Letting Your Guard Down: When Sharing Intellectual Property Drives Innovation


TelstarSat_bLawyers are trained to think about property, including intellectual property, as a “bundle of sticks.”  One stick is the right to possess your property, and another stick is the right to keep others from possessing or using your property.  The right to exclude has long been considered one of the most important sticks in the bundle; the “no trespassing sign” or its equivalent has been one of the definitive elements of property law since the Middle Ages.

In the age of the internet, the right to keep others from using one’s property has been vigorously defended by media companies, whose efforts to prevent piracy of their products have driven a great deal of development in the music and video game industry.  This right has also been reconsidered by software developers, who are finding that loosening the restrictions on the use of their intellectual property is not always a way to lose market power.  Non-profits such as the Apache Software Foundation exist solely to make their intellectual property available to the public free of charge, while major market players like Apple and Google have developed strategies for making their intellectual property available to potential collaborators.

Strategies for allowing the collaborative use of intellectual property fall along a spectrum of restrictiveness.  Apple’s strategy for letting independent developers use its application programming interface (API) falls on the more restrictive end of the spectrum.  Independent developers must work with limited information about the iPhone, and their apps are subject to a review process that ensures their quality and their compatibility with Apple’s vision.  While this  strategy ensures a consistent product and lowers the risk that independent developers will dilute Apple’s market power, it also limits the innovation that independent developers are allowed to bring to the table.

On the other end of the restrictiveness spectrum is the Android platform, an open source platform released by Google under the Apache license.  The “no trespassing” signs have been taken down from this intellectual property; developers are free to use it without a rigorous review process or negotiation with the company that developed it.  This strategy means that low-quality apps will inevitably be developed, and it creates a risk that an independent developer will do something that dilutes Google’s market power.  However, it has also meant that developers designing apps for Google’s Moto X have a much wider range of possibilities for innovation.

In today’s world of fast-paced development, placing less emphasis on the right to exclude others from using one’s intellectual property can be part of a sound business strategy.  Exactly how important the right of exclusion is to a piece of intellectual property depends on where that property fits in with the company’s intellectual property strategy, which in turn depends on how each company organizes its priorities.  Developing a strong strategy for managing intellectual property depends on knowing not only how to guard intellectual property, but also on when to let that guard down.

Garrison Street is committed to helping companies develop innovative strategies that drive their growth; contact us to find out about the solutions we can help develop for your business.

Form and Function of Licensing Deals


3318748484_9ff7e56362_oLicensing agreements are ubiquitous; from computer software to Dora the Explorer party favors, many products and services are brought to market through licensing agreements. Put simply, the holder of a patent, trademark, process or other intellectual property (the licensor) allows another (the licensee) use of the IP for commercial gain.

Whether the agreement is arrived at over a few beers at the pub, or is complex enough to involve teams of lawyers and accountants, the basic form remains the same, spelling out the rights and responsibilities of each party to the deal.

Profit is the goal of licensing deal, how that profit is divided is an important part of the agreement. Generally the licensor will receive a minimum payment at a set time as well as royalties based on sales. Royalties typically are in the 6-10% range. Compensation clauses may also require a minimum revenue requirement, which if not met allows the grantor of the license to end the relationship.

The time frame of the agreement is also important. More than just the duration of the contract is involved. The time frame mandates when the licensee must have the product or service on the market. To aid the licensee during the initial phases of development this part of the contract usually allows for a delay in initial payment to the grantor of the license. This part of the agreement also covers renewal and termination conditions.

The operational element of the contract involves quality. It is not uncommon for the grantor to require the licensor to adhere to the parent company’s policies and procedures involving development and marketing of new products. This section also covers distribution territories, non-competing covenants and ownership and control of assets involved in the agreement at its conclusion.

Putting your valuable Intellectual property in the hands of another is a decision that should not be entered into lightly, proprietary information and your good name is on the line.

Intellectual Property 101: What High-Growth Business Owners Need To Know About IP


3318748484_9ff7e56362_oAs businesses grow and develop, they accumulate assets that could be protected by intellectual property laws, which could impart significant economic and tactical advantages. (*This post is intended to be very elemental and give you the basic, necessary information about intellectual property protection.)

With that in mind, here is a brief walk-through of the four major protections that U.S. intellectual property laws provide.

Trademark secures “marks”– symbols, phrases or images used to distinguish your goods or services from that of others. Trademark law rewards active use, not originality or how long ago you first used a mark. The mark must identify the producer; if it identifies the product (i.e. “responsive cloud computing services”), is geographic in nature (i.e. “Washington state apples”) or is offensive, it cannot be trademarked. Trademarks do not need to be registered, but it is a good idea if they are, since it’s easier to prove ownership and opens the door for greater damages in the event of an infringement.

Patents secure inventions, like computer software. Patent registration is a lengthy and potentially expensive process, but for many companies, it is worth it because a patent bestows a temporary monopoly on how and by whom an invention is used.

Copyright protects artistic works, like photographs and songs, that are fixed in some tangible medium and are expressions, not just ideas. It controls the right to perform, reproduce and display the work. As with trademarks, registration with the federal government is not necessary, but it is a good idea.

Trade secrets may be the least familiar of these four. Essentially, any information that is A.) not widely known B.) derives some economic value from not being widely known and C.) is subject to reasonable efforts to keep it from being widely known can be a trade secret. This includes customer and supplier lists, marketing strategies, growth plans and the like. The formula for Coca-Cola, for example, is considered the world’s most valuable trade secret. The unique element of trade secret protection is that unlike copyrights, trademarks and patents, which all have a built-in expiration period, it is potentially unlimited in duration.

To maximize the value of a business it is important to fully understand available intellectual property protections and how your business can make use of them.

The Interest of Tech Patents


Two tech goliaths, Microsoft and Facebook, have joined forces to acquire more patents.  An interesting merge of companies to combat Google’s presence… and…. 1/2 the deal is now paid for…in less than a month.

Nick Wingfield writes, “The agreement between Microsoft and Facebook, announced on Monday, came less than two weeks after Microsoft agreed to pay more than $1 billion for 925 patents held by AOL. In a second deal, Microsoft said it had turned around and sold 70 percent of those same patents — about 650 in all — to Facebook for $550 million in cash, along with rights to 275 AOL patents Microsoft plans to retain.”

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