Patents and IP for the startup founder (pasadena connect week) 2018.10.23

Patents and IP for the
Startup Founder
Benjamin P. Kuo, Esq.
Stephen Z. Vegh, Esq.
© 2018 Patents by Benasaur / Vegh IP Legal
In partnership with
Crash Space
Pasadena Connect Week / Innovate Pasadena

Benjamin Kuo: Brief Background
• Patents by Benasaur: Solo law practice in the L.A.
area
• 10 years attorney experience, specializing in
patent and trademark prosecution, focusing
primarily on smaller companies and startups and
consulting with practitioners on USPTO issues
• USPTO Patent Examiner for 3 years in software
networking (TC 2400), licensed before USPTO
since 2010
• Background in computer science and fluent in
Mandarin Chinese
© 2018 Patents by Benasaur

The Fine Print
• Disclaimer
– This presentation does not create an attorney-
client relationship; no information will be deemed
privileged or confidential
– Use information at your own risk, and attorney
cannot predict or guarantee results.
• The slides and presentation media will be
available online

What are not patents?
• Trademarks and unfair competition
– Name of your business, product, or service (McDonald’s,
Nike, Apple)
– Registration from the USPTO affords the strongest
protection; common law rights otherwise
– When you think of a name, you should do a search and
talk to an expert about mark strength
– Common pitfalls: not doing a search; picking a weak mark;
failing to do something about a confusingly similar mark;
playing off of someone else’s mark

What are not patents (2)?
• Copyrights
– A right to a creative work (photos, videos, sound,
music, writings, graphics, computer code)
– Registration with the Copyright office allows you to
sue
– Pitfalls: Accidentally incorporating someone else’s IP
into your recording; source code is easily reverse
engineered (and is fair use)
• Trade secrets
– Some types of know-how are easily copied with little
consequence (ex. Coke recipe)
– Choosing between trade secrets and patents

What is a Patent?
• A government-granted monopoly on an invention for a fixed term
– Protection of technology and know-how in exchange for public
disclosure
– Term is 20 years from the date of filing
– Utility (for useful inventions)
– Design (ornamental and decorative features)
– Plant/microbes (selective breeding, gene sequences, etc.)
• Utility Patents
– Most valuable and most expensive to obtain
– Must be useful, novel, and non-obvious
– Types: mechanical, electrical/software, bio-chem, business methods,
user interfaces
– Patentability hinges mostly on novelty and non-obviousness

Prosecution vs. Litigation
• Prosecution
– The legal process undertaken before the USPTO to obtain a patent or
trademark
– Begins with application, ends at patent issue / trademark registration
• Administrative law proceedings
– Inter partes review (IPR) before PTAB
– Interference/cancelation before TTAB
– Sometimes handled by prosecutors
• Litigation
– Article III court (federal court)
– International Trade Commission (ITC) proceedings

The Land Grab Analogy for Patents

Deciding on when and what to file
• After your Eureka moment: “we made it work!” but before
the on-sale bar attaches
– Earlier the better, because of first-to-file
– Are you ready, or do you really need to pursue a patent?
• Provisional vs. non-provisional applications
• PCT (international application)
– An international placeholder with an 18-month pendency
• Should you do a search? (“it depends”)
– Must disclose search results to the PTO upon filing of the non-
provisional
– Exotic legal products like “freedom to operate” opinions are beyond
the scope of a startup

The On-Sale Bar for Patents
• An application must be filed within 1 year of
– Public disclosure or public use
– Sale or offer-for-sale
• Huge beginner issue
– Kickstarters that offer product (even if they fail)
– Code revisions posted to the App Store
– Demos at trade shows, disclosure of tech without
NDA, beta testing
– Shareholder, stock purchase, funding agreements that
license or promise a share of the technology

Provisional Applications
• The formal application is called the “non-provisional application”
– In lieu of a non-provisional that begins the prosecution process, you may file
a “provisional application”
• Benefits
– Informal process and lower PTO fees (and lower legal fees)
– Obtain earliest possible filing date in a first-to-file system
– 12-month pendency to file a subsequent application
• Pitfalls
– Does not ever mature into a patent: Must file either nonprovisional or
PCT before pendency expires
– Must file the best disclosure possible under circumstances; can be used
as evidence that inventor was “not in possession of invention”
• Some lawyers avoid provisionals, but they have their place for
cost savings, establishing priority, and delaying prosecution

Deciding on when and what to file
• After your Eureka moment: “we made it work!” but before
the on-sale bar attaches
– Are you ready, or do you really need to pursue a patent?
– Earlier the better, because of first-to-file
– On-sale bar considerations
• Provisional vs. non-provisional applications
• PCT (international application)
• Should you do a search?
• Eventually, all of these turn into… the Non-
Provisional Application

Prosecuting the Nonprovisional
• Pendency
– 1-2 years depending on technology
• First Office Action
– Restriction Requirement
– Action on the Merits (almost always a rejection)
• Response to OA
– Patent attorney has 3-6 months to respond
– May conduct examiner interview / FAI program
• Second or Final Action
– Generally no longer than 12 weeks
– Because of compact prosecution, it is rare to receive a “second non-final”
– Final rejection: Prosecution is closed
• After-final Filings
– PA may file after final or AFCP (to resolve objections and formal issues)
– Request for Continued Examination (RCE)
– Continuation or Divisionals (treated as separate new applications)
– Appeal to PTAB
• Allowance and Issue
– “Allowable subject matter” means you are almost there
– Can happen at any time

Understanding the Office Action
• Objections are for informalities; rejections are for substantive
issues
• Common objections
– Drawing, claim, specification
– A lot of these typically indicate poor drafting
• Common rejections (35 U.S.C. ___)
– 112 (substantive drafting issues, inadequate disclosure,
indefinite/unclear language)
– 102 (anticipation by a single reference)
– 103 (obviousness in light of multiple references)
• Software-specific issues
– Means-plus-function rejection (35 U.S.C. 112(f)/112(b))
– “Alice” abstract idea rejection (35 U.S.C. 101)

Prosecution Fees and Costs
• Patents
– $1,500 for provisional applications, plus costs ($140 small entity)
– $4,000-6,000 for non-provisional applications, plus costs (filing fees,
drawings, PCT filings fees 3.5k+)
– Small and micro entity get discount on fees
– $1,500 for responses to office actions
– Miscellaneous costs such as RCEs and issue fees
– Budget 10k for application + initial round of prosecution
• Trademarks
– $750 for most initial filings
– $1,000 for responses to office actions
– Miscellaneous costs upon approval

Patent Common Pitfalls
• Not hiring a lawyer
• Not filing a proper disclosure, or “sandbagging” the initial
disclosure
– You can fix everything else later, but you are stuck with the disclosure
at the time of your filing.
– For software applications, not including code, pseudocode, or
software structure
– Not properly translating a disclosure in a foreign language
• Relying on copyrights and not patents
– For source code, reverse engineering is fair use
– Source code is easily distributed and modified
• Not disclosing to your lawyer your bottom line
– Many choices could be made during the process to fit the budget

The Bottom Line for Patent Prosecution
• Risk of failure is high
and
underappreciated
• Game is often for
benefit of larger
players with more
resources
• But… may be
essential for buyout/
funding/ retail/
opening doors

Finding and Working with Attorneys
• Patent work before USPTO requires patent attorney
– A patent attorney “registered before the USPTO” or
“patent bar”
– For filing only, a patent agent may be cheaper
• Caveat: Cannot dispense legal advice, not helpful to newbies
– Patent attorneys / agents can work across state lines
• If you are sued or case appears headed to court
– Patent attorney who is a litigator
– PA is required for actions before PTAB
– A general “IP attorney” probably can’t competently handle
patent litigation

Pitfalls with Attorneys
• Not doing your homework
– Not knowing the basics
– Not checking attorney’s paper record
– Attorney doesn’t have experience with your industry
• Not reserving company resources or employee time for
attorney
• Reasonableness of fees
– Not getting an upfront estimate of costs for proposed work
– Ask if a referral fee has been received or paid and how much; YOU are
subsidizing someone who didn’t do work
– Paying by the hour for patent/trademark prosecution
• Negotiate flat rate or fee cap
• Customary in litigation
– Fees are, not surprisingly, one the biggest sources of client complaints

Who is Your Best Advocate?
• Your lawyer? Your employees? Your family
and friends? Your customers? Your social
media fan base?
• Yourself!

Enforcing and Defending
Intellectual Property Rights
• Patents
– Three (3) bases of statutory patent infringement
– Two (2) ways to infringe a patent
– Infringement analysis: 2-step process
– Potential relief/remedies for patent infringement
– Factors that may impact the duration/expense of
patent litigation

Intellectual Property Rights (2)
• Trademarks
– Common law vs. federal registration
– Infringement analysis: likelihood of confusion
– Trademark dilution
– Potential relief/remedies for trademark
infringement
– Factors that may impact the duration/expense of
trademark litigation

Intellectual Property Rights (3)
• The cease and desist letter
• Venues for adjudicating IP disputes
• To litigate, license, and/or cease-and-desist,
that is the Question…

QnA – Thank you!
• Benjamin P. Kuo (Patents by Benasaur)
benasaur.com/law
bkuo@benasaur.com
(213) 290-2586
• Stephen Z. Vegh (Vegh IP Legal)
veghlaw.com
svegh@veghlaw.com
(310) 980-7440
1240 Rosecrans Ave. #120
Manhattan Beach, CA 90266
• Lisa Luther (Crash Space)
crashspace.org
© 2018 Patents by Benasaur / Vegh IP Legal

Patents and IP for the startup founder (pasadena connect week) 2018.10.23

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