The Seven IP Blunders
Introduction
Intellectual Property is a weapon to defend creativity, ideas, and spirit. But, as for any other weapon, wielding it needs skill—and dodging it, too.
This article lists some of the most common blunders in IP that I've seen over the years. It's a compendium of seven posts I made in spring/summer 2023.
Each one comes with its own image, a short story, and conclusions, the latter in?bold. If you want, you can skip the image and story, but make sure you check out the conclusions.
# 1: Don't assume it's all yours (who owns IP?)
These are Paula and Paul. They don't look happy. Their tale is a tragic one.???
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Right after university, Paula and Paul invent a ground-breaking VR headset. Thrilled to work on this together, they set up a company, VRSys AG. They file a first patent, and their idea gains traction. Unable to handle all the work alone, they hire a contractor, DevSupport Ltd, to develop software and hardware. A second patent is filed.
Seven years later (and after a story involving a pretty intern), Paul decides to quit and to work for DevSupport Ltd.?
On his last workday, Paula stops him before he leaves the premises.
"Wait!" She points at the laptop he's tugged under his arm, her finger trembling. "That's staying here." She doesn't care about the computer, but she suspects its storage holds a copy of all the company's software and device specifications.
For a moment, he hesitates. Then, he tosses the machine onto a table. "Okay, fine. I don't need it anyway. I've already copied everything I need, and it's safe with my new employer."
Paula shakes her head in disbelief. "How dare you? This stuff belongs to VRSys." Taking a deep breath, she steadies herself. "Don't forget, VRSys holds the patents. You cannot use the technology anyway."
"Well, about those patents…" He sighs. "The first one doesn't belong to VRSys. It's based on an invention made before VRSys even existed, and the rights were never properly transferred to the company. As to the second patent, the software and the rest, have a look at the contracts with DevSupport."
With that, he turns and leaves the place.
Years of legal strife, bitterness, and pain follow—and lots of cash going into lawyers' pockets.
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So, what do we learn from this not-so-unusual story?
? Don't assume that all the IP is yours. Even if you paid for it. Even if you came up with it.
? As a company, review IP ownership vis-à-vis contractors, partners, investors, employees, and founders. Even if you're best friends with all of them today, things might be different tomorrow.
# 2: Keep your balance (risk management)
The second story is about being too cautious or too careless.
Have a look at Betty's and Tim's tales.
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Betty, the CEO of Bold Buddies Inc., and Tim, the owner of Timidity Tech, run their two businesses differently.
Betty is a doer, driving the company's Head of R&D to finish the new lawn mower model yesterday. Gruntingly, he obliges, muttering something about the need to check out their competitors' patents first. She ignores him, and the mower is presented at the Geneva Gardening Fair.?
Unfortunately, the presentation at the fair is cut short. Their booth is hit by a preliminary injunction granted to one of their competitors—for patent infringement.
Having heard of Betty's troubles, Tim does things differently. In no uncertain tones, he tells his dev team that he'll hold them liable if they run into IP issues with their new garden sprinkler. Freedom to Operate is what they need.
A thorough patent search is made. The patent attorney identifies "residual risks." Scared by Tim's threats, the developers want to avoid any risk. Hence, further searches are started, trying to invalidate those pesky patents. Time passes, and money changes hands. Deadlines are missed. Costs explode. The sprinkler season ends without Timidity Tech entering the market.
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So, what do we learn from this?
? IP risk management is a balancing act. You can err on the side of caution. But you can also err on the side of daring. Find middle ground.
? Betty erred when she didn't even listen to the warnings of her Head of R&D. If a company invests half a million in developing a new product but is unwilling to spend a few k on an FtO assessment, something's wrong.
? But what Tim did was—in my view—even worse: He delegated decisions to subordinates but made it clear that they'd be in deep poo if anything went wrong. That's one of the best ways to stifle innovation and drive-up costs.
? Risk management is a core task of a company's board, and that includes creating a company culture that can cope with risk. If some decisions are delegated to lower levels (as they should be), the lower levels must not be punished for taking reasonable risks.?
# 3: All your eggs in one basket (diversify your IP)
Hans has a tale to tell on diversifying your IP:
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Hans is a product manager at weeGadget, a company selling computer accessories. The device he's responsible for is weeOculus, a camera that can be mounted on the edge of your screen. It's for gamers who want to share their mean grin on Discord while obliterating the enemy.
As the device is developed in 2018, the team designs a brand-new autofocus system for it. Seven lenses operated by three motors give it dynamic depth-of-view and insta-focus.
Knowing the importance of IP, Hans makes sure that an international patent application gets filed for that.
A month before launch, software engineer Katie adds automatic backlight compensation to the firmware.?
"What's it good for?" Hans asks.
"It's in case you do a video conference with a window in the background. "
Hans frowns. "Video conference? No one does that. And if you do… what's wrong with a window in the background?". (After all, it's 2018.)
Katie searches her boss' face for signs of him joking but draws a blank. "You know, when you've got a window behind you, all what people see is a silhouette …"
"Okay…" Hans shrugs. " Well, why not."
A grin lights up her face. "Great! And can we file a patent for this?"
"Naw. The camera's already patented. Even internationally. We'll aim to get the patent granted at ten different patent offices all over the world." He holds up both his hands, all fingers raised.
The camera is launched in late 2019. When the pandemic strikes, video conferencing booms. And so do the sales figures. Everyone loves weeOcolus for its backlight compensation.
The competitors copy the camera. Hans wants to sue—until he realizes that all competing products use only a single motor for autofocus. So, his ten patents are useless.
But all competitors have implemented the backlight compensation.
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So, what do we learn from this?
???The chances that a competitor can circumvent/invalidate your single patent are 50% (or so).
????The chances that a competitor can circumvent/invalidate two different patents of yours are approximately 25% (assuming they are independent).
????I let you do the maths?for three and four patents…
????Therefore: diversify your IP portfolio. Better to have three different patents in your primary markets than one patent in ten countries. And it may cost about the same.
????Avoid bright rear lights during video conferences.
# 4: Believing Shakespeare (about trademarks)
This one is about a quote from Shakespeare's Romeo & Juliet, where Juliet tries to convince Romeo that family names don't matter:
"What's in a name? That which we call a rose by any other name would smell just as sweet."
Don’t believe her! When it comes to trademarks, names do matter.
Listen to Michael’s tale:
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Michael works in the plush toy business, which makes him a regular at the Nuremberg Toy Fair. Today, he strides through the exhibition with confidence, knowing he has something to offer: PUPPYNATOR, the fierce puppy. Ten years back, his attempt to go international with it had failed. After that, he focused on the Swiss market. And last summer, PUPPYNATOR went viral.
Now it is time to explore overseas opportunities once more.
Cradling a sleek, black PUPPYNATOR, Michael approaches the booth cluster of Toys-in-Motion, a large U.S. toy seller. But their advertising stops him short:
?????"Puppynatrix—your kid's guardian."
Cartoon drawings display Puppynatrix's adventures. And beneath them, a pudgy plush puppy ogles him from a pair of friendly eyes.
A salesman approaches Michael. "Can I help you, Sir?"
"You can't do this!" Michael gestures at Puppynatrix. "It's… I've registered the trademark. In the U.S., too."
"Trademark?" The salesman raises a coiffed eyebrow before turning his gaze toward the center of the booth cluster. "Geoff, could you give me a hand here?"
A tie-and-suit rises from a chair. Reaching them, the man scrutinizes Michael. "My name's Geoff Boff." His cold, calculating stare and small smile mark him as corporate legal.
Michael swallows, suddenly feeling he should have dressed in something more business-y than a PUPPYNATOR hoodie. "I've… registered a trademark for this." He holds up his toy, then points it at Puppynatrix.
"May I?" Geoff picks PUPPYNATOR from Michael's hand and gives it a stare. "Yes, we know your little friend. And that old trademark, too." His smile broadens as he scratches the puppy's head. "Alas, the poor creature hasn't been on sale outside Europe for a long time." His smile dissolves. "Hence, your U.S. trademark is void. We filed a request for cancellation a few days back. And anyway, you haven't registered the mark for comics."
The following years will be a treasure trove for lawyers and a bag of puppy shite for Michael.
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So, what do we learn from this?
??Registering a trademark is not enough. In most countries, you must USE the trademark. Otherwise, the registration may become invalid after a certain time.
??Also, register it for ALL classes where you want protection. And use it in all of them.
??Just as for any other IP rights: keep track of what you have and what you should (or shouldn't) do. Because, as you know, "ignorance is the curse of God; knowledge is the wing wherewith we fly to heaven." (Another one from William.)
领英推荐
# 5: Publish and perish (the pros and cons of secrecy)
Christine's story is about IP and making things public.
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Yesterday, Christine posted her company's new product (AI ToasT) on LinkedIn. Today, the post has more than 100k impressions and hundreds of shares.
Christine is thrilled.
Her patent attorney isn't.?
He’s been tasked to draft a patent application for AI ToasT and is still working on it. But once an idea has been published, it’s too late to file a patent—at least in most countries.
Unless you want to cheat, hoping no one will remember that post. But who'd want to cheat? The Internet has a tendency to remember things.
They briefly consider patenting the machine's super-secret bread-browning algorithm, written by Brian-the-Brain, because no details of that algorithm were published in Christine's post. But they decide to keep that secret—safely locked up in Brian's brain.
Three months later, Brian-the-Brain quits his job and goes to work for a competitor, Toasted Treats.
Another two years pass, and Christine's patent attorney discovers a patent application filed by Toasted Treats. It covers Brian-the-Brain's bread-browning algorithm.
That's When Things Get Complicated.?
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So, what do we learn from this?
? If you want to patent something, don't publish it, nor tell third parties about it (unless they are bound by an NDA) until the patent application has been filed.
? If you keep something secret, be aware that third parties might still patent it.?
? If a competitor files a patent, but you have used the invention secretly before the filing date, the competitor can still get at you for patent infringement (at least in countries where you haven't used the invention).
? Once you have filed a patent application, you can publish the idea without jeopardizing the patent application. Publishing the idea before the patent application is officially published (18 months after its first filing) has its pros and cons. Ask an expert ????
And yes, AI Toast is real—it's on LinkedIn, so it must be.
# 6: Abusing the Gnu (dealing with open-source software)
These days, open-source software is everywhere. It's a valuable resource. But when using it commercially, you should know what you're doing and respect its license terms.
Have a look at the tale of Rob, Alexa, and the leaf collector.
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Raking leaves in autumn? No one likes that.
Using a leaf blower for the job? We all hate the noise!
RoboLeaves to the rescue! This nifty little robot prowls your garden, collects all fallen leaves, and bins them.
RoboLeaves is built by Robowobo, and their business runs smoothly until someone finds out that the robot is using a motely mix of proprietary and open-source software. And some of the OSS components come with "non-permissive licenses", such as GPL 3, which Robowobo’s does not comply with.
Rob, Robowobo's CEO, tries to sit out the storm, but the tale of the greedy robot maker abusing free software spreads virally. He decides to have a talk with his head-of-software, Alexa.
"We need to comply with those open-source licenses," Rob says. "The GNU stuff and all of that."
"Well…" Alexa fidgets, visibly not at ease. "It's… complicated."
"Complicated?"
"Yeah… We'll probably have to open-source much of our own code."
"Fine, do that." Rob wants to get this over with.
"That'll make it freely available to our competitors," Alexa says.?
"What does…" He air-quotes. "… freely available…" He air-unquotes. "… mean?"
"Everybody would be permitted to use it…" She shrugs. "… for free."
Rob sighs as a headache forms between his ears. "Okay. Identify what you must make… freely available… and go ahead. Just make this mess go away."
"That's not so easy, Rob… We're literally using hundreds of libraries, some written by ourselves, at least in part, while others come under various OSS licenses. We'll need to make an inventory. Categorize the licenses. And see how we use the libs and what needs to be done."
"Just. Do. It." He gestures at the door.
Alexa gets up. "And, Rob…"
Rob raises a tired eyebrow.
"Our attorney says…" Her voice is small. "… some of those open-source licenses may even be mutually incompatible. Which means, there's no possible way to comply with all of them."
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So, what do we learn from this?
??Keep track of all OSS packages in your products and services. Not only for handling licenses but also for security reasons (patch management).
??Check out the licenses of what you use. Most licenses require attribution: you need to mention that you use a given package. Some require that you make your own software publicly available, often under the same license as the original software. The conditions may depend on how you use the software (e.g., are you using it commercially, are you statically or dynamically linking, and/or have you modified the software?) Some licenses adapt to be used in a mix of closed- and open-source, others are incompatible with that.
??Your developers need guidance for handling OSS. What licenses are permitted? Who keeps track of what is used? What's the approval process?
# 7: Looking not left nor right (further topics)
So, what's IP Blunder # 7?
IP Blunder # 7 is the last one. It's about tunnel view. It's about not looking left nor right.
It starts with the tale of Jack Finch.
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Jack has read all the IP Blunders # 1 through # 6. This makes him an expert in IP. Or so he thinks.
He is the CEO of the Innoflators, a company that develops and sells self-inflating life vests that are not only innovative but also stylish, sporting a smart shark fin at the back.
Jack runs a tight ship. So, he assembles his staff to tell them about the Blunders: about keeping their balance and about not keeping all their eggs in one basket. He advises them not to trust Shakespeare, not to publish and perish, and to be nice to gnus.
Befuddled, the staff retreats to their stations. Jack orders them to set corporate sail.
He feels like a captain, standing at the helm of his vessel, hands firm on the wheel. He steers through uncharted oceans, strong in his confidence. Eyes wide open, he's looking out for gnus, eggs, and Shakespeare, and he makes sure a diverse patent portfolio covers the life vests.
He ignores all the rest.
It's not long before Innoflaters gets an angry letter from a company that has trademarked the word Innoflator for inflatable swimming aids. Then, a competitor imitates the shark-fin design. And finally, a major movie producer sues them for using copyrighted images in advertising. (They are AI-generated images of people in life vests — unfortunately, the images are almost identical to shots from the Titanic movie, except that everybody has a shark fin on their back and six fingers.)
And the cost of their diverse patent portfolio rips a hole in Jack's treasure chest.
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So, what do we learn here?
? IP is about much more than just avoiding a few blunders. My series hasn't touched on design protection, company names, patentability, or plant breeders' rights. Nor did I talk much about the IP aspects of AI, trade secrets, app stores,?collective rights management, database rights, fonts, etc. Other things that might matter are portfolio management, cost control, and tax aspects (patent boxes). To name a few.
Intellectual Property is a weapon to defend creativity, ideas, and spirit. But, just as for any other weapon, wielding it needs skill—and dodging it, too. It takes more than just a few tricks.
If you want to know more about any IP subject, do let me know.?
And tell me what I forgot to mention.
Some further reading
The IP Strategy for the Rest of Us: Advice on devising an IP strategy. What should it contain? How to install one?
Patents—the Art of Spending and Saving: Patent cost management.
Machine-Generated Images and Copyright: Some advice on the IP risks of images generated by AIs. Written in September 2022 before everyone and their dog was barking about the topic.
Copyright in works generated using artificial intelligence: About getting copyright for images you generate using AIs.
The Patentability of Inventions Involving Artificial Intelligence: About patenting AI-implemented inventions.