The other side of non-disclosure agreements

 

Richard Gearhart, Esq., Founder, Gearhart Law

What is the purpose of a non-disclosure agreement (NDA)?

Many inventors and investors alike think an NDA exists solely to protect an idea or invention from thievery.  Based on that, the investor may balk at signing it.  Why would an investor steal your idea when he or she is funding it, after all? 

BUT – Although the NDA does guard against theft of your intellectual property, it has another, and, I would argue, almost more important function in the patent world.

How could that be?  First let’s talk about what a public disclosure is and how an NDA prevents this, then we’ll discuss why it means so much for patents.   A public disclosure happens when you tell another person about your invention (unless they’re a co-inventor).   But, if you have a signed NDA from the person with whom you’re discussing the invention, then it’s not public, so no public disclosure has taken place.

Who cares about a public disclosure?  The US patent office does, and foreign patent offices too, but they’re much more strict.  In the US, you have one year in which to file a patent after a public disclosure.  In legalese it’s called a ‘one year bar’.  If you don’t file within that year, you can NEVER get a patent on your invention as disclosed.  If you make significant changes to your invention you may be able to patent the modified version, but that’s not even a sure bet. 

How can foreign countries be more strict than that?  They don’t even give you that year.  Once you’ve made a public disclosure of your invention, you can NEVER get a patent in Europe or in a number of other countries either.  In legalese that’s called an ‘absolute bar’.

So what is a public disclosure?  It’s telling anyone about your idea or invention if they’re not a co-inventor and they haven’t signed an NDA.  You may do this, for instance, if you present a detailed description of your invention at a conference, during a pitch presentation, display it at a trade show, or even sell just one item or tell one investor.  If you do that, you’d better have a patent on file already or you’ve just lost all of your patent rights in Europe and other countries for that invention.

Please note – you can tell your patent professional about your invention without its being a public disclosure.  Most patent professionals (and certainly the team here at Gearhart Law) have a blanket NDA covering everything they discuss with clients.  If you’re using a law firm, you also have attorney/client privilege, and your attorney won’t discuss your idea with anyone else without your permission.

So yes, the NDA protects against thievery, and unfortunately thievery does happen.  But if you’re working with an investor who doesn’t want to sign an NDA because he or she isn’t a thief and expects you to trust them, please tactfully remind them of the importance of the NDA for preserving your patent rights in Europe and elsewhere.

 

Israel and Innovation - a Good Match


written by David Postolski, Patent Attorney at Gearhart Law

Having been invited to present at the AIPLA and AIPPI Conference March 20-22, 2016, in Tel Aviv to speak about Post Grant Review proceedings for patents, I was honored to travel to Israel. I must admit that my trip to Israel was one filled with doubt and fear of the unknown, having not been there for almost 15 years, and never having gone as a professional Intellectual Property attorney.

However now my trip to the Holy Land of Israel is complete. Wow! To sum it up: Having traveled there before because my father is in fact Israeli the surprise had more to do with my first time being in Israel as a professional, in a suit, with cufflinks, and as part of the AIPLA (American Intellectual Property Law Association) delegation of 13 U.S. Intellectual Property and patent lawyers and as a speaker at the AIPPI (International Association for the Protection of Intellectual Property) Conference on the economy of innovation. 

Israel takes its IP seriously both in high tech and life sciences and rightfully so, as it is the startup nation and is now known as the scale up nation. Israel has the highest per capita of Ph.D.s and the technology and Pharma research to back it up.  Speaking on post grant review proceedings was an honor and experiencing Israel through the eyes of their patent attorneys (equivalent to U.S. patent agents) was rather eye opening for me.  

The delegation tour started with a visit to Israel’s Ministry of Justice IP division where we met with advocate Howard Poliner and then continued to the Israel patent office where we met with the commissioner of patents Asa Kling.  The discussion was not only exciting but eye opening to learn of Israel’s high ranking place in the world of innovation and international patent filings.  We then visited the first of two technology transfer offices of Israel’s largest universities. First, we visited Yissum Research and Development Hebrew University in Jerusalem (responsible for diverse inventions ranging from the seedless cherry tomato, Mobileye technology for automobiles and their dementia drug Exelon). A few days later we visited the technology transfer office of Ben Gurion University, a world leader in agricultural innovations. The university is located in a cyber park in the city of Be'er Sheva, which is fast becoming and is appropriately named Israelis hi-tech park. Companies from all over the world have opened offices there and the energy is frenetic and exciting to be around. 

At the Conference we heard from many dignitaries including but not limited to Israel’s Minister of Justice Ayelet Shaked, Israel Supreme Court Justice Hanan Melcer,  India Supreme Court Justice AK Sikri, Director General of the World IP Law Organization (WIPO) and members of Israel’s Chief Scientist Office (CSO). The CSO mission is to match and fund businesses that want to move into world markets as well as assist U.S. businesses to move into and break into markets.   Due to its size it's very easy to see that the key innovation players in Israel have put the country in a strategic place among the top five countries for IP (U.S., Europe, China, Japan, and Korea).   

When God spoke to Moses at the burning bush, Israel was referred to as a "good and spacious land, a land flowing with milk and honey..."  Scholars have said that the key word is "flowing." Fruit trees grow in many different terrains, but their produce only overflows with nectar or honey when the land is especially fertile.  Similarly, animals survive in many habitats, but only overflow with milk when they are in particularly fertile pastures.  Thus, Israel is often referred to as a "land flowing with milk and honey" as it is indicative and symptomatic of a greater good—the fertility of the Promised Land.  Israel is now known as the startup nation or in more recent years the scale up nation. Innovation is in their DNA. Invention is what built Israel as the startup nation and invention will take this fertile nation of entrepreneurs and lead them into the future as the scale up nation. 



 

 

Michele Logan, CEO of CompoSecure to speak at FDU on April 1st

 

                                

                               Michele Logan, CEO of CompoSecure

written by Elizabeth Gearhart, Ph.D., patent agent at Gearhart Law

We all use them.  Credit cards, debit cards, gift cards, etc.  But have you ever thought about how they’re made?  Maybe you have a new ‘chip’ card.  How do they encrypt the cards to keep your bank account safe? 

Michele Logan, CEO of CompoSecure will tell all (well, probably not ALL!).

Michele will be presenting the 13th Annual Female Entrepreneur Lecture at Fairleigh Dickinson University on April 1st at 7pm in Lenfell Hall at The Mansion. 

                  RSVP at www.myfdu.net/njbizidea
             The cost of $35.00 includes hors d'oeuvres and refreshments.

Michele, who has an MBA from Fairleigh Dickinson U., started the business in 2000 with partners John Herslow and Luis Dasilva, who had all worked together at Sillcocks Plastics.  Their combined talents resulted in tremendous innovation and business growth that led them to move their plant to Somerset in 2014. 

This event is presented by the Silberman School of Business and The Rothman Institute of Innovation and Entrepreneurship at FDU. This truly is a New Jersey success story, so please join us for an interesting evening this Friday.  We’re all sure to learn something new!

 

IP protection in Cuba

                       

written by Elizabeth Gearhart, Ph.D., patent agent at Gearhart Law

I want to do business in Cuba – can I get patent and trademark protection there?
Short answer – yes!

Let’s start with patents.
In order to file patent applications in other countries, a U.S. inventor must first file in the U.S., then they may file, or ‘nationalize’ in other countries.  There is a way to hold your filing date in a number of foreign countries (148 as of today) while you decide which ones are the best to pursue nationalization in for your product, and that is to file a ‘PCT’ application once your U.S. patent application is filed.  Once the PCT application is on file, you have 18 months to decide which countries you want to do business in.   

PCT is short for Patent Cooperation Treaty, which is a treaty that countries sign on to, with a set of rules for filing in each others’ countries.   The U.S. joined the PCT in 1978.  For a list of member countries, click here.  Using the PCT saves entrepreneurs a lot of money.

Is Cuba part of the Patent Cooperation Treaty (PCT)?
Yes, Cuba joined the PCT in 1996.  That means that if you’ve filed a PCT application for your patent, you can choose to nationalize the patent in Cuba and keep your original filing date (very important for ‘first to file’ countries such as Cuba!).   Nationalization means that you go through all the steps in Cuba that you would in the U.S., with a patent examiner, office actions, etc.  It’s expensive, so most people choose their nationalization countries after having tested their product in the markets there while their product has ‘patent pending’ status.

What about Trademarks?
A system similar to the PCT exists for trademarks.  It’s called the ‘Madrid Protocol’ and has 97 contracting countries.  You can see the list here.

Is Cuba part of the Madrid Protocol?
Yes, Cuba joined the Madrid Protocol in 1995, and is a ‘first to file’ country for trademarks as well as patents.

How do I get started doing business in Cuba?
There are already some big businesses operating in Cuba, and more ready to go.  Airbnb is ready to help American Tourists visit the country as soon as possible, and cruise ships are adding Cuba as a port of call.  There are people who are experts in dealing with business in Cuba, I would contact one of them if I were considering doing business there, after I got my PCT and Madrid Protocol applications filed.   And I’d brush up on my Spanish!

 

Behind the Scenes at The NJ Devils & Hockey too! April 9th starting at 5pm

                             


New Jersey Devils Behind the Scenes Panel Discussion:
The Technology, Social Marketing & Operations of the only major professional sports team to embrace the NJ name
Last regular season game immediately after - fan appreciation night!
Saturday April 9th 5pm at The Prudential Center in Newark

Hosted by Morris Tech Meetup in conjunction with New Jersey's other Top Tech Meetups - sign up here:  NJ Devils/Tech Meetup - families welcome!

Technology – From senior technology executives and engineers, possibly including the President and CTO, on how the NJ Devils use technology in their everyday operations, how technology has changed professional sports organizations over the last 20 years and innovations planned for the future.

Social Media, Marketing & Communications – How do the Devils communicate with fans, sponsors and the community? How have they harnessed current technology to increase attendance and involvement? How do they interact with fans during the game day experience?

Game Day Operations & Scoreboard – What goes into hosting up to 20,000 people on game day? How does staff (security, vendors, executives) communicate and ensure a quality experience for fans? What systems and logistics go into the scoreboard, PA and arena mounted displays during a game?

Ice Surface Maintenance – How do they switch from hockey to concerts and how fast? How is the symbols and ads painted on the surface? How do they melt and bring back the ice surface?


Hosting at The Prudential Center in Newark NJ
SATURDAY, APRIL 9, 2016 at 5:00 PM
Our group will enter at the VIP EAST entrance and will be directed or escorted to the private meetup space from there
$45 for the entire event includes:
* Meetup featuring a panel discussion of NJ Devils executives which may include the President, CTO, Chief Engineer of the Prudential Center and other technology and marketing staff. Cash bar available
* Enjoy Fan Appreciation Night at the last game of the season vs Toronto Maple Leafs. Puck drops at 7:00pm. Fireworks outside the arena about a half hour after the game.
* Price of ticket includes a $10 meal voucher!!!
* Depending on size of group, after game activities may include: Group photo on the game ice or using NHL hockey sticks to shoot pucks into a net from the blue line

Sign up at Event Bright here: NJ Devils/Tech Meetup

Patents by State - how does your state stack up?


 

written by Elizabeth Gearhart, Ph.D., Patent Agent at Gearhart Law

Which state had the most patents granted in 2014?  Who came in second?  Which foreign country had the most US patents granted in 2014?  The answers may surprise you, or not!  The USPTO keeps tracks of these stats and lists them here.

In brief, the 5 states with the highest numbers were:
California - 40,661
Texas - 10,022
New York - 8904
Massachusetts - 6,725
Washington - 6,448

New Jersey wasn't too far behind with 5,036.

Apple, Microsoft and IBM, to name a few, had a lot to do with those numbers.  But a host of innovation comes from small enterprises, people like you, smart inventors with great ideas who don't have the backing of a giant corporation.

Which foreign country was the highest?  I was a little surprised to see that Japan led the pack with 53,849 US patents granted in 2014. 

The top 5 were:
Japan - 53,849
Germany - 16,550
South Korea - 16,469
Taiwan - 11,332
China - 7236
 
Total US patents granted in 2014, both for US and foreign applications?  300,678. 

For 2014 there were 144,621 US patents granted to US inventors, and 156,057 US patents granted to inventors from foreign countries.  

Ten years before in 2004 it was just 164,290, about half. The breakdown between US and foreign inventors tracked about the same.

What does this mean for you?  If you've got an idea, you're in good company!  Do you absolutely need to get a patent?  No, but it's a good idea.  There are different types of patents that cost varying amounts and offer differing levels of protection, and there are also trade secrets, trade marks and copyrights, all of which fall under the Intellectual Property umbrella.  If you're serious about taking your idea to the next level, talk to an Intellectual Property professional to see what strategy is best for you. 

Happy inventing!

Richard Branson in Livestream presentation Feb. 18th 6-9pmET

 posted by Elizabeth Gearhart, Ph.D., patent agent at Gearhart Law

 

Richard Branson, Entrepreneur, founder of Virgin Group

Join the conversation!  Entrepreneur.com has teamed up with General Assembly to produce a livestreamed presentation by Richard Branson, one of the world's most famous and successful entrepreneurs, on how to take your business to the global stage.

Held in Los Angeles on February 18, 2016, from 6-9pm ET, anyone can join by clicking on the link below, which takes you to the Entrepreneur.com site where you can watch the livestream:

Entrepreneur Richard Branson Livestream

Livestream viewers will be able to tweet questions before and during the live event using the hashtags #GALive and #LetItFlyLA.

Don't miss this great opportunity to hear one of the world's greatest entrepreneurs!

 

 

Applications for the National Medal of Technology and Innovation open until April 1st

Re-posted from the USPTO website by Elizabeth Gearhart, Ph.D., patent agent at Gearhart Law

*National Medal of Technology and Innovation (NMTI)

 

Medal image reads "National Medal of Technology and Innovation"Are you an innovator?  You can apply for this prestigious award, but make sure you get your application in by
April 1st!

The National Medal of Technology and Innovation (NMTI) is the nation’s highest honor for technological achievement, bestowed by the president of the United States on America's leading innovators. 

The medal is awarded annually to individuals, teams (up to four individuals), companies or divisions of companies for their outstanding contributions to America’s economic, environmental and social well-being. The purpose of the National Medal of Technology and Innovation is to recognize those who have made lasting contributions to America's competitiveness, standard of living, and quality of life through technological innovation, and to recognize those who have made substantial contributions to strengthening the nation's technological workforce.

By highlighting the national importance of technological innovation, the medal is also meant to inspire future generations of Americans to prepare for and pursue technical careers to keep America at the forefront of global technology and economic leadership.

Established by the Stevenson-Wydler Technology Innovation Act of 1980, the medal was first awarded in 1985. On Aug. 9, 2007, the president signed the America COMPETES (Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science) Act of 2007, amending Section 16 of the Stevenson-Wydler Technology Innovation Act of 1980.

Selection Process

The National Medal of Technology and Innovation Nomination Evaluation Committee, a distinguished, independent committee appointed by the secretary of commerce, reviews and evaluates the merit of all candidates nominated through an open, competitive solicitation process. The committee makes its recommendations for medal candidates to the secretary of commerce, who in turn makes recommendations to the president for final selection. The National Medal of Technology and Innovation Laureates are announced by the White House and the Department of Commerce once the medalists are notified of their selection.

*Re-posted from the USPTO website:

http://www.uspto.gov/learning-and-resources/ip-programs-and-awards/national-medal-technology-and-innovation/national.html 

David Postolski, IP Attorney, to present at APAP NYC

 

Written by Elizabeth Gearhart, Ph.D., Patent Agent at Gearhart Law

 

David Postolski, Esq. , Intellectual Property Attorney at Gearhart Law, to present at APAP NYC on January 15, 2016 at the Midtown Hilton

APAP, the Association of Performing Arts Presenters, is holding its annual conference in NYC January 15-19 at the New York Hilton in Midtown as part of January in NYC.  “More than 3,600 presenters, artists, managers, agents and emerging arts leaders from all 50 U.S. states and more than 30 countries convene in the city for five days of professional development, business deals and exciting performances.” (from the APAP website).

Gearhart Law’s David Postolski will be giving two panel presentations on January 15th, one at 1pm and the second at 2pm in the Hilton Room on Concourse C.  The topic is “Intellectual Property Considerations in Representing Talent.”  David is an engaging speaker and is very knowledgeable on IP law and how it relates to the Performing Arts.  If you are an artist, actor, performing arts professional, or involved with the creative arts in any way, this is information you can’t miss!

You can find out more about the conference at APAP 2016 Conference and more about David’s presentation at IP Panel or by emailing David at David@GearhartLaw.com or calling him at 908-273-0700 (office) or 646-644-2959 (cell).

 

Spotify - in hot water?

Is Spotify® in Hot Water?

Written by Matt Miller, Esq., Patent Attorney at Gearhart Law

Remember Entrepreneurs, sloppy logging of agreements or failing to honor existing agreements can land you in hot water, which is a lesson that Spotify is learning the hard way.

Spotify, the popular music-streaming service that has, in the minds of some, revolutionized the music industry’s business plans, may be in hot water for failing to pay artists proper royalties. David Lowery, a member of the groups Cracker and Camper Van Beethoven has filed suit in Federal District Court accusing Spotify of foul play. Before those allegations are addressed, it is helpful to look at how Spotify claims their artist-compensation program works.

Spotify generates money for the music industry by either (1) charging users a premium for an ad-free service, or (2) offering users a free service, which contains paid advertisements. Through these two revenue streams, according to Spotify, artists and record labels received “nearly 70% of all revenues.” Digging a little deeper, we see that Spotify follows the below equation to determine how much a given artist gets paid.

http://www.spotifyartists.com/site/wp-content/uploads/2013/09/Spotify-Royalty-Formula.png

© Spotify Ltd 2016

 

As a guide to the above equation, Spotify provides the following information:

“1. Spotify Monthly Revenue

The total revenue Spotify makes in a given month from advertising and subscriptions as explained above. This varies from country to country depending on a range of factors including how many users we have in that country, how many of them are premium subscribers and how much advertising we sell in that country.

2. Artist’s Spotify streams divided by total Spotify streams

This calculates an artist’s popularity on the service, their “market share.” Dividing an artist’s streams by the total streams on Spotify determines the percentage of our total pay-outs that should be paid for that artist’s rights.

3. Royalties paid to master and publishing owners

Spotify negotiates our royalty economics with labels and publishers in each territory where we operate. Our current payment agreements lead us to distribute (~)approximately 70% of our gross revenues to master recording and publishing rights (both mechanical reproduction and performance) holders. The precise division between these types of rights holders varies by territory in accordance with local laws and negotiated agreements. In the United States, for example, statutes dictate that publishers receive ~21% the amount that master recording owners receive.

4. Artist’s royalty rate

Once Spotify has paid a rights owner the total royalties due for their accumulated streams, that label or publisher pays each artist according to that artist’s contractual royalty rates. This will likely also take into account other factors including recoupment status, which is one reason that different artists in different deals might ultimately receive different royalties from their respective labels and publishers.

Independent artists can retain up to 100% of their royalty payouts from Spotify by using one of our aggregator partners (a small fee may apply). Click here for a list of these partners.

5. Artist Pay Out

The end royalty paid out to the artist after the rights holder royalty split and any other deductions have been applied.”

 

While this all seems well and good, Spotify has recently been accused of having incorrect royalty information for a given artist, and for not taking affirmative steps to pair a song’s royalty information to a given song, allowing for Spotify users to stream the track, but without the owners of the songs being compensated for this stream.

As noted above, leading this charge is David Lowery, who has filed suit in the United States District Court for the Central District of California. Lowery is seeking class-action status which would allow him to sue on behalf of all of the allegedly jilted rights holders. If Lowery is able to get this case certified as a class-action, Spotify could be liable for damages totaling $150 million.

If what Lowery alleges is true, Spotify could find themselves liable for breach of contract and copyright infringement among other things. That said, if Spotify shows evidence of them honoring the existing agreements, or that there are not errors in their database, they could escape liability. Another confounding factor is whether or not the improper linking information was incomplete purposefully. If so, Spotify could find itself on the hook for triple the amount of damages for accidental infringement.

Since this lawsuit was only filed recently, it is too soon to evaluate the merits of Lowry’s claims. That said, if you’re looking for how you can avoid this type of situations you can (1) keep complete, thorough records, (2) honor your agreements, and (3) make sure that any electronic database you keep is periodically monitored for errors.