Intellectual property aspects of entrepreneurship: protection in patent and trademark areas, as well as copyright and know-how areas (local and foreign); penetration of overseas markets (directly or through licensing); possible industrial espionage concerns.

Position:Canada-United States Law Institute Annual Conference on Comparative Legal Aspects of Entrepreneurship in Canada and the United States - Discussion
 
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INTRODUCTION

Raymond Ku

DR. KING: Okay. We are ready. Let's go.

PROFESSOR KU: Welcome back, everyone. I am Raymond Ku. I teach Copyright and Constitutional law here at Case Western. I am also co-director for the Center for Law Technology and the Arts, which is why Henry asked me to chair our panel here on intellectual property aspects of entrepreneurship. I won't give you the boring summary of what the criteria for copyright, trademark, and patent law is. I will just tell you that, obviously, from the perspective of entrepreneurs, intellectual property is often viewed as having the attributes of a double-edged sword.

I think it is billed as a friend in the sense that it provides, often, the necessary incentive and the legal protection for entrepreneurs to actually make the investments that they do and engage in the business activities that they do. But it can also be an incredible barrier to entry. Just look at any newspaper today. The right over patent law, copyright or trademark as intellectual property has expanded beyond the more traditional common law origins into, maybe, the respective regulatory regime. It can be quite difficult for entrepreneurs to navigate the regulatory waters.

We are fortunate to have our two distinguished panelists here with us today. They, unlike myself, come on the harder side of intellectual property. They are both attorneys and patent law experts. James Longwell, directly to my left, is partner at Gowling Lafleur Henderson in Canada where he specializes in information technology law, especially in the patent aspects of that field. Further to my left is Diane Dobrea, a partner at Calfee, Halter & Griswold in Columbus, Ohio. She, again, is, as I said, a patent attorney whose primary focus is biotechnology law. And one brief note about Diane, she is also a graduate of Case Western Reserve University and an adjunct professor in our Center for Law Technology and the Arts.

Now we are going to adopt the format used by the venture capitalist panel earlier, and we will kind of leave it as a free form discussion both among the panelists and you in the audience.

UNITED STATES SPEAKER

Diane H. Dobrea *

&

CANADIAN SPEAKER

James Longwell **

MS. DOBREA: Okay. Well, I will pop in first and say thank you, thank you, Professor King, for inviting me here. I am actually a three-time alumnus of this university: undergrad, grad in biochemistry, and law.

DR. KING: Can you all hear Diane?

MS. DOBREA: It is just always a pleasure to come back to the University. Although I relocated a year ago down to Columbus with our law firm, I find my way up here a lot, so I am used to seeing the faces around here on the campus.

We are trying to be responsive to the sentiments and questions that have been raised over the last couple of days in terms of how IP factors into the entrepreneurial context. And I say entrepreneurial context because there have been a lot of conversations about entrepreneurs and individuals or a small team starting up and taking an innovation out into the marketplace. But from the standpoint of an IP attorney, we deal with entrepreneurs whether they are a business unit within an existing company that is trying to go after a new opportunity or an individual who has a concept and wants to figure out how the solution that he or she has found can also make it out in the marketplace to help other people be successful and maybe make some money, too.

That is the backdrop of how we deal with intellectual property. What we want to talk about today is the role of intellectual property in the entrepreneurial context in terms of making decisions about when to spend the money, when to spend the time to figure out what kind of real estate you have got to protect, and whether or not you are stepping on someone else's real estate--which is an important consideration that can't be overlooked. Also, what is your competitive strategy and how, if at all, does IP fit into that competitive strategy?

There certainly have been a number of people who have recognized that you can have an innovation that isn't capable of being protected by IP, at least in terms of patent and trade secrets. So what other IP vehicles are available, and how can they best be exploited, and what are the risks associated with going forward with those things or protection?

Just quickly, when we do our due diligence we are .really looking at two components: What does the entrepreneur have that can be protected and how do you figure out how to capture that. (1)

But equally important, when that entrepreneur goes out into the marketplace with their innovation, what do they have to deal with in terms of somebody else who is already there? What ability do those other entities have to stop them from being productive? The bottom line is education is expensive and ignorance can cost more.

And I think that's definitely true. We, as IP attorneys, like to have all of the information at the earliest point in time so that we can pick it all apart and give you your best strategy. The reality is that the costs of us doing that are often so prohibitive that the best that an entrepreneur can do is understand enough about the context of the market they are going into to be able to weigh spending the money up front versus waiting and seeing what happens down the road.

We will then transition into covering how you protect your IP and talking a little bit about the differences on a global basis and certainly the differences in our IP schemes in the U.S. versus Canada.

MR. LONGWELL: I have been asked to focus more on the role and relevance of IP in the entrepreneurial context, and I think there are a lot of different facets to it that people tend to concentrate on, but there are many things they don't examine.

As Raymond mentioned at the beginning, I look at IP as both a friend and a foe. It is a friend, certainly, insofar as it attracts capital, which is really what every entrepreneur is chasing. IP doesn't follow money; money follows IP. It really brings in the money if it is there.

Why? Well, it is a vehicle that you can use to crystallize the knowledge that the inventor has, into a property right, which then can be held by a specific entity. Then those property rights endure for a certain life, usually 20 years for patents, longer for trademarks and so forth, but they are going to outlive that entrepreneur. So when the entrepreneur becomes disgruntled and wants to leave, the IP stays behind and continues to grow within another entity.

Most people see the acquisition of exclusive rights as the ultimate goal of IP. That's what the IP is supposed to be bringing to them. That's certainly one of the aspects. Sometimes they lose sight of what that really means.

An exclusive right might be great for trademark. I can use my trademark and I have a right to do so. But for patents, it is not always that way. It is a patent right and that gives you a right to stop others from making or using the invention that is claimed there. (2) But this is not a right that you can use. (3) It does not give you that opportunity.

It is subject to the third-party right of others that we talked about. You know what else you can do with the exclusive rights? Well, you can copy them yourself or enforce them, but obviously, there is a vehicle you can use to license to others. You can get other people involved. So we excite people and are able to offer things within intellectual property, and you can work within your own market.

But look forward, where might you be ten years from now and who might be there to help you? Go to Europe. File a patent application. Secure rights in China. Maybe you will be licensing other partners to get you into that market sooner.

Then, of course, in the last few years of development, that intellectual property itself can be relegated to someone else. People don't want to practice. They don't want to go into the marketplace. Many are happy to own IT and sit back and wait for someone else to stumble upon it so that they can be that troll who jumps out from under the bridge and says, "Ha, ha, I need a toll for you to pass over." It is going to cost you a lot of money. Our experience with our neighbors in Waterloo for Research In Motion--it cost them a lot of money to pass over that bridge.

So, that's one of the attractive aspects if you are one of these people, but it is one of the foe aspects for new entrepreneurs coming into a new space. They have to be worried about the third-party IP that can be shaping the scope of the protection for whatever they wish to obtain as well as just being a barrier to entry into a particular market.

So that, of course, involves a due diligence exercise. We are going to talk a little bit about that in a few moments. How do you evaluate the rights of others when you want to take the IP? When do you want to take the opportunity to do that? Is that something you do earlier? Do you postpone that if you can? How much money are you going to spend, and in what markets are you going to do that because it can be a very costly exercise? And why is it costly?

Well, IP is complicated. I mean, it is science law, and the law puts you in institutions, and as much as we heard the money doesn't like to see borders. IP lives and dies, in a way, on borders and the nuances and the various laws. It is really important that when we see new entrepreneurs coming in, maybe the institutional context like universities where they had this great idea, they did their thesis, they had it published, everything looked great, and somebody told them that they should commercialize. They got some interest, and then they realize their entitlement has been lost in jurisdictions because they published first. They are no longer able to secure the adequate protection they thought they could get there. So borders exist.

The differences in law are very much apparent in intellectual property. It is costly because, well, we charge more for professional...

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