Washington Redskins’ trademark battle and the implications for brand owners

One of the more interesting and controversial trademark cases of the past decade is the invalidation of the Washington Redskins trademarks. The social implications are apparent, but there are also lessons to be learned for businesses.

Nearly 10 years ago, the Trademark Trial and Appeal Board (TTAB) cancelled all Washington Redskins marks, a decision that was later reversed by the U.S. District Court for the District of Columbia in Pro-Football, Inc. v. Harjo. Under Section 2 of the Lanham Act, a trademark cannot be registered if it is disparaging to persons living or dead, and a mark is disparaging if it may “slight, deprecate, degrade, or affect or injure by unjust comparison.”

“The social ramifications stemming from any decision are fairly predictable. Legally, however, the lasting effects are less obvious,” says Ashley Johnson, a law clerk at Fay Sharpe LLP.

“Moving forward, it would be beneficial for trademark owners to take a step back and look at whether or not a group or an individual may find their marks disparaging,” says Rachel A. Smoot, an attorney at Fay Sharpe. “Should the marks imply insult or ridicule, it may save registrants a great deal of effort to change the marks.”

Smart Business spoke with Johnson and Smoot about the Redskins’ trademark cases and what they could mean for businesses.

What happened in the Redskins cases?

The District Court ruled that the TTAB lacked evidence to find disparagement in the time frame at issue, and Harjo’s petition was barred by laches, a legal theory prohibiting a party from waiting so long to file a claim that it becomes unfair to the other party. Harjo appealed, but ultimately the District Court found in favor of Pro-Football, asserting that laches barred the case.

Fast forward to 2012 and Blackhorse v. Pro-Football, Inc. Pro-Football is again named as a party, but this time the opposition includes younger plaintiffs unhindered by laches. In June 2014, the TTAB again found disparagement and voided six Redskins marks. With millions of dollars and a decades-long reputation at stake, Pro-Football has filed an appeal.

Where do the cases stand today?

As of now, the Redskins marks are scheduled to be cancelled, but Pro-Football is still fighting. Should the TTAB’s decision stand, it will effectively make the Washington Redskins’ marks available for public use, preventing Pro-Football from receiving benefits of federal registration.

Pro-Football is taking up the fight on several issues, and is asking the District Court to dismiss the case against it, asserting that because Blackhorse is not seeking economic or legal benefits from the decision, Blackhorse has no stake in the outcome of the case, and therefore the case against it is improper.

What implications could this have for sports teams with similar names?

Professional teams such as the Cleveland Indians, in addition to thousands of high schools and recreational leagues, may find themselves under examination as to whether a ‘substantial composite’ of Native Americans are offended. Moreover, should the District Court maintain the TTAB’s decision, then the door is opened to dozens of questions, such as: Will the court take the composite of Native Americans as a whole? Will it focus on a particular state? Where does the line between disparaging and nonoffensive actually lie?

While the forthcoming ruling may not have an immediate economic effect on the Redskins franchise, cancellation of marks in sister franchises as well as of marks in other professional sports may lead to a lasting impact legally and financially.

How might this affect business owners?

For business owners who may need to prepare for national cancellation, international mark protection may still be available as long as the marks are registered directly in other countries. Ultimately, whether or not a mark owner should launch an alternative mark is an individual decision based on many factors including: the amount of time and money required to rebrand, the likelihood that the new brand will bring in revenue compared to the old brand, and the potential impact on any profit-sharing partners.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

How to avoid violating intellectual property rights in corporate videos

Corporate videos are a popular means of promotion for companies, and for reaching internal employees with important messages. What companies often miss is that many of the images, sounds or references included in these presentations may be legally protected under copyright, trademark, or other intellectual property (IP) rights. Even something as innocuous as a painting on the wall in the background of a shot may be protected under copyright, and displaying it in the video without proper permission can result in heavy penalties.

“As companies work through the planning stages of their corporate video, it’s critical that they consider what releases and licenses must legally be obtained before shooting,” says Sandra M. Koenig, a partner at Fay Sharpe LLP.

Smart Business spoke with Koenig about corporate videos and how companies can ensure they are free from copyright violations before broadcasting.

How is ownership determined?

The creator of a video is typically considered the holder of the copyright. In the U.S., when a work is created within the scope of one’s employment, the employer is the author and owner. This is the case when it is the employee’s responsibility to create a video as a central part of his or her employment. If making the video falls outside of the employee’s core duties, or the employee works for the company at a foreign office, then the employee is considered the author and owner and he or she must transfer the copyright or provide permission to the employer before the employer can freely broadcast it.

When a third party creates a video, even if it’s done so on a company’s behalf, the third party owns the copyright and the company needs to get permission from the owner to broadcast it. Ideally, the creator will agree to assign the copyright in the video to the company.

Must a company get permission from employees to show them in a video?

Written releases from all individuals who appear or can be heard in a video should be obtained well before the video is shown, either publicly or internally. Rights of publicity are different in each state, so check to make sure the appropriate permissions have been obtained from each person before proceeding with a video shoot.

Similarly, if a company uses a person’s name, likeness or other recognizable aspects of their persona, even a nickname, without permission in a video, the company may have violated an individual’s publicity or privacy right. Make sure to obtain written  authorizations from the persons or the estates of the persons who may be included in a video before proceeding.

How can music be incorporated into a video without violating copyright?

Companies that include music in their corporate video need to get the appropriate licenses from the copyright holders before music can be used.  For example, a music publisher may own the copyright in the sheet music, while a record label owns the recorded song. Permissions from all relevant copyright holders should be obtained.

What IP might be missed in videos?

Sometimes companies inadvertently include a protected property in their videos. This can happen when a product, piece of art or brand is not cleared from the shot and appears in a video. Even if it’s an accident, the company could be liable for using the image without obtaining permission. Showing any branded or protected product or image in a corporate video can be misconstrued as that brand in some way supporting the products showcased in the video.

Unless they are in the public domain, works of art, such as painting or sculpture, also should not be shown without permission from the copyright owner for similar reasons.

The risks associated with video presentations can easily be cleared if companies are familiar with the potential copyright pitfalls that can happen during a shoot. Lawyers familiar with IP law can help companies navigate potentially costly mistakes, but it’s important to engage an expert from the outset because once a video is broadcast, it’s too late.

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Align U.S. and European patent filing strategies for maximum efficiency

Filing patent applications with the European Patent Office (EPO) requires a different approach than when filing solely in the U.S. The differences range from administrative to technical. There are, however, filing strategies that will save applicants time and improve their chances of success.

“There are many ways to adjust your drafting technique for your U.S. patent application that won’t hurt you when submitting it in America, but will align it with European standards. A little more work up front will save you a lot of money down the road,” says John Ling, partner at Fay Sharpe LLP.

Smart Business spoke with Ling about how to save money and ensure success when filing patents with the EPO.

How should companies approach filing patents in multiple countries?

Some companies file informal provisional patent applications that establish an early effective filing date in the U.S. and then file a Patent Cooperation Treaty (PCT) application, which makes it possible to seek patent protection simultaneously in many countries, on or before the 12-month deadline from filing the provisional application. This identifies individual countries and/or regions in which the company desires patent protection.

Let’s say a company files a provisional patent application in the U.S., files the PCT application a year later, and then elects to file national stage patent applications in Europe, the U.S., and China. In this scenario, the company has postponed the expense of the national stage filings by several years, which permits the company to evaluate whether the invention is still commercially valuable before it elects to pursue a potentially expensive patent application elsewhere.

In this instance, it can be advantageous to draft the U.S. provisional application in a somewhat universal manner so that minimal alterations to the invention are required when filing in multiple countries.

What are some key ways to save money and time when filing with the EPO?

Some patent attorneys draft lengthy and redundant patent applications. They write patent specifications that are 50 or more pages, taking multiple pages to describe an embodiment and then copy and paste that multi-page description in when describing only minor alterations to the embodiment. This approach lacks foresight when the intention is to file in multiple countries because the application potentially will need to be translated into several languages. Translation services typically charge by the word or page, so brevity can be beneficial.

Additionally, European patent practice permits the use of multiple-dependent claims — dependent claims further narrow the scope of the independent claim —without additional fees. If you make multiple dependent claims in the U.S., they’re filed separately and incur costs separately. In Europe, however, you can essentially bundle dependent claims together by claiming multiple dependency from ‘any one of the preceding claims,’ rather than from a specific single claim, giving you more claim scope coverage. Just make sure that each multiple dependent claim has a basis in the claims from which it depends.

What should patent applicants consider before filing for patent rights with the EPO?

In Europe, the examiners apply a problem-solution approach when examining patent applications. Applicants, therefore, must be able to point to a technical solution, described in the patent application, to a problem when defending claims.

Different art groups handle unique areas of patent processing. Some are more liberal than others in their problem-solution approach. Savvy companies craft claims to appeal to specific art units, which is important since once an application is assigned to an art group it stays there.

If one applicant repeatedly files applications directed toward subject matter known to be difficult to patent in the EPO, that applicant will get a reputation with an art group for filing unpatentable inventions. Over time, those examiners may recognize that and the applicant will lose credibility.

Smart businesses do their analysis early to determine whether and how to purse a European patent. Find an attorney to help determine your chances of success. No one likes bad news, but it’s better than the cost of rejection.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

What to do if your customer patents your invention

Many companies face an unrealized risk when approached by a customer with a problem. Companies will devote a great deal of time and money developing a solution, only to have that customer seek to secretly patent the solution without naming the company’s personnel as inventors or at least co-inventors.

“This leads to several bad outcomes, depending upon the particular facts,” says Steve Haas, a partner at Fay Sharpe LLP.

“At worst, the company and its other customers can be sued for patent infringement by the first customer, even though the company created the solution. Also, the first customer can source the solution from a third-party supplier without compensating the company that solved the problem — the original company that developed the solution does not get to supply it and cannot stop the new supplier.”

Smart Business spoke with Haas about unscrupulous customers that profit from a company’s hard work, and how to avoid getting cheated out of an invention.

How can a company legally attribute another company’s invention as its own?

Technically speaking, the patent is not valid because it fails to name the correct inventors. Proving this, however, is often problematic because ideas and solutions are now generated and transmitted to a customer rapidly and without sufficient documentation. The routine emails that circulate while the project is ongoing are often vague and without the necessary evidence to invalidate the patent. Meetings are often informal and undocumented.

What can companies do to stop this?

Companies partnering to create an invention should work under a written joint development contract at the start of each engagement. This agreement specifies the rights and obligations concerning ownership of the intellectual property (IP) and the responsibility for filing and prosecuting patent applications. Negotiate these agreements carefully.

A company developing a solution on behalf of a customer should file at least a provisional patent application for all significant new developments and improvements to a product or process. If possible, the provisional patent application should be filed before disclosing the ideas and improvements to the customer. A provisional application establishes an early effective filing date and allows the term ‘patent pending’ to be used. The application filing fees for a provisional application are minimal compared to litigation and other fees that would result from a dispute.

Inventions should be carefully documented with written records, drawings and detailed letters/emails to the customer. It’s important to be very specific in these messages. So, instead of writing, ‘here is the latest thing we discussed,’ write ‘enclosed is the latest design for the project XYZ developed by our personnel to address ABC problem, which includes the following features.’ Save all correspondence and engineering records in a way that’s organized and easily searchable.

To be sure your development partner hasn’t snuck off and patented the invention without your knowledge, you should monitor the published patent applications of your customers and identify any with incorrect named inventors.

What can be done if a customer partner has filed for or obtained a patent?

In the event that this happens, consider initiating a derivation proceeding in the U.S. Patent and Trademark Office, a proceeding that allows the original inventor, who may not be the first to file, to challenge the first applicant’s right to a patent. This requires a showing of complete conception of the claimed invention and communication of the invention to the other party, which then filed the patent application without authorization. That’s why thorough documentation of the invention process is so important. A derivation proceeding must be initiated within one year of the first publication of the patent application or patent.

Another option is to initiate a federal court action that allows for the name of the inventor on a patent to be corrected by the court if the patent has already been issued.

In general, the best defense is a good offense. Aggressively pursuing patents for new ideas as soon as possible after development will minimize the chance that an unscrupulous customer will fraudulently secure patent rights for your IP.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

How to leverage your IP attorney for the analysis of intellectual property

As businesses invest in new products or services, the importance of identifying and protecting their intellectual property (IP) may not be at the forefront of their thinking.

“However, if you want to recoup your investment you have to be able to protect it, and IP is one way to do that,” says George Huang, an associate at Fay Sharpe LLP. “Most people are familiar with Chinese companies that knock off a product and can sell it much cheaper than the original manufacturer, because the Chinese company didn’t have to invest in developing the product and its market. Protecting your IP can keep others from harvesting the rewards of your work.”

Smart Business spoke with Huang about how your IP attorney can help analyze your IP, so you can protect your investments.

What kind of IP needs to be protected and how can an IP attorney help?

What product or service makes your business stand out from its competitors? What knowledge have you monetized? This is the IP that needs to be protected.

Your attorney can help by asking questions and providing a framework to help identify what IP in your business is valuable. It’s important to value your own assets highly enough, which is where an IP attorney can provide expert counsel.

Your attorney can also help identify what IP is protectable, and the best way to protect it. For example, two common forms of IP protection are patents and trade secrets. A patent excludes others from selling the patented product or service, and can be especially useful for manufactured products with new features. Obtaining a patent, however, requires disclosing the IP to the public in return for this monopoly, which lasts for 20 years, and certain requirements must be met.

In contrast, trade secrets are used to protect IP that is valuable because it is unknown, for example the recipe for Coca-Cola, and can last indefinitely. Your attorney can help determine whether your IP will meet the requirements for obtaining a patent, or perhaps might be better protected as a trade secret.

In addition, your attorney can identify your competitors’ IP. This can help you direct your investments towards new territories that can further distinguish you from your competitors. You can avoid investing in areas where your competitors already have an advantage.

If needed, your attorney can identify the best ways to assert your IP and protect your investment. For example, government agencies like the U.S. Customs and Border Protection must stop shipments of counterfeit goods from entering the U.S., and can do so when provided with the right information.

What’s an example of how the right protection can create value?

One good example is the SpinBrush toothbrush. The inventor had previously developed a rotating lollipop, and used that mechanism to spin the bristles on the toothbrush. Electric toothbrushes were previously high-end products that cost a lot of money, but this invention brought the price down below $10.

Because the inventor had the patents on the mechanism in the toothbrush, he prevented others from selling the same product, and had time to build his market share. Proctor & Gamble eventually paid $475 million for the company.

How important is timing for safeguarding new IP?

Timing can be critical. For example, many foreign countries require you to file a patent application before you even start offering your product. If you begin advertising before you file your patent application, then you won’t be able to get that patent protection at all.

How do you suggest companies weigh investing in their IP protection versus advertising/marketing?

That’s difficult to answer, and is unique to each company. It’s generally better to invest in IP protection as early as possible. However, it’s up to each company to decide how best to invest and grow their business. IP protection protects your assets and helps you keep the customers you find, but you still need to find those customers. Successful companies can balance these priorities.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

How to identify and protect your intellectual property

Karl W. Hauber, attorney, Fay Sharpe LLP

Karl W. Hauber, attorney, Fay Sharpe LLP

Business and product names, logos; unique product designs, shapes, utilities, functions; and other proprietary manufacturing methods can comprise a significant portion of a company’s potential revenue and intellectual property (IP).

Protecting IP is a critical component of a sustainable business strategy. However, many companies don’t take the steps necessary to fully guard the ownership of these properties, leaving them vulnerable to encroaching competitors and/or missing out on sources of revenue generation.

Smart Business spoke with Karl W. Hauber, an attorney at Fay Sharpe LLP, about identifying and protecting IP to avoid costly legal lapses.

What do trademarks cover?

Trademarks are used to protect business and product names (i.e. words and phrases), logos, and in some cases shapes and colors that are used to identify a company and its named products or services.

There are common-law protections for using a name or symbol, but a mark not registered with the U.S. Trademark Office can cause issues. For example, a second entity can register the same name or mark. The non-registering first entity may be restricted with respect to future use and prevented from further expansion.

By registering, an entity can become the exclusive user of a trademark in association with particular goods or services, so as to develop source association in that mark. The customer goodwill and market association can become valuable IP, the rights of which may be licensed or sold outright.

How does a copyright work?

Copyrights cover software, website content, schematics, music, photos, literary and artistic works, among other things. Once ‘original works of ownership’ are secured in a fixed medium or recorded in some way, there’s an inherent copyright associated with that material and the manner in which it is expressed. Copyright ownership provides the rights to reproduce the work and to prepare derivative works based upon it.

Copyright registration with the U.S. Copyright Office provides additional benefits. Mainly it’s a public record of the copyright claim, enabling the applicant to seek legal remedies and initiate a lawsuit against someone who has copied material or is using it without authorization.

What can be patented?

The most common patent type is a utility patent, which protects unique devices and apparatuses, methods of manufacture, chemical compounds, formulas and drugs — collectively referred to as inventions. Generally, an invention is a solution to a technological problem and may be an apparatus or a method. Having patent protection provides the owner the right to exclude others from using, making, selling or importing devices protected by the patent for 20 years from the application filing date. Patent rights can be licensed, assigned and sold, which may provide monetary gains and revenue for the patent owner.

A company can be barred from patenting an invention. If the invention is on the market, or publicly known, for more than one year it’s barred from patent protection and deemed a contribution to the public.

In addition, design patents cover the shape of or pattern applied to a product — how it looks through ornamental design only. Design patents have a 14-year lifespan and different protection. The bulk of the design patent application is drawings and figures that accurately depict a product. Enforcing a design patent involves infringers trying to market a substantially similar design.

What are the pros and cons of trade secrets?

Sometimes companies have a unique manufacturing method, for example, so they protect it by keeping it secret. In contrast to patents, where a detailed description submitted to the patent office eventually becomes known to all, trade secrets must be shielded from the public. The lifespan of a trade secret is based on its secrecy and will last as long as it remains unknown to others.

Once a company has something it believes is secret, it must take active, detailed internal steps to maintain the secrecy. But if someone can reverse engineer a product, there’s nothing to stop him or her from doing so. Manufacturing methods, for example, sometimes can’t easily be reverse engineered, so are better candidates for trade secrets.

Who can help companies protect their IP?

Working with counsel knowledgeable in this area of the law can help parties get through matters concerning the best way to protect IP. It is beneficial for interested parties to be proactive with their IP counsel and openly discuss plans and future initiatives so one can avoid costly disputes with others’ intellectual property rights.

Karl W. Hauber is an attorney at Fay Sharpe LLP. Reach him at (216) 363-9212 or [email protected]

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

Patent trolls are lurking. How will you protect your business?

Christian Drago, patent attorney, Fay Sharpe LLP

Christian Drago, patent attorney, Fay Sharpe LLP

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 [email protected]

Insights Legal Affairs is brought to you by Fay Sharpe LLP

How to avoid the Google privilege ruling by using caution when writing emails

Jude A. Fry, partner, Fay Sharpe LLP

Jude A. Fry, partner, Fay Sharpe LLP

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 [email protected]

Insights Legal Affairs is brought to you by Fay Sharpe LLP

How to monitor the activities of business rivals through a competitive intelligence program

Matthew P. Dugan, partner, Fay Sharpe LLP

Matthew P. Dugan, partner, Fay Sharpe LLP

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 [email protected]

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

How a trade secret can be better than a patent, and when it can’t

Daniel R. Ling, associate, Fay Sharpe LLP

Daniel R. Ling, associate, Fay Sharpe LLP

Companies have information that gives each of them a competitive advantage over competitors. Patenting this information is sometimes legally impossible or disadvantageous — patents expire, leaving vitally important information publically exposed.

Some companies choose to treat the information as a trade secret because such a designation can offer legal leverage in certain situations. And unlike a patent, a trade secret can last forever.

A patent expires 20 years from its effective date of filing, and that previously protected invention enters the public domain. With a patent, you’re disclosing how to make and practice an invention in exchange for 20 years of exclusive rights to do so,” says Daniel R. Ling, an associate with Fay Sharpe LLP.

He says many companies, especially smaller ones, don’t often consider the role of trade secrets, but in certain instances companies could be well served by recognizing and protecting such valuable information. But there’s one catch: “You have to take reasonable steps to maintain it as a secret.”

Smart Business spoke with Ling about identifying and protecting trade secrets.

What are some examples of information that could be a trade secret?

Customer and supplier lists, the arrangement of equipment in a factory and certain manufacturing processes are examples of valuable proprietary information that may not rise to the level of something that can be patented. Often, it comes down to that which makes your product better than that of your competitors but can’t be patented because it doesn’t meet the basic legal standards, which are that the invention is new, not obvious, useful and eligible to be patented.

How long does trade secret protection last?

Trade secrets last indefinitely, as long as the information is maintained confidential and the holder of the trade secret continues to take reasonable precautions against disclosure.

How are trade secrets best protected?

There are many methods of protecting sensitive information. If it’s a process that involves multiple steps, a company could isolate the responsibility for each of those steps across multiple locations so the entire process isn’t carried out in one place and a single person isn’t privy to the entire production.

It’s also fairly common to include confidentiality agreements and nondisclosure clauses in employment contracts for not only employees who might be aware of a trade secret in its entirety, but also for employees who may have only some knowledge of the process. Companies with such sensitive information should work with a business attorney to put together those agreements.

What can be done if a trade secret is leaked?

If the trade secret was misappropriated — obtained illegally or otherwise improperly disclosed — there are steps that can be taken to prosecute the perpetrator. The Uniform Trade Secrets Act, the general framework of which has been enacted by 46 U.S. states, offers remedies when a trade secret is acquired through improper means or through a breach of confidence. This can provide some relief to a trade secret holder in the form of injunctive relief (e.g., stopping the use of a misappropriated trade secret), monetary damages and/or attorney’s fees.

However, if the information is developed independently or introduced to the public lawfully, nothing can be done. Further, if the secret that was being held is a patentable idea, another company or individual could secure the rights to it and bar others from acting on it. That’s why it’s important to carefully consider what you hold as a trade secret; if it can be easily reverse engineered it’s not right for trade secret protection.

Regardless of whether the secret got out legally or illegally, once it’s widely disclosed the remedies under the law might not be sufficient to make a company whole again — once it’s out, it’s out. The trade secret holder ultimately has an obligation to take reasonable protective measures to guard its secrets.

Daniel R. Ling is an associate at Fay Sharpe LLP. Reach him at (216) 363-9000 or [email protected]

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