Intellectual property issues are increasingly arising in other practice areas

April 22, 2015

With its ability to do things no timepiece was previously built to achieve like open hotel doors, play music and pay for that morning coffee, the newly unveiled Apple Watch is the latest advancement in consumer technology.

It is also an example of how intellectual property has moved from laboratories and research institutes into everyday life. Ten years ago, patents, trademarks and copyrights would have been more commonly associated with pharmaceuticals and desktop computers. But the wristwatch demonstrates that as technology has become more prevalent, so has intellectual property.

Intellectual property is no longer the geeky practice area, and it is going to continue to become more and more prominent, Indianapolis patent attorney Charles Schmal said. Patent and trademark issues continue to emerge in practice areas such as family law, estate planning and business law.

The consequence of not recognizing an intellectual property issue or of not handling the matter correctly could result in horrific legal headaches. For example, inventors could lose patent protection, trademarks could become void, and questions of who owns intellectual property could arise.

Schantz-Matthew.jpg Schantz

If an attorney knows what to look for, an IP issue can be easy to spot, said Matthew Schantz, an intellectual property law attorney at Frost Brown Todd LLC. However, he continued, “I think a lot of people wouldn’t think of intellectual property issues even when they walk right into them.”

Trademarks, trade secrets, copyrights and patents have been intersecting with business law for many years, but attorneys say IP issues in this area are increasing. Corporate attorneys working on acquisitions, bankruptcies or financing routinely work alongside intellectual property lawyers to ensure all issues are covered properly.

The collaboration is being driven by the change in companies’ portfolios. Schmal, partner at Woodard Emhardt Moriarty McNett & Henry LLP, pointed to Ocean Tomo’s 2015 study of the Standard & Poor’s 500 companies which found during the 1970s, about 83 percent of the value of a business came from physical equipment and plants while 17 percent came from intangibles like intellectual property. That ratio has now switched with 84 percent of a business’s value being tied up in the intangible assets.

IP growth

On April 7, 2015, the U.S. Patent Office issued Patent No. 9,000,000, and patent attorneys are not seeing any tapering in the filings of applications. Even the recent recession, said Douglas Yerkeson, partner at Faegre Baker Daniels LLP, did not sedate the number of filings.

This trend shows that businesses view their IP as their competitive advantage in the marketplace. Companies don’t want to compete only on pricing, Yerkeson said. Rather, they seek to distinguish their products through innovation because that is the way many companies think they can grow.

Nguyen Nguyen

Xuan-Thao Nguyen, director of the Center for Intellectual Property Law and Innovation at Indiana University Robert H. McKinney School of Law, sees Indiana as part of the Midwest hub in this IP boom. The state has pharmaceutical companies along with life sciences and technology startups and strong research universities, which are all producing new medicines, new processes, new devices and, as Nguyen said, new know-how.

Consequently, legal issues follow as intellectual property expands. Creditors can fight over the intangible assets in a bankruptcy and companies can have questions about the tax implications for creating those kinds of assets. Patents can be offered as collateral in financing deals, trademarks can be licensed, and holding companies can be created just for intellectual property.

Intangible assets have also been the subject of divorce battles with spouses arguing over patents instead of houses and cars. And intellectual property is often considered part of an individual’s estate and passed on to family members in the will.

“It shows us that we’ve moved away from a society that relies on land, agricultural business solely into an information-based, technology-based society,” Nguyen said. “We create new innovations and we use our minds to come up with new ideas, new inventions, new software, new products. To me, that reflects the progress of society itself.”

Easy to download

Another factor driving the rise of IP in legal matters is how easy lifting content has become. The simplicity of cutting, pasting or downloading material from the Internet coupled with the growing public attitude that whatever is on the Web is available for use is fueling trademark and copyright infringement disputes.

Norman Hedges, director of the Intellectual Property Law Clinic at Indiana University Maurer School of Law, speculated people either do not know the image or video is protected and that taking it is illegal, or they are aware capturing the content is wrong but they do not think they will be caught.

Some of the free-for-all attitude comes from the actions of the IP owners themselves, Schantz said. Certain owners have encrypted or somehow restricted their material so it cannot be downloaded from the Internet. Consequently, property that is not hard to retrieve may lead consumers to assume they are allowed to copy it.

Number one

janis-mark-mug.jpg Janis

Whenever Indiana University Maurer School of Law professor Mark Janis passes the law school’s dean, Austen Parrish, in the hall, he comments, “IP is number one.” Part of the impetus behind the slogan is Janis’ desire to get an intellectual property survey course added to the school’s required curriculum.

Janis expects IP law to continue to advance into other practice areas and its importance to keep growing.

“I think if we were designing a law school curriculum from scratch today, I’m convinced courses in intellectual property and cybersecurity would actually be required,” Janis said.

IU Maurer, IU McKinney and most law schools across the country offer students who are not focusing in IP an elective introductory course that makes them familiar with that area of the law and, once in practice, able to spot issues that require the expertise of an IP attorney.

Complicating the education is that the rules and procedures of IP law are not intuitive and can be quite nuanced. Practitioners in other areas of the law are unlikely to have the knowledge to handle, for instance, an infringement dispute. Along with the complexity is the current activity in the federal courts which very quickly can change the law surrounding patents, copyrights, and trademarks.

The rapid evolution and swings in intellectual property law can even impact a general survey course at IU Maurer, Janis said. A syllabus put together before the start of a particular semester may have to be ripped apart because of a new decision from the Federal Circuit.

Yerkeson Yerkeson

Even after passing the survey course and graduating law school, lawyers in other practice areas have to keep up with changes. Yerkeson noted what was once black letter law in IP is being adjusted, if not outright changed, by court rulings. Every day, he works to stay abreast through email alerts and blogs.

“I think it’s certainly evolving,” he said of intellectual property. “The law always tries to adapt to technology. It is always behind technology.”•


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