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Frequently, senior management at emerging companies know a great deal about technology, a fair amount of business, and precious little about the law, particularly IP issues. At least some of them view the law as an annoyance that brakes progress, momentum and continuity. Law is an afterthought. But while better late than never may work as an operating principle in certain endeavors — like paying parking tickets — it is a cocktail for confusion or chaos in IP matters. Without planning, IP rights are more likely to be in dispute or in limbo. In worst-case scenarios, companies may abandon rights or have to buy costly licenses because they failed to patent their own inventions or design around a competitor’s. While the following tips certainly can’t replace qualified IP counsel, here’s a list of things that every new chief executive should know. ALIGN YOUR GOALS A company’s IP strategy should complement its business goals. For example, some companies want exclusivity in their field to close off competition within a market, others want to earn royalty income by licensing, and some want to strike deals with private or university partners. Each situation calls for a different IP strategy. That strategy will change over time as a company matures. To achieve alignment, IP considerations should be a part of every business development meeting, and the patent strategy must be integrated with the corporate strategy at all times. IP considerations arise in many corporate legal transactions, including employment contracts, M&A transactions, financing, IPOs, and formation of strategic partnerships like research collaborations and joint ventures. IP considerations can get lost in the heat of the deal, but it’s generally harder to fix an IP problem than to get it right the first time. COMMUNICATE IP strategists should be aware of developments on the business and technology sides of the company. By looking at IP issues early on, strategists can help the company’s business development team evaluate a deal’s potential worth. The business development side should keep the IP team aware of the company’s direction and market focus. This way the IP team can know which patents the company will need in the future. Company scientists and researchers can also give IP strategists a window into the future. Scientists know where the company’s technology is headed and when it branches out or dead-ends. These insights should be communicated to the company’s IP strategist. The IP strategist can give valuable feedback to business development executives and technologists. For example, sometimes there are key patents that must be licensed or avoided. And with the proper preparation, a clever strategy may allow cross-licensing rather than royalty or up-front payments. Similarly, if the folks in the lab or on the business development team can accomplish a goal in a couple of different ways, the right answer for the company may very well be the one that requires the least amount of third-party IP. KNOW YOUR ENEMY Most chief executives instinctively pay attention to the competition, but are less likely to follow the competition’s patent portfolio. From time to time, they should be briefed on the results of searches of patent databases for company names, important inventors and key technologies. Chief executives need to be aware of and maneuver around potential problems. Reviewing a patent takes “IP eyes”; learning how to interpret patent claims is different than simply reading the patent. Too often, potentially problematic patents are dismissed by the layman only to surface later and cause headaches. CONSIDER THE WHOLE GAMUT Too often, “IP” is defined as “patents,” and trade secret protection is overlooked. There’s a built-in conflict between patents and trade secrets: Innovative companies that pursue patents end up revealing their trade secrets when applications are published or issued. These competing interests should be evaluated. Joint ventures and licensing deals create another set of problems. When an invention results from a research collaboration, which side should receive the patent rights? This kind of decision must be made up front. Trademark decisions can’t be made late in the process either. Company names and potential product names should be researched earlier rather than later. Having to change a trademark after being contacted by the owner of a similar mark is a drag. “First pass” searches are generally inexpensive and can ultimately save time and money, not to mention face. HANDLE WITH CARE In the last decade, companies have become more sophisticated about IP rights. Most new companies start out utilizing recommended IP practices, from retention of lab notebooks and technical information to employment contracts to tracking invention disclosures to procedures to avoid public disclosure prior to patent filings. But IP rights can be fragile. They can be damaged or destroyed by a single misstep or by failure to take appropriate steps. Early advice is crucial. Patents can lose much of their strategic value simply because management does not make IP a part of its corporate strategy. Most companies would not own an empty warehouse for long, nor would they let valuable inventory sit unused. Similarly, “mining” a company’s IP is even more valuable in today’s economy. To the extent that chief executives apply the same strategic vision to their IP, particularly patents, that they apply to physical assets, they can see a positive difference in the profitability of their companies. Robin Silva is a partner in the San Francisco office of Minneapolis’ Dorsey & Whitney (www.dorsey.com). If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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