Wednesday, October 1, 2025
Executive Summary
In a program convened for early-stage companies, Fish & Richardson attorneys Alex Yu and Kathryn Grey surveyed the full IP lifecycle—from patent prosecution strategy and inventorship doctrine to licensing structures and ownership pitfalls—concluding that getting inventorship and assignment right from the outset is the single most consequential legal step a startup can take to protect the value of its technology.
Instructor(s)
Kathryn Grey, PhD, Fish & Richardson
Alex Yu,Fish & Richardson
Keywords
patent prosecution strategy for startups • freedom to operate analysis • inventorship and patent ownership under US patent law • patent licensing agreements — exclusive vs. non-exclusive • 35 U.S.C. § 101 patentable subject matter • joint ownership of patents and co-inventor rights • employment agreement IP assignment provisions • Bayh-Dole Act government march-in rights • how does a startup protect its intellectual property? • what happens when a consultant is an inventor on a company patent? • life sciences patent strategy — composition of matter vs. method claims • patent term extension FDA regulatory delay
Legal Analysis
Patent Prosecution Strategy and Patentable Subject Matter Under 35 U.S.C. § 101
The foundational premise of patent law—that a patentee receives an exclusive right in exchange for public disclosure of the invention—frames every strategic decision a startup must make about its portfolio. Yu described this exchange succinctly: a patent grants the right “to make use, sell the invention, or import the invention,” and those rights are exclusive in the sense that they function “to stop others from making, using, selling, offering for sale, or importing the invention for a set period of time.” Critically, that exclusivity extends only as long as the patent term—generally twenty years from the first non-provisional filing date for utility patents under 35 U.S.C. § 154—and only within the jurisdictions where protection has been separately obtained, because, as Yu emphasized, “a US patent only protects activities with a connection to the US.”
The substantive requirements that define what qualifies for patent protection—patentable subject matter, novelty, non-obviousness, and adequate written description—each carry distinct strategic implications depending on the technology sector. Regarding patentable subject matter under 35 U.S.C. § 101, Yu noted that only “certain categories for technology and scientific invention are patentable,” comprising processes, machines, manufactures, and compositions of matter, and that a substantial body of case law has shaped what those terms encompass in practice. Non-obviousness presents particular challenges for mechanical and electrical inventions because, as Yu observed, such technologies “are often built on known components or configurations,” leading examiners to frequently argue that combining existing elements would render a claimed invention obvious. Life sciences applicants face a related but distinct problem: Grey advised that “data, data, data, and more data” is the operative principle for prosecuting life sciences patents, because comparative and unexpected-results data is often essential to overcome obviousness rejections in fields where prior art is extensive.
Filing strategy adds a temporal dimension to these substantive considerations. Yu stressed that “the early decisions for your patent application filing process matter,” because the choice among a US provisional application, a US non-provisional application, or a PCT filing in the first months of a patent’s life determines downstream deadlines at twelve and thirty months, sets the effective filing date from which the twenty-year term runs, and governs when decisions about foreign prosecution must be made. Jurisdiction-selection strategy should track commercial realities: Yu noted that biopharma companies typically prioritize the US, Europe, Japan, and China, while high-technology companies more commonly add South Korea to that set. Grey reinforced that patent strategy is emphatically not a single filing event but a layered, iterative process that mirrors the incremental nature of scientific development—illustrated by her example of an antibody patent family that grew from composition-of-matter claims filed in 2000 to formulation claims in 2011 and COVID-19 treatment-method claims in 2021, each layer extending effective market exclusivity beyond the term of its predecessors.
Inventorship Doctrine, Patent Ownership, and the Consequences of Defective Assignment
Inventorship is a legal determination of striking consequence: under US patent law, a patent that lists incorrect inventors is invalid, and a joint inventor—regardless of how minor her contribution—holds co-ownership rights over the entirety of the patent claims. Grey was direct on the stakes: “a US patent that lists incorrect inventors is invalid,” and she illustrated the co-ownership trap through a hypothetical in which a consultant who conceived of one element found in one claim of a twenty-claim patent “has rights to the entire scope of the patent claims, 1 through 20.” The legal basis for that exposure lies in the default rule of joint patent ownership: each co-owner may independently make, use, license, or sell rights under the patent and retain any proceeds, without obtaining consent from or sharing those proceeds with the other owners.
The inventorship standard turns exclusively on conception—not on physical effort, authorship of publications, or supervisory oversight. Grey drew on case law to clarify the boundaries, recounting a court decision that rejected the claim of a cat owner who had brought her ill pet to UC Davis researchers, noting that the owner had “at most . . . suggested that her cats showed symptoms of an [immunodeficiency] suppressive disease, and provided UC Davis with the infected cats”—a contribution insufficient to rise to conception of the diagnostic methods claimed in the resulting patent. Equally important, following instructions without independent intellectual contribution does not establish inventorship: a research associate who runs experiments at a principal investigator’s direction without independently modifying the protocol or contributing to claimed elements is not an inventor. However, Grey cautioned, if that associate modifies a failing protocol and those modifications become claim elements, the associate may acquire inventorship.
To prevent the ownership fragmentation that flows from inventorship, companies must establish an unbroken chain of assignment from every inventor to the company before any company confidential information is disclosed. Grey identified the employment agreement as “by far and away . . . one of the most important . . . agreements that your company will have,” provided it includes present-tense assignment language—not merely an obligation to assign in the future—and is executed before the prospective employee encounters any proprietary information. Separate recorded assignments referencing specific patent application numbers serve as a cleaner public record and support due diligence in financing and M&A transactions. When working with consultants, vendors, or university principal investigators, the same pre-engagement assignment obligation applies; Grey warned that university PIs, in particular, have often already assigned their inventive rights to their institution and may hold an expansive view of university ownership that extends to consulting work in their area of expertise. She also flagged that inventions developed with federal funding—under NIH or DOD grants, for example—may be subject to the government’s non-exclusive march-in rights under the Bayh-Dole Act, an area she characterized as one to watch given recent administrative statements suggesting potential changes in the government’s exercise of those rights.
Licensing Structures: Exclusivity, Field-of-Use Carve-Outs, and Termination Provisions
A patent license is fundamentally a grant of rights in identified IP in exchange for agreed compensation, and the specific contours of that grant—its scope, exclusivity, revocability, and duration—determine the commercial value the licensee can extract and the risk the licensor retains. Grey framed the threshold choice: an exclusive license means “no one else has the right to use this piece of IP,” while a non-exclusive license means the licensor “is willing to give a license to anyone that asks for it.” Between those poles lies a range of partial exclusivity arrangements—exclusivity bounded by geographic territory, by field of use, or by both—which permit a licensor to segment a single technology across multiple licensees. Grey illustrated the point with a preservative that could be licensed exclusively to a pharmaceutical company for use in drug formulations and simultaneously to a food manufacturer for use in consumer products, each licensee obtaining exclusive rights within its designated field.
Compensation structures in licensing agreements typically combine an upfront licensing fee, milestone payments triggered by defined developmental or regulatory events, and ongoing royalty streams tied to net sales or revenue. The agreement must also allocate responsibility for prosecuting, maintaining, and enforcing the licensed IP—obligations that, as Grey noted, generally track exclusivity: a worldwide exclusive licensee “likely will want to have the responsibility of procuring, maintaining and enforcing the IP.” Know-how provisions deserve particular attention: Grey cautioned against treating licensed patents as self-executing and observed that the practical value of an IP license often depends on the tacit knowledge needed to implement it—analogizing the difference between a professional baker and an amateur following the same recipe to illustrate why “you might want to contract for particular know-how, in combination with a patent or other IP in order to really facilitate the transfer.” Sublicensing rights represent another point of negotiation, particularly where a licensee distributes through intermediaries or incorporates licensed components into products sold through a supply chain.
Termination provisions—often overlooked at the time of contracting—determine the rights of each party when the licensing relationship ends, and Grey observed that questions about exit rights are among the most common issues clients raise once a license is performing poorly. Termination triggers may include expiration of a fixed term, invalidity or expiration of the underlying patents, uncured material breach, insolvency, or a unilateral without-cause right on notice. Grey emphasized the need for internal consistency: an irrevocable license provision creates complexity if the termination clause does not account for it. Parties must also address post-termination obligations—what happens to licensed IP, whether a sell-off period is available for product inventory, which provisions survive termination (such as payment of accrued royalties), and whether the licensee’s right to challenge patent validity can itself be a cause of termination. The overall lesson Grey drew was that licensing agreements reward front-end thoroughness: “prior to . . . getting down the road and wanting to . . . see what your rights are under the agreement, the parties want to come together and discuss . . . the how of the termination.”
Generated by AI based on the Interview/Transcript below.
Key Takeaways
- Inventorship errors invalidate patents. A patent listing incorrect inventors is invalid as a matter of US law, and even a single consultant who conceived of one element in one claim acquires co-ownership rights over all patent claims—making pre-engagement assignment agreements non-negotiable. As Grey warned: “it is very important to get inventorship right.”
- Employment agreements are the first line of IP defense. Grey characterized the employment agreement as the single most important IP document a company holds, provided it includes present-tense assignment language and is signed before any confidential information is disclosed.
- Patents grant exclusive rights, not affirmative rights. Yu stressed that a patent does not permit its holder to practice the claimed invention if blocking patents or regulatory requirements—such as FDA approval—prevent that use; the patent only empowers the holder to exclude others.
- Filing date and filing strategy are irreversible decisions. Yu cautioned that “the early decisions for your patent application filing process matter,” because the initial filing date fixes the twenty-year term, establishes priority, and governs the 12- and 30-month international filing deadlines.
- A layered prosecution strategy extends effective exclusivity. Grey illustrated how sequential filings directed to compositions of matter, formulations, and new methods of treatment can provide protection beyond the original patent term, mirroring the incremental nature of scientific development.
- Life sciences patents require maximally supported applications. Grey advised including in vitro data, in vivo data, comparative data, and even records of failed experiments, because unexpected results are among the most persuasive tools for overcoming obviousness rejections.
- Freedom to operate is independent of patent ownership. Yu’s three-party chair example demonstrated that holding a patent does not confer freedom to operate; a company may need a license to a blocking patent even while asserting its own patents against others.
- Licensing terms must be internally consistent. Grey cautioned that mismatches between irrevocability provisions and termination clauses create legal uncertainty, and that post-termination obligations—royalty tail, sell-off periods, IP disposition—must be resolved at the time of contracting, not at the time of breakdown.
- Know-how provisions are material. Grey urged parties not to “forget the know-how” when negotiating licenses, because tacit expertise may be essential to realizing the commercial value of licensed patents.
- Government-funded IP carries Bayh-Dole march-in exposure. Grey identified federal grant funding as triggering the government’s non-exclusive, non-transferable march-in rights under the Bayh-Dole Act, and flagged recent policy signals suggesting those rights may be exercised more actively under the current administration.
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Interview/Transcript
This transcript was based on an eight-part BCLT-Oregon Start Up Series. On October 1, 2025 Kathryn Grey, PhD and Alex Yu of Fish & Richardson began the series with Patent Prosecution and Licensing Basics.
Allison Schmitt 00:29
Hi everyone, and welcome to our Start-Up Series Program for today, Patents and Licensing for Businesses: Practical Considerations. My name is Allison Schmitt. I’m the convener of these programs, and it is my pleasure today to welcome two experts in this area from Fish & Richardson to join us. We’re joined by Alex Yu and Katy Grey. Alex is an associate in Fish & Richardson’s Silicon Valley office, and his practice focuses on patent prosecution and patent portfolio management, strategic counseling, freedom to operate studies, due diligence investigations, and opinions. If you’re just getting familiar with the wild world of intellectual property that you’re going to be wading into as part of your startup, you were interested in all of those things. You will be dealing with all of these issues as you go forward. Alex has represented clients in post grant proceedings before the Patent Trial and Appeal Board. We’re going to be talking about that process in some of our later programs this fall. Alex has a wide ranging set of clients, ranging from individual inventors and startups to multinational corporations. He’s worked on matters in a wide range of technological areas, including consumer robotics, medical robotics, autonomous vehicles, machine learning, consumer electronics, 2D and 3D printing, medical devices, biometrics, manufacturing, user interfaces and human computer interaction, the Internet of Things, drones, motors, Nanotechnology and optical components. So he’s got a wide range of experience, and I think we’re really going to benefit from that today. Joining him is Katy Grey, who is a principal in Fish & Richardson’s Minneapolis office. Katie’s practice supports clients in both US and foreign patent prosecution, finance related due diligence, freedom to operate, and patent ability studies, non infringement and invalidity opinions and negotiating and drafting license agreements. Again, all portions of the IP life cycle that you’re going to be dealing with with your startup company. Katie’s practice encompasses many areas of the life sciences. So today, we’re going to benefit from both the life science and the high tech perspectives in this program. Her practice involves representing companies, universities, hospitals and startups in the biotech, pharmaceutical, therapeutic and diagnostic areas. She has a wide range of technical experience, including neuroscience, molecular and cellular biology, cell lines, biomarkers, antibodies, polypeptides, formulations, gene therapy, therapeutic, surgical procedure and diagnostic assays. We are very lucky to have Katie and Alex with us today to walk us through this program, and with that, I’m going to turn things over to them.
Alex Yu 03:13
Allison, thank you very much for introducing us. I’m Alex Yu, as Allison mentioned. If after this program you have any questions, you can contact us via email listed here for both me and Katy. To start, I want to give you a bit of a roadmap of where we’ll be going today. We’ll be starting with an overview of what intellectual property generally is and why it’s important for your business, and then we’ll go into a little bit more detail on the main subject of today’s talk: patents and licensing. On the patent front, we’ll go over the basics of patent prosecution strategy. Patent prosecution, as you’ll see, refers to the process of obtaining a patent at the patent office. We’ll go into particular areas in considering patent prosecution strategy, including filing strategies, where you’ll file jurisdictional approaches of which countries and which jurisdictions you want to get patent rights in, and then also some technology area specific considerations for your patenting strategy. And then once we get to the ownership and licensing part of this presentation, we’ll go into some of the complexities of how patent ownership works and how to think about licensing patents. So first, we’ll start off with why IP is important to your business, and give you the motivation for a lot of our discussions today. Intellectual property is a pretty broad term that includes several different categories, including patents, the focus of today’s talk, copyright, trademark and trade secret. In all the categories, IP is really a creature of law that when owned by a individual or a company, it directly gives that entity some legal right under federal and or state law. It’s a pretty capacious definition. And generally, different forms of IP will grant legal rights to bring a cause of action for unauthorized use of your IP, including inventions, designs, trademarks, trade secrets and creative works. The source of authority, as I mentioned, for IP, includes both state law and federal law. Patents and copyright are both derived from federal law, trademark and trade secrets are derived from the combination of federal and state law. That’s the direct legal benefit of different forms of IP, but in addition to those particular rights, they provide these indirect benefits that can yield business advantages. IP can operate as a competitive deterrent, passively serving as a market entry barrier for competitors that operate in your particular area. For patents, for example, competitors will often see your technology and your patents and choose a different area or choose to devote their resources to design around your patents. Patents can also signal to competitors that innovation is protected and not easily replicable. In addition, patents and other IP can be a signal to investors that their investment is going to be protected. Without strong IP protection strategies, competitors can easily use IP that your business has expended significant efforts and resources into developing, and as a result, IP often attracts funding and factors into valuations, especially in M&A or IPO scenarios. And finally, as we’ll discuss in a bit more detail later, IP can be licensed and can often be used as a source of revenue. They can be monetized through licensing agreements, which Katy will describe in a bit more detail in the later slides.
Alex Yu 06:54
Again, there are four types of IP. We’re going to focus on patents today, but I’m just going to say a little bit about all four types that we mentioned. Patents primarily cover technology and scientific inventions. Patents really just represent a trade with the public. You get a patent on your idea if you publicly disclose how to make and use your invention, and that is part of that exchange you get for a limited time, an exclusive right that I’ll discuss in a little bit more detail in a bit. Again, patents do not grant an affirmative right to make or use or sell technology. There may be all sorts of other barriers that would prevent your company, who may hold the patent rights to technology, from making use of that particular technology. For example, another company’s patents may block you from using the technology with what is generally referred to as a blocking patent. Or there may be some other non patent legal hurdles, such as regulatory hurdles. A very common regulatory hurdle is FDA approval of the technology, for example, for a drug or medical device. So patents don’t grant the right to make use of the technology. You may be asking, what do they actually do? They grant an exclusive right to make use and sell the invention. The term exclusive here is critical to understanding what a patent does. That term exclusive means that the patent is a vehicle to stop others from making, using, selling, offering for sale, or importing the invention for a set period of time, also known as the term of the patent. I’ll say just a few words about the other three areas of IP that are generally thought of when the word IP is used. Trade secrets was generally correspond information that’s not publicly known and describes economic value from its secrecy. Those are often enforced when an employee departs a competitor and the employee uses know how gain from their prior employer. Example trade secrets can include formula, some algorithms, customer lists and manufacturing processes. Trademarks generally protect brands, logos, slogans and other identifiers of source and copyright generally protects original works of authorship, including art, music, literature, software code and website content. Now why are patents important to your business? Patents are extremely important for protecting technological and scientific innovations for your business. Most companies, they’re often focusing on the science and technology behind their innovations and the market for their technology. This makes sense because companies want to ensure that their technology works as predicted, and companies also want to validate that the solution they’ve come up with, in view of the science and technology, meets market needs and will be well received. But, legal protections are often overlooked. Focusing on just those two things, the science and the market puts you at the unhappy face here. This is because legal IP serves as this third pillar of protection that can prevent competitors from copying the efforts and resources you expended from achieving good use of the science and technology and from identifying the market, and ensure that those efforts are rewarded and protected, and thus, if you also consider legal and IP as part of your overall strategy, you end up here with a happy face.
Alex Yu 10:31
Now for the rest of this presentation, we’re just going to focus on patents. I’m going to start with some of the basics of what a patent is and go through the process of obtaining a patent. So, as I mentioned earlier, a patent grants the exclusive right to make use, sell the invention, or import the invention in the patent. Those rights, as I mentioned, are exclusive rights. They prevent others from doing the same without permission. Patents are often analogized to real property, because they can be bought, sold, and licensed; they can also be assigned mortgage or even bequeath. Patents, because they’re an exchange with the government, you publicly disclose what’s in your patent and what is part of your invention to get a limited term — a limited period of time where you have the right to enforce this exclusive right. That term is generally 20 years for utility and plant patents and 14 years for design patents. And this time limits important when we discuss the patent process and timeline in the upcoming slides. Patent rights are also jurisdiction specific. This means that a US patent only protects activities with a connection to the US. Separate filings are needed if you’re trying to get protection in other countries. As a result, procuring patent rights can be extremely expensive, and I’ll go into a little more detail later as to the strategy behind selecting where to file. And finally, patents are not automatic. When you file for a patent application, they go through a rigorous review process at the United States Patent Trademark Office — the USPTO. The USPTO is tasked with examining US patent applications and granting us patents that satisfy substantive patentability requirements. This process can take two or more years, up to five or even more years, depending on the complexity of the technology and the backlog. The substantive patentability requirements here, there are several and I’ll briefly touch on four of them. The first is that your patent must cover patentable subject matter. Only certain categories for technology and scientific invention are patentable. Second, your invention has to be novel. You can’t obtain a patent on something that’s already been disclosed or filed on previously. That set of description and disclosure, public disclosure, is called prior art. Third, your invention has to be non obvious. You can think of this requirement as preventing patenting of certain incremental inventions that simply amount to a combination of known elements. Though, there are other requirements behind the requirement for your invention to be non obvious. And fourth, your application has to describe your invention in sufficient detail so that the public knows what the patent covers and can eventually make and use the invention when the patent expires. As I mentioned before, patents are jurisdictional. Patent in one country, such as the US, does not protect your invention another, such as India or China. You have to file in each country where protection is desired, and there are a lot of strategic considerations that go into that. For example, where your product is sold, manufactured, or otherwise distributed. Your industry and market often can serve as a guide for where you want to file. For example, for a lot of biopharma inventions, the US, Europe, Japan and China are common jurisdictions to file, whereas for high tech inventions, the US, South Korea, China, and Europe are common places to file. Working with IP council is critically important for this step, because they can kind of they can explain to you the filing strategy and allow you to file as broadly as possible without a long term strategy that could end up wasting resources for your company. Generally, IP council will take into account your business goals and dictate this filing strategy.
Alex Yu 14:31
The key takeaways from this slide is that the early decisions for your patent application filing process matter. From the top part of this slide, it’s really the first few months of the patent application’s life that can determine some of the later milestones that happen and determine where you end up getting coverage for your patent rights. Even before you file, you have to decide what type of application to file. You have a lot of options, including a US provisional application, a US non provisional application, foreign applications, or PCT/international applications. Those choices can affect timeline, cost and your global strategy, and they can affect the timing that you would have to make different decisions, generally happening after 12 months and after 30 months after the initial filing, because what is recommended depends highly on industry, business, financial considerations. The filing strategy you select is very fact specific. Patent counsel can guide you through that strategy. The key takeaway from the bottom part of this slide is that the filing date is critical to figuring out what your patent’s term is. The term is linked to filing, meaning that when your patent expires is determined by your initial filing date in the US. For a US patent, it’s typically going to be 20 years in the first non provisional application filing date. And so that would be either a US non provisional or a PCT application. If there are delays at the PTO during the examination process or regulatory delay at the FDA, the term could be extended for those reasons.
Kathryn Grey 16:13
Hi all. So the point of this slide — don’t let the words like antibody throw you off here — the point of this slide is just the fact that a lot of patent strategy is a layered approach for different end goals, right? And so, patents are not one and done. Typically you’re going to want to file on different aspects of the invention, potentially at different times and potentially for different purposes. For example, here we see that there are three different applications that were filed within this example. The first application, the 2000 application, they covered Anti-IL-6 receptor antibody sequences. So here, this represents a composition of matter patent directed to the specific sequences of a particular antibody. You can see a little bit later in the 2011 application that they have just filed on compositions, including Anti-IL-6 receptor antibodies. And compositions here can mean formulations. So you take the antibody and you put it with various excipients and you create a therapeutic. And that combination of elements can be new and non obvious over your prior antibody sequences, and you get additional coverage. This lengthens the amount of time that you might be getting coverage for your particular therapeutic. And then, in this particular example, you can see that in 2021, after the start of the COVID-19 pandemic, it looks like this company then investigated whether or not this particular antibody could be used in the treatment of COVID-19 or a disease caused by SARS-CoV-2. Then they filed another application in 2021, directed to methods of treatment, likely using this IL-6 receptor antibody for the treatment of COVID-19. And you can see how the patent term then extends even beyond where those two initial patent application terms ended to provide additional protection for the company. So the idea here is that science is incremental and science is iterative. And a lot of times you’re going to have a filing strategy that reflects that nature of science, of it being an incremental, iterative process. And so you’ll want to work with your patent counsel to identify various aspects that are potentially patentable based on what you’re working on, and understand that patent counsel might have suggestions as to, ‘Okay, maybe we hang back on this piece of information and maybe we develop this part a little bit more before we file an application on that,’ based on some of these requirements that Alex mentioned. But the idea is that you’re going to want to create a layered approach that provides you adequate coverage for whatever product you’re you’re looking to launch. And so that’s what I was going to cover here. We’re moving on to the next slide.
Alex Yu 20:09
Thanks, Katy. So we’ve been talking so far about patents in the abstract. This is a real patent. It’s the first page of a real patent. Before I go into the details of what’s shown here, I want to emphasize that these issued patents and any publications before the patent issues, they’re all publicly available. That’s the point of patents. The patent owner, again, gets an exclusive right for a limited period of time by informing the public how to practice their invention. And that’s what’s shown in the patent. Google patents, for example, is a free tool allowing anyone to search for patents. You can search by the publication number or patent number shown on the page here, or you can even do keyword searches for particular technologies. We generally recommend working with the patent attorney even in the process they’re searching for patents. There are a lot of reasons for this. Two main ones come to mind. First, unfortunately, patents can be extremely difficult to decipher. It can be scary to see a patent that is broadly titled, for example, machine learning and online retail customer service. A patent attorney can help you understand that the patent likely cover something much narrower than that broad concept encapsulated in the title. The second reason to generally work with a patent attorney for searching for patents is that knowledge of a patent can become a fact with legal implications down the line in infringement proceedings, a patent attorney can help you navigate both of these considerations and in the patent search process. Now turning to what’s in the patent itself and what’s shown on this first page. The first page generally includes bibliographic information that does not in itself, define the legal rights that are covered by the patent. The title, for example, describes the invention at a high level. The inventors listed here are human inventors to the inventions concept. They don’t necessarily have any rights in the invention themselves. Sometimes they do, sometimes they don’t. Under a lot of circumstances, they don’t. It’s actually going to be the assignee who generally is going to be the rights holder, and that’s the entity that the inventors often have assigned or given their rights to. In a lot of situations, the inventors will assign their rights to the company they work for, either through an employment agreement or assignment document. The first page plan also lists the filing date and the date of issue, and then it also lists the priority information. What that means is that there are earlier applications. If you remember the timeline that I had shown earlier, it’ll list all the different patents that are related that preceded this application. Those applications are linked to this patent. The first page also lists the references that were cited during the prosecution of the patent while this was before the PTO. They include US patents, foreign patents and non patent literature, and also reflect documents that were cited by the applicant themselves or by the examiner during the examination process. And that is indicated here: there’s both examiners listed on the first page, as well as the attorneys or law firm that was responsible for prosecuting the application. And finally, we’re not going to show the drawings of this patent, but this patent includes several drawing sheets as well that would appear immediately after the first page. So this is the first page of text after the drawings that you’ll typically see in a patent. I’ll highlight a few things. First, you’ll have the claiming priority, which corresponds to the priority information I mentioned on the previous slide. In some patents, you’ll see a government support class. This indicates that the government supported efforts in developing the invention, and it generally is relevant to academic institutions and others who received grants for the work that they do because the government supported the invention, this clause indicates that the government may have certain margin rights to the invention that’s claimed in the patent. This patent also includes a sequence listing, and this paragraph indicates that there is a sequence listing, which is a standard way at the PTO to show biological sequences such as DNA, RNA, or protein. On this first page, you’ll also see the technical field. This is generally a one or two sentence paragraph that’s drafted by the inventors that are used to guide the PTO in classifying the invention. What I mean by classification of where this application is going to be sent within the patent office, the classification is important because it ensures that the examiner tasked with examining the patent has the right technological background to substantively examine the patent. Most patents also include a background section. This section generally describes the state of the prior art before the inventors develop the new technology that will be described in the patent. And finally, we get to the meats and bones of the patent, starting at the summary and onward. Generally, the description of the invention will include this summary as well as a detailed description, and sometimes some other related sections as well that describe in detail the invention. These sections serve as a guidebook for the invention and for the claims of the patent that we’ll discuss in a little bit. The description will often include definitions and/or examples related to the invention. So we just skipped 66 columns to get to the end of the patent. You’ll see at the top, the tail end of a sequence listing that I mentioned previously. The most important part of the patent, though, is going to be the claims. These are very important for understanding what a patent covers and the legal rights that the patent owner has. These claims — they define the scope of the legal rights the patent holder and they are analogous to what’s in a property deed. They describe the outer boundaries of what is covered by a patent. Often in litigation, infringement of patent can turn on the meaning of just a few words in a couple hundred word claim. Okay, switching gears a little bit. I will, in this slide and the next few slides, go into details as to the subject matter typically covered by patents and the different considerations that depend on the technological field your company is in. Statutorily under 35 U.S.C. 101, patents can only cover certain types of inventions, and those are processes, machines, manufacturers and compositions that matter. These areas are broad and cover different things depending on the technological field that you’re practicing in, and there’s a lot of case law that is interpreted what these words mean that we won’t go into much detail today, but it’s good to know that these are important for defining what types of things you can actually patent. Before I go into these specific areas, patent attorneys often specialize in these technological areas. You’ll have people who specialize in mechanical arts, electrical arts, software arts and life sciences. And patent attorneys will be able to develop recommendations in those areas. Each area differs, again, in the technology, but also from a legal perspective, the patent strategy and the claim structure as well. So when you look at this table, you can see that there are some there are some differences in the ways that these different statutory subject matters are claimed in the different technological areas. For example, in the mechanical and electrical technology fields, generally processes, machines and manufacturers are pretty common areas for inventions. Machines and manufacturers can include devices and apparatuses such as electric motors, medical devices, mobile devices, tools and integrated circuits. Processes can also include methods of making and using the same devices and apparatuses listed below. Compositions of matter tend to be more relevant to the material sciences, where you’ll have novel metal alloys, polymers and composites. For software, composition of matter by comparison are generally not claimed. Instead, the inventions tend to focus on processes such as executing algorithms on a computer or training an ML model. The machines tend to cover computer systems that would perform these processes that are listed here, and manufacturers tend to refer to computer readable media, such as hard drives and other tangible electronic storage media that encode instructions for performing these processes. Katy will go into a little bit more detail on the right most column here related to the life sciences.
Kathryn Grey 29:47
For life sciences, we, generally, if you can, start off with your composition of matter. So either your chemical compound, your small molecule, or your antibody, your recombinant enzyme, or whatever it is that is “the thing” that you’re working on. That’s our first, most desired category that we’d like to go after, because that category is not generally restricted on applications of how it’s used. You’re patenting the thing itself. And so whether or not that thing itself is being used in field A or field E, that would be infringing for whoever is using it, right? So, generally, we like to go after compositions of matter first. But if those are not available for whatever reason like prior art, or you’ve claimed that in a previous application, you can go after various methods associated with those things. So, methods of treatment using your small molecule or your antibody. Methods of manufacturing — that can be very important with respect to antibodies or other large molecules. Alternatively, some companies like to keep that information of methods of manufacturing, like cells and that sort of thing, a trade secret because it can be so complicated. Additionally, you can go after methods of assaying or processing various biological samples. We do have, I would say, manufacturers are like formulations, right? I talked earlier about putting an antibody in a composition where you’re working with other excipients and stuff like that for the whole formulation. That could be considered a manufacturer. We could also have kits or assays within the biological space. Machines generally, I, you know, turn to one of my mechanical colleagues, like Alex, and say, ‘Hey, Alex, can you help me with this research tool? How should we go about doing this?’ And like Alex said before, there’s different kind of legal strategies and claiming strategies that he might be able to think of, even if that particular machine is used in a life science application. Sometimes its helpful for different practitioners to partner up in order to provide coverage for for something that can go either way. Alex?
Alex Yu 32:32
Thanks, Katy. So even though the structure of patents that I covered in the previous pages look the same across these different patents, and the legal standards with obtaining a patent are the same regardless of the technology area, different issues tend to arise more frequently in certain technological areas by virtue of the nature of the technology itself. This slide discusses that, and then the next few slides will go into some of the specific considerations for each technological area listed here. For mechanical and electrical patents, the biggest hurdle generally is going to be obviousness. That was one of the substantive requirements that I had mentioned earlier about certain incremental inventions being considered obvious. Again, most inventions are incremental. So there’s a subset of what is considered incremental that the patent laws generally would consider to be obvious. And with mechanical and electrical inventions, because a lot of them are built on known components or configurations, obviousness is often a pretty big hurdle. Examiners, you’ll find, often argue that combining these known elements would make a particular mechanical or electrical invention obvious. The patent itself for mechanical and electrical patents often focus on the drawings. Those end up being a very important informative part of the patent. And these drawings often include schematics, block diagrams, circuit diagrams, and multiple views of the device and its sub components. The specification itself, the written text, often, or generally, should describe the structure, function and the technical advantages of each component and each strut of the invention, as well as the entire system. For example, if the invention is a mechanical braking system for a bicycle, your patent application should describe the mechanical components of the braking system, such as the cable, lever pads, et cetera. It should also describe the function of each of those components in the context of the overall system, for example, for mechanical actuation. And it should also describe the technical advantages of the system as a whole, such as faster braking. Alternatively, if your invention is a smartphone antenna, your patent application should describe the specific electrical components, capacitors, inductors, transistors and their arrangements, functions of those particular components, for example, for tuning or switching, and then the technical advantages of the system as a whole — for example, improved connection stability. Because mechanical and electrical technologies are often built on well known components, it’s important to cover design around to prevent easy circumvention of patents. For example, in a mechanical invention, if a fastener is being used, it’s important to have to claim cover multiple types of fasteners, such as screws, clips, adhesives and the like. And in an electrical invention, a patent plan should similarly use broad language to cover variations of implementing the same function.
Alex Yu 35:53
All right: software patents. The term software patents often is misunderstood. Source code and object code themselves are not patentable. Those are protected under copyright law, not patent law. What’s actually patentable are computer implemented inventions, and those generally will cover — the specification for software patents will include flowcharts and block diagrams as drawings, and those visuals are often going to be described in detail in text, and will describe the function and how the invention works in technical terms. And in terms of the claims, the claims are likewise often written in functional terms, and that’s because the underlying hardware, for example, the microprocessor and the memory, aren’t novel for them. In most circumstances, the focus of the claims, generally, is what the software does, not how the hardware is built or how the hardware differs from prior hardware.
Kathryn Grey 37:02
Thanks, Alex. Some specific considerations for life science patents. So life science patents can really run the gamut, right? You can have some of the longest patents you’ve ever looked at in your life. Some big pharma patents could be 3 to 500 pages of that single spaced, two column type of patent that Alex was showing earlier, where your eyes cross because it’s so long and there’s so much information in there. But then additionally, it is perfectly reasonable for smaller entities that don’t have that budget, or you’re claiming a smaller slice or use of something, to have a more tailored application. And these are just ballpark figures, but I just want to show the diversity in length and what these different companies, based on their budgets, might be able to put in their applications. So additionally, life science patents are going to have a few additional things that hook on to a patent. And Alex touched on one earlier, specifically, a sequence listing right? If you have a DNA, RNA, protein in your application, and you’re claiming the specific sequence of those things, or if you’re just listing those, you’re going to have a sequence listing associated with your patent. Additionally, if you have a novel biological material, the USPTO might require that you put a sample of that material in a recognized depository. There are some things that are hard to even describe in words, right? And as Alex mentioned, the function of the patent system is to make information available to the public. So if you’ve made and described as best you can within the patent — how to make and use this thing — it still might be helpful to provide a sample of the thing that you made or used, and it might be required, depending on what particularly you’re claiming. Additionally, in life sciences patents, you are going to want to put as much data in there as possible. As with the mechanical arts, a lot of life sciences patents face obviousness challenges. A lot of art is already out there for a lot of life sciences’ use. Not that they can’t find novel ways of making or using or doing something, but in order to overcome the prior art cited against you, it is really, really helpful in the life sciences space to have data in your application. So what does this look like? For gene therapy, it would be helpful to have experiments showing delivery of the gene of interest to the cell type of interest, or maybe you even have some animal model data. It is not required to have human data, even for the treatment of human diseases. That is FDA territory. But the USPTO is interested in seeing, ‘okay, conceptually, could this possibly work? Do we have at least preliminary evidence that it could work?’ So that type of evidence is likely going to be required during prosecution. So for antibodies, you’re going to want to make sure that you describe the generation of antibodies. You’re going to want to have the specific sequences for your antibodies. You want to identify the key residues. So, for example, the CDR sequences. You want to provide any optimization or functional testing, and you might want to have method of treatment claims, you want to have maybe in vitro data, in vivo data, and then additionally, for therapeutic methods, comparative data can be really helpful — showing that a particular therapy works better than a different type of therapy. Now, we’re generally always wanting to show that something works unexpectedly good. Having having data that goes to unexpected results would be really helpful. And so especially in the context of therapeutic methods failed, including failed experiments in your specification, might actually be helpful to show that the therapeutic method that you’re suggesting is, in fact, surprising in light of the known art. For diagnostic methods you’re going to want to describe novel detection methodology and novel manufacturing processes. And for chemical patents — so like small molecules — you want to include as many synthesis examples as you can. Liquid chromatography, mass spec data, in vitro data about how this small molecule might work in a cell. IC50 data, comparative data, right? Data, data, data, and more data. You want data in your life sciences patents as much as possible. So additionally, just to note again, that there is some interplay between the USPTO and the FDA, especially for things like life sciences treatments. And so you’re going to want to work with council in order to understand that interplay, because it is very nuanced, very technical, has deadlines associated with it. And so you’re going to want to be really on top of all these aspects about how your life sciences patents, either work with FDA considerations, or potentially patent term extension, which is when you have a patent that has been issued, but the product or the method of treatment is being held up, or reviewed by the FDA, when somehow the USPTO got clearance for the patent before the treatment was cleared at the FDA, you might be able to get some patent term extension on your patent.
Alex Yu 43:42
Okay. In the previous slides, I had emphasized that patents grant an exclusive right to prevent others from making use of an invention. They, again, do not grant affirmative rights. Now that we know more about how to understand the scope of a patent, I want to go through a quick example of how freedom to operate works in patent law. Freedom to operate means that for an individual or entity that they are free of other people’s patent rights. So imagine we have three parties here, Andrea, Betty and Carla. Andrea sells a chair with four legs. Andrea also has the earliest patent on a chair with four legs. The invention in that pattern is a four legged chair, agnostic to whether there are armrests on that chair. Betty, after Andrea’s filed, her patent begins selling a chair with four legs and two armrests. She patents a chair herself with four legs and two arm rests. Her invention is the arm rest. And then we have Carla. Carla starts selling a chair with four legs and two armrests. After, both Andrea and Carla start selling their chairs and filed their patents. Carla does not have any patents herself. Here are the legal implications of the fact pattern that I just gave you. Andrea has freedom to operate. There are no patents that cover Andrea’s product that she sells because Betty’s patent that she filed comes afterwards, and because Betty’s patent is restricted to things with two armrests, to chairs with two armrests. Andrea, with her patent, can sue Betty for using the four legged design. She can also sue Carla for using the four legged chair design. As a result, Betty does not have breathing to operate, although Betty has a patent on a four legged chair with two armrests, Andrea’s patent is a blocking patent that covers all chairs with four legs. Betty can sue Carla for copying her patented combination, for selling a four legged chair with two armrests, but Betty does not have an affirmative right to make a chair with four legs and two armrests. Carla likewise does not have freedom to operate for very similar reasons. So in sum, Andrea has freedom to operate, and Betty and Carla do not have freedom to operate. The key takeaway from this example here is that being the first filer and the first mover — Andrea, in this circumstance — is very valuable from a patent perspective. And the second key takeaway is that having a patent does not give you FTO or freedom to operate. And here’s another quick example. Imagine an example where you have two competitors who have technology that overlap in a certain area. As a company, you’re able to extract a lot of value from your patent. So you’re able to predict the technologies and design spaces where a lot of your competitors will be operating. In other words, the area of overlap between competitors one and two in this slide, in this example, if your company had a patent that would cover both competitor one and competitor two, to have freedom to operate, they would need rights to your patent through, for example, a licensing agreement.
Kathryn Grey 47:10
All right. Well, we’re going to move on to the second part of our talk, discussing how you can use patents within your business, specifically inventorship, ownership, and licensing. Next slide. All right, what is inventorship? Who is an inventor, and why should I care? You should care because a US patent that lists incorrect inventors is invalid. You know, a company is just in a bad place. If they spend a bunch of money on research and development to come up with their product, they spend even more money and time trying to patent aspects of their product to give them some market exclusivity in that area, and then come to find out, those patents that the company was relying on end up being invalid by a court. So it is very important to get inventorship right. Inventorship can be corrected, but as with many things, it’s generally best to get it right from the outset. Additionally, inventors are the default patent owners in the United States. Proper assignments must be in place for the rights to flow from an inventor to the company. All right, so, we’re going to have a an example here. Let’s say we have three inventors. Inventors 1 and 2 work for the company, and those two inventors assign their rights to the company through an employment agreement. Additionally, those two inventors work with a consultant on developing this product, and the consultant does not execute a consulting agreement assigning his rights to the company. In this situation, you have the company co-owning a patent application with the consultant. And this is very important to understand because that leads to a mess (generally). That’s because each joint owner of a patent can individually make and use the invention, license or sell their rights without permission from the other inventors or owners, and keep any proceeds without sharing those proceeds with the other owners. So if the company ends up where they’re in a situation where the company has obtained assignment from the two employees, so they do own the patent or the patent application, but the consultant has not assigned his rights to the company. The company is in this situation where they jointly own this patent with the consultant, and in this scenario, the consultant can make or use the invention. The consultant can license or sell those rights without permission of the company. And the consultant can keep any proceeds from such license without sharing those proceeds with the company. In this scenario, with employees and the consultant, say that the company is not aware that the consultant never assigned their rights to the company. And say the company sees a competitor, and that competitor is doing something that the company is like, ‘Oh, well, that’s our space. We have a patent for that, and we want you out of our space.’ And so the company sends a cease and desist letter to the competitor. Well, the competitor can look at that, look to see the issued patent referenced in the cease and desist letter, look up that particular patent, and look into it and say, ‘Hey, we see that this consultant never assigned his rights over to the company.’ The competitor can then go to the consultant and say, ‘We would like to take the license to your patent.’ And if that consultant then licenses his rights under that patent to the competitor, the competitor now has right to practice, make use, sell, offer for sale their thing that might be infringing, and the company has no ability to stop them. What’s worse is that the competitor might have given royalties or maybe just a licensing fee, just only to the consultant. So not only can the company be locked out of trying to enforce their patent against their competitors, the company might be locked out from any proceeds that they could have received under that patent as well. So it’s very important for companies to be interested and take the time to make sure that they understand inventorship, understand ownership, so they can make the most of the patents that they have obtained through the patent prosecution process. So let’s talk a little bit about what inventorship is and what inventorship is not. So inventorship is a legal determination based on conception, conception of an idea, and it’s based on each claim separately. So to continue our example of the three inventors, say inventor one — who was an employee of the company — say that they were the heavy lifter on this patent. There are 20 claims in the patent, and inventor one conceived and did the work for 19 of the 20 claims. Then let’s say that inventor two, who is also an employee of the company, they did a little bit of work and conceived of an element that is found in claim 20. And then let’s say that they worked with the consultant on another element that was found in claim 20 of the patent. Just to reiterate how devastating this can be, even if the consultant only worked on one element found in 1 claim of a 20 claim patent, that consultant has rights to the entire scope of the patent claims, 1 through 20. So inventorship is based on each claim separately, but then the inventors are all listed on the face of the patent, and they get 100% ownership rights unless they’ve assigned those rights to another entity. And additionally, inventorship is supported by corroborating evidence. What inventorship is not, right? Doing that again here. Inventorship is not the same as authorship, right? We’ve all seen those academic papers that have 20 or 25 people listed as authors on this paper and it’s unlikely that all 25 of those persons you know contributed equally to the data presented at that paper. It’s likely that someone contributed the sample here, or this model system here, or maybe this other PI has a piece of lab equipment that they let you use. And that’s not really the case with inventorship. With inventorship, you’re generally going to see a smaller list of inventors than with some of these really large academic papers because it’s tied to conception, conception of particular ideas that are found within the claims. Inventorship is not following instructions. So if you have, to continue the university or lab scenario, if you have a research associate who receives instructions from the PI — ‘Please run these experiments and report back to me,’ — And they only run those experiments and report back, that research associate generally isn’t an inventor. They have just been working as the hands of the PI. Now, not to say that research associates can’t rise to the level of inventorship. Maybe they’re given some instructions and they do it and it doesn’t work, and they’re like, ‘Oh, well, we’re going to have to really change this. And then that’s going to have us, you know, then we’re going to have to look at this over here,’ and then they’re like, “Hey we’re going to have to modify this and this and this,’ and maybe those aspects make it into the claims. And if so, then that research associate may be an inventor on that application, because they contributed to the conception of the claims. Additionally, inventorship is not suggestion of a result, right? So, there is a case out there where there was a owner of a sick cat, and that owner took the sick cat into UC Davis, and researchers — oh, and they suggested, when they took the cat in, they said, ‘Hey, this cat looks like it has symptoms of immunodeficiency’ — and the researchers at UC Davis looked at the cat and they were able to isolate and identify the feline immunodeficiency virus in that cat. And they characterized methods for diagnosing and methods for processing samples in order to diagnose feline immunodeficiency in cats, right? And then, additionally, down the road in litigation, you know, the party that’s trying to, you know, blow up the patent, wants to add the cat owner as a inventor on the application, saying, like, hey, you know, this cat owner brought their cat in, and they suggested, hey, this cat might have symptoms of immunodeficiency. And the court said, No, inventorship doesn’t work like that. They said, at most, brown suggested that her cats showed symptoms of an iOS suppressive disease, and provided UC Davis with the infected cats, right? That particular owner did not contribute to the conception of the methods as they were identified in the claims next slide. All right, so how does a company obtain ownership of an invention? Essentially, they want to create a legal paper trail of assignments of the invention from the inventor to the company, right? So what are some of the ways that a company can obtain assignment or ownership from an inventor? Alex mentioned this before, but the employment agreement is by far and away, I would say one of the most important. You know agreements that your company will have right because in your employment agreement, you should have present assignment language wherein you know the potential employee assigns any and all inventions created within the scope of their employment to the employer, the company, and that should be done before the employee ever sees any company confidential information, right? Additionally, there’s other ways that you can obtain assignment from an inventor. Some companies use invention disclosure forms, which kind of ask questions to help understand what might be patentable inventions that the R&D team is coming up with. And sometimes those invention disclosure forms have an assignment block right where in the inventors that are filling in the invention disclosure form acknowledge that you know we are assigning our rights to the company. Additionally, you might have specific assignment of patent applications once filed. So once a patent application is filed with the USPTO, it receives a specific patent application number, right? You can draft a specific assignment referencing that specific patent application number as well as the title and you know how. The Assignment language within that specific assignment, and that assignment can be recorded at the USPTO. And one of the reasons why you know specific assignments might be obtained even if you have an employment agreement with specific assignment language in it, is the fact that it’s just like a little bit of a cleaner package to make a public recordation of right? You can imagine that employment agreements might have a bunch of sensitive information in it, right about compensation and other things that you know a company doesn’t want to publicly record. They just want to record the IP assignment aspect of it. And so you create this very specific nailer, narrowly tailored assignment directed to filed patent applications that can then be recorded. And you know, those patent assignments that have been recorded at the USPTO, they provide a nice chain of title, right, going from inventor to the company. And you know, if your company is wanting to fundraise, right? And you have a company that’s interested in in giving you money, they’re going to do due diligence. They’re going to look up these assignments at the USPTO. So you want to have your assignments order in order, and then additionally, you know, if these applications turned patents are ever litigated, you know the litigation teams will also be investigating proper assignment and proper chain of title from the inventors to the company. Additionally, all right, what are some of the ways that a company can mitigate ownership issues when working with other parties? Number one is that they can limit disclosures to and from third parties and only use non confidential information when making disclosures to third parties. Right? You want to keep confidential information confidential and within the company. Number two is that you know, if you are required to make, you know a disclosure to a third party that might involve company confidential information, that you have a non disclosure agreement in place with that third party before making the disclosure of the company confidential information. Additionally, you might have projects that a company engages with with third parties, and you’ll want to make sure that those projects have the appropriate either collaboration agreement in place, or licensing agreement in place, or master service agreement in place, in order to think through and address and capture all of the potential IP that might be generated from that particular interaction or a collaboration, right? You want to think through these things in advance, work through these things with the other party, and get all these things in writing before that other party sees any company confidential information. And then, additionally, you’ll want to have legal review all agreements for invention assignment, provisions for for beginning work. Now we’re on to who owns the IP. When a company works with third parties. You know, companies these days are often going to have to work with third parties for various aspects of their business, right? We are living in a big, interconnected world, and what we want to do is we want, you know, the company, to work with other partners, but we want to do it in a strategic way, and we want to kind of try to identify potential problems and put agreements in place to try and mitigate those problems before they happen, right? So that the com so that the company has a you know, understanding of the parameters of interactions they might have with other third parties. And so if a company were to, you know, want to approach a university employee so say, like a PI of a lab, and work with that PI of a lab to develop technology for the company. Please understand that that university employee has likely already assigned all of their rights in inventions to the university right particular university employees might not be, you know, it might be a long time since they signed their university employment agreement, and they might not remember that assignment of inventions was in their agreement. Additionally, like a lot of university and. Employees might be more focused on publication than on patenting, and so they might not understand or appreciate the fact that they’ve already assigned their rights additionally University, pis, they might think, Okay, well, I’m acting as a consultant for this company, right in an area that’s not directly related to my work for the University. So I should be good, right? And oftentimes the answer is no, right? They are, you know, university PIs, they are in the business of inventing, and a university might take a really expansive view on the things that the university pi might invent, right? And you know, if they’re consulting in a an area that they have expertise on, right, it is very likely that the university, you know, likely already has rights to that potential invention, so therefore a company is going to want to recognize this, and you know, work with the University legal staff to understand what rights the university might have filed on right very likely the university might be soliciting in between disclosure forms from the university pi, and you know, potentially, they might have already filed on an aspect of of, you know, what you’re expecting to collaborate on, right? You might need to get a license for that,
Kathryn Grey 1:06:33
for that patent, or, you know, a particular family or technology anyway, for what you’re planning on doing right with your collaboration. So this might be a jumping off point, right of kind of understanding what the university might already have, and kind of getting a getting negotiations off on the right foot by kind of recognizing that, you know, they have a right and an interest in the PI’s inventions. Additionally, a company might work with a consultant or a vendor, right? And as we have learned under United States Patent Law, ownership follows from inventorship, right? So therefore, if a consultant or a vendor makes an intellectual contribution to an invention and is named an inventor, that consultant or vendor could be a co owner in the resulting patent application, right? And so the takeaway for this is to make sure that you have all consultants and vendors sign an agreement assigning all inventions to the company prior to engagement. You know, potentially, if it’s a sophisticated vendor, they might want some additional terms, right that’s more favorable to the to the vendor. You know, they might want some license back terms, or this or that. But please realize that you know that you know that you know, employees of a vendor. You know, you might have vendors that you know act only as hands, right, and therefore wouldn’t be considered as inventors on an application. But once again, just like with the research associate example, you might have the vendor with really creative employees where, you know, research doesn’t go as planned. You know, the and vendor employees make some changes to the protocol, or they do some additional experiments to verify and those end up being really important. And there might be claim elements that the vendor might be an inventor on right. So it’s very important that before exchange of company confidential information, that the company obtain assignment from consultants and vendors in order to secure that IP with the company, similar outcome with joint development partners. But usually this is between a company and a company, right? And so you you know, whereas a single consultant might be very willing to assign their rights to the company because, you know, they’re not planning on making or using, or, you know, selling that product themselves. You know, if you’re partnering with another company, it’s probably very likely that they have some sort of commercial interest in the product or the process themselves, right? And so you’re going to want to work with that company to identify, you know, who’s going to hold the IP, or are we going to both jointly hood the IP? You know, we might have some sort of cross licensing agreement, right? Where it’s like, okay, we license some of our IP to you, and you license some of your IP to us so that we can practice this joint, you know, development project together. There might be some additional terms in a joint development agreement, just because the parties might have different interests than in, like a consultant or a university sort of situation. And then, as Alex mentioned earlier, just be aware that the government might have rights in your invention, right so inventions that use government funds, so like NIH grants or DOD grants may be subject to certain requirements, including the requirement to provide the government with a non exclusive, non transferable, revocable, paid up license in the history of the baud doll act, I don’t believe the government has ever used their margin rights. However, I do believe that there have been certain statements made recently that may make people think that that might be changing under the current administration. This is just an area to watch for the moment. So just be aware that the government might have certain margin rights on certain patents. Now we’re going to do a brief overview of some of the types of agreements that are related to IP and how your business might be use these types of agreements in its practice. So we’ve talked a decent amount so far about the employment agreement, right? So the parties of an employment agreement are the prospective employee and the company, right? And in addition to, you know, job title, benefits, compensation, duties, etc, etc. Please also make sure that you have language for IP assignment in your employment agreements. Additionally, something else that’s also really helpful is a list of prior inventions from that prospective employee. Right? So it’s, we’re, what we’re trying to do here is, we’re trying to create a line between IP that the prospective employee invented before they were associated with the company and after. And so, you know, having a list of prior inventions, prior patent applications, um, maybe, you know, it can be general, right, especially if it’s something that is not related to your anticipated job duties at the company, right? I, you know, wrote some code on the side or something like that, but identifying that within the employment agreement is is important for kind of making that line and establishing those company rights. Additionally, you’re going to want to include confidentiality provisions in your employment agreement. Right? You want to have confidentiality provisions in your agreement and agreed to before the prospective employee obtains any company confidential information, right? Because what you don’t want to do is have employees start spend a couple weeks at the company and then leave before you ever sign a confidentiality agreement with the prospective employee, which is now a former employee that might have your company confidential information. Additionally, you’re going to want to have cooperation provisions in there, right, so that the employee knows that they’re expected to cooperate with, like obtaining specific assignments to, you know, specific patent applications or other documents that might be required as well as maybe you even include expectations for IP disclosure, right? What does that look like? You know that might be part of their job duties. Maybe you include, you know, hey, you know part of your job duties is that you attend a quarterly meeting with legal to disclose you know how specific projects are going or something like that. Additionally, your company may run across or may be interested in licensing agreements, right? So this might be between your company and a university or your company and then another company, but it’s very common for startups to want to in license some IP that’s already been developed somewhere else. And what a license is, is it’s essentially a grant to certain rights in exchange for certain generally compensation. And so what you’re going to you’re going to want to lay all of that out in the in the licensing agreement. So you’re going to name the specific patents that you are obtaining rights to. You want to identify the specific field of use or the specific geographical area that you will be obtaining those rights for. You will want to identify whether the parties expect any derivative work to be made, and who will own those derivative works, and whether or not those derivative works will be incorporated into the license agreement and the patents that are already licensed. You know, additionally, the parties will want to identify compensation. So what does this mean? Generally, like a. Licensing fee, potentially milestone payments, right? Where, upon a certain milestone, the company owes the license. Or, you know, certain types of compensation can also mean, like a royalty stream, right? Additionally, you’re going to work out when going to want to work out between the company and the license, or, you know, who has the obligation to procure, maintain and enforce the IP right? Generally, the more rights to the IP that you hold, the more likely you’re going to want to have those obligations yourself, right? So if you are an exclusive licensee in all fields and all jurisdictions, if you’re exclusive worldwide licensee, you likely will want to have the responsibility of procuring, maintaining and enforcing the IP, right? So you know, you’re going to want to direct patent prosecution. You’re going to want to have first rights on who you might want to, you know, bring a lawsuit against right, because generally having exclusive rights give you more, you know, more rights over how that IP can be used. Additionally, a license agreement is generally going to have representation and warranties as well as indemnification and damages provisions.
Kathryn Grey 1:16:34
Additionally, when we look at collaborative agreements or joint research agreements, usually this is between a company and a university or a company and another company, and because you have two parties that likely already have their own IP in this space, once again, the one of the points of a collaborative or joint research agreement is kind of identifying the background IP that each party holds, right because we, once again, we’re wanting to create that line and say, This is stuff I’ve already been working on before we enter this agreement. And we want to be really detailed and specific about that background IP. And then additionally, we want to provide good definitions and a good understanding of what the foreground IP is going to be, the subject IP of the agreement, the IP that we think we’re creating as a result of this joint research agreement, right? And we want to work through and specify who owns and who controls the foreground IP of the agreement. Now, this is going to take different I don’t know it’s going to look different depending on the different parties and what they’re interested in, right? Some some collaborative agreements are, you know, consist of one party who’s providing money and the other party is doing all the research right. But then the party providing money might want, you know, a license, right? Or maybe they want, you know, particular, you know, discounts or or there’s the that or the other thing, and that can be negotiated as a part of that collaborative agreement. You know, other, you know, joint research agreements, you might have two parties that are really interested in, in having control of this idea and obtaining it. And therefore you might have to, you know, kind of be a little bit more nuanced in, in, you know, really nailing down the nuts and bolts of like, you know what? What this relationship is going to look like. Additionally, a company might run across master service agreements that’s between a company and a service proprietor or vendor in a long term business relationship. So you can have some master service agreements that don’t really have a lot of IP associated with it, because the vendor is essentially just acting as the hands, right of the company who is directing all the work, I would say, even if you expect that to be the case, if you expect the vendor to just be the hands, and therefore not be an inventor on any potential IP that comes out of that relationship. It’s always, always good to still have assignment language in such a relationship or agreement, and so you know whether or not you expect the vendor to produce IP or be involved in potential IP production, it would be really good to to still include IP provisions in a master service agreement, but a master service. Agreement usually involves like project management, work schedules and purchase orders, which can be really detailed and can produce IP so it’s good to understand you know, what is expected to happen under the master service agreement, and to plan accordingly with your IP provisions. All right, next slide, all right, we’re going to dive into a few licensing considerations to wrap up right? So a licensing agreement is to once again get and obtain a certain rights from someone who already possesses the IP. So you can have a licensing agreement for patents, for trade secret trademark copyright. You also have this category that also pops up in license agreements, commonly called know how. And you know, know, how is kind of just, you know, the it can involve, you know, a certain person’s skills and understanding of an area, right? It can involve, you know, maybe a person with a certain title, right, within a within a company they might have, but it’s essentially, it’s the knowledge that you need to implement the IP that you’re licensing, right? So as an example of know, how you know? I will say, you know, I am a sufficient Baker, and I’ve baked my kids birthday cakes before, and I can follow a recipe, and I can take their input, and I can make a serviceable cake, right? But you can also imagine how you can provide that same recipe to a professional baker, and you might get, you know, a better cake faster, because they have the know how, from being a professional baker, of how to read, understand, interpret the particular recipe that we’re working with, right? And so you can see how you might want to, you know, contract for particular know how, in combination with a patent or other IP in order to really facilitate the transfer of that, you know, effectiveness of that IP, to the company. So don’t forget the know how when you’re negotiating a license. Additionally, there’s going to be lots and lots of terms within a license agreement. And I’m just going to touch on two here today, because usually these are kind of the two big ones that we think of when we’re thinking about a licensing agreement, and that are the terms of the license, right? What? Patents, trade secrets, trademarks, copyright, your your licensing. And then, kind of, you know, what? How? How is this being used? Right? Are you getting exclusive license, meaning, like no one else has the right to use this piece of IP that you’re licensing or, you know, is it a non exclusive license? Is it just meaning that, you know, they’re willing to give a license to anyone that asks for it, right? Wherein you know, you still might need the license to make user practice, but other people can make use or practice it as well, right? Additionally, you can kind of get partial exclusivity, or you might get exclusivity within narrow fields of geography or narrow fields of use. That’s a something that you’ll want to consider and negotiate with the license, or, right? Maybe you really only care about rights in the United States, right? And so you’re willing to obtain a license you know, for for the United States, right? Or maybe you’re only, you know, really focused on a particular field of use and a license, or, you know, in contrast, a license, or might be trying to find multiple different licensees for different fields of use, right? So consider, say, you have, like, a preservative, right, that can go in human consumption products, right? Maybe you, if you’re the license or maybe you license out, you know, use of that preservative in pharmaceuticals to one licensee, and maybe use it license out, use of that preservative in, you know, food stuffs to another licensee, right? Those can be two different fields of use for the same product, and each one of those licensees can obtain an exclusive license within that field of use, right? So you’re going to want to define the terms of what the licensee is getting. Additionally. A licensee is going to want to understand whether or not the license is revocable, right? So, you know, businesses generally need certainty, or would like to have certainty, and negotiating an irrevocable license can be part of having that certainty for investors or just for the business as a going concern, right? Additionally, a licensee will want to understand whether or not they have the right to sub license their rights under their license agreement. Right? You can understand and appreciate that there might be certain aspects where maybe a licensee is working with a distributor right, and that distributor wants to have the same protections that the licensee has, right? Or maybe the licensee is taking a component and putting it with their components and selling it right and and, you know, other parties in that process might want a sub license in order to make user practice right the component of the licensed invention. The other really important aspect that we’re going to talk about for licensing is termination, because that’s kind of the terms of the agreement. Are usually kind of the first thing that people look at. And then generally, people come to me when they are like, hey, this license agreement isn’t really working out for me anymore. What can we do to get out of it? And then the termination clause
Kathryn Grey 1:26:32
is, is really important for understanding the the parties, you know, rights as far as what they’re expected and allowed to do under the terms of the license agreement. So, you know, prior to, you know, getting down the road and wanting to, you know, see how, what your rights are under the agreement, the parties want to come together and discuss, you know, the how of the termination, right? Is this going to just be a license for a certain number of years? Like, maybe this is just a license for three years, and it automatically terminates, like, upon, you know, the expiry of three years, maybe the license is going to be tied to the underlying IP. So, like, for example, patents, right? So when the patents expire, you know, the license goes away. Or you know, or when the patents are found invalid, the license go away. Additionally, maybe considering uncured breach or insolvency of one or both parties, as well as you might, you know, a particular party might be interested in putting, you know, patent challenge as a as a cause of termination and a license agreement. Additionally, you might want to have a license agreement where, just like either party, can walk away when they decide it no longer serves them right. So you might want to write a provision in the license agreement where you know either party, without cause, can terminate the license agreement, usually with some notice, you know, 90 days notice, or however long the pair the parties want to contract for termination of the agreement. And then additionally, in considering termination of the agreement, you’re going to want to consider what happens right upon termination. So you’re going to want to consider what happens to the licensed IP. You want to make sure that your provisions kind of line up, because you might have an irrevocable license, right what happens to the to the you know, irrevocable license if you terminate your agreements, right? Additionally, if you have, you know, maybe kind of more of a physical, you know product that’s associated with the license agreement, right, they’re selling a particular product you might want to incorporate like a sell off period, where you know they can sell down the inventory that they have, or a destruction of inventory. And additionally, you’re going to want to identify the provisions that survive termination or any payment of accrued royalty. So those are just some of the aspects of a license agreement that you might want to consider when, when you know, trying to end license or out license, you know, IP assets for your particular company, and that is what we have today for today’s presentation, Alex and I, thank you very much for your attention, and thank you for joining us and your interest in patents and licensing.
Allison Schmitt 1:29:56
And I want to thank Katy and Alex for an absolutely fantastic presentation. Presentation, there are so much great information and advice in here. I encourage you, if you need to watch it again, watch it again, because there’s a lot of terrific information. Please don’t hesitate to reach out to Katie and Alex if you have questions, and we look forward to having you join us for our next program.