INTELLECTUAL PROPERTY Patent, Copyright, Trade Secret:Either/Or, Both/And, All Three?

http://delvacca.acc.com

Michael K. Jones Joseph J. Serritella Bob Marley July 11, 2013

Agenda

• Introductions to Patents, Copyrights and Trade Secrets

• Comparing and contrasting each to the other

• Tips on using combinations of each in varying situations

• America Invents Act (AIA) changes

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Patents

• A patent only lets the owner of the patent exclude others from making, using, offering for sale, importing or selling the claimed invention

• A patent does not mean you can practice your invention

• Plant variety patent and design patent protections not dealt with here

• Patents protect ideas, rather than creative expression per se

• Defined by federal law

• U.S. Constitution Art. 1, Section 8

• 35 U.S.C. § § 101 et. seq.

• 37 C.F.R. § § 1.1 et. seq.

• Manual of Patent Examination Procedure (MPEP)

• Limited term (20 years from filing)

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Patents (cont’d)

• Requirements • Must have some utility (35 U.S.C. §101)

• “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof”

• Must be novel (35 U.S.C. §102)

• Not previously disclosed in publications, sold, publically used or patented

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Patents (cont’d)

• Must be Non-Obvious (35 U.S.C. §103)

• Cannot, for example, merely combine off-the-shelf components in manner that is obvious to try

• Must make disclosure (35 U.S.C. §112)

• Describe invention so that a person of ordinary skill in the art can make and use claimed invention

• How to obtain• Race to USPTO under America Invents Act (AIA)

• Provisional or “full” utility applications

• USPTO search/examination

• Preparation and prosecution can cost $10,000 or more in attorneys fees

• Average pendency can be up to 3 years

• Infringer need not know of Patent

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Copyrights

• Covers broad range or expressive content (e.g., technical drawings, product specifications, databases, computer programs, architectural works, sound recordings, audiovisual works and much more) but excludes any “idea, procedure, process, system, method of operation, concept, principle or discovery” embodied in the expression.• Mask work and hull design protections not dealt with here

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Copyrights (cont’d)

• U. S. Constitution Art. I, Sec. 8• Defined by federal law

• 17 U.S.C. § §101 et seq.

• 37 C.F.R. §§2 .1 et seq.

• U.S. Copyright Office (“C.O.”) – Compendium II: Copyright Office Procedures (soon to undergo comprehensive overhaul)

• Various C.O. Circulars and Brochures (intended for non-specialists and laymen but a definitive resource) www.copyright.gov/circs

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Copyrights (cont’d)

• Right to preclude• Copying

• Compiling with other material

• Distribution to the public

• Creation of derivative works

• Public performance, display or exhibition

• By operation of preemption, assertion of “equivalent” state law-based rights

• Limited term (If created after 1/1/1978 – by a human author, 70 years past author’s death; if by a fictitious author, 95 yrs. from publication or 120 years from creation, whichever is earlier)

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Copyrights (cont’d)

• Requirements• Original (i.e., not copied from or derivative of pre-existing material)

• Work of human authorship

• Fixed in a tangible medium of expression

• That can be perceived with or without the aid of a machine

• How to Obtain• Automatic upon creation, no application or formalities

• For a “United States work,” filing with C.O. required to institute suit and to enjoy certain statutory remedies.

• C.O. Examination

• Application Fee: $35 (e-filing), $65 (paper filing). Prosecution expense: due diligence as to provenance and constituents of copyright can be costly, if done by outside counsel

• Application may be filed anytime during the life of the copyright.

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Trade Secrets

• Trade Secrets can constitute any information not generally known that gives the beneficiary a competitive advantage

• State law-based• Existed in English common law and so finds its way into American

state law -- Reinstatement (First) of Torts §§ 757-59 (1939); Reinstatement (Third) of Unfair Competition §§ 39-45 (1995).

• Uniform Trade Secrets Act (“UTSA”): Adopted by 46 states

• Inevitable Disclosure Doctrine in subsequent employment: Adopted in some states and not others

• Varying statutes of limitation

• State law discrepancies can make choice of forum important for enforcement purposes

• Federal, criminal overlay – 18 U.S.C. §1832, but creates no civil cause of action.

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Trade Secrets (cont’d)

• Right to preclude• Actionable against one who violates secrecy-in-fact

• Action for breach of agreement to maintain secrecy

• Agreement may include limited restraint on subsequent employment

• Duration is potentially unlimited, so long as:• Secret is not independently discovered by another (defense only for

such a discoverer)

• Secret is not published or otherwise becomes generally known through independent means (Some states permit enforcement in this circumstance if defendant misappropriated from plaintiff, regardless of info being freely available elsewhere).

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Trade Secrets (cont’d)

• Requirements• Protection is automatic so long as secret constitutes a competitive

advantage and is maintained against disclosure

• No registration possible, so no initial cost but imposition of Employment/Non-Disclosure Agreements, maintenance of true data security and enforcement can be burdensome/expensive

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Patent v. Copyright

• Idea v. expression

• Scope of protection

• When to rely on one, the other or both

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Trade Secret v. Patent

• Secrecy v. Disclosure

• Scope of protection• Trade secrets can range widely (e.g., know-how) and be potentially

significant, but must be maintained as secret

• Patents give strong protection, but for limited time

• Can be extended via further innovations/improvements

• When to rely on one or the other; can one deploy both?• Reverse engineering risk exists with trade secrets but is irrelevant

with patents

• Patents are intended to “teach” the invention to the public

• Not every potentially secret idea is patentable

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Copyright v. Trade Secret

• Limitation to literal expression v. secrecy of concepts regardless how expressed

• Scope of protection

• When to rely on one, the other or both

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Approaches to Circumvention:Patent Vulnerabilities• Failure to acquire rights from inventors

• Written assignment required• Does each inventor have an existing duty to assign?

• Invalidity• Prior art can be considered by post grant procedures or litigation after a patent

issues

• Infringement requires all claim elements to be practiced• Minor changes may avoid infringement• But note: Patentee may use doctrine of equivalents to capture trivial changes (i.e.,

equivalents) that would otherwise not be in the literal scope of the claims

• Not all Patents are broad• Work-arounds may be possible to accomplish comparable result

• No protection after expiration• Exhaustion of use and (re)sale monopolies after one purchases a

product embodying the patented invention• Repair doctrine can also avoid infringement

• Joint infringement issues in legal flux• Currently all elements must be practiced by single infringer or parties in legal privity

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Approaches to Circumvention: Copyright Vulnerabilities• Failure to acquire all rights

• “Work for hire” only applies to full time employees (and certain narrow categories of works)

• Otherwise, statute of frauds (need a signed writing) applies

• Licenses that permit intended use

• Matter in the public domain

• Independent creation (e.g., “clean room” for software development)

• Idea/expression dichotomy – narrow or non-existent copyright protection

• Separability – utilitarian v. aesthetic

• Fair use

• First sale

• Numerous other, esoteric infirmities

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Approaches to Circumvention:Trade Secret Vulnerabilities• Failure to secure from “discovering” employee

• May be independently known and exploited, notwithstanding claim of secrecy by another

• Includes reverse engineering, i.e., divining secrets by disassembly, analysis or testing of lawfully obtained product or receipt and observation of services, so long as not otherwise restricted by agreement

• May be discovered independently and exploited or published

• May be lost (1) through careless protection and (2) without swift and costly enforcement efforts

• Overreaching - Courts (1) dislike trivial, inauthentic or ill-protected trade secrets and (2) disfavor using nominal trade secrets as a basis for restraint on future employment

• May be subject to First-Amendment based, public’s “right to know,” types of exception

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Filing for Patent Protection While Maintaining Trade Secret Protection• Adequate patent disclosure need only instruct one of ordinary

skill to make or use the invention without “undue experimentation”• Need not disclose all details of implementation

• Best mode requirement in limbo under AIA• Cannot invalidate patent for failure to comply

• How to balance secrecy v. written description and best mode requirements• Can one bury a best mode in an enumerated disclosure?

• E.g. essentially disclosing some details of a trade secret amongst a haystack of alternative embodiments

• Description need not disclose all the details if not needed to practice the invention

• Patent will not affect many trade secrets, such as manufacturing efficiencies and unrelated matters such as customer lists, marketing plans, pricing data, and so on

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Registering a Copyright in a Work Containing Trade Secrets• Registration (or attempted registration) with the Copyright Office is

mandatory in order for infringement actions to be brought

• a completed application

• the registration fee

• and a deposit copy of the work for which protection is claimed

• If copyrighted works contain trade secrets:

• C.O. regulations permit deposit of identifying portions, constituting less than the work as a whole

• Copyright applicant may request return of deposit material altogether, in which case resulting registration is subject to “rule of doubt,” i.e., it cannot act as prima facie proof of validity

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Registering a Copyright on Work Containing Trade Secrets (cont’d)• As to the portions of material actually deposited with the C.O. under a

redacted registration, is trade secret protection lost?

• Not necessarily: (1) copies are not available to general public and (2) can be subject to court-imposed protective order

• Trade secret protection is usually spared from preemption under the copyright law (excepted, of course, is a published work which discloses trade secret information otherwise lawfully obtained by the author)

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The AIA: Impact on Patents• First inventor to file

• Can no longer swear behind references

• First “inventor” means an applicant cannot be beaten to the USPTOby someone that derives the invention from the applicant

• New rules provide some incentive to publish if not filing right away

• Gives inventor a one-year grace period during which intervening publications/patent applications are not prior art – if derived from inventor’s work

• Option 1: Treat un-filed patentable ideas as trade secrets and then get them filed at first opportunity

• Can control costs by filing provisional applications

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The AIA: Impact on Patents (cont’d)• Option 2: Publish and file later

• Risky, because it may be difficult to show derivation if intervening publication occurs

• Can be a inexpensive way to make sure your competitors cannot patent substantially similar ideas easily (in effect, you create prior art)

• False Marking• No longer illegal to leave an expired patent number on product

• New avenues to challenge patents• Ex parte pre-grant submissions allowed

• Post-grant review available in first 9 months after issuance

• Allows more than just printed publications for as prior art

• Ex parte re-exam, inter parte review (re-exam) and litigation still available

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PATENTS COPYRIGHTS TRADE SECRETS

WHAT ARE EXAMPLES OF EACH?

Mechanical and electrical devices, chemical compounds, business systems

Source code listings, business plans, product brochures, databases, technical drawings

Source code if undisclosed, a non-ascertainable customer list non-reverse engineerable product formulae

WHAT IS THE SCOPE OF PROTECTION?

The right to exclude others from making, using, or selling any product, by-product or service that results in infringing the patent

Exclusive rights to reproduce the work, prepare derivative works, distribute copies, and perform, exhibit and display the work

The right to prevent others from unauthorized use or disclosure

WHAT LAW GOVERNS? Federal Federal State

WHAT IS REQUIRED FOR PROTECTION?

An invention that is novel, useful and non-obvious

An original work of authorship fixed in a tangible medium of expression

Information that confers economic advantage while being kept secret

IS REGISTRATION REQUIRED?Required Available but not required unless

enforcement is soughtNot available

WHEN DOES PROTECTION BEGIN?Upon issuance of letters patent by the U.S. Patent and Trademark Office

Once the work is fixed in a tangible medium of expression

Once the information is known and is kept secret

HOW LONG DOES PROTECTION LAST?

20 years Life of the author plus 70 years or, if non-human author, then at least 95 years

Potentially perpetual

ON AVERAGE HOW LONG DOES IT TAKE TO REGISTER?

Approximately 2 years Several months or a matter of weeks if expedited

Not applicable

ON AVERAGE HOW MUCH DOES IT COST TO REGISTER?2

Upwards from $1600 $35 or $65 per title Not applicable

IS ANY FORM OF NOTICE REQUIRED?

Marking with the patent number (or “patent pending”) is not required but is recommended

For works published prior to March 1, 1989, appropriate notice was required. For unpublished works or works published after that date, notice is not required but is recommended

Inclusion of a restrictive legend or words such as “CONFIDENTIAL” is helpful but not required

WHAT ARE THE STANDARDS FOR INFRINGEMENT?

Accused device or system either embodies elements of the patented claims or performs substantially the same function in substantially the same way to achieve the claimed results

Actual copying or access and substantial similarity to the copyrighted work

Depends on the state, but based upon a theory of misappropriation and requires proof that the elements of a trade secret exist

CAN IT BE TRANSFERRED?By license or written assignment By license or written assignment,

except the statutory reversion rightBy license or assignment made subject to confidentiality restrictions

HOW CAN YOU LOSE PROTECTION?

Have patent judicially declared invalidCommit fraud on the U.S. Patent and Trademark Office

AbandonmentCommit fraud on the U.S. Copyright Office

Disseminate without confidentiality protection

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1 Design patents and plant patents, and mask work and hull design protectionunder the copyright law, are not included in this comparison.

2 Figures represent filing fees only, not legal fees

Comparison of Three Intellectual Property Regimes1

QUESTIONS?

DISCLAIMER: THE VIEWS EXPRESSED TODAY ARE THOSE OF THE PRESENTERS AND DO NOT NECESSARILY REFLECT THE VIEWS OF THEIR RESPECTIVE ORGANIZATIONS.

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A registered patent attorney, Mike’s practice focuses on all aspects

of intellectual property including strategic intellectual property counseling and portfolio management, patent procurement

(including domestic and foreign rights), patent opinions (including

freedom to operate, non-infringement, invalidity, patentability), due diligence, licensing, and enforcing and defending patent rights.

Mike has counseled clients in a variety of industries and in a wide range of technologies, including mechanical and electrical devices,

electronics, communication systems, computer hardware, data

collection and storage systems, content conditioning and delivery systems, software, mobile device management and security,

electrical power generation, distribution and control, electrical

connectors, robotics and automated systems, medical devices, clean technologies, consumer products, clothing apparel,

biometrics, optics, printing and imaging systems, vessel design and

construction, watercraft propulsion and auxiliary systems, manufacturing techniques, packaging, advanced materials,

ecommerce, and business methods, including for example,

business methods in the banking, insurance, investment and financial services industries.

Michael K. JonesPartner IP DepartmentPepper Hamilton LLP215.981.4405jonesm@pepperlaw.com

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Joseph J. Serritella is of counsel in the litigation department of

Pepper Hamilton LLP, practicing the law of intellectual property, including copyright, trademark, patent, trade secret and unfair

competition matters, as well as the law of defamation and free

speech.

Joe has a range of litigation experience, although his practice now

focuses on intellectual property-intensive businesses, particularly in

the fields of computer science, marketing and advertising. His litigation background has encompassed cases involving significant

scientific and trade issues as well as technical intellectual property

concerns. Joe is the author of articles and materials on various forms of intellectual property protection and has given presentations

on the legal aspects of product identity, design and licensing.

Having been involved in business counseling and pre-litigation planning for many of the firm’s technology company clients, Joe is

experienced in litigation avoidance techniques, alternative dispute

resolution and insurance coverage matters. He is the founder and past chair of the firm’s intellectual property practice group and its

liaison with the firm’s other practice groups.

Joseph J. SerritellaOf Counsel IP LitigationPepper Hamilton LLP215.981.4097serritellaj@pepperlaw.com

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Bob is responsible for all aspects of intellectual property with

Unisys. This includes world-wide IP creation, management, assertion, litigation and licensing in support of Unisys’ commercial,

public-sector and R&D activities. Unisys, a worldwide IT corporation

with over 22,000 employees, designs, builds, and manages mission-critical solutions, software and information systems for both

business and government environments.

Bob’s legal career began as an associate at Fish & Neave in New

York City. Before joining Unisys in 2007, Bob held positions as a

Senior Attorney with AT&T Bell Laboratories and Managing IP Counsel for the Motorola’s Broadband Technology Division.

Prior to obtaining a law degree, Bob was a semiconductor research

engineer with Siemens Electronics, primarily focusing on Si and GaAs high-frequency device development and fabrication.

Bob MarleyChief IP CounselUnisys CorporationBlue Bell, PA215.986.5462 robert.marley@unisys.com

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