Protect intellectual property from the start

When it comes to intellectual property (IP), the old English idiom “penny wise and pound foolish” never goes out of style – even in a world of ever-changing technology.

IP applies to anything that originates in the mind: written works, symbols, images, names, logos, and, perhaps most importantly, inventions. IP is also one of the most valuable assets a company has.

“It is important to think about how to protect intellectual property,” said Andrew P. Zappia, partner with Troutman Pepper. “But you need to be careful with what you choose to protect. Some companies want to protect everything, and they use too many of their resources on patents.”

Patents are just one way to protect IP. Other protections include copyright, which protects works of authorship like books and logos; trademark, which protects a recognizable sign, phrase or symbol; and trade secrets, which protect a practice or process of a company and is not known to the public.

“The key to a trade secret is maintaining secrecy,” said Zappia, who focuses on complex commercial and intellectual property litigation, including patent, trademark, copyright, and trade secret litigation and licensing work. “There is no government process to file for. It’s protected mainly under state law and dependent on the ability to maintain secrecy.”

Laura Smalley is an intellectual property attorney with Harris Beach. Her specialty is representing clients in the medical device and life sciences industries. She notes that some of the ways companies can keep trade secrets confidential is by having employees sign confidentiality agreements and third parties sign non-disclosure agreements.

“A trade secret is information that’s confidential to a business and some of its values derives in it being a secret,” Smalley said. “If you let the information out there through lax security the court can determine it’s no longer a trade secret.”

Tips for Startups

Whether through trade secrets, patents or other means, large companies often have patent attorneys in-house to guide them when it comes to protecting IP.

In addition to passing their state bar, a patent attorney must pass a federal examination — commonly called a “patent bar” — that allows them to be licensed representatives of clients before the United States Patent and Trademark Office (USPTO). Most patent attorneys also hold undergraduate degrees in a STEM field.

For smaller companies and startups that don’t have in-house patent attorneys, protecting IP can be more challenging, but still is extremely important.

“For startups in the tech space, really most of their assets are in IP,” Zappia said. “It’s really important for them to be conscious of the value of their IP. Patenting is often a challenge for them because the patent process is more expensive [than trademarks and copyrights] and it’s very hard for clients to do it themselves.”

International IP is even more expensive due to foreign lawyers and filing fees, something companies, especially startups, need to be careful about, Zappia noted.

Dennis Danella, a partner with Woods Oviatt Gilman, is a patent attorney whose practice focuses on intellectual property law, including patent, trademark, copyright, trade secret, and domain name matter. He has a background in engineering and was drawn to the patent field because he likes working with technology and helping businesses develop and protect their ideas.

Though he represents companies of all sizes nationwide, he has a special fondness for startups and those with their footprints in Rochester.

“Rochester is a little unique in that there’s so many universities and colleges here that produce people with a high degree of business acumen,” Danella said. “There are a lot of tech people here that used to work with Xerox and Bausch and Lomb, still have a lot of technical skills and create startups.”

He urges those with a serious idea for a startup to reach out to an attorney who specializes in IP as soon as possible — even if it’s just for an hour consultation to understand the framework and basics of patents, copyrights and trademarks.

For example, did you know a patent application should be filed before any public disclosure? Or if a third-party is writing your software, you’ll want to ensure you own the code?

He recommends those who seek a patent to search the USPTO website first to see if there is anything close to their idea. For trademarks, he recommends starting with a simple Google search.

“See if there’s anything out there already,” Danella said. “You don’t want to be nine months down the road and find out someone else is using it. It will cause less headache and cost less money down the road.”

Startups should also highly consider having their tech employees sign a proprietary information and inventions assignment agreement before starting their role. Among other things, it states that anything the employee creates on the job is for the company. It also includes some confidentiality provisions, like non-competes/solicits.

Current Trends in IP

An IP trend Danella is seeing more of lately are non-fungible tokens (NFTs) – interchangeable digital assets traded over the internet. According to a report by TradingPlatforms, the market for NFTs boomed last year with NFTs’ total value growth surging from $100 million in 2020 to more than $21 billion in 2021.

“We see more clients that are looking to sell NFT’s associated with their digital assets,” Danella said. “They need to be clear as to what IP rights (usually copyrights) are being licensed through the sale of the NFT.”

Another trend in IP is plaintiffs bringing patent cases to the federal courts in the state of Texas. Patent law cases must be heard federally.

“Texas had become a hotbed for patent litigation,” Zappia said. “Plaintiffs tend to view Texas as a favorable forum. They tend to like the jury pool and certain judges are viewed as favorable to enforcing patents. Delaware is another big forum for patent cases, though it’s viewed as more defendant favorable than Texas.”

While the pandemic slowed down many industries and government entities, it did not seem to impact patent litigation too much.

“Federal patent cases aren’t anymore backlogged than usual,” Smalley said. “Texas, Delaware and California have a high volume of cases, but are generally efficient at processing them.”

Smalley attributes this ability to keep pace with changes the federal courts embraced during the pandemic like virtual depositions and conferences. In the year ahead she expects to see patent litigation, especially in her area of expertise, increase.

“Litigation over drugs and pharmaceuticals has always been high stakes litigation and is expected to increase,” she said, noting certain areas, like diagnostic testing and personalized medicine and software focused on biomarkers are increasingly being patented more.

Danella is also seeing an increase in patent litigation.

“Recent filings have gone up, possibly because companies have slowed down and the downtime has given them time and scope to identify issues and monetize them,” Danella said. “Companies are looking to IP assets to drive and generate revenue and patents are a way to do it.”