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Intellectual property

In the world of technology, the portfolio of intellectual property is considered an integral part of any company's assets.

In the world of technology, the intellectual property portfolio is considered an integral part of the assets of any company. Investors attach importance to the protection of intellectual property assets. Although in most cases a patent portfolio will not be a decisive consideration in acquiring a company, the complete absence of such a portfolio can be problematic and deter them.

Since lawsuits for patent infringement are relatively rare in the industry, the company's patent portfolio is used in most cases to obtain freedom of action, to sign mutual licenses, and in many cases also to deter competitors.

However, there are cases where companies try to enforce their patents on competitors. Such enforcement is particularly effective where the patent owner is not exposed to reciprocal claims by competitors. This means that building the intellectual property of a technology company is a process of strategic importance, which requires decision-making on many issues: how to build it, what issues it will focus on, where to register it, at what stage – and whether to even make a registration that exposes the technology.

Key opening questions

In building IP strategies, the following points should be examined:

  • When (in terms of time) should intellectual property be protected

  • What type of intellectual property is appropriate (trade secret, patent, copyright, trademark, reputation, design, etc.)

  • What ideas should be protected

  • Where (geographically) should the protection be

  • What should we get as a result of protecting intellectual property assets

  • What steps should be taken to ensure that the intellectual property is owned by the company or entrepreneur

 

On the question of when to protect, the answer is simple:

It is advisable to protect intellectual property as soon as possible. Protection of intellectual property begins with documentation (preferably in real-time) of the process of consolidation of intellectual property. There is no binding form for such documentation, but the more reliable the documentation, the more weight will be given to it.

I was involved in preventing a legal dispute between two international companies over a patent. The dispute was averted after internal documentation was presented by one of the companies, proving that it had reached the controversial invention many months before the meeting with the other company.

A patent can also be filed before the final formulation of the idea, even before there is a working prototype – as long as it can be described in a way that it can be applied. In my experience, it is better to file a patent application even if the idea is not fully mature, leaving the protection of the final idea for a patent application later.

What is the appropriate intellectual property?

Some branches of intellectual property require registration and some do not. The different branches are well-defined.

As a rule of thumb:

  • Patents protect inventions that are innovative/ ground-breaking and involve an invention

  • Trade secrets protect information that has a trade value that is kept confidential

  • Trademarks (registered and unregistered) protect marks that are supposed to distinguish a product or service (today a smell can also be registered as a trademark)

  • A design protects the form of a product

  • Copyrights protect a particular type of creative work (including computer software).

 

Note that not all inventions embodied in computer software will be protected.

Just recently, the US Supreme Court ruled in the Alice case that software that protects an abstract idea without technological advantages would not be protected by patent law.

When you can protect an idea in more than one way, you have to choose the right one for you.

For example, patent laws provide stronger protection than trade secrets, but this protection is limited in time. Note that the "price" to be paid when filing a patent application is revealing the invention. If you do not want to reveal the existence of the invention, do not file a patent. If you think that the trade secret will be revealed quickly with the marketing of the product that includes the idea, it may be better to file a patent application.

Where to protect?

A registered patent provides protection in a defined territory. For example, a patent in the United States will not prevent a Chinese manufacturer from marketing a product that violates the patent in Europe. Due to the high cost associated with handling patent applications in many countries, it is common to file a patent application in the main markets of the product and/or where the main competitor is located (head office, manufacturing, or research and development). In many high-tech industries, the US market is dominant enough to justify filing a US patent application and to receive de facto protection in other markets as well. This is in case a competitor does not want to market different versions of a product in the U.S. and other countries.

How much to invest in intellectual property?

The cost of protecting trade secrets should be reasonable in relation to the commercial value of the secret. On the one hand, you will not be required to protect your trade secrets as jealously as Coca-Cola protects its drink formula. On the other hand, you will need to prevent unauthorized persons from accessing confidential information.

The cost of registration of patents is relatively high. In many cases, it would be cheaper to file several patent applications in one country (for example, the United States) than to file the same application in several different countries. I have witnessed companies file patent applications in several countries simultaneously, ultimately abandoning some of those requests due to budgetary considerations.

Another point to consider: It is very important to check and make sure that the ownership of intellectual property is indeed yours. Various intellectual property laws have arrangements regarding the transfer of ownership rights to the employer under certain conditions. We don't think that's enough. You must include stipulations dealing with intellectual property ownership in the employment contracts with employees and subcontractors. Review NDAs and collaboration documents to see that you are not inadvertently transferring your intellectual property ownership rights.

Our firm specializes in building a significant portfolio in intellectual property 

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