Stradley Ronon’s five-part series explores the intellectual property (IP) considerations for a business as the venture is formed, conducts research and development, begins to commercialize a product, seeks to enforce an advantageous position, and then may be sold. This third article of the series is a question-and-answer segment exploring the IP considerations in the commercialization of a product. Read the first and second installments here and here.
Question: What are the considerations for a business as a product is commercialized?
Answer: Once a product is commercialized or close to commercialization, the business might consider clearing the product from an IP perspective to minimize the risk of infringement and, especially, of willful infringement by obtaining an opinion of counsel.
Question: What is involved in “clearing the product?”
Answer: The business reviews the product with counsel and evaluates the forms of IP that might apply to the product, including utility patents, design patents, trademarks, design marks, and copyrights. Once the IP that is applicable to the product is identified, consider the types of searching that may be involved in clearing the product. Searching can be done internally by members of your business, by outside counsel, or by third-party search vendors. The searches are then reviewed by counsel, and an opinion regarding clearance of your product is discussed and perhaps reduced to a written opinion.
Question: How about patent protection? Should a business consider patent protection for its products?
Answer: Yes, we do recommend seeking patent protection for a business’ products, if applicable. As we previously discussed, as you begin research and development, it is advisable to do a collection search of patents and literature to know what the art looks like in your industry. Encourage inventions by implementing an incentive plan (monetary rewards, plaques, dinners) for disclosures and memorialize all inventions with a written invention disclosure document and have inventors maintain detailed notebooks, including dates. The written disclosure documents will be helpful in preparing the patent application, and we recommend filing patent applications as soon as possible (the United States is now a “first-to-file” priority system).
Question: Are we sufficiently covered if patent applications are filed in the United States only?
Answer: We recommend that clients consider foreign patent protection, especially if the business has any foreign presence, including foreign locations, foreign distributors, or foreign manufacturers. In addition to the business’ foreign presence for patent protection, business owners might also consider whether there are select countries where their competitors routinely file patents and file applications in those countries.
Question: Other than patents, what are other IP considerations that businesses should consider as they commercialize a product to protect any inventions in the product?
Answer: If a business owner decides not to file a patent application on its products, or even if it does file, the IP can also be protected through trade secrets. Trade secrets are defined as any information (processes, formulas, designs, etc.) that has inherent economic value as a competitive advantage, others do not generally know and cannot obtain the information, and the owner takes reasonable efforts to maintain its secrecy. The key really is the efforts that the owner takes to maintain the secrecy of the trade secret. Unlike patents, where the owner must provide enough detail to enable a third party to practice the invention, a trade secret derives its value by not being known. If any trade secrets surround a product, the business owner should ensure that it takes reasonable efforts to maintain the secret.
Question: How about any IP considerations in marketing the commercialized product?
Answer: From a marketing perspective, we consider trademarks (which identify the business as the source of the product) as well as any copyrights in the packaging. We encourage clients to consider adopting, using, and perhaps registering trademarks. Before adopting any new trademarks, we recommend, at a minimum conducting a preliminary (knock-out) search of the U.S. Patent and Trademark Office database and generally online to see if there are any third parties using similar marks for similar goods and/or services. A variety of other factors are considered in determining if a designation could be a trademark, including whether the designation is generic, descriptive, misdescriptive, or a surname. Depending on the results of a preliminary search, a comprehensive search may be advisable. When it comes to copyright in the marketing materials, we look at product packaging and any advertisements for the product. A copyright is a work of art fixed in a tangible medium of expression. With copyrights, we encourage clients to ensure that they own all rights in the copyrights, particularly if a non-employee prepared the copyrighted works. If needed, additional agreements should be secured to ensure ownership of copyrighted works and the freedom for the business to use the marketing materials. Also, consider whether any trademarks or copyrighted works that are not owned by the business are used in marketing materials, for example, photographs or third party logos, and determine what licenses or permissions are needed to use them. We also consider registering copyrights with the U.S. Copyright Office.
Question: What should I consider when it comes to the risk of claims of infringement by third parties directed to my commercialized product?
Answer: If clearance searching was conducted before commercializing the product, the business should understand the risk it faces for claims of infringement by third parties. There are also insurance options available to fund both defending against IP infringement charges as well as enforcing your IP rights against third parties.
Question: What about the enforcement of my IP in my products?
Answer: Yes, next time, let’s have more in-depth conversations about enforcement from an advantageous position.