With the tap of a touchscreen, anyone with a smartphone can connect to the Internet, stay in touch with friends via social media, and shop for the latest trends.

Technology is forever changing the way the consumer accesses information, and it's likewise reshaping the way businesses approach managing their intellectual property, according to Tom Burger, a partner at Cincinnati-based law firm Wood Herron & Evans.

Intellectual property (IP)"”the creations and inventions that make up the foundation of a company"”is protected in the form of patents, trademarks, copyrights, and trade secrets that safeguard their assets from unauthorized use. As technology evolves, the significance of IP evolves along with it, and a company's ability to control IP has a considerable effect on its success down the road.

No Limits

"It becomes more readily apparent that technology in the world we're living, particularly our 24/7 connectability, has enabled some companies to increase their worth in a shorter period of time," Burger says. "Instagram is a prime example."

In April, Facebook shelled out $1 billion to acquire the photo-uploading startup, a company that has attracted 30 million users in its 18 months of existence. As a free program, the majority of Instagram's worth is in intangible assets "” specifically IP patents.

"Technology makes certain things happen faster," Burger says.

"If you sell a product on the Internet your market automatically expands beyond your immediate geographical area."

Explaining Trade Secrets

While this can mean dollar signs to a company in some cases, it also forces business leaders to be continually aware of the state of not only their own IP, but also the protected IP of competitors, in order to avoid legal trouble in the future.

The tradeoff to a global market is the immediate threat involved with doing business in the Internet era, according to Cindy Bolden, an attorney specializing in patent and trademark protection at WolfeSBMC, because private information like trade secrets can be posted to social media sites where they can quickly become uncontainable.

"It's easy for an employee to use their phone camera to snap a picture of something considered a trade secret and then post it on Facebook for everyone they know to see," she says. And it often happens accidentally. She says the key to preventing a situation like this lies in a manager's ability to explain the importance of certain trade secrets and other forms of IP to company personnel.

And while a photograph of a company's private property posted online might be meaningless to most, there is another, more dangerous side of the coin. According to Burger, it also creates a potential for competitors to find out about a company's products sooner than ever before. It's a threat that can be thwarted through promptness in the patent process.

Trademark Timing

"Generally, a company should file a federal trademark application before it's out there for the whole world to see on the Internet," he says.

This is contrary to the past, when a business might have waited to determine if a product was going to sell before investing in filing a trademark. Waiting is no longer a viable option. In other words, there is a risk associated with putting a product on the market in the age of the Internet, and according to Burger, there are immediate costs associated with that risk, "particularly if a company wants to protect its IP rights."

Eric Robbins, a partner at Ulmer & Berne, says technology has created another major risk for companies trying to manage their IP rights: Because much of business is Internet-based, products reach the consumer sooner and can become outdated in a shorter timespan.

"Business is very fast moving and products have such a short life cycle," he says. "It takes time to get a patent, and sometimes once a patent is obtained, the product's life cycle is complete," resulting in wasted time and money related to the patent filing process.

Depending on the product, years can pass between patent application filing and acquisition. The United States Patent and Trademark Office had a backlog of more than 650,000 applications at the start of 2012. According to Robbins, the trademark office has taken steps to speed up the process and reduce the backlog.

"The patent office presently has a pilot program in place to allow expedited handling of a patent application which can, from filing to grant, be approximately one year," he says. "That is very fast." And another change recently been made to the U.S. patent filing system is even more significant.

Last September, President Obama signed the America Invents Act "” the biggest overhaul to the U.S. patent system in 60 years "” to reduce the backlog and delays, along with improving the quality of patents issued.

First to File

The chief reform will convert the country's "first-to-invent" system of patent filing into a "first-to-file" system, which is more consistent with the procedures of the rest of the world. The switch, however, isn't officially recognized until March 2013.

One of the reasons for the change lies in the uncertainty involved in the first-to-invent patent-filing process, according to Burger. It is difficult to know whether an inventor is asserting an accurate conception date or an earlier date, he says.

"Currently in the United States there are cases when inventorship comes into question," Bolden says. Shifting to the new system, she says, was a result of the "realization that as the world becomes a more global environment, the U.S. needed to make that move and get in line with what everybody else is doing."

And just like technology's effect on the patent filing process, first-to-file will also add financial risk for businesses. Rather than filing a patent application after a product is known to be a hit, according to Robbins, the new AIA rules will create a race to the patent office, pressuring companies to file before taking determining their product's true merit.

This has the potential to frontload the costs of the patent process, which could lead to negative consequences for some businesses, he says. "There is speculation that it will make the patent process less accessible to small companies and inventors."

Despite the change, the fundamental advice Robbins will offer to clients under the first-to-file system will remain the same: "File applications early in the process of developing a new product," he says. "The difference that the new law brings will put an exclamation mark on that message." - 



ASK THE PROFESSIONALS

David A. Mancino
Partner
Baker Hostetler

Q: Have you seen any interesting trends with patent litigations that your firm has been handling?

We've seen an increased reliance by accused patent infringers on "Indemnification and Defense" clauses in supply agreements as a way to potentially transfer the costs and liabilities, and arising from the patent litigation suit onto suppliers of the accused technologies. Therefore, it is very important to carefully consider and review these clauses at the time of entering into the supply agreement "” not after the patent infringement lawsuit has been filed.


John M. Mueller
Partner
Taft Stettinius & Hollister LLP

Q: As a business owner, is it always in my best interest to file for registration of my company's trademarks at the United States Patent and Trademark Office?

While there are many advantages that come with successful federal trademark registration, filing for registration is not necessarily the right course for every trademark. There are many factors that must be considered in deciding whether filing is the right decision for your business, and these factors should be evaluated on a case-by-case basis. An experienced trademark attorney can help evaluating which path is right for your mark given your company's individual circumstances.
 
 
Robert Chambers
Partner
Wood Herron & Evans

Q: What are the key components of the America Invents Act?

The most noteworthy changes of the 2011 Act include: 1) The U.S. will issue a patent to the first inventor to file an application. 2) To re-evaluate the validity of issued patents short of litigation, the act provides for post grant review, inter partes review and supplemental examination. 3) Prior use is now an accepted defense to patent infringement. As one example, if a first party non-publicly uses a machine more than one year before a second party files an application for it, the first party's continued use of the machine would not infringe the future-issued patent.