Protecting Your Intellectual Property When Pitching to Investors … · 2020/7/21 ·...

Protecting Your Intellectual Property When Pitching to Investors and Partners

Todd Ostomel, Ph.D.July 21, 2020

2squirepattonboggs.com

When disclosing Intellectual Property…

• Could recipient:• file a patent and prevent me from practicing my own idea? • publish my idea and destroy my trade secrets?• publish my idea and prevent me from filing for a patent?• export my idea?• steal my idea and incorporate it into a product?

• Could collaborating with others risk ownership of my own IP?


Growing an Idea into a Business

• Ideas• Capital ($)• Personnel (e.g., scientists, marketing, sales)• Resources(e.g., land, factory)• How protect ideas when discussing with investors and partners?• Intellectual property tools to advance business interests.• Agenda

• IP Definitions (10-15 mins)• Ownership - Case law Example (10 mins)• Tips - Records, Nondisclosure Agreements, Assignments, and

Materials Transfer Agreements (10-15 mins)• Checklist (5 mins)


I.R.O.K.

§ I: Identify§ Patents;§ Trade secrets;§ Trademarks; and§ Copyrights.

§ R: Record

§ O: Own

§ K: Keep/Protect


Patents, Trademarks and Copyrights

Trademark Registration Certificate

Copyright Registration Certificate

Patent Certificate•Their scope is defined in writing

•They are registered with a government agency

•They are publicly disclosed


“Confidential information” vs. “trade secrets”

Confidential information is anything that [COMPANY] should or wants to maintain as confidential. Examples:o business strategy, profit margins, costs,

customers, vendors, contract terms

Trade secret is information that has independent economic value from not being generally known and is the subject of reasonable efforts to keep secret. Examples:o Proprietary reagents, chemical compositions,

processes which can’t be reverse engineered, lab engineering and instrument settings

o Invention disclosures, unpublished patent apps


What is a Patent?

§ A time- and geographically-limited monopoly granted to inventor(s) by a government;

§ Claims define the invention; § “Right to exclude” others;§ No affirmative right to practice; § Must disclose invention so

others can practice it;§ Types: Utility, design, and plant.


2019 Nobel Prize in Chemistry

§ 8 of 43 References in https://www.nobelprize.org/uploads/2019/10/advanced-chemistryprize2019-2.pdf§ (8) Jungner, E. W. Sätt att på elektrolytisk väg förstora ytan af sådana metaller, hvilkas

syreföreningar äro kemiskt olösliga i alkaliska lösningar. Swedish patent no. 15567, 1901. § (9) Jungner, E. W. Primärt eller sekundärt elektriskt element. Swedish patent no. 10177, 1899. § (10) Edison, T. A. Reversible Galvanic Battery. US patent no. 692,507, 1902.§ (17) Kummer, J. T.; Neill, W. Thermo-Electric Generator. US patent No. 3,458,356, 1969.§ (24) Whittingham, M. S. Batterie à Base de Chalcogénures. Belgian patent no. 819672, 1975.§ (32) Goodenough, J. B.; Mizushima, K. Fast Ion Conductors. US patent no. 4,357,215, 1982.§ (34) Yoshino, A.; Sanechika, K.; Nakajima, T. Secondary Battery. US patent no. 4,668,595, May 26,

1987. § (35) Yoshino, A.; Sanechika, K.; Nakajima, T. Japanese patent no. 1989293, 1985.

M. Stanley Whittingham Akira YoshinoJohn B. Goodenough


Patentability Requirements

• Subject matter

• Utility

• Novelty (publication, public use, sale, or offer for sale)

• Nonobviousness

• Adequate disclosure (written description and enablement)

• Claim definiteness


Freedom to Operate

Your Patent

The Art Patent

• Freedom to practice your invention?

• Can you sell a new battery if someone holds a patent to the cathode active material in it?• You may not be able to practice your invention.• You may be able to block others from practicing your invention.

• What are your options?• Get a license and/or invalidate the patent in the art.• Cross-license


Trade Secret Basics

What is a Trade Secret? Information that derives independent economic value from not being generally known, that is the subject of reasonable efforts to maintain its secrecy.

• Infinite duration (potentially!)• Relatively cheap and easy• Broad range of information protected; complements other forms of

protection• Can be disclosed, via NDA • Can be used to get injunctive relief

• Powerful tool against competitors• Helpful with departing employees

• Be careful not to incorporate other’s trade secrets


Trade Secret v. Patent - can’t have both

Trade Secret Public Disclosure/Commercial Exploitation/Discussions with Inventors/Partners

Patent Filing or N

ever

Time*Treat all IP records as trade secrets until and only if their contents are published.


Trademark Basics

What is a Trademark? Any word, name, symbol, design or slogan used to identify / signify a source and quality of a product

• Selecting a distinctive mark – the “spectrum of distinctiveness”• Ensuring the mark is available – the importance of clearance searches

• Avoiding the selection of a potentially infringing mark• Registering the mark – use based applications v. intent-to-use applications• Prosecuting the application• The duration of trademark rights• Policing your mark

™


Copyright Basics

What is a Copyright and What Does it Protect? Works of authorship and expression

• Copyright as a “bundle of rights”• The absence of formalities

• Registration and copyright notices

• Who owns the copyright• Employees and the “Work-Made-For-Hire” doctrine• Contractors and the importance of an assignment

• The duration of copyright• Copyright and software


IP Rights

Who Owns the IP? If your company does not own the IP, it can acquire the IP by an assignment, or get rights to use the IP under a license

• US Patents: Ownership vests initially in the inventors – anyone who contributed to any claimed invention in the issued patent

• Copyright: For most works, the authors have copyrights, but a company has copyright in works-made-for-hire

• Trademarks: Belong to the user of the mark in commerce, but can be registered, which may complicate matters

• Trade secrets: Company owns the trade secret if produced in the normal course of business.

• Many institutions – e.g. Universities, Labs – automatically own the technology developed with their facilities

• Need to check governing agreements to determine assignments of IP rights


Dana-Farber Cancer Institute v. Ono Pharmaceutical (Federal Circuit, July 15, 2020)

• District Court (MA) added Dana-Farber inventor to Ono patents.• Dana-Farber inventor’s (Freeman) contribution was not recited in the

claims, but was still significant enough to warrant inventorship.• Dr. Honjo identified a T cell receptor: PD-1, which binds to cancer cells. His

team discovered that T cells without PD-1 showed symptoms typical of autoimmune disease.

• Drs. Freeman and Wood jointly disclosed an amino acid sequence which bound to PD-1 (named PD-L1). Drs. Freeman and Wood discovered that PD-1/PD-L1 binding inhibits T cell activation.

• Woods conceived of antibody therapy; and Honjo confirmed in vivo.• Drs. Freeman and Woods filed a patent without naming Dr. Honjo directed

to the antibodies which bound PD-1.• Dr. Honjo filed a patent without naming Drs. Freeman and Wood directed to

methods of treating cancer with antibodies that target specific receptor-ligand interactions on T immune cells.



• 35 U.S.C. § 116(a) provides the standard for joint inventorship:• Inventors may apply for a patent jointly even though

• (1) they did not physically work together or at the same time, • (2) each did not make the same type or amount of contribution, or • (3) each did not make a contribution to the subject matter of every

claim of the patent.

• To be a joint inventor, one must:• (1) contribute in some significant manner to the conception or reduction to

practice of the invention, • (2) make a contribution to the claimed invention that is not insignificant in

quality, when that contribution is measured against the dimension of the full invention, and

• (3) do more than merely explain to the real inventors well-known concepts and/or the current state of the art.



• Inventors are those who contribute to the claimed invention. • But here claims don’t explicitly recite the contribution of the added inventors.

• A method for treatment of a tumor in a patient, comprising administering to the patient a pharmaceutically effective amount of an anti-PD-1 monoclonal antibody.

• Discovery was the existence of an inhibitory receptor on T cells, PD-1, and that, when PD-1 binds to one of its ligands (PD-L1 or PDL2), the T cell is inhibited and does not attack the (cancer) cell expressing the ligand.

• The ’474 patent claims need not explicitly recite PDL1 for research on Unless one also knows that the PD-1 receptor binds to at least one ligand that inhibits the immune response, such as PD-L1, there would be no reason to use anti-PD-1 antibodies to treat tumors.

• Collaboration and concerted effort are what result in joint inventorship...Inventorship of a complex invention may depend on partial contributions to conception over time.

• Result: Dana-Farber is a Co-owner. How could Ono have avoided this result?


IP Disclosure Record

• What to include:• List contributors and their particular contributions.• Describe the idea in one to two paragraphs and figures including the

problem solved and/or the value added.• Describe the difference between the idea and what is publically known

and why this matters.• List the advantages.• Note dates of conception and reduction to practice.• Time stamp.

• What actions to take:• File patents for inventions in advance of confidential disclosures as well

as publications to avoid theft and statutory bars.• Audit record as ideas mature.


Meeting records

§ When and where did meeting occur?

§ Who was present?

§ NDAs or not?

§ What was discussed?

§ Why was this meeting important?§ Patent and trade secret consequences:

§ prior user right§ derivation proceedings§ trade secret misappropriation§ demonstrate reasonable measures


Reasonable Efforts to Maintain Secrecy –Recap

§ NDAs§ Need-to-know access to Information§ Training to reinforce obligations§ Exit interviews§ Document labeling§ Information security

§ Password protection§ Email and data policies§ Badge access and monitoring

§ Monitor for suspicious activity e.g., excessive access to or downloads from data or document servers

§ Take immediate action at the first sign of trouble

Absolute secrecy is not required.Company need only do what is reasonable under the circumstances.


How are Trade Secrets Lost?

o Interviewso Customers/vendors (use NDAs)o Consultants (NDA and assignment of

rights)o Trade showso Patent application publicationso Loose lipso Reverse engineeringo Theft


Make Trade Secrets Protection a Priority

The company should protect confidential information and trade secrets by:§ Limiting disclosure to those who need to know.§ Use of nondisclosure agreements.§ Curtailing discussions with nondisclosure agreements are not in place.§ Implementing security measures.§ Addressing confidentiality issues when employees join and leave.§ Requiring all employees and independent contractors to comply with an internal

confidentiality policy.§ Training employees.§ Regularly assessing trade secret protection.§ Preparing for inadvertent disclosure.

Identity a leader for IP protection and security who works collaboratively with human resources, the CEO, and the Board.


Document Protection

§ Mark confidential documents ''CONFIDENTIAL'' or “[COMPANY] CONFIDENTIAL''

§ Securely store confidential information, sensitive documents and communications§ Paper documents kept in secure file or room that can only be accessed

with authorization§ Electronic information should be encrypted, password protected, and

maintained on company servers to which access is restricted§ Enforce a policy preventing employees from maintaining sensitive

information on home computers, laptops, mobile devices, etc.§ Implement tracking software that alerts IT in the event an employee copies

an unusual amount of data from a central server

CONFIDENTIAL


Trade Secret Theft is Criminal

§ DuPont developed proprietary chloride route process for making TiO2 in the 1940s.§ Guards and tall fences at plant. No photographs. Documents monitored. Bags

inspected. NDAs with employees and contractors. Work compartmentalized.

§ 1990s: China’s government and Chinese state-run businesses began seeking ways to discovery DuPont’s methods.

§ Former DuPont engineer stole DuPont’s protocols for producing its superior titanium white from 1997 through 2011 – including factory blueprints. DuPont computers hacked.

§ Former employee convicted of economic espionage, possession of trade secrets, and tax fraud. Sentenced to 15 in prison years and ordered to pay $30 million.


Need to Know Basis

o Limit disclosure of confidential information and trade secrets to:§ Employees with a need to know in order to perform their jobs§ Third parties who need the info for a legitimate business purpose

o Ensure that IT and HR work together to update network access on a proactive basis

o Create and enforce internal protocol requiring that all NDAs with third parties – whether in-bound or out-bound – are pre-approved by a central authority before being accepted or sent.


Non-disclosure Agreements (NDA, a.k.a. confidentiality agreements)

§ Whose information protected? § One-way (unilateral)§ Two-way (mutual)

§ Notice requirements?§ information reasonably expected to be treated in a confidential manner under the circumstances; or§ information designated as confidential at the time of its initial disclosure and reduced to a written

summary within a time period after disclosure

§ Exceptions?§ (i) was publicly known; becomes publicly known through no wrongful act; (iii) is in the rightful

possession of discloser without confidentiality obligations; (iv) was learned from a third party without an accompanying duty of confidentiality; or (v) is independently developed.

§ Term?§ For the contract§ For the confidential information§ For the trade secrets

§ Jurisdiction?§ Where will disputes be litigated and what law controls?


Enter into third party NDAs with care

Avoid circumstances that might provide others with plausible bases for claiming the “theft” of their proprietary information or trade secrets1. Refuse to sign other’s NDAs – require other company to make

presentation without including its “proprietary” or trade secret information2. If you must enter into a NDA with a third party, use your own form – not

the other party’s form (we can provide one)3. Don’t rely only on an NDA4. Prepare for a breach of the NDA5. Understand that all emails and other writings, may need to be disclosed

in litigation§ Do not write anything that you would not like to see in court

6. If the technology is of no interest, send a clear, concise confirming letter saying so

§ Confirm no proprietary information received, or if received, confirm its destruction or return


Contract Basics

What is a Contractual Provision? A section in a binding agreement between two parties that imposes rights or duties and is legally enforceable

• IP provisions typically included in employment contracts• Require confidential treatment of company information (not

restricted to trade secrets)• Assign and create obligations to assign any inventions or other IP

rights of one party to the other party• I hereby assign….

• I promise to assign…

• Provide rights to use IP, e.g. a license Your Signature


Material Transfer Agreements

§ Identify:§ The material with particularity§ the authorized and unauthorized uses§ the hazards§ the owner§ whether material can be reverse engineered, analyzed, etc…§ publication restrictions.§ Include confidentiality terms.§ Include invention assignment terms if jointly collaborating. § Whether material is to be returned.


Checklist

§ I.R.O.K§ What IP assets?§ What is protecting them?§ Does a third-party have overlapping IP?

§ What is disclosed?§ Is this information confidential?§ Is it labeled confidential?§ Are trademarks labeled?§ Is disclosure more than necessary (misappropriation) ?§ Is disclosure a confidential offer for sale or publication (statutory bars)?

§ Does the company own the disclosed information?§ Who is disclosing, or receiving, information or materials?

§ What are the discloser’s and recipient’s IP assignment obligations?§ What are the discloser’s and recipient’s IP confidentiality obligations?§ One-way, two-way, or no non-disclosure agreement?§ Materials transfer agreement?

§ When am I disclosing information?§ Have I filed patents on inventions, and executed NDAs, before the disclosure?


How We Can Help

§ Counseling§ Strategic planning of patent portfolios for offensive and defensive purposes domestically and

within the global market§ Evaluating inventions§ Prior art/competitive landscape reviews§ Trade secret protection§ Freedom-to-operate, non-infringement, invalidity and patentability opinions

§ Drafting, filing and prosecution of patent applications§ Developing and managing patent portfolios ranging from start-up companies to large,

established companies§ International filing and prosecution facilitated by a worldwide network of patent associates

§ Post-grant§ Reissues, reexamination and interferences§ Inter Partes Reviews§ Post Grant Reviews

§ Corporate, Licensing, Contract, and Employment issues


Contact Info Slide

Todd A. OstomelPartner, Palo [email protected] +1 650 843 3251


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Protecting Your Intellectual Property When Pitching to Investors … · 2020/7/21 ·...

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Transcript of Protecting Your Intellectual Property When Pitching to Investors … · 2020/7/21 ·...