The Smartphone Wars Rage On

By: Debby Winters

A family member recently purchased a new smartphone. After being an iPhone user for years, she decided to switch to the new Samsung Galaxy, partly because the sales person told her that is was more advanced than the iPhone 5, the most current iPhone on the market. I have blogged many times about the Smartphone Wars and the implications it has on Intellectual Property,

but after her purchase and seeing what she had to go through to make that switch work, I thought I should once again revisit what is going on in the Smartphone Wars.

The smartphone industry is a fast-evolving and fiercely competitive market. Smartphones are constantly advertising sophisticated innovations that consumers factor in when making their purchasing decisions. Consumer marketing is the key to success in this business and these innovations drive sales as the various companies compete for business. Not only can the competitive landscape change drastically, but companies can also earn a lot of revenue in a relatively short period of time. Development of innovative designs and features appears to be the key to competitive success.

With a lot of money at stake and an intensely competitive marketplace, companies are recognizing the value of patents and are securing competitive advantage through intellectual property. Companies are no longer just using their intellectual property portfolios to protect their turf through lawsuits and cross-licensing deals with its competitors; they are also using patents as standalone sources of revenue and as strategic business tools. To strengthen their own patent portfolios, companies like Apple and Microsoft are purchasing patents from Novell for millions of dollars. Furthermore, a consortium known as the anti-Google consortium, which includes Apple and Microsoft are acquiring thousands of patents by outbidding Google. But don’t worry about Google, it has acquired about 1,000 patents from IBM for an undisclosed amount, and purchased Motorola Mobility billions. Throw in the sale of 1,100 Kodak patents for $525 million from another consortium of companies and you can see how this becomes quite complicated.

In addition to purchasing patents, companies are also aggressively filing for patents in the mobile space and acquiring patent portfolios of a staggering size. Samsung was granted the most U.S. mobile-related patents in 2012, replacing Nokia for the top spot. IBM came in second in the number of granted patents in 2012. How about Apple, which is involved in probably the most high-profile of the mobile patent wars? It didn’t even make the top 10. What does all of this mean?

For starters, most of the value of these portfolios resides in a small group of patents. An estimated 18 patents out of a portfolio of 17,000 acquired by Google may be useful for Google. One of these 18 covers a feature that automatically disables the touch screen when the handset is held to the ear to prevent inadvertent call-ending or other phone usage. This one patent will prove very useful in the market but Google had to buy all 17,000 to get that 1 of maybe 18 that it will be able to make use of.

The bottom line is that because the smartphone is in a very high-stakes and competitive industry, protecting intellectual property is absolutely vital for the competitors. With innovations evolving rapidly in areas such as screen definition, processing speed, and battery life companies are rushing to be the first to file for patent protection. It has been estimated that one-quarter of U.S. patents issued in 2013 will likely be related to mobile t
echnology. Protecting intellectual property in the areas of next-generation smartphone technology will allow companies not only to obtain a marketing advantage over their competitors, but also to use patents in these areas to change the competitive landscape of the smartphone industry. Stay tuned as the Smartphone Wars continue.

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To Patent Or Protect As A Trade Secret?

By: Debby Winters

With the patent system switching from first to invent to first to file, trade secret law, as an alternative to patents, may be one of the most important ways to protect and develop new and cutting-edge ideas. Trade secrets are generally defined as an exclusive right to valuable information not generally known in the industry or readily ascertainable by competitors.

In many cases, it makes more sense to protect intellectual property using trade secrets rather than patents. Trade secret law: (1) provides broader protection than patent law; (2) is immediately available and requires no government approval and costs significantly less; and (3) permits the inventor to keep the innovation “secret” without having to disclose the idea through patent publication.

First, with respect to breadth, trade secret law protects assets that are not otherwise protectable under the patent law. Trade secrets need not be “novel” and extend to valuable information like business plans, customer lists, technical drawings, processes, procedures, marketing data and forecasting that are specific to the innovator so long as they are secret, valuable and not generally known in the industry. A trade secret can also be “negative” know-how, that is, what paths to development would be unsuccessful, which are sometimes as valuable in terms of time and money as those that are successful. Moreover, trade secrets may be protected in perpetuity – or until someone else independently develops the idea or reverse-engineers it – whereas the duration of a patent term is 20 years.

Second, trade secret protection will attach automatically to ideas and information that are kept secret and subject to reasonable measures to protect secrecy. Trade secrets do not require any government approval, they are not subject to a registration process, or incur any official costs. Trade secrets are also not subject to the attendant delay of the patent process, which could take years to complete, and therefore are a more practical and attractive alternative for innovators in fast-moving industries. For the same reasons, trade secret protection is often less expensive than obtaining a patent and is also attractive to start-up companies and small businesses.

Third, unlike patents that are published and must be enforced through litigation if infringed, the holder of a trade secret must only keep the information secret to qualify for protection. The ability to keep information secret, rather than disclosing it through the patent process, could potentially be a very lucrative decision. The classic example, of course, of where an inventor made a great choice choosing trade secret over patent protection is the formula for Coca-Cola, which still maintains its trade secret status approximately 100 years later.

Trade secret protection is not always the best strategy for protecting intellectual property. Trade secrets are not protected if another person develops – independently and without accessing the secret information – the same exact idea. Moreover, if a product that contains a trade secret is released into the market, trade secret protection is lost if the trade secret can be reverse-engineered. Thus, trade secret law is not effective for obvious and generic new ideas or those that could be easily reproduced once a product is in the market. For example, the design of a cement mixing truck was held not to be a trade secret because it was obvious once the truck hit the street which direction the cement was being loaded to be mixed.

With the upside of protecting vast amounts of otherwise not patentable information and ideas through the use of trade secrets, the question becomes: Are innovators doing enough to protect their trade secrets? Methods for protecting trade secrets will vary depending on the size and scope of the enterprise and the secrets kept therein, but here are general guidelines to help ensure secrecy:

• Build a culture where innovative ideas and information are highlighted as critical, valuable and that they will be protected.

• Emphasize the importance and secrecy of the information through the use of nondisclosure and non-compete agreements.

• Ensure that facilities where trade secrets are kept are physically and electronically secure with locks, passwords and credentials, and limit access to such information to those that really need to know.

• Mark physical and electronic documents with legends and footers indicating that the information is “trade secret” and “confidential.”

•Establish policies and procedures to protect the information and continue to make employees aware of the importance of such information through training.

• Keep current with technological advances that allow misappropriation of trade secrets and adjust security, monitoring and policies as necessary.

Human Gene Patents in ‘Myriad’ Ruling- Supreme Court Says No

By: Debby Winters

Remember back in October and November of 2012 when I blogged about the then pending Myriad case? The U.S. Supreme Court, just this past week, rendered a huge decision in this case. Reversing decades of federal patent awards, the Supreme Court on Thursday unanimously ruled that human genes and the information they encode are not patent-eligible.

The ruling invalidated controversial patents held by Myriad Genetics Inc. on two genes whose mutations dramatically increase the risk of hereditary breast and ovarian cancer — the so-called BRCA1 and BRCA2 genes. Myriad discovered the exact location and sequence of the two genes, which enabled it to develop diagnostic tests for detecting the mutations and assessing a person’s cancer risk. The company’s patents gave it the exclusive right to do research and diagnostic testing of those genes and also to synthetically create BRCA DNA, known as complementary or cDNA.

The justices’ decision in Association for Molecular Pathology v. Myriad Genetics surprised few in the patent law field. Following oral arguments in April, the court appeared to be leaning favorably towards an argument presented by Solicitor General Donald Verrilli Jr. Breaking with the position held by the U.S. Patent and Trademark Office, Verrilli urged the justices to hold that isolated, naturally occurring DNA is not patent-eligible, but that laboratory-created, synthetic DNA is.  The court also ruled that cDNA is patent-eligible because it is not naturally occurring since the lab technician “unquestionably” creates something new when cDNA is made.

In the opinion, written by Thomas, there was also mention of what was not implicated by the court’s decision. First, he wrote, there were no method claims before the court (for example, that Myriad had created a new method of manipulating genes while searching for the BRCA1 and BRCA 2 genes that might be patentable). Second, the case did not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes. And finally, the court did not consider the patent eligibility of scientific alteration of the genetic code.

If you remember, the court case stemmed from a lawsuit filed against Myriad by the ACLU and the Public Patent Foundation on behalf of researchers, genetic counselors, patients, breast cancer and women’s health groups, and medical professional associations representing 150,000 geneticists, pathologists and laboratory professionals.  The decision was a semi victory for both parties. The ACLU had argued that neither isolated DNA nor synthetic DNA was patent-eligible. Myriad defended patents for both. Because of this ruling, patients will have greater access to genetic testing and scientists can engage in research on these genes without fear of being sued

The decision invalidated five of the company’s claims on isolated DNA, but many of its unchallenged claims are method claims applying knowledge about the BRCA1 and BRCA2 genes.

Patent litigators differed on the long-term consequences of a decision that human genes were not patent eligible. Some say that the court ruled very narrowly on the particular question asked. The main concern was that the court would issue a major pronouncement on products of nature that would affect antibodies, proteins and other substances occurring in nature. The court, instead, focused its discussion on human DNA. It did not expansively opine on products of nature. The narrowness of the decision is taken as good because it doesn’t implicate, the way it might have, the broader scope of biotech products out there.”

The decision is not expected to prove too disruptive for the industry because it leaves open many ways for companies to build patent exclusivity around manipulated nucleic acids, methods of using even naturally occurring nucleic acids. Additionally, much of what this decision pertains to is research and discoveries that took place more than 10 years ago and many of the patents were set to expire soon. It is also not predicted to have much of an effect on biotech investment.

What is expected, is that the ruling will impact the patent eligibility of other newly discovered compounds that are ‘isolated’ from nature, such as medicinal compounds isolated from plants, beneficial proteins isolated from human or animal sources, and beneficial microorganisms isolated from soil or the deep sea.

NATIONAL SMALL BUSINESS WEEK, 2013

By: Debby Winters

President Obama has declared June 16-22 as National Small Business Week saying “In America, we believe that anyone willing to work hard and take risks can get their good idea off the ground and into the marketplace.  It is a notion that has made our Nation bold and bright, and the best place to do business for generations — from small-town storefronts to pioneering startups that keep our country on the cutting edge.  This week, we celebrate America’s entrepreneurial spirit, and we recommit to helping our small businesses get ahead.”

To read the entire proclamation visit: http://www.whitehouse.gov/the-press-office/2013/06/14/presidential-proclamation-national-small-business-week-2013

To find out more about what is going on in relation to Small Business Week, visit: http://www.sba.gov/nsbw/

Additional ways you can participate in Small Business Week include:

Free National Small Business Week events in DC include:

Thursday, June 20

  • 8:45 – 9:30 AM: SBA Speed Mentoring: Building Your Business for Success

Friday, June 21

  • 10:45 – 11:45 AM: Affordable Care Act 101: What the new health care laws mean for small business owners (Panel Discussion)
  • 3:00 – 4:00 PM: Expanding Your Business Through Exporting (Panel Discussion)

All events take place at The Renaissance Hotel, 999 Ninth Street NW in Washington, DC.  To RSVP, email smallbusinessweek@sba.gov with your name and company/organization.

As part of National Small Business Week, SBA will host a series of Google+ Hangouts on topics like Getting Started with Social Media, Managing Your Business’s Online Reputation, How a Mentor Can Help Your Business and How to Get a Business Loan.

Panelists from the following organizations will be hanging out: Twitter, Constant Contact, W20 Group ,Google, Yelp, LinkedIn, OpenSky, Dun and Bradstreet Credibility Corp., Manta, America’s Small Business Development Centers, Women’s Business Centers, AARP, SCORE and Ninkasi Brewing Company

Hangouts begin on Monday and end on Thursday. All hangouts start at 4pm EDT. You can watch them at www.sba.gov/smallbusinessweek.

You can follow the conversation on Twitter using the hashtag, #SBW2013 or follow @SBAgov.  Updates are posted at www.facebook.com/sbagov. All events and Hangouts will be streamed live at www.sba.gov/smallbusinessweek.