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Tuesday, March 22, 2011

Intellectual Property: How Do I Get Rights to Patents?

There are a few ways to obtain the rights to IP for your NewCo.  Two of the most common are:  INVENT something or ACQUIRE the rights from someone else.  Ownership of patents will is something you will need to devote serious attention to before acquiring rights.  I have had more than one discussion with inventors that believed they owned the rights to the technology in their invention only to find that was not the case.  Inventors do not always have ownership and rights to license the intellectual property they create.  Just make sure you determine you are negotiating with the correct party for rights to inventions!

If you invent the product as sole inventor, you own 100% of the rights: UNLESS, you work for an institution which had you sign documents otherwise.  University faculty members unfamiliar with the dynamics at their institution often do not realize that their employment agreements give invention ownership to their university.  Inventors in industry tend to be more aware that the company owns their inventions and that those rights were provided for in their employment agreements.  This does not mean that the inventors do not get receive financial benefit from their institution or company: many institutions have a mechanism of sharing financial gain with the inventor.  But, for you or your NewCo to obtain licenses or acquisitions of rights to IP, make sure you are negotiating with the CORRECT owner of those technology rights.  

All inventors listed on patents own the intellectual property and equally have a 100% right to practice the invention: if owned by institutions those rights are held by the institutions.  If there are multiple institutions or multiple inventors, each having ownership, you will need to acquire the rights from all inventors or institutions to have EXCLUSIVE ownership of the rights to make a product.  Please don’t overlook this point.  Once when dealing with a licensing activity for a client, I found that there were two inventors each retaining their individual rights and ownership.  Inventor 1 had licensed rights to company 1 which was spending extensive funds to develop a product: i.e., millions of dollars.  Inventor 2 was in the unique position of being able to market and sell his/her rights to company 2.  This had the potential to create a scenario where a possible problem could occur.  If company 1 were to launch their product, company 2 could immediately follow by launching their product without infringing.  Company 1 would have spent large sums of money on development and advertising only to find Company 2 would have been able to sell the same product with minimal expenditures and advertising. This is not a good scenario and investors do not like such surprises.

Assuming you do not have a novel idea for a product to file your own patents, but do have a wish to start a company in a particular area, you will need to seek IP and obtain the rights to build NewCo.  You can also obtain rights to your own inventions if your institution owns those rights.  In seeking new technology or exploring the patent landscape of an invention, you can search patent data bases.  You likely already know that the USA patent website has a search feature.  You can search issued patents and some applications which have not issued via their website: http://USPTO.gov .  There are many search sites which cover US patents and some foreign filings and patents.  I sometimes will use the following links:  http://www.wipo.int/pctdb/en/  or http://www.patentstorm.us/ .  If you have never seen a patent before, you may want to do a search and take a look at some area of interest and get a feeling for what goes in them. 

If you are looking at a patent for the first time, please note there are several sections including:  Abstract, Drawings if applicable, References, Background of Invention, Summary of Invention, Detailed Description, Example(s), and Claims.  The last is a particularly important section as specific claims of the invention are spelled out and these are the key areas of focus when seeking what your rights are relative to the invention.  In preventing someone from selling products covered by you inventions, they must be in violation of one of the claims.  Your patent counsel may be able to infer more rights based on the body of the patent, but I usually look at claims first.

I will search for related patents and review claims when preparing to license or acquire rights to patents.  I will also explore whether I may need additional licenses or rights to commercialize a product.  This is not a legal or comprehensive search that will stand up I court, but I do get an overview that can help guide my business decisions at minimal or no cost.  You will use your patent counsel for all comprehensive work and for filing and possibly for creating license documents; do not leave them out of the process.  You will be standing in front of investor one day and get the question, “how do I know you own the rights and have freedom to operate.” That is when you say, call my patent counsel.

A second area to consider in your search for technology is identification of inventors and institutions working on technologies of interest.  The very start of a patent defines Inventors and Assignee, the possible owner.  Once when working for a company, I searched for a particular area of novel drug discovery from marine life forms.  I then reviewed the inventors and assignees to see which research organizations were was the prolific and then contacted them.  I went for meetings and discussed possible business relationships leading to the license any of their new discoveries.  This is a part of what your Business Development person may do and will be discussed later.  On other occasions, I searched for a specific University and/or Inventor to define what IP was available and then contacted the university.  Many University sites list available IP, but sometimes a search can give you ideas of areas and interests. I hope these examples provide a few ideas of how you can seek technology.

I can help provide guidance but you will want to discuss what you want to do and how to do it properly with your legal counsel.  Once you find technology, obtaining the rights would be the next step.  Your legal counsel can help with agreements but I usually like to negotiate the key business terms first.  As always, if you have questions, comments, or request for topics, contact me.

 Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon