Developer's IP checklist

Awhile back I got a call from a video game developer that was about to go live with their product. The lead developer/CEO had just discovered that there was a trademark registered to a major company, that happened to be the same name as their game.

Luckily, we were able to resolve the issue prior to them going live, but it raises an interesting point.

A lot of the discussion relative to IP in the start up / developer space is colored by the larger market discussion on software patents and their role in, or hindrance on, innovation.  This discussion has sucked all the air out of the room as it applies to the multiple forms of IP that are pretty critical to a successful brand.

As such, I figured I would just do a quick check list for all the app/game/social media/ tech start-ups out there that maybe thought that having a position on patents was their sole IP issue.  Here is the quick check list, followed by some in-depth discussion.

1. Do you have Copyright Assignments for Coders, Designers and UI/GFX Modelers
2. Do you have a Trademark on your company / product name. Do you have a domain name on the same?
3. Do you have a firm wide confidentiality policy?

Copyright  Assignment Documents:
 In the U.S. any works of authorship, which includes drawings, character models, wireframes, code, or text, is covered by copyright.  The copyright vests in the creator at the time of creation. So, as soon as your character modeler generates an awesome character for your app, the copyright in that character vests in the creator. Not, I repeat, Not the company who they they are working for.

This is always true, UNLESS, you have an agreement in place that assigns all of that work to the company.

This can be done in two ways. The first is to have everyone that is working on the project sign a document that assigns all of their work to the company.

Second, which is more subject to legal challenge, is a Work For Hire Agreement. A Work For Hire Agreement that states that the works created were done so as a commissioned work of authorship. This is the language you will find in employment contracts for large media companies and software companies alike. The problem is, if you and your buddies are coding the killer app, when did you sign employment agreements? Odds are you didn't Once you are ready to go live, pitch investors, or hit Kickstarters, everyone who has contributed to the project should agree, in writing that they are assigning their rights over to some entity.  However the agreement is made is largely irrelevant, the goal is to get the assets essential to the company under the ownership umbrella of the company.

As a second point, I always suggest filing a few federal copyrights on art assets or screen shots, just to deter scrapers, clones and knockoff artists.

Trademarks:

Trademarks are source designations of origin. They identify the good or service as coming from a particular entity. As I stated at the beginning of this piece, an invaluable use of time is to check the trademark office to see if the name of your game, company, or app is already in use. If so, is it is the same field of use. There is nothing worse then having to go back through code looking for references to a company name that needs to be changed at the last minute. Securing a trademark relative to a patent is a cheap and easy process. Once it is secured it can be used as your brand and the public show case of all your company has to offer.

I always remind clients that Twitter did not Trademark "Tweet", a decision that came back to bite them in terms of money and attorney fees. See here.

Confidentiality

As a rule of thumb, anything that pertains to proprietary technology, that gives you a perceived edge in the market place (google's search algorithms, Coke's formula, Zucherberg's Hoodie), should be kept confidential.  Not only is this just good practice, but it also lays the foundation of a strong Trade Secret Policy.  As I pointed out in an earlier post here, the rules for protecting valuable IP via Trade Secret Laws has been greatly enhanced.

Every Company should take advantage of that, not just vampire squid banks. The best way to do so, is to make sure that everyone has signed confidentiality agreements that lay out their responsibility to keep the companies secrets...secret.

For the large majority of start-ups and developers, this is all the IP you need. In the future, when you begin driving technology, Patents will become a critical component of your IP strategy. However, you will never get there if you don't secure your IP in the beginning.

Jordan Garner

Tax Policy for NPE ('Patent Trolls") [Wonky]

'In this world nothing can be said to be certain, except death and taxes." - Benjamin Franklin (noted scientist, inventor, philanderer  founding father, and fit model for currency).

The current debate around NPE (non-practicing entities, i.e. Patent Trolls) had me thinking about the law of unintended consequences and taxes. (Yes, I know, boring).  

I think everyone can agree that the ultimate goal of the AIA changes to the patent law were driven, in no small measure, by companies wishing to eliminate the threat of Patent Troll suits. For a general counsel with the ear of the legislature, this sounds like a perfectly reasonable use of power and influence. For the solo inventor who honestly believes that MegaCorp has ripped him off, it looks like corruption of the highest order. 

Resolving these two conflicting visions is nearly impossible. For MegaCorp, it honestly believes that Solo inventor is just a crook who is hassling their highly successful venture. For Solo inventor, he has invested time, but more importantly, money in acquiring a patent and MegaCorp is reaping all the benefit.  Furthermore, to Solo, it looks like the law has been changed to favor one party over the other. 

While the AIA might cut down on NPE suits, it will likely have inadvertent effects that we are barely aware. As such, I tend to not agree with wholesale legal changes as a way to eliminate 'bad' actors. When profit is the motive, very bright people will expend effort to find the loophole.  The problem with the AIA is that it targets the result of NPE actions (suits directed against major tech companies) instead of the goal of NPEs (Profit!). 

I would have advocated using tax policy to target the goal, not the result. 

On MegaCorp's side, Tax policy could be changed to make a new taxable income category for reasonable royalties as assessed by a court for infringement of a non-practiced patent.   Currently the tax rate for recovery in settlement and and reasonable royalty recovery by judgement are the same (~35% and taxed as income).  However, a change is the way that the IRS treats recovery from settlement vs recovery from litigation would lead NPE's to maximize their profit through the most efficient way possible.  If the tax rate for reasonable royalty (of a Non-practiced patent were sufficiently high, it would alter the calculus of going after MegaCorp, especially given that attorney fees are not tax deductible. Likewise, tax policy could be used to reduce the windfall that a true NPE could recover based on a past damages.

While this might drive NPE's into settlements instead of broadside litigations (which is what most GC's are really worried about), it would still leave Solo inventor holding the bag on his out of pocket patent fees.  

One way to lesson the impact to Solo is to use tax policy to unburden him of some of the cost in acquiring the patent.  This system would work as thus: The IRS would allow, given the size, income and subject matter, a tax credit for money spent acquiring a patent. This could be as simple as acquiring a tax credit for application fees, or it could be as complex as some formula for a tax credit that takes into account the amount of money that was spent in prosecution. 

These are obviously rough sketches of a goal oriented solution to the NPE problem, while trying to make sure that honest small inventors are not thrown out with the NPE bathwater. 


Jordan Garner