As the availability and use of 3-D laser based printers proliferate, IP related issues need to be considered.

The use of lasers for rapid prototyping has existed for a number of years as a process of making molds and models in the early stages of production. However, with improved technology 3-D printers are becoming used as a means to make finished products.

For patent owners, the ability of large numbers of individuals (with 3-D printers) to produce products will increase the difficulty of enforcing patent rights. Particularly, 3-D printer technology will act to fragment the target of potential patent enforcement, says Mark Svat, a partner attorney at Fay Sharpe LLP.

For example, an infringer who produces 5 million patented widgets is a clear target for the patent owner.  If, however, 5 million people can produce that widget on their own, the patent owner might need to target each individual infringer to put a stop to the infringement.

Additionally, there are concerns about 3-D printing related to other types of intellectual property, including, for instance, copyrights such as found in artistic works.  Artists can have their designs lifted and potentially turned into any number of products, reducing the market for their merchandise.

Smart Business spoke with Svat about the threat 3-D printing creates for businesses.

Why might the ability of companies to protect their patents be insufficient now that 3-D printing is more available?

A patent owner often looks to a party that is directly infringing its patent. As 3-D printing becomes more common, the direct infringer often will be an individual that is operating a 3-D printer in his/her own home.  Stopping each individual infringer can be quite an onerous task.

A more efficient manner to stop the infringement would be to stop the party providing the data files used to create the infringing product. This could be the person running the website through which the data files are made available and/or it could be the party that created the data files being used to print the infringing product. However, neither of these entities is directly creating the infringing products. Their actions are therefore more likely an indirect infringement, which is often more challenging to litigate.

Particularly, indirect infringement may require an additional level of proof, which means more obstacles must be overcome to prove indirect infringement. This extra burden increases the costs associated with a lawsuit and allows for more defenses to be presented, further complicating an already complex process.

What other challenges might arise as 3-D printing becomes more common?

In addition to patent-related issues, 3-D printing also raises issues related to copyright infringement.   For example, widespread use of 3-D printing could cut into licensing opportunities for creators of artistic works.  A third party might generate a data file for a copyrighted work and then place  it online where others would generate unauthorized 3-D printed versions, cutting out the creator for merchandise revenue. 

To stop unauthorized use, if the data file is from the creator or inventor, he or she may attempt to use technologies similar to a digital rights management (DRM) system to combat piracy. In one embodiment, DRM systems embed code into the data files, only allowing reproduction if proper credentials are used.

Other issues with 3-D printing include the possibility of expanding the physical locations around the world where counterfeits can economically be produced. Similarly, where now a counterfeiter might ‘specialize’ in, say counterfeit shoes, an advanced 3-D printer would allow the counterfeiter to easily switch among a large number of different products.

What should companies that are vulnerable because of 3-D printing do to ensure their patents are enforced?

Companies should pay attention to advancements in 3-D printing, such as new materials that would allow the printers to make one of their products.

Another step is to consider monitoring websites such as www.thingiverse.com that permit individuals to share 3-D printing designs.

Mark Svat is a partner attorney at Fay Sharpe LLP. Reach him at (216) 363-9000 or msvat@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

Global branding has become increasingly popular in the past few decades. Companies are more often seeking to expand overseas into tempting and lucrative developing markets. Furthermore, the Internet has given global branding a heightened importance as websites can be accessed from anywhere. This is why international trademarks have become a necessity for companies operating in the global marketplace to ensure as much protection for their brands as possible.

Smart Business spoke with Namit Bhatt, an associate at Fay Sharpe LLP, about protecting brands when advertising abroad.

What should a company consider before expanding internationally?

One of the first steps is making sure the brand is protected at home. In the U.S., this means registering a trademark with the U.S. Patent and Trademark Office (PTO). Securing a federal trademark registration with the PTO offers the strongest protection by helping to fight dilution and infringement of the brand marks used on the company’s products and in any advertisements.

Before a company expands into a foreign marketplace, it should conduct a trademark search to look for any marks in that country that could be confused with its brand. Fighting against a conflicting trademark is costly and time consuming to a growing company; a search helps avoid that cost.

How can a company achieve international protection?

When dealing internationally, take advantage of international agreements between countries because multi-national treaties and agreements can determine branding protections. The World Trade Organization is a useful source for treaties dealing with intellectual property (IP) standards. The World Intellectual Property Organization (WIPO) is also a useful resource for determining the IP rights available. WIPO manages the Madrid Protocol, which assists the international registration of trademarks. More than ninety countries have acceded to the Madrid Protocol with India, Rwanda and Tunisia becoming members in 2013.

The Madrid Protocol allows companies that own trademark applications or registrations in a member country to expand the trademark application to other member countries with a single application. For example, a company with a registered trademark in the U.S., a member country, that desires to expand to India, can electronically file an international application with WIPO under the Madrid Protocol. The designated member countries are then notified of the international application and can examine the application for any conflicts within the local trademark system. Using this method is a convenient way to expand into a global marketplace quickly, efficiently and with one set of fees instead the expense of applying to each country individually.

Another international treaty that is helpful for global branding is the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The TRIPS agreement establishes a minimum level of IP protections including trademarks. This means that any member country of the treaty must adopt at least the amount of protection set forth in the treaty and can choose to give more protection than the minimum.

How can a company maintain international protection?

After a company achieves trademark registration in the new marketplace, it is important to maintain and enforce the rights granted under the trademark registration. Generally, the company should maintain continuous use of their trademark to not relinquish any rights for the brand. Also, the company should watch out for any marks that could dilute the protection of a registered mark. These methods will ensure that the global branding can be used for many years after registration.

Ensuring global protection of a company’s brand has become easier as the need for international protection has increased. Companies looking to enter new markets should be mindful of the options available and consider using them. Before advertising a product in a new marketplace, a company should look to gain protection of its brand in the marketplace.

Namit Bhatt is an associate at Fay Sharpe LLP. Reach him at (216) 363-9000 or nbhatt@faysharpe.com.

Published in Cleveland

You’ve just launched your product, which has taken months of research and development effort to bring to market. Soon after its debut you receive a notice that you’re infringing on an existing patent or trademark.

You’re now left with a decision: License the technology that you’ve infringed, which you may or may not be able to do, or wind up with a costly infringement suit. You could fight the suit, retreat and try to design around the patent, or scrap the whole thing and start again. Any of those choices come with substantial costs. All the while knowing that with a little bit of due diligence up front all of it could have been avoided.

“Don’t undervalue your business’s IP,” says Jeffrey N. Zahn, an attorney with Fay Sharpe LLP. “Do what’s required to make sure it’s protected and not potentially infringing a third party’s IP rights. This will help you protect your investment in your IP and avoid unnecessary third-party, IP-related expenses down the road.”

Smart Business spoke with Zahn about the intellectual property (IP) mistakes companies most often make.

What IP mistakes do businesses make most often?

The three biggest IP mistakes, in no particular order, are the failure of a business to adequately protect its IP, failure to avoid infringing the IP of other companies and failure to seek the advice of an IP attorney.

There are many ways a company can leave its IP exposed. Those include not using nondisclosure agreements when working with outside parties; forgoing patentability investigations to determine if a patent would suitably protect company technology; failing to file provisional and regular utility and design patent applications when appropriate; allowing trade secrets to leak; not ensuring employees, outsiders and third parties maintain the confidentially of the company’s critical technology; and failing to federally register trademarks to protect brands.

Another major problem is failing to avoid infringing on another’s existing IP rights. This is often the result of not conducting freedom to operate searches for issued patents, as well as published pending patent applications, and trademark clearance searches.

But the one mistake that often leads to all others is failing to seek the advice of an IP attorney. This is a critical aspect of due diligence and developing a solid and secure IP strategy.

Do large or small companies typically make these mistakes?

Smaller companies are more likely to make these mistakes. Smaller businesses often believe an IP attorney is a service they can’t afford, or one is only needed when filing a patent or trademark application. In most cases, it comes down to not recognizing the value of IP to their businesses.

In contrast, the larger a company is the more likely the company is educated about IP and has in-house counsel and/or a relationship with an IP firm to address these issues.

Is there a particular time when a company is more vulnerable to IP issues?

Businesses are typically more at risk during the early stages of their existence. That’s why companies should take stock of their IP and look into the market to identify the IP of the relevant third parties, such as competitors, early on. This can save a lot of time and expense if it’s done up front.

Companies are also vulnerable during the early stages of a product development cycle. Bringing a potentially infringing product to market may require the company to license the infringing technology or trademark, or rebrand or redevelop the product if the technology or trademark can’t be licensed. That’s why it’s critical to conduct freedom to operate searches and trademark clearance searches during the initial stages of a product’s development.

What can help businesses prevent these errors from happening?

The best tool is education and a proactive IP management program. Have conversations with those who know the issues — someone who works in the IP field regularly, whether that’s an in-house attorney or an IP attorney at a firm — because affected parties must be aware of IP issues. Then continue to talk with an IP attorney as your business grows, new products are developed and new markets are served. Many businesses would be pleasantly surprised how valuable an initial consultation with an IP attorney is relative to the expense.

An ounce of prevention is worth a pound of the cure. This is especially true in the area of product design and branding where a little due diligence to investigate third party IP rights can help you develop your product and brand strategy so it doesn’t potentially infringe existing rights. This can help you avoid potential infringement issues, such as a costly patent or trademark infringement suit.

Jeffrey N. Zahn is an attorney at Fay Sharpe LLP. Reach him at (216) 363-9168 or jzahn@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

Companies invest significant resources developing products and services that are intended to generate revenue. The ability to prevent competitors from copying these new products and services utilizing intellectual property (IP) protection is essential.

However, many companies fail to fully protect all of their resources. Or, by failing to educate their workforce on the vulnerability of unprotected assets, unintentionally spoil the outcome of products in development before they reach the market.

Smart Business spoke with Sean M. Weinman, an attorney at Fay Sharpe LLP, to learn what companies at various stages of their lifecycle must do to protect their IP.

What are some common mistakes young companies make when it comes to their IP?

The most common mistake young companies make is failing to protect their intellectual property (IP). Some companies choose not to protect their IP because they don’t believe that IP protection is available. Others choose to protect IP but file for such protection too late, while some avoid seeking protection because of cost concerns.

One common mistake is thinking that patents are the only IP that matters, which ignores the importance of copyrights, trademarks and trade secrets. Failing to protect all types of IP can have devastating effects on a company by leaving the door open for competitors and customers to access and copy vulnerable IP.

What mistakes do more established companies make when it comes to IP?

A common mistake more established companies make is mismanaging their IP. Protecting IP can be expensive. Therefore, an IP strategy needs to be developed with an understanding of how IP fits into an overall business strategy. A good strategy should at least consider which assets should be protected, the extent of the company’s investment in pursuing IP protection, and how IP can support the company in achieve its business goals.

More established companies often fail to perform an IP audit to check that all IP is being protected properly. A review of all existing products and those in development should be performed annually to ensure that all potential IP is being protected and valuable rights are secured. IP audits also help ensure the right IP is being protected. Many companies waste thousands of dollars protecting the wrong IP. Protecting products and assets that have little potential can negatively affect a company’s bottom line.

Along with having a strong IP strategy, it is important to understand competitors’ IP to avoid costly lawsuits and ensure up-and-coming projects have strong market potential. Not knowing the scope of your competitor’s IP protection could impede your own product development if you incorrectly assume it’s too close to something your competitor is developing, even when a lucrative opportunity exists.

How can companies avoid these mistakes and gain a better understanding of IP?

First, hire an IP attorney who has experience developing IP strategy and protection, ideally in the technology domain of the company. You want to find a lawyer who will work with your company and who understands your company’s business, strategy and plans for the future.

Include confidentiality and IP provisions in agreements with employees, contractors, suppliers and other parties. A premature public disclosure of a new product can negate future IP protection. In many cases, foreign patent rights are lost if an invention is publicly disclosed or offered for sale before a patent application is filed. Additionally, all employees, contractors, and other parties working close to your IP should be required to assign any and all IP to the company. It is important that non-employees include similar provisions assigning IP rights to the company.

Further, make sure your entire company is educated about IP. In most cases, only management and engineers understand IP protection. However, other groups of employees are also associated with the IP of a company, such as marketers, salespeople and technicians. Educating an entire company about IP can help ensure that IP rights are not lost because valuable IP isn’t identified, a public disclosure is made prematurely, or protection is filed too late to be effective.

Sean M. Weinman is an attorney at Fay Sharpe LLP. Reach him at (216) 363-9000 or sweinman@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

There’s a lot of opportunity for investors in Cleveland to fund up-and-coming technology companies.

“There’s a growing sense of entrepreneurship and innovation,” says Steve Haynes, managing partner at Glengary LLC. “It has become the norm for colleges, universities, hospitals and other institutions to think about monetizing the technology developed in their facilities. They’re getting research dollars and they’re trying to convert science into something commercial. In addition to institutional technology transfer, incubators, accelerators, etc., are being formed to drive economic development.”

Patrick R. Roche, a partner at Fay Sharpe LLP, adds that there are many companies in the area looking to assist the right companies with capitalization.

“It’s very competitive — there are a lot of deals to be looked at,” he says.

While the market is fertile with both investors and entrepreneurs, Roche and Haynes say there are many things entrepreneurs fail to account for when seeking funding, including the viability and strength of their intellectual property (IP).

Smart Business spoke with Roche and Haynes about what investors look for in entrepreneurs’ IP before a deal can be done.

What does an investor look for in the IP of an entrepreneur seeking funding?

From an investor’s perspective, when an entrepreneur approaches with an idea the investor has to ask, ‘Will this idea have value in the marketplace?’ If yes, then one of the next questions is whether it can be protected, from an IP perspective. Otherwise, releasing it into the public creates a marketplace for anyone who can reproduce it. Then it becomes a marketing game, and early-stage companies don’t have the money to compete with well-capitalized competitors.

From an IP attorney’s perspective, basic due diligence dictates that a business owner or entrepreneur should present to the attorney what he or she thinks is the IP, so it can be analyzed.

It’s important to know when a patent application was filed and whether foreign rights have been preserved. The IP attorney, working on behalf of the investor, will examine in detail what the U.S. Patent and Trademark Office has done with the application and conduct his or her own research to try and predict what the patent office might do with it, called a patentability study. If it’s determined the patent application has little chance of being granted, that will likely kill the deal.

Patent attorneys also are looking at whether the invention can be designed around. Can noninfringing copycat products be created that could hurt the market?

What commonly turns an investor away from a fund applicant?

At an early stage, many of the potential obstacles for investors relate to whether or not there’s IP protection, both legal and otherwise. The strength of that protection is determined by identifying the difference between the applicant’s invention and prior art — the new invention has to be a nonobvious improvement over the state of the art.

Another part of the due diligence analysis is to determine if there’s an obstruction to the right to practice or use the invention freely in the market. It’s dangerous if it’s necessary to get a license from another party to sell a product in order to avoid infringing.

How can entrepreneurs best prepare before pursuing funders?

Entrepreneurs should check their IP ahead of time. Patent applications need to be filed, research should have been conducted, and their novelty and any likely obstructions identified and clearly understood. Investors need to see a thoughtful canvassing of the principal issues that an investor needs cleared. If the efforts of the entrepreneur are consistent with the IP attorney’s findings, and the entrepreneur is honest and truthful with the potential investor, the momentum carries through to a deal.

There’s not much worse than when an entrepreneur says they have a patent and it’s just a provisional application; the person hasn’t done any research and is just hoping everything works out.

It’s understood that every nickel is precious when a company is in the early stages, but it’s important that a company conducts thorough research on its IP before seeking funding.

Patrick R. Roche is a partner at Fay Sharpe LLP. Reach him at (216) 363-9000 or proche@faysharpe.com.

Steve Haynes is managing partner at Glengary LLC. Reach him at (216) 378-9200 or shaynes@glengaryllc.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

Some mistakenly believe that U.S. patents travel the world with universal protection, but countries work independent of each other when granting patents. That is why, when conducting business internationally, it is important to understand how intellectual property protections are procured in each country.

According to the Paris Convention, a treaty signed by the U.S. and 174 other countries that protects industrial property, a patent granted in one signatory country does not mean it must be granted in another.

“U.S. patents are independent from those granted by foreign countries, so protection is advisable in each market a patented product will be sold,” says John S. Zanghi, a partner at Fay Sharpe LLP.

Smart Business spoke with Zanghi about acquiring international patent protection.

How does the Paris Convention apply?

National treatment and right of priority are two important clauses of the Paris Convention with which businesses should be familiar. National treatment says member countries must grant the same patent protection rights to foreign citizens of other signatory countries as it grants to its own nationals. Nationals from a non-signatory country also are entitled to national treatment so long as they have a ‘real and effective industrial or commercial establishment in a contracting state.’

‘Rights of priority’ refers to the length of time an applicant can take to file a patent for the same invention in two countries. For patents and utility models, an applicant must file additional applications within 12 months. A patent office handles these as if they were filed on the same day as the original application, allowing time to determine the commercial viability of the patented product in additional countries.

An applicant seeking priority based upon an earlier filing is protected from any subsequent disclosures, such as publications, that occurred since the first patent was filed.

Why can’t one international patent application grant protection in all countries?

People have long discussed the idea of a single international patent application, but it’s not available.

Applicants can file using the Patent Cooperation Treaty (PCT), a multilateral agreement administered by the International Bureau of the World Intellectual Property Organization, which allows applicants to file a single application for patent protection in multiple countries. Applicants select the countries or regions where they would like to receive protection. The application is submitted to each office for review, which manages the granting of patent protection individually. Applicants must adhere to the requirements of a particular country and prosecute each patent separately from other countries.

For patent protection in Europe, filing regionally through the European Patent Office (EPO) is an option. The EPO is a collection of 38 European countries that agreed to establish a single procedure for the grant of patents. A European patent gives its proprietor the same rights as would be conferred by a national patent granted in any participating country. Ultimately, if granted, the European patent will grant in the selected European countries. Any infringement is dealt with by national law.

What needs to be done to file a patent in a foreign country?

Obtain legal counsel in each foreign country because each manages its own patent protection. Local counsel has knowledge of local requirements and can assist in filing and prosecuting an application through to the grant of the patent. They also are able to process applications in a timely manner to ensure you don’t miss a filing deadline.

Which patent and patent laws apply if a U.S. business is sued in another country?

Each issuing country manages and maintains patent protection. If someone sues you for infringement outside of the U.S., the laws of that country govern. However, if the country is a Paris Convention signatory, it must grant the same protection to all non-citizens as its own citizens. It is important to understand how the various international treaties and conventions operate, as well as the filing requirements of each country.

Filing a patent is not an insignificant cost, so it is imperative to understand your obligations and risks wherever you conduct business or in countries where significant competitors conduct business.

John S. Zanghi is a partner at Fay Sharpe LLP. Reach him at (216) 363-9000 or jzanghi@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

An infringement on your trademark by another entity through its domain name can affect the strength of your brand. In some instances, a company may benefit from stopping an infringer and seeking damages.

“Ultimately, it all comes down to dollars and cents, and whether a business wants to truly invest and strengthen its brand to prevent others from capitalizing on its goodwill,” says Mark J. Masterson, an associate at Fay Sharpe LLP.

Smart Business spoke with Masterson about the intersection of trademarks and URLs, and what protections are available to help prevent costly trademark infringements.

How might a domain name or URL infringe on a trademark?

A trademark owner can enforce trademark rights against a domain name that is likely to create source confusion with the trademark owner’s brand or if a domain name dilutes that trademark. However, in some instances, a domain name registrant would not be prevented from exercising its First Amendment rights by registering a domain name that is similar to the trademark. As such, third parties have a right of fair use as well as the right to parody and satirize others’ trademarks. Regardless, domain name registration does not provide a right to violate trademark law or to engage in cybersquatting.

The U.S. Patent and Trademark office (USPTO) and domain registrars operate separately from one another. Generally, registering a domain name is done on a first-come, first-served basis, with the idea that the registrant has a good faith and a legitimate interest to use the name. On the other hand, the USPTO must examine a trademark application for conformity with federal law and trademark rules prior to formally granting a registration.

What’s the recourse against cybersquatters?

The Anti-cybersquatting Consumer Protection Act provides a private right of action for trademark owners to bring suit in federal court against the holder of a confusingly similar domain name. Additionally, trademark owners may initiate arbitration procedures under the authority of the Internet Corporation of Assigned Names and Numbers (ICANN) to transfer control of a confusingly similar domain name to the trademark owner without having to go to court.

A trademark owner can avoid federal court by filing a grievance through ICANN, following the Uniform Domain Name Dispute Resolution Policy’s procedure for filing complaints. The arbitration process can take as little as three months and is less costly than litigation. However, filing suit in federal court is usually recommended when market share is affected by the infringing use.

How has Internet commerce affected common-law trademark rights?

A URL or domain name registration does not in itself constitute ‘use’ for purposes of acquiring trademark priority. Common law trademark rights are geographic in nature and have caused a bit of judicial confusion with the broad geographic reach of the Internet.

Although some common law trademark rights may exist due to the creation of a website, the strength of these rights is generally dependent upon market penetration, the nature of the business, and the actual geographic reach of the business’s products and services. However, even in situations that appear to be a strong case for granting broad protections to a common law trademark, the courts have raised various questions and developed fact-based tests that can be expensive to prove and tend to favor a registered trademark holder.

Therefore, it is in the best interest of a common law trademark user to register his or her trademark with the USPTO to take advantage of the strongest commercial protection afforded by law.

How can companies ensure their marks are protected in the market and online?

Fundamentally, companies should select a name or logo for their products and services by keeping such variables as domain name and trademark registration in mind. The key is selecting a mark that can become a federally registered trademark with the USPTO and is marketable to a desired consumer. The trademark prosecution process can take up to a year or more, but it is the best way to ensure that trademark rights are protected, online or otherwise.

When selecting a mark, the company should conduct an informal trademark search online or hire a trademark attorney to conduct an in-depth trademark search. Usually, in-depth trademark searches cover USPTO files, state trademark listings and domain name registries, as well as online and other common law uses.

Selecting a domain name should become a priority only after selecting a trademark that can be validly enforceable. Once granted, it is the responsibility of the trademark owner to actively police his or her mark in commerce to prevent unauthorized uses that would otherwise reduce its strength and value.

Mark J. Masterson is an associate at Fay Sharpe LLP. Reach him at (216) 363-9000 or mmasterson@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

Patent trolls can be huge, single-minded licensing companies. These nonpracticing entities purchase patents from small inventors who don’t have the desire or funding to create what they’ve patented and threaten potential infringers to get money through licensing fees or lawsuits. Business owners of small and midsize companies can be caught off guard when they receive the letter claiming their product infringes an existing patent, and often don’t know what to do.

“Fighting the alleged infringement usually costs more than the licensing fee the troll is seeking,” says Christian Drago, a patent attorney at Fay Sharpe LLP.

This can make a business owner feel trapped. However, he says patent trolls often cast a wide net, sending letters to companies that may not be infringing. That’s why it’s important to know how to respond.

Smart Business spoke with Drago about how to deal with patent trolls.

Who is most at risk of being the victim of a patent troll?

Generally, infringement claims are a lot more successful when made against small to midsize businesses because they don’t have the capital to fight an infringement suit, so they often opt to pay the license fee.

A patent troll is not going to pick a company out of the clear, blue sky. It will buy a company’s products and reverse engineer them, or scrutinize its marketing collateral for product descriptions. It’s important for companies with patents to be careful what they post on their website. Market your company, but don’t give too much away because you could be giving ammunition to a troll.

If you receive a letter from a nonpracticing entity, what do you do?

First, don’t panic. The entity is soliciting a licensing fee and its track record in litigation is not great. Contact a patent attorney and have him or her review the claim and your product to find out if you’re actually infringing. Don’t use your in-house or general practice attorney; courts want outside independent review.

If it’s discovered that you’re not infringing, get a non-infringement opinion by outside counsel. That can be used to offset damages and show you acted in good faith by procuring the assistance of an attorney.

The attorney will compose a letter that says your company had outside counsel review the claim and determined you are not infringing. Now the troll has to do its cost/benefit analysis and decide whether it wants to pursue this any further. The troll may just move on.

However, if willful infringement is discovered, meaning you continue to infringe after you’re made aware of the infringement, the penalty can be upped by a judge. That’s why it’s important to show you acted on the well-reasoned opinion of counsel as soon as possible.

How can you protect yourself?

If you’re going to file for a patent, you want to file as soon as is practical. Bring an attorney onboard while the product is in development, not when you join the market. Have a patent attorney conduct a patentability search and get a freedom to operate opinion. This gives you the best idea of what patents are out there.

If the attorney finds similar, existing patents, he or she can show them to your engineers, and the engineers can innovate around current designs. This could give you a competitive edge and allow you to go after competitors when they infringe on you. The process also focuses the company on what it’s doing in the market.

If you have to backpedal because you failed to do your due diligence, your R&D costs could double because of scrapping a project and going back to the drawing board.

However, keep in mind patent searches aren’t exhaustive because, at the time of the search, there may be applications that are being reviewed but have not published. Patents issue from three to five years after they’re filed and they’re published 18 months after filing. That leaves a gap.

That’s why, it’s important to take these letters seriously and get counsel involved right away. You need to quickly determine the best course of action based on the facts, not the claims.

Christian Drago is a patent attorney at Fay Sharpe LLP. Reach him at (216) 363-9000 or cdrago@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

Many companies train employees to enter phrases such as ‘confidential’ or ‘attorney work product’ and copy counsel when sending sensitive emails so that the information is protected under attorney-client privilege. In the event the company becomes embroiled in litigation, counsel would see such phrases and flag the messages as privileged, preventing them from inadvertently being produced to the other side during discovery.

However, while it’s a good idea to include such phrases in messages, it’s not always enough in the court’s eyes to designate it as privileged. Also, a computer’s auto-save feature may have saved versions of an email that didn’t include such phrases, leaving them unprotected. Both of these issues arose during Oracle America, Inc. v. Google, Inc.

“For each email being composed, Google’s system was saving multiple drafts of it. That’s probably something that you wouldn’t want to do,” says Jude A. Fry, a partner with Fay Sharpe LLP. “Then when the company got sued, there were, for this single email, multiple versions, and the only version put on the privileged log was the final one.”

Smart Business spoke with Fry about how companies can ensure privileged information sent through email is protected.

What happened in the Google case?

Oracle claimed Google’s Android smartphone platform infringed its patents, and the two entered into litigation. An email that included language that could be harmful to Google in the patent case was placed on a privileged log, a document describing items that can be withheld from a case under attorney-client privilege.

That internal email was sent to the vice president in charge of the Android smartphone platform at Google, copying Google’s counsel in the ‘to’ field. The email was captioned ‘attorney work product’ and ‘Google confidential.’

While the final version of the email was placed on a privileged log, auto-saves of the email were inadvertently produced to Oracle’s counsel during discovery. Since the auto-saved drafts did not include the phrases ‘attorney work product’ or ‘Google confidential,’ they were not caught by electronic scanning mechanisms.

Google demanded that Oracle return the emails under the clawback provision of the protective order, claiming the emails were privileged. Oracle returned the emails but filed a motion to compel their production. The district court ordered that the emails be reproduced.

How were the auto-saved drafts of the email not coded as privileged?

When doing the search, counsel was likely using key words to see what was coded as privileged. There were probably thousands of emails produced. Counsel was able to locate the final email because, by that point, the author had put the phrase ‘attorney work product’ in the email’s body and added the attorney as one of the recipients. However, in other auto-save versions those phrases weren’t included, so they didn’t get flagged.

What’s disturbing is that the system saved nine versions during the time it took to type it up. Why is it necessary to save all of those versions?

Consider only saving emails that are sent, and configure your email system to delete all other versions. Also, understand how your email system works — whether auto-drafts are saved, what happens to these drafts, where they’re stored. Figure this out now and not when a case is pending.

How should a corporate employee set up an email to make sure it is privileged?

Train your employees to direct the email to legal counsel in the ‘to’ field and salutation. State in the email that information is being given to or sought from the lawyer so that he or she can give legal advice. Also, include in the message that it is being prepared in anticipation of litigation, at the direction of an attorney, to further the provision of legal advice. Include headings such as ‘attorney work product,’ ‘privileged’ and ‘confidential.’ However, these headings alone will not make an email privileged, so limit the substance of the email to the legal issues.

People write a lot of emails but often don’t think about someone other than the intended recipient reading it. When doing business though email, consider who could possibly read the message and approach it accordingly. It’s a good practice to think carefully before you put something in writing.

Jude A. Fry is a partner at Fay Sharpe LLP. Reach her at (216) 363-9113 or jfry@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

Competitive intelligence aims to provide as much insight as possible into the trends of an industry and into the strengths, weaknesses and current activities of direct competitors. Such programs can be as simple as monitoring the intellectual property (IP) filings within the U.S. of a single competitor, or as sophisticated as gathering and analyzing IP information for many competitors in different countries throughout the world. Either way, there is business value in establishing and maintaining a competitive intelligence program to understand how competitors are behaving through their IP habits.

Smart Business spoke with Matthew P. Dugan, a partner at Fay Sharpe LLP, about competitive intelligence programs.

What is competitive intelligence?

The term refers to a program to develop and maintain a body of data and information that can be organized and analyzed to provide a better understanding of one or more aspects of a company's business environment. The analysis can provide a broad, high-level view of an industry by identifying trends in a particular area of technology. It also can give a focused view of the activities of a particular competitor or group of competitors. Often, the strategy includes both.

What types of information are included?

Information described in patents and published patent applications often form the backbone of the program. While records from the U.S. Patent and Trademark Office are easily accessible and can provide valuable data for a competitive intelligence program, in some cases other sources may provide access to information on a shorter time frame. For example, companies with foreign competitors should consider searching for patent applications in the competitor’s home country, since patent filings are often made and published there before a corresponding U.S. application is available for review.

Is just the technical information of the patent documents evaluated?

No. Often, useful information can be ascertained from what patents and patent applications a competitor decides not to aggressively pursue. So, once a potentially relevant patent application is identified, the application’s progress can be monitored to try to determine whether the competitor is moving away from that technology. With such an assessment, it can be helpful to ask:

  • Has the competitor continued to pursue its initial patent applications for a new concept? Or, did the initial applications go abandoned without further activity?

  • Did the competitor file just a single application for this new concept? Or, did it file a whole family of applications that cover a variety of aspects and variations of the concept?

  • Did the competitor pursue patent protection in a very limited number of countries? Or, did it go to the expense of filing the application all over the world?

What other information can be included in a competitive intelligence program?

News and announcements, regulatory filings and even domain name registrations can add to the overall effectiveness of a program.

Useful insight can be gained from the trademark and service mark applications filed by a competitor. They are normally available within days or weeks of being filed, so a company can be alerted to the possibility of activity by a competitor much earlier than by monitoring patents alone.

Also, in cases of new products and product lines, trademark applications are often filed in the U.S. based on an intention to use the trademark or service mark with a particular list of goods or services. Such information can be useful in determining that a competitor is working toward offering an updated product or expanded product line.

Why should a company undertake this?

Insight gathered through a competitive intelligence program can help business leaders make more informed decisions about a company’s strategic direction and where to focus marketing and product development resources. It can help identify trends in the evolution of existing technologies, which can impact existing product lines; find developing technologies near core businesses, which could lead to new products and business opportunities; and identify new or emerging players in the industry, which can help in preparing for new competitive threats and eliminate surprises.

Matthew P. Dugan is a partner at Fay Sharpe LLP. Reach him at (216) 363-9167 or mdugan@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP.

Published in Cleveland
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