News

On November 17, 2017, the New York State Science and Technology Law Center co-hosted the NEXT Conference, focusing on technology, manufacturing and biotech, with the Central New York Biotech Accelerator, CASE, and TDO.  The all-day event included keynotes, workshops, and a technology showcase at the Syracuse University Sheraton.

The morning keynote featured Dave Warner, a medical neuroscientist and director of medical intelligence at MindTel.  His keynote, “Convergent Futures: Cognitive Neuroscience Meets Deep Learning”, focused on the Internet of things, quantum computing, perceptual modulation, and experimental interactive systems.

Hod Lipson, author, entrepreneur, and professor of engineering and data science at Columbia University, held the afternoon keynote.  “Artificial Intelligence and the Road Ahead” highlighted advancements in artificial intelligence including robots and driverless cars.

The workshops focused on three tracks: biotech innovation, legal issues in technology commercialization, and manufacturing excellence. The NYS STLC participated in the legal track, moderating three workshops: “Protecting IP: Timing, Validity Challenges, International Decisions”, “Papering Up: Agreements in Tech Commercialization”, and “Finding the Funds: New Venture Assistance for Innovation and Capitalization”.

The morning workshop, “Protecting IP”, was moderated by Jack Rudnick with panelists George McQuire, John Boger, and Renato Smith.   They discussed issues like patent filing strategy, decisions about international filings, trade secret protection as an alternative to patenting, and the post grant review options offered under the American Invents Act.

The afternoon workshop, “Papering Up” was moderated by Shubha Ghosh with panelists Steve Wood, Bill Bond, and Judy Albers.  They focused on the documentation of intellectual property such as licenses and other documents key to consider for successful collaborations.

Lastly, the mid-afternoon workshop, “Finding the Funds” featured panelists, Marcie Sonneborn, Rami Katz, Nasir Ali, and Clayton Besch.  They discussed the availability and pitfalls of various types of funding, how funding options can influence the structure of the company, which fund sources have the best long run perspectives, the evolutions of different financing structures and tips on the best approaches for success.

On November 10^th, the Blackstone LaunchPad presented a BAIL Workshop at Syracuse University.

What is BAIL? BAIL stands for banker, accountant, insurance, and lawyer, and Blackstone recommends every new business or startup form a good relationship with each team member.

At the workshop, banks were represented by Ben Alexander, Commercial Loan Officer at New York Business Development Corporation.  In the simplest definition, banks provide organization for capital, but what most entrepreneurs are interested in is obtaining financing. Alexander recommended entrepreneurs come prepared when applying for a loan.  Banks like to see personal funds invested into the project, as well as a business plan, financial projections, sources and proposed uses of funds, cost estimates, personal finances and tax returns, and specifically for startups, a detailed plan on how operations will be funded.

Representing accounting was Matt Gardner, co-founder of Gardner & Capparelli, a Syracuse-based CPA firm.  Not only do accountants help with general bookkeeping, they can help navigate things like taxation, payroll, sales tax, and the difference between employees and contractors.

Business insurance is coverage designed to protect a business from financial loss.  Insurance agents like Rina Corigliano-Hart, an OneSelect Account Consultant at Onegroup, can help entrepreneurs decide what type of coverage best fits their small business or startup.  Corigliano-Hart notes that Business Owners Policies (BOP) are great for entrepreneurs for the protection on a range of things like copyright infringement and intellectual property claims.

The last member of a BAIL team is a lawyer.  Gerry Stack, a partner at Barclay Damon, who focuses on tax and corporation law, spoke to the importance of a lawyer on a startup team.  A lawyer can help decide the corporate form that makes the most sense for the business, often a limited liability corporation or a corporation, and the pros and cons of each.  A lawyer can assist in protecting all aspects of a business, from intellectual property, to protecting personal interests to entering into various sorts of agreements.

Blackstone Launchpads are campus based entrepreneurship hubs to provide support to entrepreneurial students and other members of campus communities.

Dr. Shubha Ghosh is the new Crandall Melvin Professor of Law at Syracuse University College of Law and director of Technology Commercialization Law Program.

Through a nearly unanimous vote, the Senate passed the Defend Trade Secrets Act of 2016 on April 4.  This Act creates a civil cause of action in federal court for misappropriation of trade secret.  Twenty years ago, Congress made trade secret misappropriation a federal crime.  With the Senate vote, Congress has moved closer to federalizing what has been a matter of state law since at least 1790.  This movement is a positive one as trade secrets are an important body of law for promoting innovation and commercialization of technology.  But there are several potential pitfalls that Congress and the courts need to approach with caution in the law’s implementation.

First, the law authorizes seizures of goods that may contain misappropriated trade secrets. Although courts can order such seizures under extraordinary circumstances and only against parties who are deemed to have misappropriated trade secrets, there is always the danger of overreach. In the areas copyright, trademark, and patent, intellectual property owners have been zealous in enforcing their rights against even innocent users of copyrighted music, trademark parodists, and innocent businesses that acquire products that allegedly infringe patents. Similar enforcement efforts may occur under any new federal legislation.  The seizure provisions must be applied sparingly and with a heavy burden on the trade secret owner to ensure that seized products in fact embody misappropriated trade secrets.

Second, trade secret law has always recognized reverse engineering, a method of learning the trade secret through experimentation and study of a product.  If I buy a can of Coca-Cola and through my knowledge of chemistry uncover the secret formula, I have not broken any laws. In fact, trade secret law encourages such independent discovery as research is part of the innovation process. Although existing state law acknowledges reverse engineering, it is not clear how courts will interpret reverse engineering under any new federal legislation.  Courts should not narrow established understandings of reverse engineering and the support of independent discovery.

Finally, there is the problem of inevitable disclosure. In certain situations, an employee can be barred from taking a position at a competing company because of the possibility of trade secrets being misappropriated. Twenty years ago, an Illinois court kept a Pepsi executive from taking a position at Quaker Oats for fear that he might leak trade secrets.  According to the court, even if actual trade secret misappropriation had not occurred, disclosure of Pepsi’s secrets was inevitable under the circumstances.  This wide reaching application of state trade secret law has been rejected by many state courts, but a few influential jurisdictions still enforce the rule of inevitable disclosure. The rule has been criticized because employment mobility is beneficial to the economy and should be prevented only if there is clear evidence of misappropriation of trade secrets or infringement of other intellectual property. With a new federal law, courts may take the opportunity to make inevitable disclosure the law of the land, as opposed to the law in a handful of states.  This path should be avoided to maintain the proper balance between employee movement to new jobs and the protection of proprietary information.

On April 26, the Supreme Court will hear oral arguments in a patent case that has implications for the integrity of the patent system.. At issue is the continued viability of the most comprehensive reform of the patent system since 1952, the America Invents Act. With five votes, the Court can overturn this landmark legislation by diminishing the power of the US Patent and Trademark Office.

Cuozzo, an independent inventor, obtained a patent in 2004 on a speedometer that informs a driver when the car is travelling above the legal speed limit. Combing GPS technology with standard electronic speedometers, the invention was subject to review by the USPTO for novelty, usefulness, and nonobviousness. Once Cuozzo obtained the patent, he had the legal presumption that the patent is valid.

But the USPTO can make mistakes. Examiners may have missed prior art showing that the invention, or something close, was already in the field. They may have misjudged how nonobvious the invention was in light of the prior art and standards in the field. Because mistakes happen, the law allows private parties, often times competitors in the same industry, to challenge the patent based on evidence of newly discovered prior art. The goal is to make sure that patents are awarded only to inventions that are deserving.

Prior to the enactment of the AIA in 2011, the main way to challenge a patent was in the courts. The AIA, however, created new procedures in the USPTO permitting administrative challenges to newly granted patents before the Patent Trial and Appeals Board (PTAB), part of the patent and trademark office. These proceedings are known as the post grant review (available up to 8 months after a patent issues) and the inter partes review (available after the time frame for post grant reviews). Garmin had successfully brought an inter partes review to challenge Cuozzo’s patent in 2015. The Patent Trial and Appeals Board found that some of Cuozzo’s patent was invalid. Consequently, Cuozzo appealed the decision to the United States Court of Appeals for the Federal Circuit, which agreed with the PTAB. Cuozzo took the next step and appealed the decision to the US Supreme Court, that is now preparing for oral arguments on April 26.

Underlying the various technical features of his argument is the goal of cabining the USPTO’s role in identifying and cancelling invalid patents. Under the AIA, the USPTO determines whether an inter partes review should be pursued. This determination involves examining whether the challenger has evidence in the form of prior art that could potentially invalidate the patent. This decision by the USPTO is not subject to review by the courts. Congress did not want to complicate the process by having patent owners subject the USPTO to court review at the threshold even before the agency has a chance to examine the new prior art evidence. The goal was to avoid delay tactics by the patent owner. Of course, once the USPTO has made a decision to invalidate a patent, that decision is reviewable by the courts as we see in the Cuozzo appeals.

One difficult question in patent law is understanding what the patent means. This question is called claim construction. When a court takes on a patent case, it engages in extensive, often expensive, review of the patent document to understand its language. Since the USPTO review process is meant to be more expedited, the AIA allows the USPTO to sidestep the extensive process of claim construction that courts undertake. Following long standing practice, the USPTO interprets a patent as broadly as is reasonable to determine whether it is valid. While it might be the case that a broad reading would make it more likely that a patent is invalid, the rule of “broadest reasonable interpretation” allows for a more streamlined review of a patent at relatively low cost. The final decision by the USPTO can be appealed to the courts if the patent owner feels that the agency interpreted the patent too broadly.

Cuozzo is asking the Court to overturn the USPTO’s broadest reasonable interpretation standard. Presumably, if this standard is rejected, the USPTO will have to engage in the extensive method of claim construction we see in the courts. This radical shift will burden the new procedures Congress created leading to further delay and increased costs for those legitimately seeking to challenge patent validity.

There are many reasons to be skeptical of Cuozzo’s arguments. They threaten the independence of the USPTO from the courts. At the heart of the matter is the separation of powers between the executive branch and the judiciary in reviewing patents and shaping policy. On a more practical level, there is a genuine question of expertise. Patents are, needless to say, the bread and butter of the USPTO; they are only a small part of the range of cases that come before the judiciary. By undercutting the independence of the agency, Cuozzo’s arguments will lead to the loss of important expert input as challengers raise questions of patent validity. Congress designed the new administrative procedures with the goals of harnassing USPTO expertise and opening up the process of reviewing patents to include a wide range of parties that could be adversely affected by the grant of an invalid patent. Cuzzo’s arguments, if accepted, will roll back Congress’ efforts.

The Supreme Court has demonstrated a careful approach to the potential overreach of intellectual property rights. It has implemented this approach through recent decisions on what can and cannot be patented, the right to resell patented inventions, and what makes an invention nonobvious and patentable. The Court should continue this cautionary approach in ruling on Cuozzo’s arguments. At stake is not only the AIA, but the integrity of the patent system in granting exclusive rights to genuinely novel and innovative inventions.

Please join us April 21 for a webinar to discuss these and other issues raised by the Cuozzo case. Topics to discuss include:

• Role of the PTAB and its relationship to the courts
• Use of post-grant proceedings such as inter partes review
• Vulnerability of patents in post-grant proceedings
• Implications of Cuozzo for patent practice and technology commercialization

A team of students in the College of Law‘s Technology Commercialization Law Program (TCLP) spent their summer working with entrepreneurs, startups and inventors to provide information on the legal and regulatory issues involved with bringing new technologies to the market. Students researched intellectual property and market landscapes for over 25 new technologies.

The students, five from the College of Law and one from the Whitman School of Management, worked under the supervision of TCLP and New York State Science and Technology Law Center Director Jack Rudnick, Associate NYS STLC Director Molly Zimmermann and commercialization expert Dean Bell, who recently retired from his position as principal research and development engineer with Welch Allyn.

The commercialization projects included continuing work from projects started in the prior academic year, as well as patent landscapes for companies in the New Energy Xcelerator in Upstate New York (NEXYS-NY) program at High Tech Rochester. NEXUS-NY is sponsored by New York State Energy Research and Development Authority with a goal of facilitating the development of clean energy start-up companies based on the work of New York researchers.

The College of Law has been home to the Technology Commercialization Law Program for 25 years. The program consists of LAW 814, a classroom course on technology transactions law, and LAW 815, an experiential learning course. Until recently, the work done by students in LAW 815 had previously been confined to the academic year.

Rudnick began changing the format of LAW 815 in the 2014 spring semester to provide more research to New York start-ups and broader experience to students. He shifted from three or four large, comprehensive projects to multiple projects that were shorter and more targeted. By the semester’s end, students in the class had worked on 30 projects. The extra demand convinced Rudnick it would be worthwhile to offer a similar program through the summer.

“Businesses do not take the summers off,” explains Rudnick. “New ideas happen year round and in the startup world that we support it’s 24 hours a day, seven days a week. We ran the summer program like a consulting business, tracking hours and efforts. The main focus was client needs and satisfaction, with students working hard to complete projects on time and serve up quality reports.”

During the academic year, students in the TCLP take LAW 815 for credit. Students working over the summer were paid hourly wages. Whitman entrepreneurship M.S. candidate Dharmil Sheth ’14 found value from the experience beyond the financial compensation.

“Through the summer program, I learned about the latest technologies, researched on some disruptive ideas, assisted with business planning and met people whom I would have never had the chance to meet otherwise,” says Sheth.