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Intellectual property (“IP”) can be one of the most valuable assets to a startup
company, whether it is a patent on a new innovative technology, the customer
goodwill associated with your trademark and brand, or a copyright over your
original material. This IP portion of the startup kit provides a few tools to
help you as an entrepreneur when you develop and seek protection for your
IP and maintain this protection over time.
For each category of IP, the primer will discuss what types of subject matter
are eligible for protection, the criteria for obtaining protection for your IP, the
scope of your rights as an owner of these rights, and how to secure and
maintain these rights.
This primer will help you start thinking about how to protect your startup’s
intellectual property rights. However, we strongly encourage you to consult
an attorney when dealing with these complex issues. If you are filing a patent
application, you should have an attorney help you search for prior art and
draft and compile the application.
For complex trademark issues, you may want to consult an attorney as you
search competitors and existing marks to ensure clearance for your use of the
desired trademark. If you face a copyright infringement action, you should
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consult an attorney to navigate copyright law’s fuzzy areas where the courts
do not follow bright-line rules.
It is important that you seek advice from an attorney to ensure that your NDA
will be enforceable. An attorney will tailor the agreement to reflect the laws
of the state that will govern it. Additionally, you should consult an attorney to
discuss the various issues that arise through this agreement including:
Disclaimer
You acknowledge that your use of these documents does not create an
attorney-client relationship between you and the Clinic or you and the
individual members of the Clinic and does not constitute the provision of
legal advice or other professional advice. You should seek advice from a
licensed attorney before using or relying on these documents. Additionally,
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none of the documents created constitute tax advice. By using and relying on
these documents, you assume all risk and liability that may result.
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10 Dos and Don’ts of Intellectual Property for Start-ups
Engaging Others
Don’t: Choose the wrong trademark class or too many trademark classes.
Do: Accurately describe the products or services that your trademark will
apply to.
Do: Think about future product expansion to include a broader scope, but
avoid false or misleading information.
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Public Disclosures
Don’t: Publicly disclose your technology before filing a patent (e.g., through
printed publication, disclosures, availability for public sale, etc.).
Do: Avoid disclosure—but if you do disclose, file a patent within one year
of public disclosure.
Timing
Drafting Strategies
Don’t: Rush to file a weak, poorly drafted initial patent application that
offers little protection for your innovation.
Do: Invest seriously in the startup’s first one or two patent applications
and file a carefully drafted, high-quality patent application.
Do: Avoid overreaching and speculative language. Ideas are not
patentable.
Do: Avoid language that is too narrow.
Do: Understand the IP landscape and corner a valuable part of the market.
Ask:
What is the company doing now?
Where is the company headed?
What are the business goals?
Who are the actual and likely competitors?
Do: Think about a global strategy.
Unlicensed Images
Don’t: Do a quick Google image search and use unlicensed images on your
website or blog.
Do: Use only licensed images, unless you have express permission from
the author.
Do: Subscribe to a stock photography service such as Shutterstock or
iStock.
Do: Use creative commons licensed images.
Fair Use
Don’t: Use pieces from copyrighted works if you don’t understand “fair
use” in copyright law.
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Do: Be careful about using copyrighted material, no matter how little, if
you do not have the owner’s permission.
Do: If you plan on using copyrighted material under the fair use doctrine,
be sure you fully understand the four factors and how courts may
perceive this use.
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Intellectual Property Primer
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Furthermore, a PTO search will find only identical trademarks—not those
that are confusingly similar—and your trademark must not be confusingly
similar with any existing trademarks. It is important for new startups to look
at other sources, such as state trademark registries, publications specific to
the industry, and the web. It is also wise to consult a trademark lawyer who is
adept at conducting strategic searches.
For patents: conduct a basic but thorough search of prior art in your
startup’s industry as early as possible. You must be able to answer the
following 2 questions:
It is important to do the research early and know the answers before filing
for a patent. You might be asked these questions when looking for funding,
trying to go public, or trying to get acquired. Furthermore, you do not want to
waste time and money constructing a patent application that will get denied
by the USPTO because all the claims are precluded by prior art.
When registering your trademark, protection will apply only to the products
and services you have listed on your trademark application form (“trademark
classes”). The USPTO defines very specific trademark classes, and you must
be careful that you are accurately describing the products or services that
your trademark will apply to. On the flip side, it is also illegal to list every
product or service on the application.
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4 Failing to protect and enforce your trademark
There are a few ways that you might lose rights to your trademark. The
following are pertinent to startup companies:
You must file a patent application within one year of disclosure or you
lose patent rights in the U.S.
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You immediately lose almost all patent rights outside the U.S. because
most countries have no grace period.
The United States follows the first-to-file rule. If you wait too long to file a
patent application, you might lose the race completely. Even if you invented it
first or worked hard to develop a similar product independently, but
someone else filed for a patent first, you will not be able to obtain patent
rights and will be prevented from doing business related to this invention.
The provisional application will last for 12 months from the filing date and
cannot be extended. During this 12-month period, the applicant must file the
corresponding nonprovisional patent application claiming the benefit of the
provisional application or convert the provisional application into a
nonprovisional application.
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8 Doing a quick Google image search and using unlicensed images on
your website or blog
When you are looking for images to add to your website or blog, it may seem
harmless to do a simple Google image search. However, using unlicensed
images that you did not pay for or get permission to use can result in negative
consequences. Most images found online are protected by copyright. It might
seem like a small risk to use one of these images on your website, but since
2006, stock image companies have been aggressively going after infringing
parties. Few lawsuits are filed, but these companies send letters to infringers
demanding up to $1,000 per image in damages.
Instead, use only licensed images or make sure you pay for or get permission
from the copyright owner of the image. A good source for licensed images is
Creative Commons on Flickr, where users can offer their photos and other
images under a Creative Commons license. However, users can choose to
allow or restrict certain rights to the image, so be sure to read the fine print
for each image you use. For an interesting article on this litigation campaign
against copyright infringement, see The Stock Photo Industry’s Massive
Copyright Campaign.
It is always best to get the copyright owner’s permission before using any
amount of copyright-protected work, but the doctrine of “fair use” under the
Copyright Act provides one defense against copyright infringement. The
doctrine of “fair use” limits the rights granted to copyright owners, allowing
other parties to use the copyrighted material in limited circumstances that
would be considered “fair use.”
The Copyright Act identifies certain types of uses as fair use, including
criticism, commentary, news reporting, teaching, scholarship, and research.
Still, the rules are fuzzy and courts often come to conflicting decisions on the
issue. Courts weigh the following four factors to determine whether the use
of copyright material is fair use:
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Determining whether your use of copyrighted material falls under fair use
can be difficult, and it may be wise to consult an attorney before relying on a
fair use defense to an infringement suit. For an explanation of these four
factors, see U.S. Copyright Office Information on Fair Use.
Further, business owners may assume that if they only use little pieces from
other works, the amount copied is too small for courts to even conduct a fair
use analysis. Like the fair use defense, there are no bright line rules for
determining whether the use was de minimis, so be sure you understand the
doctrine or consult an attorney.
For a trademark registration to remain valid over time, the owner must file
particular forms to renew this registration according to a very specific
timeline. Click here for more information on the timing of filing the renewal
forms and for links to these forms for renewing your trademark registration.
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Intellectual Property Overview
Trademarks Copyright Trade Secrets Patent
Source of Law Federal: Lanham Federal: Copyright State law Federal: Patent Act
Act Act
State: Common law
Period of Perpetual, unless 70 years after the Until no 20 years from filing date
Protection abandoned creator’s death, or longer secret 14 years for design
the last creator’s patents
death
Works made for
hire: 120 years
after creation; or
95 years after first
publication
Costs of Registration filing Registration filing None, except Fees and costs,
Protection fees fee costs to keep maintenance fees
information
secret
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Trademarks
Trademarks are used to identify the source or producer of goods and services
in a particular market. Trademark rights are secured and maintained through
commercial use of the mark, regardless of whether the mark is registered
with the USPTO. For example, one would have trademark protection simply
for using the trademark on the goods. However, trademarks that are not
registered are only protected in the territory in which the mark is actually
used.
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2 Actual use of the mark in commerce or intent to use the trademark
in connection with the goods/services listed in an intent-to-use
application
If you have not started to use the mark in commerce, you can submit
an intent-to-use application, but will later be required to submit a
Statement of Use before the mark can be registered.
What are the advantages of registering the trademark with the USPTO
even if registration is not required?
Copyright
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Should You Register Your Copyright?
However, many companies choose not to register their copyright for several
reasons. Each individual work, including each new version or edition, must
be separately registered. Furthermore, registering the work requires at least
partial disclosure of the work to the public. Companies who are concerned
about confidentiality may choose not to register their work, but instead to
protect the material as a trade secret. Registration is really necessary only if
you plan to sue someone for copyright infringement. You may still send
cease-and-desist letters to infringing third parties even if your copyright is
not registered.
Although the creator of the work automatically owns the copyright, one
exception to this general rule covers items known as works made for hire. To
qualify as a work made for hire, the work must be either:
If the work qualifies as a work made for hire, the employer or the
commissioning party of the creator owns the copyright.
What Protections and Rights Do You Get if You Own the Copyright?
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Trade Secrets
Owners of a trade secret can bring a lawsuit for misappropriation of the trade
secret. Example include:
The owner of a trade secret must make reasonable efforts to preserve the
secrecy of this information within his organization, and also among third
parties who need to use the information. Such third parties may include
vendors, suppliers, and customers. The owner of trade secrets should have
effective security measures and use written confidentiality agreements with
everyone who has access to the information.
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Patents
Patents offer the patent holder a monopoly over the use of the patented
invention. A patent holder has the right to exclude others from making, using,
or selling the invention within the U.S. or importing the invention into the U.S.
A patent owner may also license its rights to others on an exclusive or non-
exclusive basis.
The patent application remains confidential with the USPTO for 18 months.
The USPTO publishes most utility patent applications—if they are still
pending—18 months after the filing date. If the USPTO rejects a patent
application, the applicant can appeal to the USPTO’s internal Patent Trial and
Appeal Board.
Process;
Machine;
Manufactured goods; and
Composition of matter.
The Federal Circuit has carved out exceptions from these four categories that
are not patentable:
Laws of nature;
Physical phenomena; and
Abstract ideas.
However, the Federal Circuit has also held that some abstract ideas may be
patentable if the claims contain an inventive concept sufficient to transform
the claimed abstract idea into a patent-eligible application of the idea. See the
USPTO note on Patent Subject Matter Eligibility for more guidance.
2 First-to-file
The first inventor to file an application to the invention gets patent rights
regardless of who may have actually invented it first.
3 Prior Art
The invention must be explained along with the process of making and using
the invention in full, clear, concise, and exact terms to allow any person of
ordinary skill in the industry to make and use the invention without
extensive experimentation.
The claim(s) must specifically claim the subject matter that the inventor
regards as the invention. The claims define the scope of the protection of the
patent.
If the inventor himself has publicly disclosed his invention (by publication or
made available to the public for use or sale), he has one year to file a patent
application before losing the ability to obtain patent protection.
The claimed invention must be sufficiently different from the prior art such
that the invention is non-obvious to a person having ordinary skill in the
area. A patent may be refused even if the invention is not exactly shown by
the prior art, but involves only one or more obvious differences over the prior
art.
For example, the substitution of one color for another or changes in size are
ordinarily not patentable.
For more information about filing a utility patent, see the USPTO note on
General Information Concerning Patents and the USPTO Patent Application
Filing Guide.
Ex parte reexamination. Any person at any time may request that the
USPTO reexamine a patent based on prior art and printed publications.
Post-grant review. Any person, except the patent owner, may file a petition
for a post-grant review within 9 months after the patent issue date.
Inter partes review. Any person, except the patent owner, may file a petition
for a review based ONLY on the ground that the challenged patent is not
novel or is obvious in view of prior art or printed publications. The petition
must be filed after the later of:
prior art; or
statements by the patent owner in federal court or the USPTO.
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Non-Disclosure Agreement i
1 Confidentiality
1.4 Other Information. The Employee acknowledges that the above list
is not exhaustive, and that Confidential Information also includes
other information that is marked or otherwise identified as
confidential or proprietary, or that would otherwise appear to a
reasonable person to be confidential or proprietary in the context
and circumstances in which the information is known or used.
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Non-Disclosure Agreement
(C) not access or use any Confidential Information, and not to copy
any resources containing any Confidential Information, or
remove any such resources from the premises or control of the
Employer, except as required in the performance of the
Employee's authorized employment duties to the Employer or
with the prior consent of an authorized officer acting on behalf
of the Employer.
(B) This Section does not, in any way, restrict the Employee from
exercising protected rights to the extent that such rights cannot
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Non-Disclosure Agreement
3 Proprietary Rights x
Act of 1976 (17 U.S.C. § 101), and such copyrights are therefore
owned by the Employer. xiv
(A) apply for, obtain, perfect, and transfer to the Employer the Work
Product and Intellectual Property Rights in the Work Product in
any jurisdiction in the world; and
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Non-Disclosure Agreement
To the extent any copyrights are assigned under this Agreement, the
Employee waives, to the extent permitted by applicable law, any and all
claims the Employee may now or hereafter have in any jurisdiction to all
rights of paternity, integrity, disclosure, and withdrawal and any other
rights that may be known as “moral rights” with respect to all Work
Product and all Intellectual Property Rights therein. xix
7 No License
The Employee understands that this Agreement does not, and will not be
construed to, grant the Employee any license or right of any nature with
respect to any Work Product or Intellectual Property Rights or any
Confidential Information, materials, software, or other tools made
available to [him/her] by the Employer.
The Employee will comply with all Employer security policies and
procedures xx as in force from time to time (“Facilities Information
Technology and Access Resources”).
9 Exit Obligations
9.1 provide or return to the Employer any and all Employer property
and all Employer documents and materials belonging to the
Employer xxi and stored in any fashion, that are in the possession or
control of the Employee; and
9.2 delete or destroy all copies of any such documents and materials not
returned to the Employer that remain in the Employee's possession
or control. xxii
10 Publicity
10.1 Employee Consent. Employee consents to any and all uses and
displays, by the Employer and its agents, of the Employee's name,
voice, likeness, image, appearance, and biographical information xxiii
at any time during or after the period of [his/her] employment by
the Employer, for all legitimate business purposes of the Employer
(“Permitted Uses”).
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Non-Disclosure Agreement
11 Acknowledgement
12 Remedies
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Non-Disclosure Agreement
12.3 Relief. The equitable relief will be in addition to, not in the place of,
legal remedies, monetary damages or other available forms of
relief.
14 Severability
15 Miscellaneous Provisions
[Employer Name]
By:______________________________________
[Employee Name]
Signature:____________________________
The employer must provide consideration for the employee’s obligations under this NDA.
ii
This document assumes that the employee signs the agreement at the beginning of new
employment. If the employee is already employed at the time of signing the NDA, the
employer should research whether there is sufficient consideration under state law for this
agreement to be enforceable.
The lists in these sections which describe the employer’s confidential information should
iii
be modified to reflect the employer’s business and industry. The employer should also note
any relevant third parties with confidential information that the employee might access.
ivEmployers should explain why the protected information needs to be kept confidential
(e.g., because the information has commercial value to the employer and gives the employer
a competitive advantage).
vAn employer should customize the definition of confidential information according to the
nature of its business and industry and to be narrowly tailored to the employer’s business.
This will help to ensure that the agreement is enforceable. The employer may wish to specify
materials that are relevant to the employment, such as trade secrets, customer lists,
research, terms of agreements, software design, business practices, techniques, information,
potential transactions, financial information, and information about pricing, marketing,
advertising, sales, customers, personnel, etc.
viHere courts will look at: (1) What information the employee can access during the normal
course of business; and (2) Whether the employee is required to obtain authorization to
access any of the material in this section.
information depending on: (1) The employer’s business organization and management
structure; (2) The nature of employee’s position and job responsibilities; or (3) The
importance of the particular confidential information at issue.
An employer should ensure that the disclosure and use restrictions meet its legitimate
viii
business needs, taking the definition of confidential information into account. Employers
seeking to preserve trade secrets may want to limit the disclosure of that information to a
specified group of individuals who need the information to perform their jobs.
Time limits on the duration of a confidentiality agreement generally are not required for
ix
enforceability.
xSections 3 and 4 are important to ensure that the employer retains ownership of its
intellectual property and that employees do not take that intellectual property and use it for
purposes not in the employer’s interest.
Customize this section based on what applicable terms fall into the employee’s work
xi
product.
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Non-Disclosure Agreement
Employers should tailor this to include specific types of proprietary work product that
xii
xiiiThe
employer should specify the definition of employer information here with types of
documents or material to which the employee will have access, such as inventions, research,
product plan and designs, and information about customers, manufacturing, marketing,
advertising, sales, etc.
http://copyright.gov/circs/circ09.pdf.
xvThis section includes a present assignment of the employee’s interest in all other work
product and IP rights to ensure that the employer owns the IP.
xviThe employer typically covers these expenses, but it may choose not to include this
language (although this may affect the employees’ efforts to comply with anything beyond
signing documents).
Here, the employee agrees to assist the employer to the extent necessary to protect the
xvii
employer’s interest in the work product and IP rights. The employer may need the
employee’s assistance, even after employment, when seeking to obtain certain IP rights or
enforcing those rights.
Moral rights are statutory rights that give a copyrighted work’s author the right to be
xviii
identified as the author and to object to any distortion, mutilation or other modification of
the work.
This provision ensures that the employer can rely on the agreement as constituting a
xix
waiver of all moral rights relating to copyrighted works created during employment. For
more information about moral rights, you may visit:
https://cyber.law.harvard.edu/property/library/moralprimer.html.
xxEmployer should customize this section with any security procedures including passwords
or restricted access measures at the place of employment.
xxi Employer may wish to customize these materials with relevant items.
Employer should include specific references to employer property and every location and
xxii
device where confidential information or work product might be stored and consider the
employer’s specific storage, filing, documentation, IT and security practices.
xxiii Employer may wish to specify with details of the future publicity.
xxivThis is an optional publicity provision and might not be relevant to the employer’s
business. If that is the case, it can be removed from the agreement. Employers should also
consider whether they want to include a non-disparagement clause that prohibits
defamatory statements about a company’s products and services or officers (although the
latter may be not enforceable if overly broad).
and proprietary rights agreement to minimize the risk of later disputes with the employee,
especially with regard to the terms of at-will employment (if applicable).
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Non-Disclosure Agreement
xxvi Use this language only if the employee is at-will. For at-will employees, employers also
have the option of integrating confidentiality and proprietary rights obligations provisions
into an employment agreement.
This provision will help to ensure that the remainder of the agreement is enforceable
xxvii
Include this provision only if the employer wishes to resolve disputes through
xxviii
arbitration. Before including an arbitration clause, employers should review relevant state
law to determine whether arbitration clauses in the context of employment are enforceable.
xxixWhen choosing the state law to govern the agreement, employers should choose the law
of a state to which the employment in question bears some relationship. For example, the
state in which the employer is located or where the job duties will be performed would be a
reasonable basis for choosing the law of that state. Other considerations for the employer,
when selecting states for governing law include: (1) The state with the most beneficial laws
for the employer; (2) The Employer’s convenience; and (3) Does the employer have a better
understanding of the law in any particular state?
xxx Employers should consider whether to draft the agreement to favor enforcement in one
Employers can modify this section if they wish for other agreements with the employee
xxxi
to be enforceable.
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