Editors Note: Caroline Horton Rockafellow is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A. TechLaw is a regular feature in LTW.
_______________________________________________________________________________________Sometime life starts moving so fast that it is easy to feel like you are losing your mind.
For a technology company, the mind or the “brain” of the company is its intellectual property assets, and losing its mind can quickly and easily become a fact and not just an analogy. Intellectual Property, such as patents, copyrights, trademarks and trade secrets form the core value of a technology company, and protecting these assets is key to protecting the brain of the company.
Although technology companies are often focused on the proper methods for securing patents and other proprietary rights, it is important to consider certain precautions and actions as a part of any intellectual property asset protection plan. Such considerations are a necessary part of protecting and eventually exploiting those assets, and a failure to recognize and take the appropriate proactive measures may ultimately result in the loss of intellectual property rights or the brain of the company.
What follows are 10 general guidelines for technology companies to implement in order to avoid losing the corporate mind.
Confidential information that provides a competitive advantage may be protected as a trade secret or may be appropriate subject matter for a patent application. In either case, the value associated with the information will be diminished or even lost if the information is disclosed without an obligation of confidentiality. All disclosures of trade secrets must be subject to an obligation of confidentiality to avoid forfeiture of this asset. Likewise, with few exceptions, disclosure of patentable subject matter will initiate the twelve month clock for filing a patent application in this country and may preclude the ability to file patent applications in other countries.
Keep Good Records
Proper maintenance of research and development records will protect an evolving knowledge base and serve as an essential defense mechanism in the event of a claim of trade secret infringement or misappropriation. In addition, such documentation may help to secure certain patent rights. In the United States, a patent will issue to the inventor with the earliest documented date of conception and reduction to practice, rather than the first inventor to file a patent application. For this reason, maintenance of detailed records and the ability to demonstrate an early date of conception and reduction to practice of an invention may be the critical element in securing valuable patent rights.
Secure Consultant Rights
It is a common misconception that simply paying for material developed by a consultant transfers the underlying intellectual property rights. Unfortunately, this is not the case. Rather, there must be a written agreement assigning the underlying intellectual property rights. A failure to secure such assignment may restrict the development of a product line or may result in additional payments to such consultants.
While it is impossible to remove all proprietary knowledge from the brains of departing employees and consultants, it is possible to restrict what such individuals may do with such knowledge, at least for a limited period of time. Noncompetition agreements that serve a legitimate business interest and that are limited in scope and duration are often found to be enforceable. The appropriate use of a noncompetition agreement may help to maintain the integrity of a company’s intellectual assets and forestall the inappropriate use of information retained by employees and consultants.
Restrict Incoming Trade Secrets
Trade secret misappropriation claims are often based on claims of misuse of information disclosed under an obligation of confidentiality. A claim of misappropriation may significantly damage corporate reputation. It may also result in large damage claims and delays or even termination of product development. Accordingly, it is important to restrict receipt of confidential information and to carefully monitor the confidential information that is received.
Analyze Competitive Efforts
Companies commonly fail to monitor patents and other developments of competitors. As a result, a valuable opportunity to take defensive actions and avoid infringing third party rights may be lost. In addition, by monitoring third party developments there is an increased opportunity to discover misappropriation of rights by those third parties.
Understand Grants of Rights
Misuse and misappropriation of intellectual property rights is often not intentional, but rather the result of a failure to adequately understand certain contractual obligations and restrictions. Accordingly, it is important to carefully monitor both the authorized use of intellectual property by third parties and the internal use of third party materials.
Keep Sales People in Check
Most technology companies do their best to create a buzz of interest in the community, while simultaneously developing products. Unfortunately, when product details are discussed, there is the possibility that confidential information will be disclosed. Promotion of potential products also raises the issue of “on-sale bars” to patentability. Once an invention has been offered for sale, any subsequent domestic patent applications must be filed within twelve months from the initial offer date, and the right to file foreign patent applications in certain countries may be foreclosed.
An intellectual property protection policy should be established and made available to every employee with access to intellectual property assets. This policy should be periodically updated and distributed to all such employees. In addition, the company should regularly meet with such employees to go over the policy, related goals and objectives. A failure to properly educate the employees with a direct impact on the protection, use and implementation of intellectual property assets may ultimately result in a loss of critical rights.
Conduct IP Audits
A periodic audit of intellectual property assets, as well as use and protection of those assets is essential for all technology companies. This audit should include a review of all contracts, documents and activities related to such assets and related policies and procedures. An intellectual property audit helps to ensure that intellectual assets are appropriately protected and avoid the unintentional loss of such rights. This type of audit should be considered a standard part of the corporate procedures and should be conducted by experienced intellectual property personnel on a consistent basis.
In Conclusion —
In summary, while the scope and manner of protecting intellectual property assets can be quite complex, there are some very simple steps that all technology companies should take to help ensure the long-term viability of intellectual property assets. We all want to keep from losing our mind; following these steps will help a technology company avoid losing its mind.
Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. Caroline Horton Rockafellow is a licensed patent attorney who works primarily in the areas of technology deals and licensing. Questions or Comments can be sent to email@example.com