intellectual property law

Auto Added by WPeMatico

In an increasingly hot biotech market, protecting IP is key

Published July 16, 2021

John Flavin
Contributor

John Flavin is founder and CEO of Portal Innovations, LLC.

Start with an option agreement

Most early-stage biotechnology starts in a university lab. Then, a disclosure is made with the university’s tech transfer office and a patent is filed with the hopes that the product can be taken out into the market (by, for instance, a new startup). More often than not, the vehicle to do this is a licensing agreement.

A licensing agreement is important because it shows investors the company has exclusive access to the technology in question. This in turn allows them to attract the investments required to truly grow the company: hire a team, build strategic partnerships and conduct additional studies.

But that doesn’t mean jumping right to a full-blown licensing agreement is the best way to start. An option agreement is often the better move.

What I learned the hard way from naming 30+ startups

Published July 6, 2021

Drew Beechler
Contributor

Drew Beechler is the director of marketing at High Alpha, a venture studio that creates and funds B2B SaaS companies.

There’s a lot wrapped up in a name: feelings, emotions, connotation, unconscious bias, personal history. It’s an identity — it gives something meaning and importance.

In leading marketing and brand at High Alpha, I think about naming quite a bit. As a venture studio, we co-found and launch five to 10 new software startups every year. It is my team’s responsibility to create and build out the brands for all the new companies we start, including everything from naming and domain acquisition to brand identity and websites. Over the past five years, we’ve named more than 30 software startups at High Alpha.

Over the past five years, we’ve named more than 30 software startups.

As a soon-to-be first-time parent, the idea of naming has taken on a whole new meaning and importance in my life. Even though I help name new companies for a living, I now fully understand the paralysis that often comes when faced with the task of deciding the name for someone or something that’s especially important to you.

Because of this, I’ve always tried to take an objective, pragmatic approach to naming a company with our CEOs and other startups. Naming is an incredibly difficult and nuanced process. It’s fraught with subjectiveness and personal preference. And to top it all off, most founders have zero (or very little) experience in naming.

The truth is that business names fall on a bell curve — you have a small number of outliers that actively contribute to your success and a small number of outliers that actively impair your ability to succeed. The vast majority, though, fall somewhere in the middle in their impact on your business.

So, how should a founder go about effectively naming their baby startup and not picking a name that will hurt them? I’m sharing my own criteria and lessons for how to go about naming your startup, how to evaluate a company name and what makes for a good company name.

Is the name ownable?

As a founder, one of the first criteria to look at is ownability and URL availability. Nowadays, you’ll be hard-pressed to find a name where the .com is still available. I oftentimes will look at .io, .co, get_______.com, or _____hq.com as my top alternatives to a .com, but I always still prefer if the .com is potentially attainable in the future. It may be parked by a domain investor or someone asking a ridiculous price, but that’s always better than an established business using your .com. If not, you will always be fighting a search battle with some other brand that owns your .com.

This goes much further than just the availability of the coveted .com domain, though. You should evaluate the competitiveness and search congestion around your branded keywords. A company named “Apple” or “Lumber” is going to have a really hard time competing for search placements, even if they don’t sell computers or building supplies. An established name and word is also going to come with existing connotations and previous experiences in your audience’s mind. You want a name free from as much baggage as possible so you can easily build your own connotations and memories.

Heirlume raises $1.38M to remove the barriers of trademark registration for small businesses

Published April 30, 2021

Platforms like Shopify, Stripe and WordPress have done a lot to make essential business-building tools — like running storefronts, accepting payments and building websites — accessible to businesses with even the most modest budgets. But some very key aspects of setting up a company remain expensive, time-consuming affairs that can be cost-prohibitive for small businesses — but that, if ignored, can result in the failure of a business before it even really gets started.

Trademark registration is one such concern, and Toronto-based startup Heirlume just raised $1.7 million CAD (~$1.38 million) to address the problem with a machine-powered trademark registration platform that turns the process into a self-serve affair that won’t break the budget. Its AI-based trademark search will flag if terms might run afoul of existing trademarks in the U.S. and Canada, even when official government trademark search tools, and even top-tier legal firms, might not.

Heirlume’s core focus is on leveling the playing field for small business owners, who have typically been significantly out-matched when it comes to any trademark conflicts.

“I’m a senior-level IP lawyer focused in trademarks, and had practiced in a traditional model, boutique firm of my own for over a decade serving big clients, and small clients,” explained Heirlume co-founder Julie MacDonell in an interview. “So providing big multinationals with a lot of brand strategy, and in-house legal, and then mainly serving small business clients when they were dealing with a cease-and-desist, or an infringement issue. It’s really those clients that have my heart: It’s incredibly difficult to have a small business owner literally crying tears on the phone with you, because they just lost their brand or their business overnight. And there was nothing I could do to help because the law just simply wasn’t on their side, because they had neglected to register their trademarks to own them.”

In part, there’s a lack of awareness around what it takes to actually register and own a trademark, MacDonell says. Many entrepreneurs just starting out seek out a domain name as a first step, for instance, and some will fork over significant sums to register these domains. What they don’t realize, however, is that this is essentially a rental, and if you don’t have the trademark to protect that domain, the actual trademark owner can potentially take it away down the road. But even if business owners do realize that a trademark should be their first stop, the barriers to actually securing one are steep.

“There was an an enormous, insurmountable barrier, when it came to brand protection for those business owners,” she said. “And it just isn’t fair. Every other business service, generally a small business owner can access. Incorporating a company or even insurance, for example, owning and buying insurance for your business is somewhat affordable and accessible. But brand ownership is not.”

Heirlume brings the cost of trademark registration down from many thousands of dollars to just under $600 for the first, and only $200 for each additional after that. The startup is also offering a very small business-friendly “buy now, pay later” option supported by Clearbanc, which means that even businesses starting on a shoestring can take the step of protecting their brand at the outset.

In its early days, Heirlume is also offering its core trademark search feature for free. That provides a trademark search engine that works across both U.S. and Canadian government databases, which can not only tell you if your desired trademark is available or already held, but also reveal whether it’s likely to be able to be successfully obtained, given other conflicts that might arise that are totally ignored by native trademark database search portals.

Image Credits: Heirlume

Heirlume uses machine learning to identify these potential conflicts, which not only helps users searching for their trademarks, but also greatly decreases the workload behind the scenes, helping them lower costs and pass on the benefits of those improved margins to its clients. That’s how it can achieve better results than even hand-tailored applications from traditional firms, while doing so at scale and at reduced costs.

Another advantage of using machine-powered data processing and filing is that on the government trademark office side, the systems are looking for highly organized, curated data sets that are difficult for even trained people to get consistently right. Human error in just data entry can cause massive backlogs, MacDonell notes, even resulting in entire applications having to be tossed and started over from scratch.

“There are all sorts of data sets for those [trademark requirement] parameters,” she said. “Essentially, we synthesize all of that, and the goal through machine learning is to make sure that applications are utterly compliant with government rules. We actually have a senior-level trademark examiner that came to work for us, very excited that we were solving the problems causing backlogs within the government. She said that if Heirlume can get to a point where the applications submitted are perfect, there will be no backlog with the government.”

Improving efficiency within the trademark registration bodies means one less point of friction for small business owners when they set out to establish their company, which means more economic activity and upside overall. MacDonell ultimately hopes that Heirlume can help reduce friction to the point where trademark ownership is at the forefront of the business process, even before domain registration. Heirlume has a partnership with Google Domains to that end, which will eventually see indication of whether a domain name is likely to be trademarkable included in Google Domain search results.

How tech companies measure ‘legal’

This initial seed funding includes participation from Backbone Angels, as well as the Future Capital collective, Angels of Many and MaRS IAF, along with angel investors including Daniel Debow, Sid Lee’s Bertrand Cesvet and more. MacDonell notes that just as their goal was to bring more access and equity to small business owners when it comes to trademark protection, the startup was also very intentional in building its team and its cap table. MacDonell, along with co-founders CTO Sarah Ruest and Dave McDonell, aim to build the largest tech company with a majority female-identifying technology team. Its investor make-up includes 65% female-identifying or underrepresented investors, and MacDonnell says that was a very intentional choice that extended the time of the raise, and even led to turning down interest from some leading Silicon Valley firms.

“We want underrepresented founders to be to be funded, and the best way to ensure that change is to empower underrepresented investors,” she said. “I think that we all have a responsibility to actually do something. We’re all using hashtags right now, and hashtags are not enough […] Our CTO is female, and she’s often been the only female person in the room. We’ve committed to ensuring that women in tech are no longer the only woman in the room.”

Conflicts in California’s trade secret laws on customer lists create uncertainty

Published November 12, 2020

Nick Saenz
Contributor

Nick Saenz is a partner at Lewis & Llewellyn LLP, who focuses on employment and trade secret issues.

California law invalidates non-competition agreements

In the vast majority of states, employers can, and do, require employees to enter into some form of non-competition agreement in exchange for continued employment.¹ In contrast, California has a long-standing policy of favoring employment mobility over an employer’s concerns. California’s policy is embodied in Business and Professions Code section 16600, which provides: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

California courts “have consistently affirmed that section 16600 evinces a settled legislative policy in favor of open competition and employee mobility” that is intended to “ensure that every citizen shall retain the right to pursue any lawful employment and enterprise of their choice.”² The policy also allows California employers to “compete effectively for the most talented, skilled employees in their industries, wherever they may reside.”³ Accordingly, unlike in most states, the “interests of the employee in [their] own mobility and betterment” generally outweigh the “competitive business interests of the employers.”⁴

Courts have broadly applied section 16600, invalidating non-competition agreements, which would prohibit or restrict an employee from leaving to work for a competitor.⁵ Importantly, courts have also invalidated contractual provisions purporting to restrict an employee’s ability to leave and then solicit the company’s customers.⁶ In other words, a salesperson cannot be contractually precluded from leaving their company, joining a competitor and continuing to solicit, service and communicate with their former company’s clients. Furthermore, with limited exceptions, California courts will disregard a “choice of law” provision purporting to mandate that the court follow the law from a state that enforces noncompetes.⁷

Google launches the Open Usage Commons, a new organization for managing open-source trademarks

Published July 8, 2020

Google, in collaboration with a number of academic leaders and its consulting partner SADA Systems, today announced the launch of the Open Usage Commons, a new organization that aims to help open-source projects manage their trademarks.

To be fair, at first glance, open-source trademarks may not sound like it would be a major problem (or even a really interesting topic), but there’s more here than meets the eye. As Google’s director of open source Chris DiBona told me, trademarks have increasingly become an issue for open-source projects, not necessarily because there have been legal issues around them, but because commercial entities that want to use the logo or name of an open-source project on their websites, for example, don’t have the reassurance that they are free to use those trademarks.

“One of the things that’s been rearing its ugly head over the last couple years has been trademarks,” he told me. “There’s not a lot of trademarks in open-source software in general, but particularly at Google, and frankly the higher tier, the more popular open-source projects, you see them more and more over the last five years. If you look at open-source licensing, they don’t treat trademarks at all the way they do copyright and patents, even Apache, which is my favorite license, they basically say, nope, not touching it, not our problem, you go talk.”

Traditionally, open-source licenses didn’t cover trademarks because there simply weren’t a lot of trademarks in the ecosystem to worry about. One of the exceptions here was Linux, a trademark that is now managed by the Linux Mark Institute on behalf of Linus Torvalds.

With that, commercial companies aren’t sure how to handle this situation and developers also don’t know how to respond to these companies when they ask them questions about their trademarks.

“What we wanted to do is give guidance around how you can share trademarks in the same way that you would share patents and copyright in an open-source license […],” DiBona explained. “And the idea is to basically provide that guidance, you know, provide that trademarks file, if you will, that you include in your source code.”

Google itself is putting three of its own open-source trademarks into this new organization: the Angular web application framework for mobile, the Gerrit code review tool and the Istio service mesh. “All three of them are kind of perfect for this sort of experiment because they’re under active development at Google, they have a trademark associated with them, they have logos and, in some cases, a mascot.”

One of those mascots is Diffi, the Kung Fu Code Review Cuckoo, because, as DiBona noted, “we were trying to come up with literally the worst mascot we could possibly come up with.” It’s now up to the Open Usage Commons to manage that trademark.

DiBona also noted that all three projects have third parties shipping products based on these projects (think Gerrit as a service).

Another thing DiBona stressed is that this is an independent organization. Besides himself, Jen Phillips, a senior engineering manager for open source at Google is also on the board. But the team also brought in SADA’s CTO Miles Ward (who was previously at Google); Allison Randal, the architect of the Parrot virtual machine and member of the board of directors of the Perl Foundation and OpenStack Foundation, among others; Charles Lee Isbell Jr., the dean of the Georgia Institute of Technology College of Computing, and Cliff Lampe, a professor at the School of Information at the University of Michigan and a “rising star,” as DiBona pointed out.

“These are people who really have the best interests of computer science at heart, which is why we’re doing this,” DiBona noted. “Because the thing about open source — people talk about it all the time in the context of business and all the rest. The reason I got into it is because through open source we could work with other people in this sort of fertile middle space and sort of know what the deal was.”

Update: even though Google argues that the Open Usage Commons are complementary to other open source organizations, the Cloud Native Computing Foundation (CNCF) released the following statement by Chris Aniszczyk, the CNCF’s CTO: “Our community members are perplexed that Google has chosen to not contribute the Istio project to the Cloud Native Computing Foundation (CNCF), but we are happy to help guide them to resubmit their old project proposal from 2017 at any time. In the end, our community remains focused on building and supporting our service mesh projects like Envoy, linkerd and interoperability efforts like the Service Mesh Interface (SMI). The CNCF will continue to be the center of gravity of cloud native and service mesh collaboration and innovation.”

IP strategy: How should startups decide whether to file patents

Published July 3, 2019

Bryant Lee, Ed Steakley & Saleh Kaihani
Contributor

Bryant Lee is the co-founder and managing partner of Cognition IP, a YC-backed IP law firm for startups. Ed Steakley was the Head of IP at Airware and Senior Patent Counsel at Apple. Saleh Kaihani is a partner at Cognition IP.

Deciding what to patent can be a confusing process but by creating a formal process it is something that every startup can manage.

Intellectual property (IP) is one of the most valuable assets of a startup and patents are often chief among IP in terms of value. Patents allow the startup to prevent competitors from using their technology, which is a powerful feature that can grant unique advantages in the marketplace.

From a business perspective, patents can help with driving investment and acquisitions, provide protection during partnerships and business deals, and help defend itself against patent lawsuits by others.

However, startups also often have a hard time determining when and what to patent. Innovative startups are inventing new things on a regular basis, and there is a danger of slipping into a haphazard approach of patenting whatever happens to be available rather than systematically analyzing the business needs of the company and protecting the IP that moves the needle the most.

Moreover, startups must balance the need to protect IP with other areas of the business: Patents are complex documents that require an investment of time and resources to obtain. They often require specialized legal counsel to write and a lengthy examination process at the U.S. Patent & Trademark Office (USPTO).

This article is a how-to guide for startups to make the decision on when and what to patent with a mature approach to IP strategy.

Creating a regular IP harvesting process

In order to make a decision about what to patent, a startup must first know what IP it has. For very small teams, it may be possible for everyone to have a shared idea of the IP. However, once teams grow beyond a few people, it is no longer possible to have complete visibility into what everyone on the team is doing and potentially inventing. Therefore, a regular IP harvesting process must be put in place to ensure proper reporting of IP to the executive level.

Most startups are best served with a simple IP harvesting process involving just three steps: (1) disclosure (2) invention review and (3) patent filing. In the disclosure stage, employees who are in IP creation roles must be trained to disclose ideas that are potentially protectable IP.

Leaving for a competitor? Onboarding new employees? Avoid accusations of trade secret theft

Published June 18, 2019

Nick Saenz
Contributor

Nick Saenz is a partner at Lewis & Llewellyn LLP, a boutique litigation firm in San Francisco specializing in complex corporate litigation.

When a company hires talent away from a competitor, onboarding the new employee can pose significant legal risks for both the company and the new employee. A fundamental aspect of Silicon Valley is that employees are generally free to move between competitors.

This unrestricted movement of talent facilitates the robust competition that helps drive the Silicon Valley economy. While this is no doubt positive, unfettered employment mobility also creates unique challenges when it comes to protecting a company’s trade secrets, which are the lifeblood of many Silicon Valley companies.

Because of California’s policies regarding free employment mobility, unlike in most other states, California companies cannot protect their trade secrets with non-compete contracts. So, they instead rely heavily on trade secret laws for protection.

And, of course, when trade secret theft occurs, it is often when an employee transitions from one company to another. Thus, when a key employee gives notice that he or she is leaving for a competitor, it sets off alarm bells for the soon-to-be former company.

Unfortunately, because of the hypersensitivity to protecting trade secrets, many departing employees who have no interest in actually taking their former company’s trade secrets get accused of theft. This allegation can trigger a long, stressful, expensive legal process for both the employee and the new company, and sometimes cost the employee his or her reputation and new job.

This article explains how this situation arises and provides some practical considerations for how the employee transitioning jobs, and the onboarding company, can avoid an unnecessary legal fight.