Commonly drafted agreements include nondisclosure agreements, business associate agreements, consulting agreements, licenses, services arrangements, telecommunications relationships, distributor and reseller relationships, support, hosting, co-location, and software development relationships.

A strong candidate will posses strong written and verbal communication skills and a working knowledge of copyright, patent, trade secret, and trademark law, as well as the laws governing transacting business on the Internet, privacy, and security.

An interest in technology and business models using technology is a must.

To apply, please complete the online application.

Contact Information
Name: Kimberly M. Hensarling
Email: attyrecruiting@mmmlaw.com

I. Continuing Legal Education. High quality continuing legal education programs continued to be a signature of the Technology Law Section in 2010-2011. The Section sponsored its annual flagship event, the Technology Law Institute on October 22- “2010: A Tech Odyssey.” The event explored critical challenges for the world today–the economy, environment, and healthcare. The goal of the conference was to enable lawyers to make an impact and provide valuable services to their clients in these important areas. This year was the first year the Institute was simulcast to the State Bar office in Savannah. The event attracted approximately 60 paid attendees. The faculty consisted of contributors from premiere organizations such as AT&T, Emory University, Georgia Solar Energy Association, and McKesson. Participating law firms included Alston & Bird, FSB FisherBroyles, Hunton & Williams, and Morris, Manning & Martin.

The Section continued to offer smaller luncheon programs with CLE credit, including:

• Development, Licensing and Distribution of Mobile Applications
• Annual Technology Law Update on State and Federal Law
• Digital Media Matters: Attorney Advertising and Professional Guidelines

II. Website Enhancements. The Technology Law Section added numerous features to its website (www.technologybar.org) during the 2010-2011 year, including:

• Integration of the Bar’s Facebook Page to allow members to view Bar updates within the Section’s website
• Enhanced event pages with maps, driving directions, and online registration through the Bar’s membership portal
• Calendar page featuring upcoming events and annual calendars
• Redesigned logo
• Incorporation of the Section’s Twitter account to provided updates and reminders to members
• History page highlighting Section leaders for the past 25 years
• Incorporation of RSS feeds to incorporate news from Section members’ websites
• Ability for users to post comments on journal articles and share articles with social media sites
• Microsite for the Technology Law Institute (www.technologybar.org/tli2010) including agenda, speaker bios, sponsors, and event details

III. Participation by Section Members. This year the Section continued to increase participation of its members in Section activities. The Section hosted a networking event at Ri Ra Pub. Many current and prospective members attended in addition to several law students from area law schools. The Section has renewed its Law School Liaison position and continues to support student member participation in the Section.

IV. Community Involvement. During 2010-2011, the Technology Law Section continued to actively support important community development efforts. As in past years, the Section made a donation from the proceeds of the Technology Law Institute to Computers for Youth. Computers for Youth has been a long-time beneficiary of the Technology Law Section’s financial support. Computers for Youth is dedicated to increasing the availability of information technology to lower income households by providing donated computers to these families. The Section also made a donation to Pro Bono Partnership of Atlanta and established an annual goal for Section members to complete projects for this organization. Pro Bono Partnership provided a training session for attendees of the Technology Law Institute.

Respectfully Submitted,

Stephen Combs

Section Chair

Technology Law Section

As the Immediate Past Chair of the Technology Law Section, it is my responsibly to chair the Elections Committee for the Section. The Elections Committee is comprised of the three most recent former Chairs of the Section as well as two other members appointed by the current Chair. The Elections Committee is tasked with accepting nominations for the office of Secretary and verifying that the nominees are qualified in accordance with the Section Bylaws. Secretary is the only office open for election, as pursuant to Section Bylaws, the current Secretary succeeds to the office of Vice-Chair and the current Vice-Chair succeeds to Chair. To be qualified to hold the office of Secretary, candidates must have been a member of the Executive Committee of the Technology Law Section and actively participated in the activities of the Executive Committee during the twelve month period immediately preceding the elections.

Brett Lockwood, a Partner at Smith, Gambrell & Russell, is the sole nominee for the office of Secretary. The Elections Committee finds that Mr. Lockwood is a qualified candidate pursuant to Section 3 of Article VI of the Section Bylaws. Unless there are other qualified nominees who contact the Elections Committee, Mr. Lockwood will be installed as Secretary at the Annual Meeting of the Technology Law Section on Tuesday, June 28, 2011.

I would like to personally encourage all of you to attend an Executive Committee meeting and help plan the activities for the Section in the coming year. I would also encourage you to visit the Section website, www.technologybar.org. There you will find information on upcoming events and meetings as well as articles from our Section members. If you have any questions regarding the election process please feel free to contact me.

Best Regards,

Chuck Ross
Immediate Past Chair
Technology Law Section
770-822-8443
Chuck.Ross@gwinnettcounty.com

Presentation Materials:

• Powerpoint
• State Bar of Georgia – RULE 7
• Entire Bar Rules
• ABA Opinion on Attorney Websites
• Read about the controversy related to the ABA  not making the ABA opinion publicly available at no charge)

There was a marked rise in the filing of false patent marking litigation in 2010, with over 500 such cases having been filed in that year alone.  Small and large companies alike have found themselves in the crosshairs of such lawsuits, leaving many others wondering whether they can avoid becoming the next target.

Liability For False Patent Marking

Section 292 of the United States Patent Act provides, in part, that a person may be liable for false patent marking if he or she, for the purpose of deceiving the public, (1) marks upon any unpatented article the word “patent” or any word or number importing that the same is patented, or (2) marks upon any article the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no such application has been made or is pending.  See 35 U.S.C. § 292.  The statute further provides that persons found liable for false patent marking “[s]hall be fined not more than $500 for every such offense.”  Any person may sue for the penalty, with one-half of the penalties going to the person bringing suit, and the other half going to the United States.

Forest Group, Inc. v. Bon Tool Co.: Penalties Should Be Applied On A Per Article Basis

In its December 28, 2009 decision in Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), the United States Court of Appeals for the Federal Circuit interpreted the false patent marking statute as requiring that penalties be imposed on a per article basis.  The Court explicitly rejected the notion that the statute imposes only a single fine for each decision to falsely mark, reasoning that such a limited reading of the statute would be insufficient to deter false markers, and would not provide sufficient financial motivation for members of the public to bring suit on behalf of the United States Government.  While the Court acknowledged that its decision might spark a rise in “marking trolls,” it concluded that “it seems unlikely that any qui tam plaintiffs would incur the enormous expense of patent litigation in order to split a $500 fine with the government.”

The Aftermath of the Forest Group Decision

Since the Forest Group decision in late 2009, the legal industry has witnessed a steady increase in the filing of false marking suits.  More than 500 false patent marking cases were filed in 2010, compared to only 17 such cases having been filed in 2009.  Many of these suits have been filed by plaintiffs that have not suffered any direct harm, and that may have been formed for the sole purpose of pursuing such litigation and the significantly higher damages that may now be available.

Legislation has been proposed that may curb the filing of such suits, and may retroactively limit the damages that are available in pending suits.  For example, some proposed legislation would help protect companies by requiring that plaintiffs show competitive injury, and by instituting compensatory damages, as opposed to statutory damages.  Whether and when such legislation will be passed is uncertain.  The Patent Reform Act does appear to be gaining momentum in the Senate, with backing from Democrats and Republicans, and has strong support from the Obama administration.  Nevertheless, it still contains some controversial provisions, unrelated to false marking, opposed by several stakeholder groups.

How Can A Company Protect Itself Against A False Patent Marking Claim?

Companies should evaluate their patent marking practices, and take steps to limit their exposure to false marking claims and penalties.  In particular, companies should consider conducting an audit to ensure that:

• products marked with a patent number or other patent information practice at least one claim of the patent; the patent has not expired; the patent has not been invalidated by any court or administrative decision; and the patent has not been found to be unenforceable; and
• products marked with patent application information or “patent pending” practice at least one claim of the pending patent application; and the patent application remains pending before the Patent Office.

Importantly, companies should reevaluate whether a product has been properly marked any time (i) the claims of the patent are construed during litigation, or the patent holder proffers constructions during litigation; (ii) the scope of the patent claims changes upon reissue, during reexamination, or during prosecution of the original pending application; and (iii) the design or functionality of the marked product changes such that it may no longer be covered by the patent or the pending application.  In addition, patent markings for expired patents and abandoned applications should be promptly removed from products, product packaging, and associated advertising.

Companies wishing to discuss the false marking statute, any impact it may have on their business, how to audit their patent marking practices, and how to limit their exposure should consult their patent counsel.

In 2001, the United States Supreme Court declared that evolving technology must not “erode the privacy guaranteed by the Fourth Amendment.”²  Since then, however, courts have struggled to apply the protections provided by the Fourth Amendment to new forms of communication and information storage. But as technology – and with it, society’s expectations of privacy – continues to evolve, the question of how to balance the needs of law enforcement against the requirements of the Fourth Amendment has taken on increasing importance. The Georgia Court of Appeals recently made a crucial contribution to this expanding area of law when it decided Hawkins v. State³ – a landmark case of first impression that sat squarely at the intersection of two challenging areas of jurisprudence: the unsettled doctrine of searches of automobiles incident to arrest after Arizona v. Gant and the emerging law surrounding the constitutionality of cell phone searches.

I.  Searches of Vehicles Incident to Arrest

a.  Pre-Arizona v. Gant

The Fourth Amendment establishes a constitutional right to be free from “unreasonable searches and seizures.” The United States Supreme Court has held that under the Fourth Amendment, warrantless searches are “per se unreasonable . . . subject only to a few specifically established and well-delineated exceptions.”⁴  The Court’s decision in Chimel v. California helped establish one such exception—the “search incident to arrest.”⁵  In Chimel, the Court held that an officer conducting an arrest may “search the person arrested” to ensure the officer’s safety and to prevent the “concealment or destruction” of evidence.⁶  Additionally, the Court declared that an arresting officer may also search the “area into which an arrestee might reach in order to grab a weapon or evidentiary items.”⁷

While Chimel defined an important exception to the warrant requirement, New York v. Belton was the first significant case addressing search incident to arrest involving a vehicle.⁸  Belton provided a bright-line rule for officers making arrests of vehicle occupants: “when a policeman has made a lawful custodial arrest of the occupant of an automobile, he may, as a contemporaneous incident of that arrest, search the passenger compartment of that automobile.”⁹  Moreover, the Court stated that officers could search containers – both open and closed – in the passenger compartment of an arrestee’s vehicle.¹⁰ The Court affirmed and expanded upon the Belton rule in Thornton v. United States, explaining that an officer could conduct searches of vehicle passenger compartments – and  the containers found inside them – as part of a search incident to arrest, even where “the officer first makes contact with the arrestee after the latter has stepped out of his vehicle.”¹¹

b. Arizona v. Gant

In April of 2009, the Supreme Court issued a decision – Arizona v. Gant – that substantially altered the search-incident-to-arrest analysis. In Gant, officers arrested and handcuffed a driver who was driving on a suspended license before placing him in the back of their squad car.¹²  The officers then conducted a search of the vehicle, where they discovered cocaine.¹³  The Court, without explicitly overruling Belton, announced a substantially different and more nuanced approach to searches of vehicles, replacing Belton’s bright-line rule that officers could search cars whenever they arrested an occupant of the vehicle. The Court explained that there were only two situations in which a search of an automobile incident to arrest could take place. First, affirming Chimel, the Court held that a search of the passenger compartment of a car is permissible if the arrestee is “unsecured and within reaching distance of the passenger compartment at the time of the search.”¹⁴  Second, the Court held that if the officers may search passenger compartments and any containers found therein if have a reasonable belief that they will find evidence of the crime of arrest, even where the arrestee is not within reaching distance of the car.¹⁵ Arizona v. Gant, by permitting searches of cars incident to arrest in only two situations, effectively overruled Belton and changed the way courts evaluate the constitutionality of warrantless searches of vehicles incident to arrest and the containers therein.

II.  Searches of Cell Phones

Courts have struggled to formulate a coherent framework for analyzing warrantless searches of cell phones, but one relatively popular approach has to been to analogize phones to physical containers. In United States v. Finley, for instance, the Fifth Circuit found that a warrantless search of an arrestee’s cell phone did not violate the arrestee’s constitutional rights because the “permissible scope of a search incident to a lawful arrest extends to containers found on the arrestee’s person.”¹⁶ Similarly, the U.S. District Court for the Northern District of Georgia concluded that the cell phone was a “container . . . in that it contained information – recent calls, contacts’ telephone numbers, and so forth – not readily apparent without manipulating the cell phone itself.”¹⁷

Other courts, however, have refused to make such analogies.  The Supreme Court of Ohio, for example, explained that cell phones falls outside Belton’s definition of “container, which implies that the container must actually have a physical object within it.”¹⁸   The court further explained that “[e]ven the more basic models of modern cell phones are capable of storing a wealth of digitized information wholly unlike any physical object found within a closed container.”¹⁹ Discussing computers and electronics generally, the Tenth Circuit similarly stated in Untied States v. Carey that “[r]elying on analogies to closed containers or file cabinets may lead courts to ‘oversimplify a complex area of Fourth Amendment doctrines and ignore the realities of massive modern computer storage.’ ”²⁰

Some courts have relied on other justifications for upholding warrantless searches of cell phones. One common rationale is the need to preserve evidence. The District of Kansas justified a warrantless search of a cell phone in part because the “need to preserve evidence is underscored where evidenced may be lost due to the dynamic nature of the information stored on and deleted from cell phones or pagers.”²¹  The court cited with approval a related rationale behind upholding warrantless searches of pagers: “Because of the finite nature of a pager’s electronic memory, incoming pages may destroy currently stored telephone numbers in a pager’s memory.”²² By analogy, because cell phones have limited memories, the need to preserve evidence before it is erased or deleted may justify warrantless searches. Unsurprisingly, however, courts have been more reluctant to allow such searches where they have found that there is no danger of evidence destruction. The district court in United States v. Wall, for example, invalidated a search where the government “failed to establish that the text message at issue would have been destroyed absent intervention.”²³.  The cell phone in question, unlike early pagers, the court reasoned, automatically stored text messages and other information, unless “deleted by the user,” and contained text messages that were up to two months old.²⁴

III.  Hawkins v. State

a.  Facts

The Georgia Court of Appeals thus decided Hawkins against a backdrop of constantly-evolving Fourth Amendment law. The facts of the case are deceptively simple.²⁵ An alarmed mother delivered her unidentified son’s cell phone to an officer with the Lowndes County Sheriff’s Office, concerned that her son was receiving text messages involving narcotics sales. The officer subsequently received a text message on the son’s cell phone from Haley Hawkins – whose identity was unknown to the officer at the time – asking whether the son had “received certain controlled substances.” The officer, posing as the son, set up a drug transaction with Hawkins, and the two agreed to meet at a local restaurant later that evening.

The officer arrived prior to the agreed-upon meeting time to survey the restaurant parking lot. Hawkins soon drove into the parking lot, at which time the officer observed Hawkins “entering data into her phone.” At almost the same time, the officer received a text message on the son’s cell phone announcing Hawkins’ arrival at the restaurant parking lot. The officer arrested Hawkins, at which time Hawkins admitted that she had been texting the son’s cell phone in order to set up the drug transaction. Police thereafter searched Hawkins’s vehicle, incident to arrest, and found her cell phone inside her purse. Without obtaining a warrant, the officer searched Hawkins’ phone for the incriminating text messages, downloaded them, and printed them. Hawkins filed suit based on the officer’s conduct, alleging that the officer violated her Fourth Amendment rights by searching the electronic data stored on her cell phone without first obtaining a warrant.

Hawkins unsuccessfully moved to suppress the text messages and immediately appealed the trial court’s decision to the Court of Appeals.

b.  The Majority Opinion²⁶

The Court of Appeals’ analysis hinges on two issues: first, what, if any, exception to the warrant requirement applies in this case, and second, whether the fact that the object searched is a cell phone has any constitutional significance.

In addressing the first issue, the majority’s opinion relies almost entirely on Arizona v. Gant’s holding that when an officer arrests an occupant of a vehicle, the officer may search the passenger compartment of the vehicle for evidence, if “it is reasonable to believe that evidence of the offense of arrest might be found in the vehicle.”²⁷ The majority notes that although the proper scope of a search permitted by Arizona v. Gant remains unclear, the “most restrictive plausible interpretation of Gant” upholds the warrantless search of “places and things in a vehicle in which one reasonably might find the specific kinds of evidence of the crime of arrest that the officer has reason to believe might be found in the vehicle.”²⁸ Applying this standard, the majority finds that the Lowndes County officer had a reasonable belief that evidence of the crime of purchasing controlled substances would be contained in Hawkins’s cell phone. Hawkins and the officer had communicated exclusively through text messaging during the hours leading up to what Hawkins ostensibly believed was a drug transaction. Moreover, the officer had observed Hawkins entering data into her cell phone in the restaurant parking lot at the moment before he received a text message from Hawkins. Finally, at the time of arrest, Hawkins admitted to the officer that she had been the individual who had exchanged text messages with him throughout the day.

But what makes relevant the officer’s reasonable belief that the cell phone contained evidence of Hawkins’s crime of arrest is the majority’s determination that Gant applies to cell phones in the same way it applies to any physical container. The line of cases leading to Gant has long governed searches of both vehicle passenger compartments and “any containers therein.”²⁹  But, as discussed, there is disagreement as to whether a cell phone should be treated just as any other container. The majority offers a slightly nuanced approach. Following the lead of most other courts that have considered the question, the majority concludes that cell phones should, indeed, be treated like physical containers. Court also recognizes, however, some crucial differences between cell phones and containers that give pause to treating cell phones and physical containers the same way. Cell phones have the capacity to hold more, and a greater variety of, information than most traditional physical containers. Relatedly, cell phones often contain the most private personal information for which “individuals may reasonably have a substantial expectation of privacy and for which the law offers heightened protection.”³⁰ In light of these special attributes of cell phones, the Court cautions that an officer’s authority to search data on a cell phone “does not mean that he has the authority to sift through all of the data stored on the phone. Rather, the officer’s “search must be limited as much as is reasonably practicable by the object of the search.”³¹ Because the record suggests that the officer merely searched for and found the incriminating text messages without looking for any other data on the cell phone, the Court concluded that the officer’s search of Hawkins’s cell phone was constitutionally permissible under the Fourth Amendment.

IV.   The Significance of Hawkins v. State

The Georgia Court of Appeals’ decision marks a substantial step in Fourth Amendment jurisprudence for a number of reasons.

As an initial matter, the Courts’ opinion is important simply for the novelty of the legal question presented. Courts have certainly considered searches of vehicles incident to arrest, and a number of courts throughout the country have addressed searches of electronic devices, such as cell phones. But according to one recent commentary, only the tiniest handful of courts have considered warrantless searches of cell phones incident to arrest and even fewer have addressed warrantless searches of cell phones in automobiles incident to arrest.³² In fact, Hawkins v. State may constitute the first – or at the very least, the most recent – substantive analysis of searches incident to arrest of cell phones found in automobiles. As such, the opinion is likely to serve as persuasive authority to the plethora of courts that will almost inevitably begin considering the issue in the future.

Second, while the majority interpreted Arizona v. Gant in line with most courts, Hawkins v. State indicates that there is still significant disagreement on how exactly to apply Supreme Court precedent regarding searches of automobiles incident to arrest. Chief Judge Miller in his concurrence and Judge Phipps in his dissent disagreed with the majority on the significance of the need to preserve evidence as a justification for the warrantless search of Hawkins’s cell phone. Chief Judge Miller and Judge Phipps stated that the search incident to arrest exception to the warrant requirement “derives from interests in officer safety and evidence preservation” and that in this case, because officer safety is not a consideration, the relevant inquiry is “whether the search of Hawkins’s cell phone was for purposes of evidence preservation.”³³  While he did not explicitly argue that there was any risk of losing the text messages on Hawkins’s phone, Chief Judge Miller concluded that the “officer reasonably conducted a search for such messages in order to preserve the evidence.” Judge Phipps in dissent similarly stated that the relevant question in this case is whether the warrantless search was necessary for evidence preservation but finds that the “state offered no evidence that the data needed to be searched immediately to protect the arresting officers or to prevent the data’s destruction.”³⁴

As both Chief Judge Miller and Judge Phipps correctly note, the U.S. Supreme Court has long relied on two justifications for the search incident to arrest exception to the warrant requirement: the need to protect officers from harm and the need to preserve evidence. Indeed, the two traditional justifications—articulated most prominently in Chimel—justify Gant’s first holding that a warrantless search of a passenger compartment is permissible where the arrestee is “unsecured and within reaching distance of the passenger compartment at the time of the search.”³⁵ But quite apart from that holding is the other major pronouncement in Gant, which is that a warrantless search of the passenger compartment of a vehicle is constitutionally permissible when it is “reasonable to believe evidence relevant to the crime of arrest might be found in the vehicle.”³⁶ The Gant Court, while offering no substantive justification for the rule, explicitly recognizes that allowing warrantless searches upon reasonable belief that evidence of the crime of arrest might be found is not justified by the traditional rationales for allowing warrantless searches incident to arrest.³⁷ Thus, according to the Gant Court, the rule permitting warrantless searches of cars where there is a reasonable belief that evidence of the crime of arrest might be found need not be justified by the need to protect officers or preserve evidence.

The concurrence and dissent in Hawkins, by asking whether the search was justified by the need to preserve evidence, apply an analysis that is not, strictly speaking, relevant. Nonetheless, Chief Judge Miller and Judge Phipps raise an important issue that the Gant Court has left unresolved: if the need to     protect officers and preserve evidence do not justify warrantless searches where evidence of the crime of arrest might be found, what rationale does? If, in fact, there is no risk to officer safety or evidence destruction, why not require officers to obtain a warrant before searching cell phones? Courts—like the Georgia Court of Appeals—will no doubt continue to struggle with such questions.

Hawkins is also notable for the Court’s affirmation of the widespread notion that a cell phone should, for Fourth Amendment purposes, be treated as a physical container. As discussed, the Court cites a number of cases that support drawing an analogy between cell phones and physical containers. But the Court clearly recognizes that the amount and type of information a modern cell phone can contain distinguishes cell phones from traditional containers. Interestingly, the Court sees those differences not as justifying the invalidation of cell phone searches altogether but merely as necessitating restrictions on the scope of such searches. Citing scholarly commentary, the Court states that a cell phone should be treated “like a container that stores thousands of individual containers in the form of discrete files.”³⁸ As a result, “[j]ust because an officer has the authority to make a search of the data stored on a cell phone . . . does not mean he has authority to sift through all of the data stored on the phone.”³⁹ Indeed, the scope of the search must be “narrow[ed] in some meaningful way” aimed at uncovering evidence of the crime of arrest without unnecessarily invading the arrestee’s privacy.⁴⁰

The Court’s approach, while ostensibly reasonable, perhaps raises more questions than it answers—namely, it begs the question of how searches should be narrowed so as to balance the legitimate need to preserve evidence against the arrestee’s privacy interests. Under the Court’s approach, officers on the street—some of whom may have limited experience with cutting edge cell phone technology—must make the difficult determination of how to properly limit the scope of a given cell phone search. This determination, at minimum, will require case-by-case considerations of: the nature of the crime of arrest, the likely form and content of the incriminating data, the available functions and capabilities of the arrestee’s cell phone, and the arrestee’s privacy interests in the various forms of data contained in the phone. In short, the Court charges officers—who face the most difficult of circumstances on a regular basis—with the task of tailoring cell phone searches to the strictures of the Fourth Amendment without the benefit of any clear guidelines or rules. Until Georgia (or federal) courts offer clearer guidelines, officers may be better off seeking warrants prior to conducting searches of cell phones in the absence of any danger of evidence loss, rather than risking the admissibility of evidence by searching cell phones without warrants.

V.  Conclusion

The Georgia Court of Appeal’s decision in Hawkins v. State marks a significant advance in Fourth Amendment jurisprudence to the extent that it is one of the earliest—if not first—forays into the law of warrantless searches incident to arrest of cell phones found in vehicles.  While the Court offers a thoughtful analysis of Arizona v. Gant, it is clear from the concurring and dissenting opinions in Hawkins that there is significant disagreement in how the Gant case should be applied. Moreover, although the it recognizes the difficulty of limiting the scope of cell phone searches, the Court seems to leave the difficult questions unanswered, perhaps leaving officers in an untenable situation—at least for the time being.

Federal Case Law Update 2010 PowerPoint
Federal Case Law Update 2010
Georgia Law Update 2010
Restrictive Covenant Comparison Chart
Restrictive Covenant CLE Paper

Image gallery for the event:

 A start-up company may find itself competing in a marketplace heavy with protected intellectual property, such as patents. The patent landscape within the start-up company’s field should preferably be analyzed before entering the market, lest the start-up be faced with a flurry of third-party licensing “opportunities” or even lawsuits. Likewise, the start-up company should consider how best to develop a patent position of its own.

There are various considerations that a start-up company should take into account when developing a suitable patent strategy. In addition to the basic need to protect turf and mitigate risks of being squeezed from the market by a competitor with its own patent portfolio, a start-up company should consider all of the offensive and defensive aspects of patents, while balancing the strategy with practical concerns such as cost. Creating effective patent policies and procedures within the company early in the process can result in gained efficiencies later in the process.

How Patents May Be Used
Developing and protecting a patent portfolio can help a start-up overcome barriers to entry in a market. If the new company’s products or services are unique in an area crowded with pre-existing patents, protecting the unique aspects of its product or service can help insulate the new entrant from existing competitors and thereby overcome hurdles to entering that market. By protecting the core business product or service of the new company, the survivability of the start-up can be enhanced.

Having a patent portfolio can increase the value of a company and aid in obtaining funding through borrowing, VCs, and IPOs. Defensively, a patent portfolio can serve as a deterrent to potential infringers and competitors from copying and entering the same technology areas. Defensive tactics also include identifying third-party patents in the same technology area as the start-up, and addressing them at an early stage by, for example, clearance (freedom to operate) analysis and opinions, designing around, invalidity and non-infringement analysis and opinions, or seeking licenses. Offensively, while a patent provides the patent owner with the exclusive right to prevent others from making, using and selling the patented invention, it also affords a potential stream of revenue and strategic alliances through licensing and cross-licensing opportunities. Patents also provide their patent owners the opportunity to seek judicial remedy against infringers that are unwilling to license or cease infringing activities. The development of a patent portfolio can instill a culture of innovation in a company, as well as a reputation in an industry for being a technology leader. Developing a patent portfolio can also provide a feeling of ownership among employees by recognizing their contributions to the company’s well-being.

How to Develop a Patent Position
One of the first steps in developing a patent position is choosing patent counsel. Inside counsel (if the volume of patent work justifies it), outside counsel, or a combination of inside and outside counsel can be used. If outside counsel is involved, the start-up must decide who they will use. Like any legal service, outside patent counsel should be chosen based on experience, capability, comfort-level, and expense. Getting patent counsel involved early in the process helps better execute patent strategy by developing procedures for invention disclosure, focusing the portfolio, and optimizing the use and value of the portfolio.

Invention “mining” within the start-up company helps grow the patent portfolio. The purpose of invention-mining is to provide a mechanism for bringing inventions from various levels of an organization to a point where a decision can be made whether to seek patent (or other intellectual property) protection. Invention mining within a company also helps create a culture of innovation and protection and instills an ownership value among inventing employees.

Invention disclosure within a start-up (or any company) may be encouraged through one or both of an incentive program and recognition systems. Typically, an invention disclosure form (IDF) may be developed with input from patent counsel for use by inventors within the company to document details regarding their inventions. A well-designed IDF can facilitate the decision process regarding patentability and lower patent preparation costs by providing much of the information needed by a patent attorney.

Another important element of the invention disclosure process is a patent committee. The patent committee within a start-up typically consists of senior management most closely related to the inventive process, such as a Chief Technology Officer. Preferably, the patent committee should also include other senior business executives, to ensure that the business objectives of the company are considered. The patent committee need not be formal in nature — it can be as small as one person — although it’s important that both technical and business input is obtained, to be combined with the advice of patent legal counsel.

In operation, the patent committee receives IDFs from company inventors, ensures all relevant details regarding the invention are included, assesses the invention with respect to the technical and business strategy of the company, assesses the patentability of the invention (with help from patent counsel), and coordinates with patent counsel regarding whether to pursue patent protection. Other activities of the patent committee may include decisions regarding enforcement and licensing of patents, and the initial review and consideration of third-party patents regarding validity, infringement and design-around issues.

The structure of the patent committee can vary based on the size and needs of a company, but it is a good idea to work with patent counsel in developing the patent committee and in some cases it may be beneficial to have patent counsel serve on the patent committee

Having a Strategic Focus
Having a strategic focus in mind with patents can be critical to a start-up company’s long-term viability and success. For example, the company may want to pursue a patent-mapping process early in the patent development cycle. Patent mapping provides a landscape of patents in a relevant area of technology, and can help to identify key competitors in that space. It can be used by the start-up company to focus and tailor its research and development, by identifying “holes” in patent coverage of a given technology sector. The results of patent mapping can be used to pursue strategic patent coverage.

Patent-mapping can also help avoid litigation, the need for licensing, and costly design-arounds. Even if patent-mapping is not employed, a “shotgun” approach to development of a patent portfolio should be avoided. A group of patents that are in a related technology area are generally of greater value to a company than having scattered patents in a number of unrelated technologies. The strategic focus should be conveyed throughout the company and should be a criteria used by the patent committee when deciding whether to pursue patent protection for an invention.

Conclusion
The importance of patents and other types of intellectual property to companies, large and small, is becoming more and more pronounced, as technological innovation advances and competition increases. All start-up companies should give serious consideration to the minefield of existing patents, as well as the development of a patent portfolio. A patent portfolio can protect the core business concepts of the company, thereby increasing the company’s value. Patents can be used offensively and defensively, and the start-up needs to be aware of and take steps to protect itself from the patents of others. When implementing its patent strategy, a start-up should choose patent counsel carefully, develop a patent committee (either formal or informal), “mine” inventions within the company by developing an invention disclosure process, map the patent landscape, provide incentives for innovation, and, of course, manage costs associated with all of these activities. In the end, the patent strategy should be focused on creating value for the company, in order to maximize the chance of long-term success.

*Greg Kirsch is a partner in Ballard Spahr LLP, where he leads the firm’s Software, Electronics and Communications Technology Patent Team.  He represents clients ranging from small technology start-ups to large international companies, as well as universities, in the U.S. and abroad.  In addition to his full-time legal practice, Kirsch has also served as an adjunct professor of patent law at Emory University School of Law since 1997.

BACKGROUND:

Substantial capital investment in renewable electricity generation infrastructure and clean technology is as important to Georgia’s economy as investing in roads, bridges and other fossil fuel intensive capital construction projects.

Currently in the state of Georgia, there are two state laws and one legislative omission that together are largely responsible for preventing industrial scale capital investment and job creation in the renewable energy and clean-tech sectors.

One such law is the Georgia Territorial Electric Service Act, which presently subjects virtually every significant contract for the sale of electricity between non-public utility parties to the risk of litigation.

The second is the Georgia Cogeneration and Distributed Generation Act of 2001, which severely restricts the size of investments in renewable energy.

Lastly, the absence of any law requiring public electric utilities to account for all the costs borne by the public associated with the generation of electricity is causing unfair negative price-fixing, forcing Georgia electricity consumers to overpay for renewable electricity through various green power programs offered by the utilities.

ISSUES:

1 How to stimulate and support industrial scale capital investment and job creation in Georgia’s renewable energy generation industry.

2 Proposed guidelines for legislative clarifications of the Georgia Territorial Electric Services Act.

3 Proposed guidelines for amendments to the Georgia Cogeneration and Distributed Generation Act of 2001.

4 Proposed guidelines for avoided-cost externality adders.

5 Critical factors preventing lending approvals and tax equity investment in renewable energy projects in Georgia.

Read the rest of the memo. [PDF; 7MB]

Lee J. Peterson is a licensed attorney and Senior Manager for Reznick Group’s National Tax Practice. He also leads the firm’s Tax Research and Planning Department in Atlanta.

Download (PDF, 7.31MB)