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How to Avoid Five Common IP Pitfalls

Eric Snustad is a shareholder with Fredrikson & Byron, focusing on prosecuting and managing patents. He also advises clients on how to stop or prevent infringement of their intellectual property. His email is [email protected]

When your company hires a consultant, engineering firm or design firm to create inventions for your company, get a written agreement that assigns the resulting inventions and patents to your company.

Without a written agreement, the consultant or firm that created the invention for your company will own the resulting patent, even though you paid them to create it. Your company may have the right to use the invention, but the consultant or firm will own the patent.

Make sure your trademark position is solid.

Pick your trademarks wisely. Select trademarks that are available for you to use, and that you can protect. When you have a particular trademark in mind, have a trademark attorney check to see if it appears to be available and protectible. One goal is to avoid receiving a cease and desist letter from someone who was already using the same trademark or another trademark that is different but still confusingly similar. It can be a costly headache when you are forced to switch to a different trademark after already having launched with a first trademark.

Protect your trademarks, at least your main trademarks, by filing federal trademark applications and prosecuting those applications to obtain federal trademark registrations. The goal is to have a valuable trademark that you can prevent others from using.

For employees who may create inventions or copyrightable material while working for your company, have them sign a written agreement that assigns to your company the resulting inventions, patents, works of authorship, and copyright.

When an invention or copyrightable material is created by an employee who has not signed an assignment agreement, it can create headaches. In some cases, the employee inventor will own the resulting patent, even though you paid them to create the invention. In those cases, your company may have the right to use the invention, but the employee will own the patent. In other cases, if the employee was an engineer who was “hired to invent,” then the employee may be obligated to assign the resulting patent to your company. It is best, however, to execute an assignment agreement that makes it crystal clear that your company owns any resulting inventions, patents, works of authorship and copyright.

Employment agreements often include IP assignment provisions. Such provisions, however, can alternatively be included in other types of agreements, such as employee confidentiality agreements. Regardless of the particular type of agreement in which you include the IP assignment provisions, the agreement should be signed right away when an employee starts working for you/is onboarded.

Otherwise, the employee might be able to argue that the agreement was invalid, depending on the laws of the state in question. Furthermore, the agreement should include a present assignment of future inventions (as opposed to merely saying the employee “agrees to assign” future inventions).

Finally, a number of states (e.g., California, Delaware, Illinois, Kansas, Minnesota, Nevada, New Jersey, North Carolina, Utah, and Washington) have specific laws on assignment of employee inventions. Some state laws create restrictions on the scope of employee inventions for which employers can require assignment. And some state laws have specific provisions or notices that employers are supposed to include in agreements when requiring employees to assign inventions and patents to the company.

In the absence of an appropriate assignment agreement, your company may not have the IP rights it needs.

Whenever possible, file your patent application before starting to sell the invention and before disclosing it outside your company.

To obtain valid patent protection in the U.S., it is necessary to file your patent application within one year from when you first sell the invention, offer the invention for sale, or disclose the invention publicly. This one-year period is sometimes called a “grace period.” In many foreign countries, however, there is no grace period. In those countries, to obtain valid patent protection, it is necessary to file your patent application before disclosing the invention publicly. It is therefore best, whenever possible, to file your patent application before starting to sell the invention and before disclosing it outside your company. Otherwise, you may immediately lose the ability to obtain a valid patent in some foreign countries.

And remember that in the U.S., if you have already begun selling your invention, or you have already disclosed it publicly, but not more than one year ago, you can still file your U.S. patent application, but it must be filed within one year from when you first sold the invention, offered the invention for sale, or disclosed the invention publicly.

When your company hires a developer to create software or other copyrightable material for your company, make sure you get a written agreement assigning copyright to your company.

Without a written agreement, the person who created the software or other copyrightable material will own the copyright, even though you paid them to create it. While you may have a license to use the material, it may be limited and not what you wanted.

To avoid these pitfalls, consider working with a skilled and experienced attorney who can assess your business needs and ensure your intellectual property assets are covered by the necessary documentation. Corporate attorneys Michael Raum and David Tibbals, along with myself, would be delighted to work with you to avoid these common pitfalls.

Written by Fredrikson & Byron

Fredrikson & Byron is a 290-attorney law firm based in Minneapolis, with offices in Bismarck, Des Moines, Fargo, Mankato, St. Paul, Saltillo, Mexico, and Shanghai, China. Fredrikson & Byron has a reputation as the firm “where law and business meet”. Our attorneys bring business acumen and entrepreneurial thinking to work with clients, and operate as business advisors and strategic partners, as well as legal counselors.

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