After correcting any glaring deficiencies, the first goal of your IP team will be to develop a plan to harness your intellectual capital. This chapter sets out an overview of how your team should go about developing this plan.
Broadly speaking, there are four elements to an effective plan to harness your intangible assets:
1) systems and procedures to identify potentially protectable assets
2) systems and procedures to assess whether to seek protection for these assets
3) a system for obtaining protection for worthy assets
4) systems and procedures for monitoring and enforcing the assets you choose to protect
Notably, the planning process is all about creating systems and procedures, not about making any final decisions.
Your company cannot harness what it does not know it has. Accordingly, the first element of an effective plan to harness your intangible assets is to develop systems and procedures to identify potentially protectable assets. You should have already identified the current assets that fall into this camp during the IP audit process.
During this phase, the goal is not to actually identify assets; the goal is to develop systems and procedures to ensure that assets created in the future will be identified on an ongoing basis. This will largely be a matter of creating awareness and building a fulsome communication chain from the creators to the deciders. By creating awareness and opening the lines of communication, your IP team should be able to ensure that it can identify all of the significant innovations occurring at the company.
A company will never succeed in building a robust intellectual property program without the active participation of its employees. Your employees are innovating on a daily basis and are unquestionably creating potentially protectable intangible asserts. Unfortunately, unless your company is different than most, these employees have no idea they are creating potentially valuable assets. As a result, these employees don't take any steps to protect the assets or to inform anyone in management of their existence.
A successful intellectual property program must address this major stumbling block. Luckily, the very act of beginning the IP planning process will likely have some effect (especially in small companies). Your employees will undoubtedly hear about the intellectual property planning initiative, which should raise their general awareness in and of itself.
General IP planning will not completely solve the problem, however, because it will not provide all employees with a working knowledge of the various types of intellectual property protection available to the company. Thus, you should strongly consider adopting training programs to educate your workforce on the various forms of intellectual property and the forms of innovation that are potentially protectable.
The training does not need to be complicated; all that matters is that your employees receive some form of training to ensure they are familiar with basic intellectual property issues.
Creating training programs to build awareness for intellectual property issues will not work if your company does not also take the time to develop open, easy channels of communication between creators and deciders. The creative employees within your company need to have easy access to inform the IP team about new innovations that potentially merit protection.
If you adopt the plan I played out for creating your IP team, you will be halfway to the goal. If you follow the plan set out in the previous chapter, your IP team will include members from the various groups that are creating potentially protectable intangible assets. These individuals will serve as a ready conduit between the creators and the deciders.
Product-Development Team: The product-development team will be an obvious source of potentially valuable IP. Each new product may contain novel, non-obvious inventions or improvements that are patentable. Similarly, certain products (e.g., software) will create copyright interests. In light of the role this team plays in creating valuable assets for your company, it is crucial to maintain open lines of communication between the product team and the IP team.
Depending on your company culture, a plan to ensure regular communication between the IP team and the product team might take the form of a formal written document that must be provided on a regular schedule or might involve informal discussions that are prompted by a reminder on the IP team's calendar. Regardless of the form, your IP team should develop a plan for regular communication with the product team.
Marketing Team: Your marketing employees will also create significant, potentially protectable, intangible assets. In the course of creating marketing copy, these individuals will create material that is protected by copyright and will likely create words, phrases, and logos that are potentially protectable under trademark law.
Communication between your IP team and the marketing team will be easier to facilitate because there generally will not be a reason to take action until after the promotional material goes public. Thus, the material created by the marketing team will likely come to the IP team's attention relatively easily.
Sales Team: Your sales team will also likely be creating potentially protectable intangible assets. Among other things, your sales team is almost certainly developing sales funnels, databases of leads (that are likely segmented based on interests), and customer lists. Each of these pieces of information might be protectable—either as a trade secret or potentially under copyright.
As with the product team, the particular process to facilitate regular communication between the IP team and the sales team will need to mesh with your company's overall culture.
Business Team: Your IP team should also maintain regular communication with the general business-side employees. These employees may create some potentially protectable intellectual property, but this is not the primary purpose of regular communication. Communication with the business team is primarily about ensuring that the IP team is fully aware of major company initiatives. This insight will help the IP team to identify areas to keep tabs on with respect to the other teams.
To facilitate communication, it might be worth considering whether to offer incentives for employees related to their reporting of potentially protectable IP. Whether to adopt incentives will be an issue that will depend, in large part, on your company culture.
If you decide to include incentives, my recommendation is to tie any incentives purely to reporting the innovations to the IP team. Although it might seem logical to tie the incentives to reporting an asset that ultimately obtains protection, tying the incentive to the result can create tension should the IP team ultimately decide not to pursue protection. The goal is to give employees a strong incentive to report information up to the IP team to ensure that your handpicked team will be able to make the best decisions about how to harness your assets.
As an alternative to an incentive, you might consider including each employee's cooperation with the IP team as an element in the employee-review process. This might be more fitting for a company culture that still needs to reiterate the importance of communicating with the IP team. By explicitly making this part of the employee-review process, you will continue to build innovation into your company's overall culture.
The IP plan also needs to include systems and methods for assessing the intangible assets that are brought to the IP team's attention. The simple fact is that not all of the assets warrant protection—at least not if obtaining the protection will require the expenditure of company resources but will not provide worthwhile benefits. This is true regardless of your company's size. Even the largest companies will decide not to seek protection for large swaths of the intangible assets their employees create.
Beyond eliminating assets that would not warrant protection under any circumstances, the assessment procedures will allow your IP team to prioritize the other intellectual property so that you can choose how to spend your (likely) limited budget for obtaining IP protection. Without a systematic way to assess your intangible assets, your company will likely end up spending money to protect lower-priority assets and then lack the resources to protect higher-priority assets.
In assessing potentially protectable assets, the IP team must consider the value of the asset to your business. As noted earlier, your company's business objectives are core aspects of the IP planning process. The IP planning process should always serve your broader objectives. It is important to ensure that the tail does not wag the dog. Thus, the prioritization process should heavily weight the value of the various assets to your business.
In a world with unlimited resources, it would be worth seeking IP protection for every asset whose potential value, whether to your business or to a partner down the line, exceeds the costs of obtaining the protection. Few of us live in that world, however, and money will almost always be a limiting factor. With that in mind, your plan should focus on developing and harnessing the assets that have real value to your company right now. Indeed, the value of the asset to your business will often be the overriding factor that will trump all other considerations.
Assets that are crucial to your overall business objective will almost always warrant protection. Thus, you should unquestionably register trademarks for your business name, your important product names, and even marketing slogans that are core to your brand identity. Similarly, it will generally be worth seeking to patent a new and revolutionary product or service that will be the lynchpin of your business for the foreseeable future. This will be the case even where there are serious hurdles to obtaining and/or enforcing the patent. The fact is that the upside of obtaining the patent will justify the costs even in the face of uncertainty for such a core offering.
Given financial constraints, most startups and small businesses won’t seek to protect assets that do not bring significant value to the company. This is a decision that each company must make for itself, but you will serve your company better by making the hard choice to eschew protection for non-essential assets to ensure that your company has the resources to protect the core, crucial assets.
Consider Value To Third Parties
But what about assets that would have value to third parties? The short answer is that an asset that would have immediate value to others and that you could sell has value to your company. For these categories of assets, the IP team will have a relatively straightforward, albeit not always clear, analysis to perform: If the company could sell or license the asset for greater than the cost of obtaining IP protection for that asset, then the asset warrants protection.
Of course, the analysis can get even cloudier when it is not clear whether you will be able to obtain the desired IP protection. I expect that most entrepreneurs will be able to run an expected-value analysis to determine the value to attribute to this risk.
Even assets that may not have an immediate value to others may have an obvious value in the future. These types of assets create a more difficult question. The answer lies in prioritization. To the extent that protecting one of these assets would tie up resources and thereby prevent your company from protecting a currently valuable asset, your team should decline to protect the future valuable asset.
Put simply, your focus should always begin with assets that have an immediate value to your company. If, and only if, the company has the resources to protect a broader class of assets, may it be worth seeking protection for an asset that will have value for others.
Beyond considering the value of the asset, you should consider the likelihood of your company obtaining the desired protection. Put another way, the IP team needs to consider, for example, whether the company is likely to be able to obtain a patent or to register a trademark. If you have a budget that would allow it, this would involve having an IP attorney conduct searches to assess your potential protectable assets. Companies that can't afford to have counsel review IP protection opportunities still have avenues to analyze the opportunities.
Patents: To assess whether an invention is likely patentable, the IP team should consider a number of factors. First, the team should consider the extent to which the invention relates to an abstract idea (as opposed to a concrete invention). Although weighing whether an invention relates to "patent-eligible subject matter" is not an exact science; the more abstract an invention, the more likely it is that it will run into difficulties at the patent office. Thus, inventions that relate to more concrete inventions will generally have an easier time obtaining a patent.
Second, your IP team should consider how innovative the invention is. This is not for the purpose of assessing the invention's worth or making any judgments about how good it is. Instead, the goal here is to assess the novelty and non-obviousness of the invention. To obtain a patent, you will need to demonstrate that the invention is different from what came before it and that it was not obvious in light of what was known in the past. Without conducting a full search of publications and prior patents, it is hard to assess these elements. However, your IP team can create a shortcut by analyzing how innovative your invention is. Inventions that are truly revolutionary are likely to meet the requirement for being novel and non-obvious. Inventions that merely combine known elements from related products, on the other hand, will face a much steeper climb.
Finally, your IP team should consider the technical legal requirements. Most notably, the team should confirm that the product had not been offered for sale (or otherwise publicly disclosed) more than a year before the filing of the patent application. Any such disclosure would prevent your company from obtaining a patent.
Trademarks: To assess whether you are likely to obtain a trademark, your IP team should conduct searches of publicly available sources to determine whether your desired mark has already been taken or is similar to marks already registered. If you are on a budget, focus your trademark search on two sources. First, the team should conduct a search of the federal registry. You can conduct this search on the U.S. Patent and Trademark Office's website (www.uspto.gov). The registry allows you to conduct simple and advanced searches. The search process can be time consuming, but it will allow you to identify any registered trademarks that are similar to your mark. Obviously, you would prefer to see fewer results (ideally none). Finding some related marks will not necessarily be fatal to your chances of getting a trademark, but the more marks that you find that are close or identical to yours, the harder it will be to obtain a trademark.
Second, your IP team should use the most widely used, free tool that is available—Google. Run a search for the term you are considering trademarking and review the results. Your team obviously won't be able to review all of the results, but they should go multiple pages deep into the search results to confirm that the mark is not obviously being used by others.
Copyrights: The availability of protection is not a consideration for copyrights because you can always register your copyrights.
Trade Secrets: For trade secrets, the fundamental question for assessing your ability to protect your asset (i.e., your information) relates to whether it meets two elements. First, the information must be confidential. Thus, to the extent the information has been publicly disclosed, you will not be able to protect it. Your IP team should also assess the extent to which the company has already taken reasonable steps to protect the information.
Second, the information must have business value. Regardless of its confidentiality (and even if your company takes significant steps to keep it confidential), information that does not have business value will not be protectable under trade secrets law.
The IP assessment also requires consideration of the costs involved. Costs will be a particular consideration when deciding whether to patent an invention. Even a relatively simple patent will cost a considerable sum to obtain (likely $10,000 or more). For most small businesses, and especially startups without a solid cash flow, the expense of a patent application will be a major consideration. If your IP team has deemed that obtaining a patent is a priority for business reasons and has also concluded that the company will likely obtain the patent, it will generally be worth your while to find the money to fund the patent application.
For copyrights and trademarks, costs tend not to be a major consideration given that registration generally involves nothing more than the filing fees.
As for trade secrets, in most cases, costs will also not be an issue. In some cases, however, costs may come into play. Specifically, maintaining the confidentiality of a particular trade secret will require investment in additional resources (e.g., special software to maintain confidentiality). These expenditures will rarely be significant enough to outweigh the benefits of protection, but it is an issue worth noting. Ultimately, this will be an issue that will have to be addressed on an ad hoc basis in spite of all the planning your team will have done.
The IP plan should also include systems and procedures that direct how to proceed when the IP team concludes that an asset should be protected. In other words, the plan should set out how your company will go about seeking the necessary protection. This is one of the simpler parts of the planning process. The primary decision that must be made relates to hiring counsel.
There are books that describe how inventors (and companies) can patent an invention and/or obtain other forms of intellectual property by themselves. I cannot express how strongly I believe it is a mistake to take this course. In my practice, I routinely come across patents that an inventor obtained without the assistance of counsel. Invariably, these patents have a number of flaws that make them considerably less valuable than they would be if a patent attorney had handled the prosecution. These flaws decrease the value of a patent by, for example, making it more narrow than necessary or more difficult to enforce due to unclear language. While the inventions that a patent covers may not necessarily be of a legal nature, the process in obtaining a patent (including its drafting and back-and-forth discussions with the patent office) is inherently a legal one. Thus, whether to obtain the help of counsel is an important consideration.
Aside from the flaws in these patents, I have often found that inventors who handle the patent process themselves often take considerably longer to obtain their patents. Because the life of a patent is measured from the date of the filing, not the date a patent is ultimately issued, the added time spent in the patent office when an application is handled pro se (i.e., on one’s own behalf) can limit the useful life of your patent. This not only results in an inefficient patent-application process, but also a costly one for your wallet and your business strategy.
In the context of trademarks and copyrights, the application process is less complex, but you still risk making an error that could limit the value of your rights or that could require you to pay an additional fee.
Assuming that I have convinced you of the need to hire counsel to handle these matters, the obvious question is when to hire counsel. My general recommendation is to make the decision during the planning process. By vetting counsel at the outset, you will create a ready process that can be executed without delay when it is time to seek IP protection. If you take the time to find counsel at the outset, your IP team will simply need to call your chosen counsel to start the process when it is time to obtain the protection.
Beyond developing systems and processes to obtain protection for your intangible assets, your company's IP plan needs to address what will happen after you obtain protection. This portion of the plan needs to address how your company will monitor for infringement and what it will do to enforce its rights when it discovers infringement.
The first portion of the monitoring and enforcement plan is to develop systems to detect infringement of your rights. There are many choices that need to be made at this stage, including choices about how closely you care to monitor your assets and how you will go about conducting the monitoring.
The decision regarding how closely you care to monitor your assets will be driven, in part, by how aggressive you intend to be with your enforcement regime (discussed in the next section). Some large companies (general design-based companies) are super-aggressive in their enforcement efforts. An aggressive enforcement regime requires a rigorous monitoring mechanism that will catch even minor infringements.
Other companies that have a more balanced approach to enforcement choose to take enforcement actions only against major infringements. For these companies, there is no requirement to adopt a monitoring system that will detect each and every infringement. Instead, these companies need a means to detect major infringements. That being said, these companies might opt for a more robust monitoring system so that they are at least aware of infringing activity. They can then adjust their enforcement regime based on the extent of the infringement they detect.
Your IP team will need to decide how robust your monitoring mechanism needs to be based on your company's culture and likely approach to enforcement. Once you decide how aggressive your monitoring will be, the question will turn to developing the proper procedures to monitor for infringement.
The most obvious element of a monitoring scheme is to engage in competitive-market intelligence. Your company should adopt a mechanism to monitor your competitor's market activities on an ongoing, systematic basis to detect any signs of infringement. Engaging in competitive-market intelligence is a wise business practice for its own sake, and, once your company begins to consciously think about its IP rights, it will become second nature to include an IP aspect to this monitoring.
The monitoring mechanisms do not need to be complex. Your team should set up mechanisms to receive your competitors' marketing material, press releases, social media posts, and other important announcements. Similarly, your team should set up automatic notifications from public sources (e.g., Google Alerts). The team then simply reviews these sources as they come in looking for signs of infringement.
On the patent front, this will involve looking at new product launches to determine whether a competitor's new products infringe any of your patents. The goal here is not to engage in an in-depth analysis that comes to a definitive resolution; instead, the team should be looking for signs that the competitor’s new products are similar to your company’s patented inventions. If the team concludes that a new product may be infringing one or more of your patents, it may be worth taking a deeper dive with the help of a patent-infringement attorney.
On the trademark front, the monitoring will involve reviewing competitors’ announcements and setting up notifications for any priority marks. Alert services are a relatively easy way to obtain information about potential infringement of your marks. With that said, conducting intelligence on your competitors will only take you so far in protecting trademarks because you may not be able to identify all potential competitors and you may not be able to monitor every action of all your competitors.
Copyright monitoring is a bit more difficult to perform in-house, but you can monitor your competitors' websites and promotional material looking for copy that is similar to (or directly copies) yours. Similarly, if you release audio or video content, you can invest in technology to track the use and potential illegal transfer of your material. For a typical startup or small business, there is no need to utilize this technology. These technologies are primarily useful for companies whose business model involves releasing and selling these materials.
Trade secret monitoring will often be a more discrete task. Assuming that you have taken reasonable steps to protect your trade secrets, the most likely source of a theft will occur when an employee who has had access to the information leaves your company and joins a competitor. When this occurs, you should carefully monitor that competitor's activities, looking for signs that your former employee is making use of your protected information.
In addition to in-house monitoring, your IP team may want to invest in the various third-party monitoring programs that are available. I won't recommend any particular service partly because the right service may vary for each company. Your IP team can simply run an internet search for "intellectual property monitoring" or similar terms, and a number of services will pop up. Retaining one of these services may serve to streamline your monitoring process, but you will need an in-house employee reviewing the results and working with the service.
During the planning phase, the IP team should develop systematic procedures for conducting each of these levels of review. This should include identifying what the company will monitor, who will be charged with the task, how often the assigned employee will engage in the monitoring (i.e., daily, weekly, monthly), and whether the assigned employee will report all findings or only any significant infringement activity that is discovered.
The second prong of the post-protection aspect of your plan should set out your company's enforcement plans. During this process, you need to set a general philosophy for enforcement, develop plans for what will trigger an action, and consider whether to hire counsel.
Some companies’ overall philosophy on enforcement is to be ultra-aggressive in their enforcement effort, going after any infringement they detect. Other companies take a more measured approach, understanding that it may not be possible (or even desirable) to prevent all infringement and opting to pick their battles.
Your IP team will need to make the determination about where along the spectrum your company will sit. There are a number of considerations that can affect this decision.
The primary nature of your protected (or protectable) assets will affect your decision. If your firm is primarily design-based and your IP holdings are generally trademark rights, you should consider being more aggressive in your enforcement regime. Your primary asset as a design-based firm will be your protected designs. Preventing others from using these designs can provide significant value for your business.
Service companies, on the other hand, will rely significantly less on their IP to create value for their bottom line. Although the brand name and other IP assets will be important, incursions by third parties will not necessarily pose an existential threat to the business. These companies will, therefore, have a different view when it comes to enforcing IP rights.
Manufacturing companies will also present a different situation. Like service companies, manufacturing companies will generally not be drawing their primary value from design-based elements. Manufacturing companies will often have more substantial patent holdings. This will tend to change the analysis. Patent suits tend to be the most expensive form of IP litigation, and it will not always be clear what value the company will obtain at the end of the litigation. Thus, companies with substantial patent holdings will often have to be more judicious in their enforcement mechanisms.
Regardless of your primary business activity, your current market position will often affect your decision. If your company is the market leader in a particular segment, that might warrant a more aggressive enforcement scheme. So long as your actions are legitimate, there can be real advantages in using your IP assets as a means to maintain your status as a monopoly (or undisputed market leader) in the segment.
As with all issues in IP planning, your budget will also help shape your overall enforcement philosophy. IP enforcement is not free—even with the growing number of lawyers willing to take these cases under contingency-fee agreements. If you have limited resources, you will need to determine how best to deploy those resources. This will often require you to make a decision that you will target only the most egregious infringers. Where money is an issue, your team absolutely must create a method to prioritize the decision-making on enforcement to ensure that you are focused on the right targets.
As part of developing an overall enforcement philosophy, your IP team will likely need to establish some criteria highlighting what will trigger an action. The trigger could take any number of forms, including reaching a threshold for one of the following:
- The number of times an infringing trademark is being mentioned in various sources.
- The number of sales (or dollar figure for sales) of the infringing products.
- The impact on your business in terms of lost sales.
- The number of prospective customers who mention the infringing product to your sales team during the sales process.
- The number of customers lost to a competitor after a former employee joins that company.
This partial list demonstrates that there is an endless number of ways to slice and dice the potential impact of an infringement.
During the planning process, your IP team should identify the triggers that are most relevant to your business and should attempt to identify a threshold that will warrant serious enforcement discussions. If you are a design-based business, the threshold is likely to relate to the extent of the infringing sales. For a service company (e.g., SaaS companies), the focus is more likely to be on the extent to which a potentially infringing product is coming up in discussions with potential or current clients.
The purpose of creating these triggers during the planning phase is to automate the process going forward. Put another way, by taking the time to set triggers at the outset, your team will be able to avoid having to discuss each individual case of infringement and avoid making an ad hoc decision about whether to enforce. Establishing triggers will allow your team to seamlessly identify cases where enforcement is likely justified and to consider those cases more closely. This will save an immense amount of time down the line.
Finally, though not a requirement, I strongly recommend that your IP team take the time to establish relationships with outside counsel during the planning phase. Building these relationships when there is no immediate issue will allow you to fully vet the counsel you are considering, rather than having to make a decision in the heat of the moment. This will tend to result in relationships that are more fruitful when the time comes to take action.
Many lawyers will offer services that will make them available to your IP team for consultations on a flat monthly fee. Creating these relationships will provide your IP team with the legal support they need. Moreover, the lawyer you choose will begin to build a working knowledge of your company, which will, in turn, make the lawyer more efficient and effective if and when enforcement action is necessary.
Many lawyers will be amenable to an agreement that includes a relatively small monthly retainer in exchange for some level of access during the month (e.g., a monthly retainer of $500 that will allow your IP team to reach out a certain number of times during the month). Many firms will offer these retainer agreements for fees that are below our traditional hourly fees. The reason is simple—good lawyers understand that there is value in building relationships.
Choosing the right lawyer for your business is equal parts art and science. The lawyer you choose will need to have the right experience, will need to have a temperament that matches your company's culture and enforcement philosophy, and should be someone that you can envision becoming a trusted advisor.
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