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Lipika Sahoo

Lipika Sahoo has 3 articles published.

Entrepreneurship and IP Part III: Trade secrets

in Sci-IP/SciBiz by

Tradesecret blog_final_Lipika

Trade secret can be of any commercially valuable information that gives your business a competitive advantage as it is not known to your competitor or public. It could be a formula, physical device, survey method, idea, recipe (e.g., recipe for Coca-Cola), business plan, pattern, advertising or sales strategy, distribution method, document tracking process, consumer profile, manufacturing process or a little tweak involved in the process, computer algorithm (e.g. Google’s search engine), compilation of information (customer list, suppliers list etc.), financial information, that helps the owner gain a competitive advantage in market place.

Trade secret may have a combination of information available in public domain and information unique to the company. And compilation of such information provides a significant advantage to the owner.

How to protect trade secret?

Typically speaking, for trade secret protection, no registration or no government grant is required. You simply need to maintain secrecy of the information. However, few countries (e.g., US & EU) have formal legislation for trade secret registration. World Trade Organization (WTO) recognizes protection of trade secrets. Member states of WTO and counties that are party to the Agreement on Trade Related Aspects of Intellectual-Property Rights (TRIPS) are obliged to provide trade secret protection. Protection lasts as long as the information is kept confidential. Simply saying information as trade secret will not help, you need to take substantial and reasonable measure to keep the information confidential. Once the information is made available to public or if someone discovers from an independent source, the trade secret protection ends.

Challenges of start-ups:

Trade secret policies differ greatly in an established company and in early stage start-ups. Many start- ups and SMEs (Small and Medium-sized Enterprises) exclusively use trade secret to protect their Intellectual Property (IP). Start-ups have challenges in terms of space – many of them operate from incubation centre, accelerator, shared office space etc. However, they should have some policy documents for trade secret identification and protection. Start-ups should at least address the following:

1) Identifying your Trade secret

Every business has some set of information that can be categorized as trade secret.  First, you should identify such information. Take a through look of your company’s asset. It would be very difficult to prove later that a particular category of information is trade secret if you do not have a hard copy document or electronic format stating the same.

2) Maintenance of Trade secret

Once you have identified your trade secrets, you need to set up policies and procedures to protect them. Trade secrets are considered as the most valuable asset for start-ups. You can consider the following measures to protect your trade secret:

  • Signing non-disclosure agreements (NDA) with your third party development partners and manufacturers. NDA is a contractual agreement between you and the recipient of the information.
  • Signing trade secret assignment with employees, independent contractors and consultants. Writing them down makes it clear to the employee and others that these set of information are trade secrets & they should take effort to keep confidential.
  • Marking documents as confidential, password protection, limiting distribution of password & access to priority documents.
  • Locking important folders and listing who can access the information.
  • Reporting periodic status of the trade secret information. During the process of growth & operation some information might lose the status of trade secret e.g., product launch, patent filing etc. Regular auditing of information is required for appropriate maintenance of trade secrets.
  • Marking emails, attachments etc. as trade secret/private/confidential, specific guidelines for document sharing provision and email usage.
  • Having physical security, locks and limited access to the area/systems having confidential information.
  • You must have clear policies as how you handle visitors coming into your space. Your employees should know what information can/cannot be shared, and also not accessing confidential documents/ keeping off desk in the vicinity when the visitors are around. As the company grows, the policies and procedures expand and will become more robust.

3) Patents or trade secret

For start- ups, filing patents may be too expensive but the technology may be entitled for patent protection. In some cases, you can choose ‘trade secret’ as an alternate mode of protection. Furthermore, patent law requires complete disclosure of your invention in patent application in return for obtaining a 20 year monopoly. Some information/technology that you have developed might be of high value but not appropriate for patent protection. And you may also lose trade secret rights for such information by public disclosure in the process of patent filing. In addition, it might just be a gift to your competitor, as the information could easily be available to them.

If the trade secret is about an innovative product, others may reverse engineer and then entitled to manufacture and use the product. You need to know that, unlike patent law, trade secret does not protect against independent discovery of the information. The decision of keeping information as trade secret or filing a patent depends on technology, valuation, business consideration and evaluation of relative benefits of patent and trade secret.

4)  Employee awareness about trade secrets

Notify your employees about the category of information that are trade secret and routinely remind them.

Your trade secret policy should start to roll on immediately, when an employee comes on board and remain until she/he leaves the company. Employees coming on board can also ‘contaminate’ trade secret information from earlier employer(s), that should not happen. When employees leave, remind them about the non-disclosure documents they had signed and ensure that critical information do not leave with them. It is their duty to maintain the confidentiality of trade secret information of the employer for specified period of time (as mentioned in the trade secret agreement) even after their employment.

5) Trade secrets and misappropriation

When a trade secret is leaked out, unauthorized use of such information by persons/competitors/third parties other than the owner is regarded as an unfair practice and violation of the trade secret. In case of misappropriation, you need to show by record to substantiate, that the said piece of information is trade secret and you took adequate measure to protect the information.

The court will look into following while establishing misappropriation of trade secrets,

  • The information was confidential to company.
  • The information was of commercial value, and use of such information in an improper way results in financial damage to the company.
  • Company took reasonable efforts to keep the information as secret through agreements, trade secret policy and procedures.

Conclusion:

Trade secret is considered as one of the important form of Intellectual Property rights protection for start-ups. Value lies in information what works for your company, as well as what did not work and not spending resource what did not work. Documentation of such wealth of information (not known to your competitor) over time adds tremendous value to your company.

In case of industries, where employee attrition is very high, special measure should be taken. You should maintain record that you developed specific technologies or strategies independently of your competitor.   It will create a good defence in the long term protection of your company’s IP assets.

Finally,  do not loose valuable intellectual property  rights, just because you did not consider entering into a non-disclosure agreement, data encryption, training employees, marking documents as confidential, password protection of accounts, documenting trade secret policies due to lack of time or so.  Trade secrets are extremely valuable, but that value can instantly vanish, if not maintained adequately.

References: 1, 2, 3, 4

Image source: Author

This post is the third in the series of articles on “Entrepreneurship and IP”.

Link to the First part of the series: “Entrepreneurship and IP Part-I: Starting up right”http://www.sciwri.club/?p=871

Link to the Second part of the series: “Entrepreneurship and IP Part II: Patent strategy and business value” http://www.sciwri.club/?p=1174

 

Disclaimer: The materials in the blog are solely for the purposes of informing, assisting and educating the readers and are not in any way a substitute for professional opinion or advice. They do not constitute legal advice or legal opinion or solicitation.

Dr. Lipika Sahoo, Founder & CEO of Lifeintelect Consultancy Pvt. Ltd., a registered Indian Patent and Trademark Agent having 16 years of experience in academia and industry. She holds a PhD from Indian Institute of Science (IISc). She holds triple masters; MSc from Sambalpur University; PGDIPR from National Law School of India University (NLSIU); PGCBM from Xavier Institute of management (XIMB); and advanced certifications from World Intellectual Property Organization (WIPO) in Patents and Patent Drafting.

lipika@lifeintelect.com| https://in.linkedin.com/in/lipikasahoo|

News: The Author will be  conducting a workshop in IIM, Bangalore on IP & Entrepreneurship for start-ups & entrepreneurs associated with IIM ecosystem.

IP_DrLipika_24thAug_emailer

Link to Poster: IP_DrLipika_Poster_24thAug

 

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This work by ClubSciWri is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Entrepreneurship and IP Part II: Patent strategy and business value

in Sci-IP/SciBiz by

Lipika 2

Innovation is the central issue in economic prosperity” -Michael Porter

There are several challenges for a start-up company, including developing a viable product or service, business development, employee recruitment, business value creation, tackling competition from bigger companies and new entrants, technological advancement and also managing legal and regulatory compliances. Typically start-ups are flooded with recommendations and advice from friends, peers, mentors and investors about business challenges and patent strategy they should follow.

One of the expensive mistakes a start-up entrepreneur can make is messing up their intellectual property right policies.  Irrespective of size of the company, effective and diligent IP portfolio management is vital for any emerging company. Bigger companies have the resources to address IP issues with relative ease, but what about start-up company? Are the filing strategies for start-ups different from that of established enterprises? Should start-ups wait for venture capitalists to fund their patent filings? Should they focus on business development or prioritize patent protection? Should they wait for patent protection till they have conducted enough customer discoveries?

Patent rights are important because they create a legal barrier to competition, important drivers of risk reduction, adding value to business and for raising seed or venture funding by licensing or transferring IP rights. A start-up needs to manage its own IP rights while avoiding the IP rights of others.

According to WIPO, “A patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application.”

First thing we need to understand start-ups usually have a tighter budget to address IP issues. In addition, filing strategies differ for start-ups and bigger companies. The key difference is that, the latter have a validated business model, products in the market, qualified customers and established new product development channels. Whereas, the former should validate the actual paying customers who will buy the product or technology within start-up’s business framework. If the start-up cannot validate the actual paying customers for the innovation, then protecting such innovation is expensive waste of time and resource unless there is an actual customer demand for the start-up’s product or technology. The business value from patents should be measured for it to be managed well. Patenting decision should be backed by data. Once they have established that a strong demand exists they must move quickly and ensure a strong IP protection to restrict competitors.

The second most important point for start-ups is to remember that patenting decisions must go hand in hand with business processes, as opposed to being an event or an output of product development process. Patenting decisions should be integrated into business strategy on an ongoing basis. We always let our clients know the viable option to integrate IP strategy in innovation process. Proactive IP strategies can help overcome patenting mistakes.

There are few important things you need to know as a start-up to address patenting issues efficiently and in cost effective manner.

1. Specifying protective IP provisions in employees, contractors, partners and suppliers agreements/contracts:

Start-ups usually start their business with consultants, suppliers, partners, contractors and employees. If these stake holders develop an invention during their working time with the start-ups, the invention will belong to the start-up if IP ownership clause is covered in the agreement/contract. However, the stakeholder will always retain her/his right to be mentioned as inventor. All stakeholders including owner and executive board members should sign agreement and assign all IP rights to the start-up if generated using start-up’s resources.

2. Accountability for IP process

Large companies have an in house IP counsel who has the knowledge of company’s ongoing innovation process and are often in charge of IP protection. However, for start-ups with limited budget, it does not make any sense to hire full time IP counsel. Start-ups could look for training one of company’s managers in IP processes who could be accountable for IP protection. Another viable option for start-ups could have an external IP strategist who could be part of the innovation team and has access to product development pipeline on a part-time basis.

Accountability of IP process ensures that the IP created are adequately protected and unrecoverable errors that open unwelcome competition are minimized. Furthermore, it reinforces that IP creation and protection are aligned with company’s business processes

3. Protecting valuable innovations with patents

It is true that not all companies create patentable invention, and it is also true that patents can be obtained for simple safety pins to complex automobiles.

Sometimes companies decide not to protect innovations with patent filings for various reasons like; cost factors, strength of protection, time factor or wrongly informed etc. At times these are business decisions.

If you don’t protect your invention, and the product becomes successful, competitors may copy your product. Smaller competitor may sell at lower price as they would not have incurred research and development expenditure. Also, larger organization has the advantage of volume and scale; they can compete for a reasonable market price.

Also, chances are there that someone else may patent same or equivalent invention and could legitimately exclude you from manufacturing or may ask you to pay a licensing fee for the use of invention.

However, you may also consider disclosing your invention to the public without patenting it. Then it becomes prior art for all future applications. This is commonly known as defensive publication. In such scenario, no one (including yourself) can file patent for the same invention due to lack of novelty.

4. Patents are territorial

Patents are territorial rights, granted and enforced by national patent office as per the law of that country. At present, there is no “Universal patent” or “World patent”. However, there are few regional patent offices like, “European Patent Office (EPO)” and the “African Regional Intellectual Property Organization (ARIPO)” that accept regional patent application and grant patent for that region.

Again, if you are seeking patent protection in multiple countries, you may consider filing an international application under ‘Patent Cooperation Treaty (PCT)’. PCT has 148 participating nations; any resident of these nations can initiate a single international patent filing process through PCT. However, the grant and enforcement of patent will be done by national patent office that you will choose.

5. Invention has to be unique universally

Though patents are territorial rights, but the invention has to be unique world wide, in order to be patentable. Before incurring the expense for patent filing, it is highly recommended to conduct a worldwide patent search to identify similar patents, to understand the novelty and inventiveness of the invention.

6. Have cost effective strategies for patent filings

Patent application drafting, filing, prosecution and maintenance can be expensive when you have too many international filings. So it is important to develop good strategies to minimise cost on managing IP assets. Start-ups should work closely with a patent attorney or patent agent and should do some initial work by themselves to save money. They should be actively involved in patenting process and understanding the patent procedures.

7. Patent claim coverage

Patent should provide long term business value and competitive advantage to company. Patent claims should cover more than just the product. It should cover the reason why the customer will buy your product. Patent claims should capture the value of the product. It should cover functional benefits of the product and claims should have sufficient scope to prevent your competition from providing the same value to your customer.

Conclusion

Intellectual property rights, especially patents, help in safeguarding a start-up’s innovation, serve as an indicator for potential VC funding and a guide to discover potential alliance partners.

Innovation to a large extent happens in start-ups, smaller companies, research labs and universities. As company becomes too large, decision-making process becomes slower. Large companies usually do not stay responsive to support a vibrant innovation ecosystem. Most of the times they prefer to buy smaller start-up companies with a thriving innovation process and good IP assets. Without legal ownership of technology, both sides may find it difficult to disclose the invention for the fear of idea or concept being stolen. Therefore, start-ups should have a good patent portfolio to trade with. Patents are tools that can help facilitate a deal with other company that may want part of your right though license or technology transfer. How will you trade the interesting things the other company has to offer if you don’t have anything to trade for?

References: 1, 2, 3

This post is the second in the series of articles on “Entrepreneurship and IP”.

Disclaimer: The materials in the blog are solely for the purposes of informing, assisting and educating the readers and are not in anyway a substitute for professional opinion or advice. They do not constitute legal advice or legal opinion or solicitation.

Dr. Lipika Sahoo, Founder & CEO of Lifeintelect Consultancy Pvt. Ltd., a registered Indian Patent Agent having 16 years of experience in academia and industry. She holds a Ph.D from Indian Institute of Science (IISc). She holds triple masters; MSc from Sambalpur University; PGDIPR from National Law School of India University (NLSIU); PGCBM from Xavier Institute of management (XIMB); and advanced certifications from World Intellectual Property Organization (WIPO) in Patents and Patent Drafting. Dr. Lipika is also an inventor and passionate about technology & innovation; likes music, history & architecture.

lipika@lifeintelect.com | https://in.linkedin.com/in/lipikasahoo |

 

Image source: Google http://bit.ly/1WR16gz

 

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Entrepreneurship and IP Part I: Starting up right

in Sci-IP/SciBiz by

“The best way to predict the future is to create it.” – Peter Drucker

Innovation and entrepreneurship are the most common buzz words today. One can clearly see the energy, enthusiasm of young talents raring to plunge into entrepreneurial ventures in Indian start up ecosystems. Whether it is a post doctoral researcher in IISc thinking about starting a company based on a brilliant idea of 3D printing technology or a fresh engineering graduate fuelling his renewable energy project for his start up, or a yoga therapist ready to go global with her brand, all are proficient in their respective fields. It is a privilege to associate with such diverse, creative and brilliant entrepreneurial ventures. While it is important for an entrepreneur to follow her passion, initiative, commitment to the idea and dedication to her venture, it is also equally important to starting up right. Protection of Intellectual property(IP) is a valuable business asset for a start up. Irrespective of nature of business, IP provides both business value and competitive advantage for a company. IP policy should be ingrained by design into company strategies as the business develops. Succeeding in the marketplace with your idea is a journey- a continuous process. You need to think and follow some strategies for successfully building an enterprise. Here is what you need to know while starting your venture if you are new to the business world.

Choosing a business name:

1) Company name and Trademark: Trademark is a mark capable of being represented graphically and is capable of distinguishing your goods or services from others. A mark could be:  Brand (Example: BPL), Device (refers to pictorial representation. Example: CoCa-Cola), Name (Example: TATA), Letter (Example: IBM, GM), Word (Example: LIFEINTELECT, INFOSYS) and so on. Think long and think deep about your business name. A name that will last long because rebranding is expensive and stressful. Choose a name which will embody your values, stand out and communicate your identity to your consumers. You should avoid generic or descriptive phrases as your company name. For example, “Laptop Service”, ‘The Solar Panel” etc. Arbitrary and coined names are considered as stronger mark and are entitled to greater protection. For example, “Yahoo’ for internet service, “Kodak” for camera etc.

2) Company name for Limited Liability Company: If you are planning for Limited Liability Company, you need to check the availability of names with the Ministry of Corporate Affairs and Registrar of Companies.

3) Your web presence: A company’s website can be a great tool for promoting business. You will need to work with an available web domain and register your company domain name with a web hosting company.

Please note that all these three bodies function independent of each other. So before choosing your company name you need to check the availability of names with all three.

Understand your industry’s best IP practices:

Protecting your intellectual property through patents, trademarks, designs, copyrights, technical know-how and other tactics creates a legal fencing necessary to safeguard your idea, builds a cushion of competitive advantage and helps in fund raising. Despite being expensive, it is necessary to build a strong IP portfolio. And that should be adequately funded and managed well.

Before creating the IP road map for your company, it is imperative to know how your industry deals with intellectual property. For example, in biotechnology, pharmaceutical and telecommunication industry, products stay on the market for decades. That suggests start-ups in these sectors need bulletproof IP and patent protection from the beginning. However, retail industry, consumer device and manufacturing sectors have a shorter product life-cycle. So, the best strategy used by these industries is to file late in the product-development process, and may also benefit from the use of different IP policies such as trade secrets and confidentiality agreements.

Start the IP protection process early:

Whatever may be the IP strategy you follow for your business, you need to understand, plan and execute them from the beginning. If you have a big idea for a product or process, it is always good to know the possible options to protect the idea. Talk to an IP consultant and do some research at an early stage. Believe me, many times it helps a lot in iteration and proof of concept phase, and aid your innovation process. If patenting early is best, search out an IP firm in the beginning. Already years in business but don’t have IP policies to protect your valuable ideas or brand? Get started now. In the present day knowledge economy, IP protection should not be at the bottom of your to-do-list. Additionally know that, for industrial design and patent protection, the subject matter has to be new & novel. So, you need to file for patent protection or design registration before making any public disclosure.

Conclusion:

Every business is different and every industry requirements are different. So an IP strategy of a company depends on technology, funding, consumer base, product life cycle and stages of company. Success in market place depends on several factors, and if you don’t plan for success from the beginning you are almost certainly planning to fail. You should have immediate, short-term, intermediate and long-term strategies for IP protection and innovation.

References: 1, 2, 3

— Lipika Sahoo

 

–This post is the first in an upcoming series of articles on “Entrepreneurship and IP”.–

Disclaimer: The materials in the blog are solely for the purposes of informing, assisting and educating the readers and are not in anyway a substitute for professional opinion or advice. They do not constitute legal advice or legal opinion or solicitation.

Dr. Lipika Sahoo, Founder & CEO of Lifeintelect Consultancy Pvt. Ltd., a registered Indian Patent Agent having 16 years of experience in academia and industry. She holds a Ph.D from Indian Institute of Science (IISc). She holds triple masters; MSc from Sambalpur University; PGDIPR from National Law School of India University (NLSIU); PGCBM from Xavier Institute of management (XIMB); and advanced certifications from World Intellectual Property Organization (WIPO) in Patents and Patent Drafting. Dr. Lipika is also an inventor and passionate about technology & innovation; likes music, history & architecture.

lipika@lifeintelect.com| https://in.linkedin.com/in/lipikasahoo|

 

(image source:  http://blog.internationalstudent.com/wp-content/uploads/2017/10/game-design.jpg)

 

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