Lateral Capital Management, LLC

IP Health Checkup: Do This Now

Once a year, Early Stage CEOs should sit down with their Boards to re view their IP program. This process should start with a meeting between the CEO, the company’s IP and business lawyers, and the technology chief to answer this question: “Is our IP being managed in a way which is consistent with our overall business objectives?” Thanks to the legendary Angel investor John O. Huston of Ohio Tech Angels in Columbus for some of the material./p>

At your checkup meeting, here are some of the topics you will want to touch on:

  • Provisional Patents – What’s the plan for converting them to non-provisional? How long is the runway on each filing? Have we budgeted for the required legal expense?
  • Foreign Filing – Has filing in foreign countries become important in the past year – for either offensive or defensive reasons? Remember that reason number one for filing a patent is to be sure you can practice your own technology – in every market where you want to do business.
  • Patentable Product Improvements – Are they being properly tracked and captured in “lab books” or on software designed to establish your rights? (Look at the records yourself to be sure this is being done. People are notoriously bad at keeping good records.)
  • Competitive Patents – Have you been following your key competitors? Are you sure someone else hasn’t jumped into your space unbidden? Don’t guess: Use patent tracking software so you know.
  • Employment/Contractor Agreements – Do you have “shop rights” agreements signed and on file with every single employee – including assistants, secretaries, Board members and the CEO? Have you yourself seen the fully executed assignment documents for employees who departed during the year?
  • IP Legal Expense – What did your outside patent/IP counsel charge you over the year? He or she should be pleased to review this with you. Was it worth it? Remember that Early Stage companies frequently “grow through” their patent counsel, as their claims, filings and competitive issues become more complex. And the “lowest priced” patent lawyer is rarely the “lowest cost.”

And while you are at it, take a look at your use of trademarks as well – the ones you own, the ones you license and the ones you might be using without having registered them:

  • Have you paid the trademark registration fees? This sounds ridiculous, but the stories of companies who “abandoned” their trademarks simply because they forgot to keep them current are legendary. Example: P&G discontinued the White Cloud toilet paper brand after 30 years, but forgot to protect the trademark. They were unable to stop Wal-Mart from introducing White Cloud as their brand!
  • Are all your trademark uses properly presented in marketing materials, on your website, etc.? Generally, if you have received a Federal/USPTO registration on the main register, the first use of your trademark on any document should be accompanied by “®.” And it should be on the Principal Display Panel of every package, website, etc. Don’t have an ®? Not to worry. Put a “™” at the upper right of anything you use as a brand mark. This tells others that you intend to use this as a trademark and that at some point, you might look to prevent others from using it for the same goods or services.
  • Do descriptions of your “goods and services” need updating? In other words, do the new uses you have found for your product fit under the same SIC code for which you applied? Or do you need to apply to broaden your usage categories?
  • Have you cleared your trademark in the foreign markets you expect to enter? If you don’t assert yourself, don’t be surprised if your competitor starts selling an inferior product under “your” name! Remember that outside the U.S., trademark rights are based on registration, not usage. Generally, this means that whoever gets there first gets the registration. (In the U.S., federal trademark rights are established only by usage of the marks in Interstate Commerce.)
  • Are names for all your new products on a path to protecting them for the long term? Remember that even if you don’t care about “marketing,” the buyer of your company will very much care! Our advice: Trademark everything you think has long-term value to your customer/consumer benefit promise.

Important Notice – This material is not legal advice and that you are urged to consult your patent/trademark attorney for specific guidance before taking any action based on this information.