Define and Assign Inventor Rights Ahead of Time

In business and in life, there’s really no way to prevent a motivated adversary from trying to do you harm. Plain and simple, if someone wants to create a stir, he or she can do so by leveling claims and accusations, whether warranted or not.

Of course, “trying” to do harm and actually “doing” harm are two entirely different things. Smart business leaders take steps to protect their organizations through preventive measures, such as agreements that govern certain rights and responsibilities among parties. This often precludes situations from ever arising because parties to an agreement or a relationship know the “rules” ahead of time.

Should a situation arise, prudent business leaders also do their due diligence to refute any claims against them through expert research, fact-finding, and qualified legal representation. They know they while they can’t stop frivolous or inflammatory actions by others, they can beat those claims if the facts and the law are on their side.

When the Unthinkable Happens

In an earlier blog, How You Can Avoid the Nightmare of a Rogue Employee Stealing Your IP and Trade Secrets, we explored how one rogue employee quit and proceeded to cause major headaches for the former employer. In this case, written agreements were in place to document the nature of the company and the employee’s relationship, including a clear delineation of intellectual property and inventor rights and how they were assigned to the company. However, that didn’t stop said employee from stealing the company’s intellectual property and trade secrets upon exit while also blocking access to the company’s business and inventory systems, including company email.

“In the past couple of months, there have been significant developments in this ongoing situation,” explains Eric Ludwig, whose California-based law firm, Ludwig APC, represents the company in this matter. “The former employee retaliated by filing an application for a temporary restraining order (TRO) and preliminary injunction against the company from transferring any rights under any patents in question. From the outset, it was obvious to us, our client, and ultimately the judge, that the plaintiff had no standing in the matter, but that didn’t stop this disgruntled employee from making life difficult for our client, which was probably the chief motivation for this action all along.”

The TRO proved meritless, but that didn’t mean the company didn’t have to expend a lot of time, energy, and resources countering the claim.

“Temporary restraining orders are quite common in the intellectual property space, especially around inventors seeking to exert their rights as patent owners/inventors even though they have assigned those rights to their employers, or in this case former employer,” says Ludwig. “With our client, proper agreements were in place, so it was more of a scenario where someone had a desire to cause harm. Our approach was to put the complainant through the paces by presenting clear, irrefutable facts, which the judge agreed with.”

Whose Patent is It?

While companies cannot register as patent owners or inventors, they can be assigned patent rights to an invention. This is done when employees and independent contractors sign pre-invention assignment agreements with their employers. Essentially, these agreements set the stage for employees/independent contractors to transfer their invention rights—anything they conceive or develop—to their companies as a condition of their employment. To avoid gray areas, such as what happens when inventions are conceived after employees/independent contractors are no longer employed by a company, it’s critical that assignment agreements be as clear cut and specific as possible so that all parties protect their rights.

“In seeking a TRO, our rogue employee was attempting to backtrack and exert ownership rights that didn’t exist over a particular invention,” explains Ludwig. “Fortunately, the agreement in place was quite clear about what was covered and the time frame involved. As a result, we were able to expedite the proceedings and achieve a clear-cut, favorable ruling.”  

Get it In Writing

The need for pre-invention assignment agreements to be properly written and in place with employees and independent contractors is critical so companies can gain assignment rights for their research and development efforts and the inventions they fund.  

“As with most legal instruments, the devil is in the details,” says Ludwig. “Intellectual property law is complex and constantly changing. Litigation around IP issues is usually very time consuming and painstaking. It’s not something companies can take on themselves and find success. We strongly recommend companies retain law firms well-versed in business litigation and IP matters, like Ludwig APC, to help them properly prepare for and manage their high-risk, high-reward IP issues. Working with a firm like Ludwig APC can save companies major legal costs and avert undue stress.”

Protect Your Product. Your Business. Your Privacy. Your Dreams.

Contact Eric Ludwig today for a one-hour consultation to discuss your unique copyright, patent, trademark, business litigation, or other intellectual property issues.

(619) 929-0873 | consultation@ludwigiplaw.com

The shift from an economy based mainly on physical or “tangible” assets to one where the majority of economic value is derived from “intangible” assets has been a long time coming, a transition that was intensified by the coronavirus pandemic which saw companies spend big on remote and virtual ways of doing business.

The numbers paint a convincing picture of what amounts to a 40-year transition. According to the 2019 Intangible Assets Financial Statement Impact Comparison Report from the Ponemon Institute, a Michigan-based, independent research firm, the value of intangible assets has skyrocketed during this period as a percentage of the overall value of the S&P 500.

• In 1975, 17% of the S&P 500’s then overall value of $715 billion was attributed to intangible assets.
• By 1985, intangibles accounted for some 32% of the S&P 500 value, while the figure rose to 68% by 1995. 
• In 2018, 84% of the S&P 500’s overall value of $25 trillion came from intangible assets.

“The 84% figure might actually be a little low today,” explains Eric Ludwig, whose California-based law firm, Ludwig APC, specializes in intellectual property, data privacy matters, and business litigation around the globe. “Throughout the pandemic, many businesses that relied primarily on physical assets, such as those in the hospitality and travel sectors, lost significant value, while companies active in digital and virtual market spaces did quite well . . . and continue to do so.”

Bricks and Mortar a Thing of the Past?

Clearly, the days of companies deriving most of their value from bricks and mortar assets such as buildings, land, vehicles, equipment, and concrete financial assets such as stocks, bonds, account receivables, and cash are in the rearview. Nowadays, non-physical assets that represent potential revenue are what comprise a company’s greatest value. These intangible assets include patents, copyrights, trademarks, trade secrets, know-how, goodwill, brand reputation, market influence, agreements with other businesses, human capital, non-competes, customer and vendor relationships, public rights, software, and client/vendor databases.

Think of top tier companies like Apple, Alphabet (Google’s parent), Microsoft, and Amazon. Now contrast them with the likes of Exxon, IBM, Mobil, and GE. Given the makeup of today’s marketplace, where intangible assets rule, it’s easy to see why today’s leading companies are the most valuable while those who have traditionally derived value from physical assets, manufacturing, and refinement processes are now what could best be described as belonging to a “second tier” of companies.

Protecting What’s Important

With so much riding on intangibles, more than ever companies must find ways to protect their assets. But unlike physical assets, intangibles can be difficult to value. They’re also difficult to insure. After all, just how do you go about placing a value on goodwill or brand reputation? Similarly, how do you insure something that’s intangible against intellectual property infringement?

First, it is possible to place monetary value on intangible assets—possible, but not easy. As you might suspect, opinions abound on the best approach, and none are an exact science.

• For example, one method is to subtract a firm’s book value from its market value to establish the overall value of its intangibles.
• Another is to determine the fair value of an intangible asset by estimating what it would cost to replace it with a similar intangible asset.

What almost all experts can agree on is the need for companies to work with external business asset evaluators to properly gauge value.

Protecting a company’s interest in its intangible assets is far more straightforward, at least for a subset of them that includes trademarks, patents, copyrights, and trade secrets. Registering these intangibles as intellectual property is commonplace. Doing so gives you greater standing in lawsuits should someone infringe on your rights or claim you’re infringing on theirs.

For other intangibles not covered by traditional intellectual property registration, protection often comes in the form of contract terms and insurance coverage (yes, they make insurance for that!). The types of intangibles covered by contract language and insurance include things like customer relationships, goodwill, employees and their know-how, and brand recognition.

• Companies can protect themselves and seek protection from others by including clauses in their contracts to indemnify them from infringement up to certain monetary levels (often in the millions of dollars) or entitle them to compensation from the other party should they infringe.   
• Intellectual property insurance is another option. For policyholders, it covers legal costs associated with pursuing intellectual property infringement or theft, plus legal costs for defending against accusations of infringement or theft.

Next Steps

“For the foreseeable future, or at least until the next big ‘revolution’ in business comes our way, the most successful companies will be those whose leaders are best able to adapt their business models to thrive within this new digital, intangible asset paradigm,” says Ludwig. “It’s an exciting time, but it won’t be easy. Globalization, the advent of sophisticated technologies, and the growth of remote workforces make many great things possible for today’s companies, but they also add numerous layers of complexity. We recommend companies work with intellectual property and business litigation experts such as Ludwig APC to explore various options and approaches for protecting their interests.”

Protect Your Product. Your Business. Your Privacy. Your Dreams.

Contact Eric Ludwig today for a free, one-hour consultation to discuss how your company can develop a strategy to protect both your tangible and intangible assets.
(619) 929-0873 | consultation@ludwigiplaw.com

All other things being equal, your intellectual property may be the one thing that gives you an advantage of competitors. As such, what are you doing to ensure IP is an important part of your business strategy?

Intellectual property is present in every business. IP includes patents (representing innovation) and trade secrets (representing valuable confidential information), plus trademarks (representing your brand in the marketplace) and copyright (representing the creative expression of your brand).

IP comprises your company’s capacity to get things done, from the internal know-how of staff to the external products and services you offer in the marketplace. Successful companies are often those best able to leverage their IP to achieve short-, medium-, and long-term goals.

IP as a Business Strategy

When a company embraces an IP-driven market strategy, they do so to ensure their company remains at the forefront of innovation. Why is that important? In a recent GE study of 1,000 senior business executives from 12 countries, 95% of respondents rated innovation as the top factor driving competition.

Thus, innovation and intellectual property go hand-in-hand. Innovation is makes it possible for companies to continuously develop new ideas for products and services, which promotes greater employee job satisfaction, and encourages teamwork. Ultimately, this is what allows organizations to develop competitive advantages in the marketplace through the introduction of new IP.

Implementing an IP Strategy

One of the first steps for implementing an IP strategy is to conduct an IP INVENTORY of your company’s existing assets:

Patents

• Existing patents
• Pending applications
• Technology suitable for patent protection
• Duration/life of the IP

Trademarks

• Existing trademarks, service marks, or tradenames
• Existing registrations
• Pending applications

Copyrights

• Existing content and creative expression
• Art, photos, text, music, video, software code, etc.
• Existing/pending registrations
• Duration/life of the IP

Trade Secrets

• Existing confidential information that’s of value
• Historic and current measures to maintain secrecy

Next up is IDENTIFYING BARRIERS. What IP rights do other parties have that pose a challenge to bringing your product to market?

• Existing or related patents
• Similar trademarks or brands
• Protected content.

Once that’s done, you’ll want to assess what MIX OF IP is necessary for success? What are the right ingredients for your company?

• Some IP arises automatically from the day-to-day of doing business, such as copyrights and trademarks
• Some IP requires conscious designation by your company, such as trade secrets and maintaining confidentiality.
• Some IP requires government license, such as patents.

LONGEVITY OF THE IP also plays a key role because different forms of IP enjoy different lifespans. What is the life of your IP? For example, is it 20 Years (for patents) or life of the author plus 70 years (for copyrights)?

Perhaps most importantly, as you embark on an IP strategy, how will your company ACQUIRE AND MAINTAIN YOUR IP?

• Through innovation: your plan is to develop technology, methods, and content internally
• By license: you plan to partner with others for new or supplemental technology, methods, and content and license out what you have, license in what you need, and give away rights for long-term strategic reasons.
• Via litigation: you will be aggressive protecting your IP by using litigation to keep competitors and infringement in check.

Nature of Your IP Strategy

There are generally two approaches to implementing an IP strategy. You can be inclusive by involving others and fostering open innovation, or you can be exclusive and highly protective, which tends to cripple innovation. Given how senior business executives view innovation (see above), it’s plain to see that inclusive strategies tend to fall into the category of best practices.

To foster a collaborative environment when it comes to IP, these days many companies focus on the concept of open intellectual property , which presumes that when companies cooperate with technology transfer and the sharing and exchange of knowledge—all in pursuit of developing something new and patentable—everyone wins. It’s a complete 180 from traditional IP development where companies developed their products and technologies in secret.

Which is right for you, an open approach rather than restrictive? Total exclusion? Limited exclusion? Partial transfer of rights? Open and free access? What forms of IP might be available from third parties or in the public domain?

Seek Expert Advice

Before settling on an IP strategy for your company, know that IP Strategies tend to be high-risk, high-reward. As such, you must “come to the party” well-prepared, willing to spend time and money, and remain flexible.

“Intellectual property rights and laws are complex and everchanging, especially with the global nature of today’s marketplace,” explains Eric Ludwig, whose California-based law firm, Ludwig APC, specializes in IP, privacy matters, and business litigation around the globe. “We recommend companies that are considering IP strategies to differentiate themselves in the marketplace work with experts like us to explore the various options and approaches that might be right for their business goals.”

Protect Your Product. Your Business. Your Privacy. Your Dreams. Contact Eric Ludwig today for a free, one-hour consultation to discuss how to develop an intellectual property strategy for your business.
(619) 929-0873 | consultation@ludwigiplaw.com

Most consumers pay little attention to the terms and conditions they agree to when downloading software, updating an app, visiting a website, or signing up for a social media platform or some other online venue.

Who knows what’s in all that legal jargon? Who has the time to decipher it? Does it really even matter?

While consumers remain somewhat “in the dark” (and pehttps://ludwigiplaw.com/hkrhaps understandably so) about exactly what they accept when they click the “agree” button, the companies that put forth those terms and conditions have no such luxury. Agreements work both ways, and as a party to so-called “user agreements,” companies need to know exactly what it is they are stating they will do or will not do, and they need to adhere to those terms. Not all do.

“As an experienced intellectual property lawyer and certified privacy professional, I get asked by clients and friends all the time about what options they have when accepting or not accepting terms and conditions like those they encounter on a website or when downloading a piece of software,” explains Eric Ludwig, whose California-based law firm specializes in intellectual property, business litigation, and information privacy matters around the globe. “Of course, their only real option is to agree or not agree. It’s not like there’s a negotiation.”

While the situation is a fairly cut-and-dry “yes/no” proposition for consumers, the stakes are higher for the companies behind those agreements. They need to be transparent about exactly what information they’re collecting from consumers and what they do with that information, including who they share it with, so users can make informed decisions about whether to use or not use their service, website, or app.

Companies that fail to disclose or that falsely disclose what they do with user data, or who fail to adhere to their own stated policies, can find themselves in legal hot water fast—with regulators, consumers, and with the courts. In essence, what a company says about its privacy policies in user agreements becomes an enforceable edict by which the company is bound.

“Before companies ever go public with their terms and conditions, they need to have a comprehensive data and privacy policy in place that spells out exactly what’s-what for them and for their customers,” says Ludwig. “What makes it so tough for companies doing business in America is that unlike the European Union, where data privacy is governed by the General Data Protection Regulation (GDPR), U.S. privacy laws tend to be a hodgepodge of federal and state regulations, with different laws governing different states, and some much more far-reaching than others.”

For example, companies that deal with personal healthcare information, whether online, in-person, or both, must adhere to specific Health Insurance Portability and Accountability Act (HIPAA) requirements concerning how patient data is handled. In addition, these companies may also state their own privacy policies around access to, reporting, and manipulation of that data. If they do something with that data they say they will not do, whether it’s intentional or not, if it breaches their own privacy policies, regardless of whether it actually breaks a state or federal law, they can expect legal backlash from consumers for mishandling their data and possibly from other companies for engaging in unfair business practices.

“With the nature of the internet making it easier for companies to do business across state lines and even international borders, it’s very difficult these days for businesses who collect customer data not to run afoul of a few privacy laws without an expert on their team,” says Ludwig. “For most, even though it’s unintentional, it’s only a matter of time.”

Protect Your Product, Your Business, and the Privacy of Your Company and Its Customers

Contact Eric Ludwig today for a one-hour consultation to discuss legal issues and concerns you may have around your company and its data privacy policies. (619) 929-0873 | consultation@ludwigiplaw.com