Fri, 25 Jan 08
IP Crash Course For Entrepreneurs
This past Wednesday, I went to an interesting talk sponsored by Silicon Flatirons (an organization worth knowing about). Jason Haislmaier gave the talk, and the subject was intellectual property (IP); it was titled ‘Intellectual Property “Crash Course” for Entrepreneurs’ and was packed! I got there 10 minutes late (parking on the CU campus is no fun at all) and sat in the back on a heater. Good thing the fire department didn’t come by, as I’m sure we were over capacity. (Incidentally, I heard about this via the Boulder Denver New Tech Meetup mailing list but it was also on the Colorado Startups Events calendar.)
Jason said the presentation and possibly a recording of it would be available, but I was unable to find it by looking around his blog or the Silicon Flatirons site. I took some notes, but his presentation, if and when it becomes available, will be a great introduction to what entrepreneurs need to know about IP. (Note that all mistakes herein are mine, and I am most definitely not a lawyer. Consult your friendly attorney for serious advice. I marked things I thought I remembered with a ‘?’.)
There are 4 kinds of IP: patents, which are ideas or inventions, trademarks, which are about branding, copyright, which deals with creative expression, and trade secrets, which is know how. The overall emphasis on his talk was that you may not need protection from one or any of these forms of property, but that you, as an entrepreneur should be aware of all of them and make a conscious choice to pursue or not to pursue them. Which makes a lot of sense to me! (Incidentally, he repeatedly mentioned that the US was different in IP than the rest of the world, in a lot of ways, so if you plan to do business internationally, you should definitely think about that sooner rather than later.)
Trade secrets are pretty much anything–data, methods, software, etc. The protection is dependent on keeping them secret. Jason was working with a $10-20 million company that had only one patent; its valuation was almost entirely based on trade secrets. NDAs and employment contracts are the front line of trade secrets. He emphasized that you need to read NDAs and think about how they affect you and your relationship with the NDA signer. In particular, you can’t expect a signer to forget everything they’ve learned after a relationship ends, but you can expect them to return all the tangible forms of information. NDAs should have remedies (injunctions). If the other side won’t sign an NDA, that’s fine, just don’t tell them anything that you wouldn’t want to see posted on the Internet.
Copyright is protection for an original work or authorship in a tangible form from which the work can be perceived, not an idea. Apparently, there was a famous case (Feist) which basically outlined the limits of copyright–anything more creative than the White Pages qualifies for copyright protection. There are five rights, which I didn’t note because I thought the presentation would be up. Copyright can be unregistered (just about anything–these notes and this blog post are unregistered copyright) or registered. Registering costs something, but means you can sue folks. Under the DMCA, the copyright owner no longer has to show infringement–the possibility of infringement is enough (?). There are safe harbors though, one of which is the service provider harbor(?). You have to register with the Library of Congress and take things down if notified, but if you are providing any service with user generated content, you should pursue this safe harbor.
Trademarks (or service marks) are about branding. They’re easier to file for than patents. Use in commerce generates rights. He had a great slide showing the protection levels of trademarks from the fantastic (Kodak, Exxon) to the arbitrary (Apple) to the suggestive to the descriptive (World Poker Tour) to the generic (aspirin, escalator). The more the trademark describes what it represents, the less protectable it is, and trademarks can be lost (as escalator was).
Patents–the big one! Patents are the right to excludes others from making, using and selling a new, useful and non-obvious invention. There are a number of reasons to patent–defensive, offensive, ego, source of revenue (a secondary market is developing for patents. Offensive patents are getting riskier recently (courts are narrowing down patent infringement). But, investors are starting to ask why patents weren’t filed, and “we didn’t think to do so” is a poor answer. The answer to the question “Is it patentable?” for almost any value of “it” is yes, but you need to think about why–the better question is “How relevant and valuable will a patent be for the business?”. Lack of knowledge or independent development is not a defense against patent infringement.
All in all, it was a lot of ground to cover. Jason did a good job making things very applicable to the audience he was talking to. It kinda sucks that you have to think about such things, when all you want to do is develop killer software. (Brian made an offhand comment about patents and long running servlets almost 4 years ago, incidentally.) As Jason said in closing, if you don’t have an intellectual property strategy, your competitors will give you one (and, I inferred, you probably won’t like that one very much).