Intellectual Property

Professor David Robertson The Wharton School March 22, 2011

2011 David C. Robertson. Not be used or reproduced without permission.

What is strategy?

the essence of strategy is choosing to perform activities differently than rivals do.. [but] a company can out perform rivals only if it can establish a difference that it can preserve
Michael Porter Harvard Business Review, 12/1996

2011 David C. Robertson. Not be used or reproduced without permission.

How can we preserve this difference?

One way: by establishing and maintaining a monopoly on an important tool to promote sales---intellectual property. Such rights are government sanctioned monopolies which help add the fuel of interest to the fire of genius, in the discovery and production of new and useful things." Abraham Lincoln, Second Lecture on Discoveries and Inventions (Feb. 11, 1859).

2011 David C. Robertson. Not be used or reproduced without permission.

What are the intellectual properties?

DIFFERENCES BETWEEN TRADE SECRETS, PATENTS, TRADENAMES, TRADEMARKS, AND COPYRIGHTS
Origin of Rights Trademark, Trade Dress, or Service Mark, passing off Trade Secret Adoption & Use, consumer protection laws Investment of time and money Creation of works of authorship Prerequisites to Protection Use to identify and distinguish business, goods or services Recognition of value and utility OriginalityRegistration and Copyright Notice required if publicly distributed New, original and ornamental subject matter New, useful, and non-obvious subject matter Scope of Protection Words, names, symbols, or other devices Confidential subject matter Works of authorship Life As long as property used Test for Infringement

Life of property protection

Life of confidentiality

Derivation

Copyright

Variable-on the order of 100 years or longer; life of author plus 70 years

Copying

Design Patent

Grant by Federal Govt. on application by Inventor Grant by Government on application by Inventor

Ornamental design for article of manufacture Useful process, machine, article of manufacture, or composition of matter

14 years from date of grant

Designs look alike to eye of ordinary observer Manufacture, use or sale in U.S. of claimed invention

Utility Patent

17 years from date of grant or 20 years from date of application

Source and : James G. Conley, Kellogg School of Management, Northwestern University. Used with permission. 2011 David C. Robertson. Not be used or reproduced without permission.

Functionality of protection
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Likelihood of confusion, mistake or deception

Trademarksthe right to clearly identify source

1. What are trademarks? Word Name Symbol Device Color Smell Gesture

or any combination

Used by a manufacturer or merchant to: IDENTIFY GOODS & DISTINGUISH THEM from competitive products. Can last indefinitely and as a complement to technology (e.g., DOLBY). Law can be summarized as "Likelihood of Confusion by Consumers"
2011 David C. Robertson. Not be used or reproduced without permission. 5

Trademarks
How should they be used?

Always use capitals/upper case for the whole trademark (e.g., KLEENEX, not Kleenex) when referring to competitors trademarks (leading caps or logo if your own) Always use as an adjective (make sure there is a noun) when referring to your mark (e.g., a JEEP car not a JEEP). Do not mis-use your mark on labels ( has a legal meaning check each country). If in doubt use sign. USE IT (RIGHT) OR LOSE IT
This applies to external & internal correspondence

2011 David C. Robertson. Not be used or reproduced without permission.

A gift from what store?

Source: James G. Conley, Kellogg School of Management, Northwestern University. Used with permission. 2011 David C. Robertson. Not be used or reproduced without permission. 7

The mark consists of a shade of blue often referred to as robins-egg blue

Serial Number Filing Date Registration Number Owner Description of Mark

75544375 August 24, 1998 2359351 (REGISTRANT) Tiffany and Company CORPORATION NEW YORK 727 Fifth Avenue New York NEW YORK 10022 The mark consists of a shade of blue often referred to as robin's-egg blue which is used on boxes. The matter shown in broken lines represents boxes of various sizes and serves to show positioning of the mark. No claim is made to shape of the boxes. The drawing is lined for the color blue, and color is a feature of the mark. TRADEMARK. SERVICE MARK PRINCIPAL

Type of Mark Register

Source: James G. Conley, Kellogg School of Management, Northwestern University. Used with permission. 2011 David C. Robertson. Not be used or reproduced without permission.

What company?
The mark consists of the color chocolate brown, which is the approximate equivalent of PANTONE Matching System 462C, as applied to the entire surface of vehicles and uniforms. The mark consists of the color brown alone.

IC 039, US 100 105. G & S: delivery of personal property by air, rail, boat and motor vehicle IC 039, US 100 105. G & S: motor vehicle transportation and delivery of personal property.

Source: James G. Conley, Kellogg School of Management, Northwestern University. Used with permission. 2011 David C. Robertson. Not be used or reproduced without permission.

Who owns the color pink in mobile telecom?

Source: James G. Conley, Kellogg School of Management, Northwestern University. Used with permission. 2011 David C. Robertson. Not be used or reproduced without permission.

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Who owns the color pink in mobile telecom?

Source: James G. Conley, Kellogg School of Management, Northwestern University. Used with permission. 2011 David C. Robertson. Not be used or reproduced without permission.

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Other types of trademarks

The Yamaha WAVE RUNNER rooster tail

The Garmin GPS spinning globe logo

2011 David C. Robertson. Not be used or reproduced without permission.

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Other types of trademarks

The Yamaha Wave Runner rooster tail

The Garmin GPS spinning globe logo

The THX logo theme consists of 30 voices over seven measures, starting in a narrow range, 200 to 400 Hz, and slowly diverting to preselected pitches encompassing three octaves. The 30 voices begin at pitches between 200 Hz and 400 Hz and arrive at preselected pitches spanning three octaves by the fourth measure. The highest pitch is slightly detuned while there are double the number of voices of the lowest two pitches.

Source: James G. Conley, Kellogg School of Management, Northwestern University. Used with permission. 2011 David C. Robertson. Not be used or reproduced without permission.

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THE MARK CONSISTS OF THE EXHAUST SOUND OF APPLICANT'S MOTORCYCLES, PRODUCED BY V-TWIN, COMMON CRANKPIN MOTORCYCLE ENGINES WHEN THE GOODS ARE IN USE.
To the Assistant Secretary and Commissioner of Patents and Trademarks Washington, D.C. 20231 Harley-Davidson, Inc., a Wisconsin corporation Milwaukee, WI 53208 Sir: The above-identified applicant has adopted and is using the trademark described in the accompanying drawing for motorcycles in International Class 12. Applicant requests that said mark be registered in the United States Patent and Trademark Office on the Principal Register established by the Act of July 5, 1946. The trademark was first used in connection with the goods in International Class 12 by applicant's predecessor at least as early as 1930; was first used in connection with the goods in International Class 12 in interstate commerce at least as early as 1930; and is now in use in such commerce. The mark consists of the exhaust sound of a HarleyDavidson motorcycle. The sound mark is emitted when the goods are in use, and three specimen recordings which incorporate the sound mark as actually used are presented herewith. . HARLEY-DAVIDSON, INC. Dated: 17 January, 1994 By: /s/Timothy K. Hoelter Vice President and General Counsel Docket No. 43210/9695 APPLICANT: Harley-Davidson, Inc. ADDRESS: 3700 West Juneau Avenue Milwaukee, WI 53208 FIRST USE: At least as early as 1930 FIRST USE IN INTERSTATE COMMERCE: At least as early as 1930 GOODS: Motorcycles in Int. Class 12 The mark consists of the exhaust sound of a Harley-Davidson motorcycle. THE MARK CONSISTS OF THE EXHAUST SOUND OF APPLICANT'S MOTORCYCLES, PRODUCED BY V-TWIN, COMMON CRANKPIN MOTORCYCLE ENGINES WHEN THE GOODS ARE IN USE.

2011 David C. Robertson. Not be used or reproduced without permission.

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Trade secrets
1. What are trade secrets? ! Confidential information or knowledge (Know-how) of a technical or commercial nature that is not known or easily accessible, so that part of its value consists in the lead time that is gained by the person who has access to it. ! Examples: recipes, formulae, technical processes, customer lists, or field test results
Must be secret, identifiable, and substantial

2. How are they obtained? ! No registration but must be kept secret and owner must take clear steps to ensure this is so.

2011 David C. Robertson. Not be used or reproduced without permission.

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Trade secrets (contd)

3. How should they be used? Label and treat them clearly as secrets (CONFIDENTIAL) Use warning notices stating that it is not legal to use or disseminate the information Avoid their coming into public domain Restrict access within the company Maintain information separate and secure from everyday documents or working papers Written confidentiality and non-compete agreements with employees or third parties are crucial, including need-to-know only basis and duty to maintain documents separately and securely 4. How are they enforced? Breach of duty of confidentiality must be proven (often difficult!)
2011 David C. Robertson. Not be used or reproduced without permission. 16

Trade secrets (contd)

Example: Jose Ignacio Lopez de Arriortua leaves GM for VW ! In 1993, Lopez leaves GM for VW, taking with him a 3,350 page printout listing 60,000 parts, their suppliers, prices, and delivery schedules for GM Europe ! GM files lawsuit in March 1996, charging both copyright and trade secret infringement ! In 1997, VW and GM settle out of court. VW agrees to pay GM $100 million, to sever all ties with Lopez, and to purchase $1 Billion in GM parts over the next 7 years

2011 David C. Robertson. Not be used or reproduced without permission.

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Copyrights
1. What are copyrights? Original works including art, literature, music, computer programs Give exclusive rights to prohibit copying and derivation for 70 to 120 years or longer. 2. How are they obtained? Automatic -- arise on creation by author Registration -- useful for proving copying, for claiming attorneys' fees (USA) & ticket to Federal Court

2011 David C. Robertson. Not be used or reproduced without permission.

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Copyrights (contd)
3. How should they be used? For Co. ABC Ltd., use a mark and add year of creation (e.g., " ABC Ltd., 2000) and years in which work was modified. 4. How are they enforced? Litigation --Actual copying or derivation must be proved (often difficult !) 5. Dangers ! Diagrams/drawings/artwork/photos/software from sub-contractors/ Advertisements/brochures: make sure you are free to change and reuse. Get written contracts and waivers of rights

2011 David C. Robertson. Not be used or reproduced without permission.

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Utility patents
1 What are utility patents ? 2 Creating a patent what is managements role? 3 The eight deadly sins

2011 David C. Robertson. Not be used or reproduced without permission.

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1. What are utility patents?

Basic principles of every national patent system:

National grants of exclusive rights to make, use, sell, import or offer for sale.

Patents do not guarantee a right to practice the invention freely but only to exclude others from practicing it without a license.

2011 David C. Robertson. Not be used or reproduced without permission.

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1. What are utility patents?

Form: 3 Parts:
!! Specification !! Drawings !! Claims = the most important part!

5 substantive requirements:
i.! INDUSTRIAL APPLICABILITY ("utility") ii.! NOVELTY (usually absolute world-wide) iii.! INVENTIVE STEP ("non-obviousness") iv.! SUFFICIENT DISCLOSURE ("enablement") v.! BY THE "INVENTOR" (i.e., the true inventor?)

2011 David C. Robertson. Not be used or reproduced without permission.

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(i) Industrial Applicability (utility)

Naturally occurring products are not patentable. Their methods of extraction may be. Purely mathematical algorithms or natural discoveries are not patentable. Utility or intervention by man is needed. DNA sequences? Methods of doing business? Law is in transition. In most European countries methods for therapeutic treatment of the human or animal body are not patentable (not so in the U.S.). Software patents are now increasingly accepted

E=mc2

2011 David C. Robertson. Not be used or reproduced without permission.

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(ii) Novelty (worldwide and absolute*)

The invention must not have been made available to the public in any form, in any country, before the application was filed (e.g., printed or oral publications; trade shows; on-sale bar/offers for sale). Prior art is the state of the art before the invention. Prior art is global and eternal 6th century BC Chinese woodcut pictures can (and have been) considered prior art!

SEARCH PRIOR ART DATABASES (e.g., www.uspto.gov) CAREFULLY

2011 David C. Robertson. Not be used or reproduced without permission.

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(iii) Inventive Step (non-obviousness)

In order to be validly patented, the invention must not have been obvious to a person of ordinary skill in the relevant art at the date of filing. What is obvious once the patent application is published? What is the skill level of one skilled in the relevant art ? Obviousness is one of the most difficult issues in patent law. Secondary indicators of non-obviousness: unexpected results, failed attempts by others, commercial success etc.

2011 David C. Robertson. Not be used or reproduced without permission.

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(iv) Sufficient Disclosure (enablement)

Enabling disclosure (e.g., recipe in a cook book) Best mode (USA) Duty of Candor--U.S. law requires the inventor and attorney to disclose all material prior art known to them (patents, articles, sales materials, etc.) to the U.S. patent office. This is a subjective test! Last weeks legislation weakened the ability to challenge a patent based on insufficient disclosure

2011 David C. Robertson. Not be used or reproduced without permission.

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(v) Application by the Inventor or Sponsor

Who gets the patent? First to invent (law changed last week to harmonize US with the rest of the world) Who is the "inventor ? Who is the sponsor/applicant? Who owns the invention? In the US, the inventor, who must assign his/her rights

FAILURE TO LIST AN INVENTOR CAN BE DAMAGING

2011 David C. Robertson. Not be used or reproduced without permission.

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2. Creating a patent
What is the inventors role? CLAIMS are most important part of the patent, as they define the monopoly rights granted.
!! The independent claims are the basis for the patent application. They are modified by the dependent claims !! The independent claims should be as broad as possible. The patent office has the duty to grant the widest possible patent permitted by the prior art AND requested by Applicant. If the independent claims are judged to be obvious or not novel, the patent may still be rewritten around one or more dependent claims !! While the final language should be worked out together with a lawyer, the initial draft can be done by the innovation team

The inventors responsibility is to:

!! Make sure that they are getting the best advice from counsel !! Ensure the claims as broad and general as possible !! Attempt to create inventions that do not infringe on the draft claim, then rewrite the claim so that the hypothetical invention would infringe !! Make an investment decision about where and how to protect the invention

2011 David C. Robertson. Not be used or reproduced without permission.

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3. The Eight Deadly Sins of Inventors

8. Believing that just because he has a patent, he is free to make, use & sell his invention.

Source and European Patent Office 2011 David C. Robertson. Not be used or reproduced without permission.

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