assets and gain an edge over competitors. Ultimately, the decisions on how to innovate involve a “make versus buy” decision. Through a screening process, an organization can weigh the various factors that influence its decision to pursue an innovation opportunity. At this stage, the organization is looking at factors such as:

  • Are ideas and inventions emanating from within the organization? This is certainly enhanced when the IP education and awareness is part of the organization’s culture.
  • What is the value of these ideas and inventions, as against the cost of developing the idea to a commercial product?
  • Is this a core or non-core function for this organization?
  • Is it more cost-effective for the organization to internally develop this as a product or innovation, to pay someone else to develop it, or to license it in from another company?
  • If it is internally developed, is IP protection available, and what type of protection will it be? Is it eligible for patent protection?

Here is one example of how these different pieces may fit together:

Let’s say an organization has reviewed and listed its trade secrets during an intellectual asset audit. In the course of this process, it learned that trade secrets formed an important part of the organization’s competitive advantage, but there was a lack of any internal confidentiality policies, nor was there any invention or idea disclosure process. With the help of counsel, it developed an internal confidentiality policy, as well as a modest reward system for idea disclosures. The CEO directed IP counsel to provide a lunch-and-learn session for employees, including those in the sales team. Employees were educated about their role in the organization’s value-chain, and the importance of maintaining secrecy over confidential information and innovative ideas. After the education sessions, someone in sales came forward to describe an idea for product improvement based on recent feedback from customers. This idea was filtered through the company’s “make versus buy” decision process, leading to a product improvement which was determined to be patentable. This patentable improvement blocked competitors from adopting this product change. The company’s confidentiality policy emphasized the importance of maintaining secrecy over the improvement until the patent application was filed and the product improvement was released for sale.

To discuss the importance of intellectual assets within your organization, contact Richard Stobbe in our Intellectual Property and Technology Group.

Calgary – 07:00 MST

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Innovation in Canada

By Richard Stobbe

A recent survey of the top patent producing corporations in Canada (see this link, courtesy of our colleagues at IPPractice.ca) shows a few interesting trends:

  • Despite its fall from grace over the past 4 or 5 years, BlackBerry remains among the top innovators in the country.
  • The top five patentees in Canada all make a significant investment in departments that focus on purely on research and development (R&D):
    • BlackBerry (419 patents),
    • Qualcomm (329 patents),
    • Schlumberger (183 patents),
    • Procter & Gamble (164 patents),
    • LG Electronics (147 patents)
  • Innovators in the oil-and-gas/energy sector are not leading the pack, but are well-represented in the top tier: Schlumberger (183 patents), Baker Hughes (121 patents) and Halliburton Energy Services (105 patents), all of whom provide services to companies in the extraction / production sector.
  • Innovation in mature consumer sectors – led by BlackBerry, Qualcomm, Procter & Gamble, LG Electronics, General Electric, Microsoft and Honda – is typically incremental in nature. This is a sector where protection for incremental improvements (as opposed to quantum leaps forward) can play an important role in maintaining a competitive edge.

Review your patent strategy with the Field Law Intellectual Property and Technology Group.

Calgary – 07:00 MT

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Update on Anti-Patent-Troll Laws

By Richard Stobbe

Yesterday draft “anti-patent-troll” legislation was put forward in Washington. This is part of a ground swell of opposition to illegitimate patent demand letters from so-called patent assertion entities (PAEs), or “patent trolls”. This draft legislation, according to the sponsor of the proposed bill, “increases transparency and accountability to help expose and prevent fraudulent infringement claims. It would require patent demand letters to include certain basic information to help companies determine whether a letter is legitimate.”

See more at: this link

This proposed law approaches the issue from a consumer protection angle, using Federal Trade Commission (FTC) authority and state Attorney General authority for enforcement.

Another anti-patent-troll bill passed by the US House in 2013 is now stalled in the Senate. Congress may be stalled but the fact that patents are within federal jurisdiction has not prevented state legislatures from passing consumer-protection laws which target PAEs. I attended a lunch yesterday at which the Attorney General of Vermont spoke about his state’s efforts to deploy state-level consumer protection laws against PAEs. A case involving a well-known PAE by the name of MPHJ Technology is currently before the Vermont courts. The debates and the legislative responses are far from over.

Do we need anti-patent troll laws in Canada?

Calgary – 07:00 MDT

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Use of ADR in Technology Transactions

By Richard Stobbe

A recent WIPO Survey assessed the use of alternative dispute resolution (ADR) clauses in various technology transactions, and the results make for interesting reading for anyone who is in the business of negotiating technology deals. The goal of the survey was to establish trends in the use of ADR to handle technology-related disputes, and almost 400 participants from 62 different countries participated. A few takeaways:

  • Overall, the use of ADR clauses appears to be on the increase, as compared to the use of litigation in court.
  • Almost all of the respondents (94%) indicated that dispute resolution clauses are the subject of contract negotiations. In other words, negotiators are paying attention to these clauses, and not merely defaulting to the clause that is proposed by the other side, or comes with the precedent agreement.
  • Respondents were asked to estimate the percentage of their technology-related agreements that led to disputes. The results were:
    • License Agreements (25% of Respondents)
    • R&D Agreements (18% )
    • NDAs (Non-Disclosure Agreements) (16%)
    • Settlement Agreements (15%)
    • Assignments (13%), and
    • M&A Agreements (13%).
  • The most common dispute resolution clauses according to respondents were:
    • Court litigation (32%)
    • Arbitration (30%)
    • Mediation (12%)
    • Multi-tier clauses (17% of all clauses) in which mediation is deployed prior to court litigation, arbitration or expert determination.
  • Regarding time and cost, the estimates of respondents were as follows, and remember there are averages, and most would involve patent international disputes:
    • Court litigation (home jurisdiction) took approximately 3 years; and amounted on average to US$475,000
    • Court litigation (foreign jurisdiction) took on average 3.5 years; and amounted to US$850,000.
    • Arbitration was shorter, at 1 year; the cost added to US$400,000.
    • Mediation was shortest, at 8 months, and 91% of Respondents indicated that mediation costs were under US$100,000.
    • Interestingly, 25% of respondents indicated that “management time of business executives and wasted time of other participants in proceedings, lost productivity and lost business opportunities” represented important factors when assessing the costs of dispute resolution.

See: FULL PDF REPORT: Results of the WIPO Arbitration and Mediation Center International Survey on Dispute Resolution in Technology Transactions

Calgary – 07:00

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