9UNP0208SD_Laura_Heisler_WordPress

- This is a course that's offered through the University of Wisconsin's School of Human Ecology. And as we begin today, I'd like to extend thanks to our partners that are supporting this course. The UW Office of Corporate Relations, the UW College of Engineering, for their technical support, and financial support that is provided to this class by the Marion Ewing Kaufman Foundation, which is committed to advancing academic education and entrepreneurialism. Additionally, we'd like to thank our media partners, Wisconsin Public Television and the University Place crew for taping today's lecture. I'm very pleased to introduce our guest this afternoon, Laura Heisler. She is program developer for the Morgridge Institute for Research, and intellectual property manager for the Wisconsin Alumni Research Foundation. Laura is also a patent agent, registered with the US Patent and Trademark Office. Laura is manager of WARF's strategic technology enhancement program, or more familiar to people as STEP. It promotes the advancement of key technologies through the technology transfer process. 

Before joining WARF, Laura worked as the intellectual property manager and grants manager, and was a research scientist for Third Wave Technologies. She also ran a freelance science and grant consulting business, specializing in SBIR grant preparation for biotech companies. She did her undergraduate work at Stanford University in biological sciences and classics. And she earned a PhD in cellular and molecular biology from the University of Wisconsin. I have asked Laura to come and talk with us today, and provide a primer, if you will, on intellectual property and its importance as we think through things, entrepeneurially. So thank you, and join me in welcoming Dr. Laura Heisler. 
(applause)
 
- Thanks. Normally, intellectual property is not a terribly sexy topic. And I feel extra self-conscious after having heard a little bit of Dave's lecture on car crashes and car cams, and all of that. But I will say that there's a movie coming out, or maybe it already started, with Greg Kinear, that's called a "Flash of Genius," that's all about patents and patent infringement, and stealing intellectual property rights. So that sort of spices things up a little bit. And all of us in the IP world, we call it IP, because intellectual property is hard to keep saying. All of us in the IP world are talking about it. And in fact, little announcements about the movie are on like, all the patent Web sites, because we've never been featured in a Hollywood big movie before. So we're really excited. And that's the way to sort of learn a little bit more about IP in a more fun way. But what we're going to do today, what I want to do, is sort of give you a sense of what intellectual property is. 

And you probably all know a lot about it, without realizing that you do. And in fact, intellectual property is often what makes the difference between someone being an entrepreneur and not. Because when you have that great idea, then what do you do? I mean, someone can steal it from you, unless you figure out a way to protect it and promote it. So that's what intellectual property is all about. So what I'm going to do is start out by talking for just a couple minutes about WARF, the Wisconsin Alumni Research Foundation, where I work. Mostly, to give you a sense of where I'm coming from, and how we think about IP, because we're a huge resource right here on campus. And in fact, we are involved in giving that grant from the Kaufman Foundation. We work really closely with OCR, and other offices on campus all the time, because we're the primary interface on this campus with companies and commercial entities. So I want to tell you a little bit about WARF, so you get sort of acquainted with us. 

And then I'm going to go into, like Jeanan said, some basics about different kinds of intellectual property protection. You're going to recognize a lot of these concepts, because we come across IP all day long in various forms. So as we go, if you have questions, or something doesn't quite sound right, or you have something you want to add to what I'm saying, just pipe right up. We can keep this informal. So I'll go on talking for about 35-40 minutes, and that will leave some time for some questions and back and forth. Okay, so WARF. Does anybody know where it is? Have you had to pay a parking ticket and go to the WARF building? Most people that know that I work at WARF say, what a drag, that's where I pay my parking tickets. It sounds awful. 

It's a big building out by the hospital. So you'll see it. It's a tall, kind of strange looking building. This is a picture of it. And WARF, despite having sort of a modern looking building, WARF is actually the oldest technology transfer office in the world. In fact, WARF was the product of the invention of the concept of university technology transfer. And the whole idea here is that you can take some ideas that come from research that happens at the university, and there's just tons of bright ideas on campus. You can take those ideas and somehow translate them into money, that can then feedback to fund more research. So that's how the whole concept got started. And it was started by Harry Steenbock. 

If any of you have ever been to Steenbock Library, it's named after Harry Steenbock. He had invented an unusual process for enhancing the Vitamin D content in food. And I don't know how many of you know this, but Vitamin D, like Vitamin D enriched milk, all of that owes its roots to work done here at the University of Wisconsin. So Harry Steenbock had come up with this new process. And he was approached by a company who wanted to have him just sell the rights to this process to the company, and he would just get rich and pocket like a million bucks, which in 1925, was a lot of money. It's still a lot of money, but in 1925, it was a hell of a lot of money. So Harry said no, that's not what I want to do. What I want to do is find a way to bring that value back and really give back to this university. And so he approached the university administration, and they said they didn't want anything to do with that dirty commercial money-making stuff. Go away, this is academia. 

So then he went to some of his friends, who were also alumni of the University of Wisconsin and said, you know, how can we do this. Can we find a way of making money off my invention and giving that back somehow to the university? And so a bunch of his friends, all of them were alumni, founded the Wisconsin Alumni Research Foundation, as a separate group bound by contract, by charter, to the university. But it's a separate foundation. They each put in some pocket money, and said let's get a patent. Let's then sell the rights to the patent to Quaker Oats, that was the company at the time. And then any money we make, we'll give it back to the university. That's exactly what they did. And that's exactly what WARF still does. So want we do is we capture intellectual property. 

And I'll talk a lot about the kinds of intellectual property we capture. We capture that. We license the rights to companies who want to bring that technology somehow to market. And I'll show you some examples of things that we've been successful at bringing to market. A lot of them are things that you've heard of. We take that money and we give it back to the university. That's what WARF does. Every year, WARF gives upwards of about $50 million to the university for the university to do with as it pleases. So the mission that Harry Steenbock set out with is exactly how WARF works today. And WARF is a separate entity. 

It's not part of the university. It's a separate not-for-profit foundation. And over a billion dollars’ worth of products out on the marketplace actually are covered by intellectual property protection that's owned by WARF. So here's some examples of technologies that WARF has brought to market. We talked about Vitamin D. And that work continues. There are some drugs on the market now that are Vitamin D derivatives that are still bringing money back to WARF. If anyone knows Hector Deluca in the biochemistry department, he's a very prolific inventor. He's actually Harry Steenbock's last student. And Hector works on Vitamin D. 

And a number of his Vitamin D derivatives are licensed pharmaceuticals. They bring back $30 million to $40 million a year to WARF. And we give that back to the university. You might have heard of the company Tomotherapy. They have large instruments for conducting imaging of people and diseases. That technology is owned by WARF. Certainly, human embryonic stem cells, I'm sure most of you have heard in the news from time to time. Wisconsin is the subject of all kinds of controversy because of human embryonic stem cells. WARF actually owns the intellectual property rights to embryonic stem cells. And that brings a lot of attention to us, some of it good, some of it not so good, on a pretty regular basis. 

And there are lots of other things out there, too. Okay, that's WARF. Does anybody have any questions about WARF and how it works? I'm not going to spend a lot of time going into the details of how inventors work with us. That's sort of the subject of another talk, but if anybody has any questions about WARF or how it operates. Okay, we're going to move on. I'm going to give you some background now on intellectual property. So what is it exactly that we're making all this money on? Again, I mentioned that we give about $50 million a year. We make about that on licenses to technologies that we own the rights to. 

So how does that work? Let's start by trying to get our arms around what this concept is of intellectual property. And when we think about intellectual property, it's really helpful to pay extra attention to the word property. You're all familiar with property. You're familiar with, if you own a tract of land, you know, the land has certain boundaries. You don't like it when people come and do something on your land. You can rent your land if you want to, to someone else. You can make money off that. Intellectual property really follows the same kind of guidelines. And it was really founded with looking at property, especially land, as an example. 

So a lot of the terms that we use when we talk about IP actually borrow themselves from terms that you use when you talk about land. Like we talk about claims. We talk about taking title, things like that. IP, intellectual property is actually any product of the human intellect. It can be sort of an artistic product. It can be music. It can be a scientific idea. It can be an image of something that someone's created. Any product of the human intellect that can be protected by law. That's basically what IP is. 

And there's a vast body of intellectual property law in the US and in other countries that's designed to sort of define and protect different kinds of IP. And in the US, all of this was set up in the Constitution, actually, so the forefathers were very insightful in thinking about, you know, what they knew about land rights and other kinds of ownership rights, and saying, why shouldn't ideas, things that people create, have similar kinds of protection. So this is an ancient concept. And it's actually borne out pretty well. We're going to talk about different kinds of intellectual property and different ways you can protect it. And thinking about these different ways of protecting it actually has a lot to do with being an entrepreneur and being successful, because there are different risks and costs associated with all these different kinds of IP protection. And they're not necessarily all mutually exclusive. There are some things that you can protect in multiple different ways. So I'll give you sort of a rundown of those things. These are the main types of IP that are protectable by law. 

I'm sure you're all familiar with copyrights. I'm sure you're all somewhat familiar with trademarks. And what I'll probably spend most of the time talking about is patents, because most enterprises that get started revolve around patents, especially in a technology kind of sector. I'll spend a little bit of time walking you through each of these. You can sort of see the pluses and minuses of protecting this kind of IP, and what goes into it. There's a fourth kind of IP that is kind of stealthy, because it actually is intellectual property protection that you don't do anything about. And that's trade secrets. So we'll talk a little bit about that, too. Depending on what you want to protect, that sort of informs what kind of intellectual property protection you're going to seek. There's some overlap, but they are also very distinct areas. 

What we deal with the most at WARF, because we're a really technology based enterprise, is we deal most with patents. I'll probably talk the most about patents. Patents relate to protecting things like machines, formulas, methods of doing things, improvements of doing things, business methods like Amazon.com's one click method of ordering, is something that's patent protectable. And eBay's auction site is something that's patent protected, or some of the methods underlying that. Those are some of the things that patents protect. They don't protect artistic expressions, like music, or a painting, or an image. Those things are protectable through copyright. So copyright is something that you can encounter a lot in the academic world. If you ever write an article and you want to publish it in a journal, the journal will own the copyright for that article. So that's the kind of thing that copyrights protect. 

Expressions of an idea. Then trademarks, you're all familiar with trademarks. And we're going to start by talking about those, because those are maybe the easiest to understand. Okay, here's a bunch of trademarks. This is a really fun slide, because it's all the letters of the alphabet. And all of these letters come from some recognizable trademark. Let's just go through a few of these and see if it works for you, if you can sort of say what these different letters are from. Does anybody recognize this "A"? 
(inaudible)
 Exactly, "B"?
(inaudible)
"C"?
(inaudible)
I think it is KFC. Actually, I think it's Crest. I think it is Crest, yeah. What about that "D"? 
(inaudible)
 How do you know all these? 
(laughter)

 I'm totally blown away. 
(inaudible)
 I'm very impressed. What about that "E"? I'm not sure I know it. I don't think. It might be. What about the "F"? 
(inaudible)
"G," everybody knows "G". 

Yeah. "H," what is that "H"? It might be Hershey's. I'm not sure. Well, you get the idea, right? 
(inaudible)
You want to keep going? I don't have the answer key, actually. I wasn't planning on walking through all of these. Okay, if you know "I" or "J". 

Those are tricky. And I'm sorry I don't have the answer key. I'll email it to Jeanan. She can tell you later. 
(laughter)
 What about the "K"? 
(inaudible)
 You guys are awesome. "L"? Halls, like Halls. 

Okay, everybody knows "M," so we don't have to do that. "N," what is that? I think it is Nestle. "O"? 
(inaudible)
 You guys are awesome. "P," what is that? Does anybody know that? Oh, wait, I think I know. No, I don't know the "P". 

Do you guys know? 
(inaudible)
 I'm really sorry I don't have the answer key, because I didn't think we were going to do all these. I think that "S" is from Crest. And I think the "C" is from KFC, now that I'm looking at it. I think that "S" is from Crest. Other ones, "U," do you guys know that one? It's sort of a giveaway in the corner. Toys 'R' Us. That's the kangaroo, or whatever it is. 

Well, you get the idea. The idea is that trademarks are instantly recognizable. And what they make your recognize isn't so much the product as the company, right? So if you see, you know, if you see McDonald's, you aren't necessarily thinking about a particular product. And you're certainly not thinking about the methods they use to make their products, or their formulas in their secret sauce, right, you're just thinking about the company. So trademarks are designed to make you associate something with the company. And trademarks can be almost anything. You're probably familiar with some crazy trademarks that you haven't really thought about that actually mean nothing. But they mean a lot to you subliminally, because they tell you about the company. So good examples are things like Kodak, Xerox, things that don't have, I mean, Xerox doesn't mean anything. 

You're all too young to know that Xerox doesn't mean anything. But actually, all it tells you is the company. Now we use it as a verb, but when these things got started, they were just designed to be catchy words, like Xanax and Zoloft. All those kind of drug names are good examples of trademarks, too. They don't inherently mean anything. They don't describe anything about the product, except they make it recognizable. So they give it sort of a unique identity. And that unique identity is like indistinguishable from the company that makes it. So that's the use that trademarks have in commerce. Trademark rights last forever. 

And among intellectual property protection forms, this is the only one where rights last forever. With the caveat that you have to still be doing commerce with the trademark. So the minute you take a product offline, or the company goes away, then the trademark rights aren't valid anymore. So it's a really distinctive kind of IP protection. And it has to be associated with use in commerce. One other nice thing about trademarks, and you can probably imagine that this is one of the reasons that a company might want to get trademark protection, is that it prevents you from being associated with knock-offs, right? So if someone is trying to make a cheap version of something that you have trademarked, and they come up with a trademark that makes you sort of mistake it, like Lola-Cola, or something like that, and they make it look almost like that, and it seems like someone could make a mistake and assume that you're responsible for that product, then you get in the business of suing them for trademark infringement. So trademarks allow you to really make a distinctive showing of what's yours, and assure that the goods and services that you're providing are up to your standards of quality. So someone can't also come online and say they've got Coke, and you know, it has twice as much food coloring, and half as much sugar and call it "Coke." They can't call it Coke if it's not Coke, and if in fact it's not being produced by the Coca-Cola company. 

So that's the value of trademarks. They really sort of help put some law in the wild west of commerce. And if you can imagine what the world would be like without trademarks, you know, there wouldn't be any kind of protection for a particular company providing a particular good or service. But in order to assert that protection, you really have to be very vigilant. You can't just lay down and when somebody starts to get kind of close and creep up with products that sound and look a lot like yours. If you don't say anything about it, eventually, you can give those rights away. And in fact, there's something called genericization. So something like Xerox was actually running into risk of genericization, just like Band-Aids. Band-Aid actually is a trademark. But we call all bandages Band-Aids. 

So it's up to, I think it's the Johnson & Johnson Company, to really assert when someone starts to use language or imagery that looks too much like Band-Aids to say, hey, you're getting close, that's infringement, cease and desist. So the trademark owner has to be very vigilant, or else they give their rights away. Trademarks don't prevent someone from figuring out your recipe and going ahead and marketing it under a different name. They don't offer any protection over actually what it is that's being trademarked. All it does is say you can't pass this off as something you've made when it's really our mark. So there are other forms of IP protection for that, principally patents. So we'll talk about that some more. So what I want you to come away with is the idea that trademark gives you protection over a certain aspect of a business or a product manufacturing cycle, or something like that, but not everything. Mostly, what it does is give you protection that your product comes from you as a source of the goods, from your company. It also gives you some bargaining if you want to do co-branding. 

We've all seen a lot of that, right? Like Taco Bell has-- Is Taco Bell a good example? There are various examples of companies sort of doing co-branding. I'm not thinking of good examples, but you've probably seen them, like Pepperidge Farm and Taco Bell getting together on flavors, or something like that. Then you know that, okay, these two companies, who I trust, or I don't trust, you can have your own reaction, but they're getting together and I know what kinds of quality and service they're going to provide. And so, it's what makes it recognizable as belonging to a particular company. I'm going to shift gears and talk a little bit about copyrights. And as I said in the beginning, copyrights, you're all sort of familiar with copyrights. Probably if you've been downloading things from Napster and getting a nasty letter from the university or somebody else, you know there's already something there about copyright. Copyrights protect a particular expression of an idea. 

Copyright infringement, actually, I was watching a DVD the other day and thinking about this lecture. I noticed that you can actually go to jail for pirating DVDs. And I did a little more research on this, and I found that copyright infringement is actually the only intellectual property violation that you can go to jail for. It was the music industry and the movie industry that got together and lobbied hard with the US government. So there's actually a criminal offense to pirate, you know, software, movies, music, or whatever. There's no other form of IP infringement that will land you in jail. So I thought that was interesting. That's really because copyrights are so incredibly important in the entertainment industry and the software industry, where there's a lot of money at stake, and where piracy is actually quite a very real proposition. When some sells you, if you go to Times Square in New York, and you buy a knock-off DVD, that's an example of copyright infringement, because the company or the author who produced that actually owns the rights to that particular expression. And someone who isn't going through them is violating that. 

That's not to say that if someone watches your movie and comes up with a movie that has exactly the same plot line, but with different actors, and a different title, and a different look and feel, that's not copyright infringement. They're completely free to do that. They're completely free to plagiarize your idea, but they can't plagiarize your expression of your idea. So that's an important distinction. The whole idea behind copyright protection is that it encourages people not to keep their music or their art secret, for fear that someone will just steal it. But it gives them a sense that you can bring this out there in the world, and you will be able to be protected, by law, that says that someone can't just take a picture of your image and then pass that off as their own. This really does happen, especially with the Internet this happens. If you post your art work on a Web site and then someone takes that and copies it, and passes it off as their art work, or makes money off that, that would be copyright infringement. So it's a very real thing to be aware of in our current culture. And certainly, it's something, even if you're not starting your own company, as an entrepreneur that starts your own Web site or other kinds of forms of expression, you'd want to be aware of it. 

There are various things you can do to get copyright protection. This is the one form, in addition to being one where infringement is punishable by prison, it's also the only form of IP protection that people can really take care of on their own. So you automatically get a copyright the minute you produce something, because you're the author. You're the owner. You can assert your rights much more effectively and get much more punitive damages against someone, if you take the trouble to register your copyright. That's a very simple thing to do. You can just go to the Web site: www.copyright.gov and you just fill out a form, and you attach your expression, whatever it is. I think the fee is $35 or $50, or something like that. Then you've got a registered copyright. So those things are kind of interesting. 

They go hand in hand. You can protect it yourself. And if someone violates it, there are some serious penalties involved. So this is one that I'm confident you're going to need to know about as you go through your careers, with whatever you end up doing. So do be aware of it. Okay, now what I want to do is I'm going to shift gears a little bit, unless you have questions on trademarks and copyrights, because I'm not going to touch on those anymore till the end. You guys are good? I want to talk now about patents and trade secrets. And I kind of think of these as two sides of a coin. I'm going to talk a fair amount about how things are either/or when it comes to trade secrets and patents. 

I don't have a whole lot to say about trade secrets. So I'll just give you sort of an overview. Then I'm going to spend a fairly substantial amount of time talking about patents, mostly because I'm a patent professional. People always talk the most about stuff they know the most about. But I want to give you a flavor for the complexity for them. Then I sort of want to juxtapose trade secrets and patents, and then get you thinking about how, if you have a great idea, or concept, or device that you've invented or something like that, you'd want to think about this whole concept, trade secrets versus patents. The most famous trade secret is the recipe for Coca-Cola. So here's something that has made just an unimaginable amount of money over the last century. And the recipe for Coca-Cola is still a secret. It is probably the most jealously guarded trade secret on the planet. 

There's no patent to Coca-Cola. And if someone reverse engineered Coca-Cola, that would be an interesting thing, because could they get a patent on it? They probably couldn't get a patent on the Coca-Cola itself, but maybe they could get a patent on a new method of making that composition. Coca-Cola has never sought patent protection, or any other kind of legal protection for its special recipe. So that's a really powerful thing to think about. The main thing about trade secrets that really makes them work in our culture, is that they stay secret. So companies invest a huge amount of money and legal infrastructure to make sure that those secrets never see the light of day. And I think with Coca-Cola, there's an urban legend that no one actually knows the whole recipe. You know parts of the recipe. I don't know if that's true. 

But the main things to know about trade secrets are that they require a lot of diligence and enforcement. There's no legal documents you fill out that says here's my trade secret. It's all after the fact that you say you took great pains to keep this secret and someone stole it. But really, you're sort of hoping that no one else figures it out. That's what I want to leave you with for trade secrets, which is the exact opposite of patents. So let me tell you a little bit about patents. Then you can sort of see the pluses and minuses. Does everybody kind of have a sense of what a patent is? You all enjoy products that are patented. And you've probably seen patent numbers on things. 

And you've probably seen something that says, "patent pending." So pretty much everything that you're using, your laptops, your iPods, your running shoes, all those things are patented. Patents are legal documents that say here's my idea, it's not an idea, it's here's my product or here's my method of doing something. I have the right to exclude anybody else from doing this. So, no one else can make an iPod the way that the iPods are made, and sell them without infringing Apple's rights. Patents are very useful, if you have a commercial product that you want to prevent others from making. This is a list right here of the various things that you can patent, and I mentioned this, so I'm going to move on. But basically, you get the idea that patents protect devices, recipes, drugs, medical compounds, all kinds of things like that. And now that you're aware of them, you'll probably see things like patent numbers. You'll see patent pending a lot more. 

Patents, what they do, they don't actually give you the right to make your thing, because you might need the rights from somebody else's patent to make something. What they do is they say no one else can make it either. So think, for example, a real simple example is like a mug. Let's say someone invents a mug without a handle. Someone else comes along and invents a mug with a handle. That person who invented a mug with a handle actually needs to get rights from the person who invented the mug without the handle before they can sell it. Does that make sense? The mug without the handle, that's patented. Then you come along and say you've got a better way to make a mug. Here it is. 

The person who made the mug without the handle can't use, and doesn't have rights to your mug. But you don't have rights to their mug. So then you get it together and you give each other rights. You cross license. That's the way that patenting works. And much of our economy is actually built on this. So patents, there's some differences. And this is where the comparison to trade secrets and patents comes in really handy. Part of the deal with patents is you get this defined period to exclude other people from using your intellectual property, from making you device or selling it. And that limited period is actually 20 years from the time you file the patent in exchange though, for getting that nice big chunk of time, you agree to divulge absolutely everything anybody needs to know about how to make or use your invention. 

So you make it public. And that's sort of an exchange that was thought of at the very beginning. It's sort of a quid pro quo with the government. The idea is the government is going to allow you to have this time when you can keep others out of the marketplace. But in exchange, you agree to enrich this sort of general body of knowledge in the public by laying out for someone how they can make this invention, and how they can advance technology. And if you think about trade secrets, that's kind of the opposite. Trade secrets work because you're not telling anybody. So no one can make an improvement on Coca-Cola. They can't start with the base recipe and make it better. No one but Coca-Cola can do that. 

If it were patented, that recipe would've been out there and we would have all kinds of improvements to Coca-Cola. So our government actually, by setting out these laws for patent protection, actually prefers the patent route. The government or the founding fathers really thought this was a much better way to go. This is the way to sort of elevate our technological advancement as a people, by having this exchange where you get to sell and make money off your product, but you also make it all public. So I've got a few slides, that if you have these slides to look at later, you can maybe study them in more detail. I don't want to march through all of them right now. But what I do in the next three or four slides is sort of layout the differences between patents and trade secrets. I'll go through a couple of these. For patents, patents are used to protect new inventions. If something has been around for a long time, and it's been on the marketplace, you can't patent it. 

It has to be something that's new. There's all kinds of legal definitions for what new is. Trade secrets though, you can have a trade secret for something that people have been doing for a long time. Maybe you have sort of a slightly different way of doing it, or maybe you just happen to know several steps that work in a particular order to do it. You can go ahead and carry that out and make money on it. But you might not be able to patent it. There's a lot of sort of pros and cons. And here on this slide, I list some things that are just not patentable. They might be valuable. A great example, and something that people talk about a lot in the literature, is customer lists. 

You can imagine that customer lists can be really valuable to a particular kind of business. You can't put a patent on them. They're not one of those patentable things like a machine or a composition or a method. But they might be the difference between a successful business and an unsuccessful business. Those are the kinds of things to think about. In general, when you confront these kinds of things, patents or trade secrets, you have to pick one, not both, because of what I just said. With trade secrets, you have to keep it secret or it's not valuable anymore. With patents, you have to make it public, or you can't get a patent. So it's one or the other. Especially when you think about being an entrepreneur and starting a business, it's really important to decide, especially this one, because it's a fork in the road. 

You pick one or you pick the other. It's something that's important to decide. Now something I haven't spent a lot of time talking about, but that's really relevant is the cost of these different kinds of protection. So trade secrets, I referred to the need to have pretty sophisticated vigilance, diligence and processes to allow you to keep that secret a secret. With patents, it's kind of different. Patents actually cost a lot of money up front. So to file for a patent, and this is not something you should do on your own. To file for a patent generally costs somewhere between $10,000 and $50,000. That's just to get a patent in the US. So if you want to protect your patents all around the world, you're looking at millions of dollars, just to get the patent. 

It also takes a long time to get a patent. So from the time you have somebody write up your patent and file it, you probably don't know if you're going to get that patent for three, four or more years. There's sort of a lot of waiting to find out what's going to happen, whereas with trade secrets, you can just get started. You just have your secret, and you just start working on it. With patents, I mentioned before that you have to make it public. With trade secrets, you don't. And what's worse with patents, you have to make it public before you even know if you're going to get a patent. So that's sort of a situation where you sort of open it to the world, but you don't know really, what your rights are going to be. These are some considerations when someone is trying to make that decision between patent and trade secrets. I'll skip through these. 

So the last thing I want to say about this question of patents and trade secrets, and that people need to think about when they're making these kinds of decisions, and we talked about the cost and we talked about the time. Can what you have be reverse engineered? Can someone take your device and take it apart and figure out how to make it and then just go on the marketplace and make it? If they can, then you probably, well let's see, let me ask you. In that case, would you want to have a patent or you'd want to have a trade secret? If you think you'd want to have a patent, raise your hand. Okay, if you want to have a trade secret, raise your hand. Okay, so you guys are getting this. The patent people, somebody who said patent, can you say to me why you'd want to get a patent? Anybody? 

I'm going to look at Ryan, because I just saw your hand go up. 
(inaudible)
 Exactly, so if someone can reverse engineer it, then you've got really no protection. So your device is out there. You're counting on people just not figuring it out, and you maintain a market advantage because you've got the way to do it and they don't. But if they can take it apart and figure out how to make it, you're done. That's over. But with a patent, even if they do that, guess what, you've got this legal document that says, well, good for you, you've got to wait 20 years, because I have the right to exclude you from being in the market. So that's a huge difference and a huge consideration in making this decision. Some other things that you want to think about are the shelf life of the invention. 

I'm sorry, yeah? 
(inaudible)
 Right, so if they reverse engineer it and you don't have a patent? You have a patent? Yeah, absolutely. 
(inaudible)
 Well, actually, this gets into some details of what you need-- Yeah? 
- Could kind of repeat her question, because we won't hear it, otherwise. 
- Absolutely. So the question is, let's say you have a patent and someone reverse engineers your device, your invention. 

Is there some certain percentage of what your invention is that they have to change in order to be able to be on the market with it, basically, is that about right? So what this basically gets at is some of the requirements for patenting. And I went over some of this kind of quickly. We have some slides, I'll maybe just flip back if I can do it quickly. I'm trying to gauge where your interests were as a group, so I skipped over some of this. Okay, so on this slide, I go into some of this. Where it says in exchange for complete disclosure, so we talked about that. The other things that you have to have in order to get a patent are, the invention has to be useful. It doesn't have to be very useful, like it doesn't have to be an improvement that enriches mankind, which is why I have that slide in there about the sandwich protecting device that I glossed over. It has to be novel. 

And it has to be non-obvious. These are the two key things to answer your question. If you have an invention out there, and then someone comes along and they make an invention that is a lot like it, but slightly different. Then you would have to say that's novel because it's not exactly the same thing. So this requirement that something be novel really means that it not be exactly the same thing. The hard part is this next requirement, which is that it be non-obvious. So in the case of Coke versus Pepsi, and I don't think either of these are patented, so maybe it's not the most accurate example. But let's say Pepsi decides to add twice as much caramel color. Actually, I'm going to move away from the Coke Pepsi example, because those aren't patented things, and it's sort of hard to take this argument further. Let's say it's a running shoe. 

Okay, so all of a sudden, someone invents-- Someone has this great running shoe, and then someone else comes along that wants to make a running shoe a lot like your running shoe, but it has lights on it. And let's say that it doesn't exactly mimic what you have as your intellectual property in that running shoe. So let's say they don't need a license. But they've got this new running shoe, and it's got lights on it. So the questions would be, is it novel. The fact that it has lights on it, and it's not exactly your same running shoe means, okay, in terms of the patent office and legally, that legally counts as novel. The next question, the really hard part is, is it obvious. Is it obvious to put lights on a running shoe? And that's where all of it gets decided. It's a very sticky kind of thing. 

Just because, you know, a smart person might come up and say well, it's obvious, of course you'd want to put lights on a running shoe, because then you can all of a sudden see it. It doesn't usually work that way. It usually comes down to a whole series of legal arguments about what the law says counts as something that's obvious or not obvious. So that's a long answer to your question, which is basically, yes, you can make a very minor modification to something that's patented, and it might be patentable, if in fact it's novel and non-obvious. The whole non-obvious thing, that's like what we call the third rail in patent law, because you just are basically arguing. It's human beings arguing with each other. There's some law there to help guide you, but people all have a sense of what they think is obvious. So a lot of money and time gets spent on saying my modification isn't obvious. So that's how that works. Other questions before I sort of wrap this up? 

Okay, I'll get back to where I was. Does that answer your question? 
- Yes. 
- Cool. Okay, so what I want to leave you with, and again, there are some more details in some of the slides. But what I want to leave you with is that depending on what it is you're trying to protect as your intellectual property, and what your goals are, there are different kinds of intellectual property protection. And they all come with their own pluses and minuses. So we talked a little bit about trademarks, where what you're trying to protect there is sort of the spirit of your company. And you do that using a logo, or some other recognizable word or name. And that is something, when you think about it, that's not, you're not protecting anything tangible. 

It's not something you can hold in your hand, right? It's an intellectual invention. It's the source of the goods. It's your company. So we talked about trademarks. We talked about copyright, which is a protection that you, yourself, can seek on some expression of an idea. And then we talked about patents as something that you can protect with a whole body of law, through lengthy documents. That gives you the right to keep others from making your invention. And then we talked about trade secret, which you protect by making sure that your people all sign agreements saying they won't tell your secrets. And you have all kinds of very nasty repercussions for them if they do. 

And then we talked about sort of the pros and cons of some of these, how much they cost, how long they last, all of that. Now, what do you think? Can you, if you are running a company and you're producing a device, and you have maybe manuals that show how it works. What do you think? Would you pick just one kind of IP protection, or would you pick several? Let's see, if people thinks there's just one best kind of IP protection, raise your hand. Oh, you guys all got it. So basically, you can use multiple forms of protection for IP for different things that you're doing. In an entrepreneurial kind of environment, you really want to think carefully about which form, at which time, given how much it costs, given how long it takes to get, given what kinds of risk and exposure that sets you up for, and given what your business is. These are the kinds of things that we think about. 

Really, the whole crux of all of this, going back to what I said at the beginning about Harry Steenbock, you can choose not to protect anything, right? I mean, it's fine if you don't protect anything, but you leave opportunities on the table. So I think of IP as sort of getting something for nothing, because if you choose not to file a patent, you can publish a paper and your results can be out there in the world, and people can see all about your invention, but you can't make any money then. So IP is a way, sort of, of creating value in a circumstance where, you know, you're not exchanging goods and services necessarily, but you find ways of creating value all through the use of documents and laws, and business arrangements. So I kind of think it's magical in a way. And certainly, to do it at the university is really magical, because until 1925, no one did it at any universities. And now, pretty much every university does it. So I think it's really actually kind of interesting to think about huge amounts of intellectual activity turning into money. And I think that's all I'm going to go over with you guys today. So if there's any more questions, I'll take them now. 

- Any questions for Laura? I always have questions. 
- And this fellow down here does, too. 
- Is there a question down here? Great, thanks. 
- Just one short question. I have a question regarding 20 years of the limited time period. Are there any additional protections after the period is over? 
- After the patent period is over? The question is, is there any way of extending protection for your invention after the patent expires. 

There really isn't. So, you'll sometimes hear, especially in pharmaceuticals, you'll hear about companies coming up with ways of extending their patent life, which is really not what they're doing. What they're doing, is they're coming up with a new version of their product that allows them to get a new patent. A good example is like, well, there's a bunch of drugs that they do this with. I think there are drugs for depression. One was on the market for a long time, and then its patent ran out. Then another one came on the market with a new patent on it. What that is, a fraction of the drug that's in the first one is a mixture of a couple of different parts of a particular drug. The second patented drug is just a purified version. It just has one part, so the went ahead and got a new patent. 

Basically, it's the same composition, but it was a complex mixture versus a simple mixture, so that worked. That gave them an effective extension of patent life for their research investment. But the patent office, it's pretty iron clad. You get 20 years, and then there's a little asterisk by that, so there's a couple ways that you can get a few hundred more days here and there. But you can't basically go in and renew your patent, or anything like that. It's a real defined period. Yeah? 
- I'm going to pass a note to Jared here in just a second. But I want to ask a quick question. One of the questions that comes up pretty regularly is that of sharing ideas. 

Because if you're an entrepreneur, you've got a lot of ideas. So from your perspective, as a patent professional, how openly should people share their ideas, just in order to test their creativity? 
- That's a really great question, because ideas are always enhanced by exchange with other people. So the answer is it really depends. And so, in terms of the patent office, and getting a patent, if we're talking about patents, you can put various forms of protection in place. So at WARF, we often use confidentiality agreements, which is a legal document that says if you tell my secret, I can sue you. And so, that helps to sort of keep people honest. It doesn't provide any protection from the patent office. So if someone tells your secret, they can ruin your ability to get a patent. So all you have then, is the ability to sue them. 

You definitely want to be careful about it, and you want to, I always tell people that you want to let them know. Look, I'm telling you this, but this is confidential. At a minimum, tell them it's confidential. At maximum, I would get a confidentiality agreement. Or at the super maximum, go ahead and protect your idea. Register it somehow. So if it's something that you want to copyright, copyright it, register it. File that trademark. File that patent application. Then share your idea, and then come back and file a new one. 

So that you at least have that line in the sand. In a lot of cases, though, if you write out your idea and have it signed, witnessed and notarized, that someone saw that it was yours on a particular date, and then you share your idea, and it looks like someone stole it. You would have some good grounds for going after them, and say, hey look, you clearly stole this, because I had this notarized on September 26 that all of this was mine. And you're passing this off as yours. So there are various levels and forms of protection. And you definitely want to be head sup about it, and think about it. It all depends on how much money you have, and how much time you have. But do protect your ideas. 
- My question is, if you're just starting up your business, and you have this great idea, how do you go about getting the initial, you said like $30,000 to $50,000 to get a patent, and make sure somebody doesn't steal your idea while you're in the process of starting up your company? 
- Right, it's really tricky. 

And often times, new companies will take whatever money they've raised, even if it's from their rich uncle, whatever, and invest it in patent protection before they do anything else. Because that ultimately is going to end up being what they make their money from. It's a question of whether or not you can, with confidence and with trust, or maybe with a confidentiality agreement, get enough interest from people who are going to invest in you, to put up that money for the patent. Also, it doesn't usually cost $30,000 right off the bat. Usually, to draft up a patent application costs between $5,000 and $10,000. So if you can get that drafted up and on file, so that gives you that sort of line in the sand, then you can use that document, which now you feel safe, because you've got this line in the sand, you can use that to go out and try to raise more money. The rest of the money comes in over the life of what we call patent prosecution, arguing with the patent office, like no it's not obvious, no, no one else has done this before. So it sort of phases in. It's $5,000 to $10,000 up front. Then it will be another two or three years before you end up paying those additional fees. 

So that's a real practical way of doing it, is getting some investor to give you enough money to get that thing on file, and then use that to sort of shop your ideas. That works out. But a lot of times, companies take their very first assets and they invest them in intellectual property. So the company I started with, Third Wave, which recently got sold for almost $600 million, it's a company in town here. Their initial investment, that's what they did with absolutely all of it. They worked out of a basement. They had like one researcher. And they spent like a million dollars a year on patents. Then they just got sold for $600 million. So, it can end up being really the most valuable investment you make. 

Does that answer your question? 
- Yeah? 
- I'm just curious, can students use WARF as a resource to sort of get their ideas out there, or can it just be used for the professional research? 
- We definitely work with students, but you now, with a little caveat. We are based on technology inventions. So really, if you're working with somebody in a lab on campus, or in some other capacity, and you work as a student, and you have an idea that's a patentable idea. Then we are at your service. If it's an idea that you cooked up in your garage for a new kind of iPod holder, or something like that, that's a different thing. So we'll take a look at it, because we are here to serve the UW community, including alumni. But in general, to be very candid, when we've gotten those kinds of more consumer product inventions that people come up with on their own time, we don't actually feel very capable of handling those, because we're technology based. 

We don't know those companies, and we don't really know, sort of what the market is like. But for things that come about as part of your work as a student, by all means. And I would say the majority of our inventions have a student or a post-doc as a co-inventor. And unlike any other thing that you'll run into when you're a student, we treat students and professors exactly as equals. And so, the proceeds that we get, and I didn't talk about this at all. But when we make money off patents, we share the proceeds with the inventors, then we give the rest to the university. And we share 20% with the inventor or the inventor group. So if there's two inventors, and one's an undergrad and one's a Nobel Laureate, or an Emeritus faculty, they each get half. We treat them exactly as equals. So the answer is yes. 

And you'll have a lot more success with us if it's something that actually came about from your work at the university. 
- So Laura, for those that have consumer products, or other kinds of ideas, WARF can provide them with direction, maybe a small business development center could provide a little bit more hands on help. Would that be accurate? 
- Yeah, you definitely want to go. Ultimately, patents are drafted by patent lawyers. And there's really no one else qualified to do it. And in fact, to work with the patent office, you have to be either a patent agent or a patent lawyer. So the best advice would be to sit down with someone to get a sense of the business model. Is patenting the best way to go? You've had an exposure to other kinds of protection, and so you'd want to talk it over. 

You could talk over with someone at work, or have the small business center hook you up with a patent attorney and find out, like, is patenting the way to go. Do I want to go raise this $30,000, or is trade secrets the best route for me? What is the best route? And if it turns out that patenting really is the best route, then there's lots of patent attorneys around that do specialize in that. And generally, those kinds of technologies to protect are less. So that $30,000 to $50,000, that's for pretty esoteric, you know, engineering and biochemistry and things like that. Consumer devices are generally going to cost less, because it's more straightforward to identify what's the inventive element, and what else is out there, so the cost scale is a bit lower. 
- I want to close with a question that you have answered, actually, in the course of your presentation. But I think it's such an important piece of what the University of Wisconsin is about, that I just want you to capsulize and reiterate it for us. You made a comment that there is technology transfer at other universities. 

But that WARF was really the very first in the nation to come up with this idea. Can you explain, once again, what WARF, what the contribution that WARF makes to the University of Wisconsin, because until I completely understood this, I didn't-- I think it's a very important thing for students of the University of Wisconsin, and for people across the state to really understand. 
- Sure, I'm really happy to do this. It all goes back to the Harry Steenbock model. Let's use Hector Deluca as an example. Again, Hector was Harry Steenbock's last student. So there's like zero degrees of separation or removal between the idea, the thing that got this started and someone now who actually brings in, he's solely responsible for the vast majority of our revenue. So Hector Deluca works in Vitamin D. He's got Vitamin D derivatives. One of them is a drug called Zemplar. 

It's sold by Abbott, which is a big pharma company down in Chicago. Abbott sells the drug, and WARF has agreed, so we gave the rights to Abbott. We own the intellectual property. We own the patent, but we've licensed the rights to them. And in exchange for having the right to sell this Vitamin D drug, they need to give us a percentage of whatever they make back. That's called royalties. So they need to give us royalties. It's in the single digits. The upper single digits is the royalties that Abbott pays. So for all the hundreds of millions of dollars that they make on Zemplar, very large checks come back every year to WARF, to basically pay us for the privilege of using the intellectual property that was developed here at the University of Wisconsin. 

We take those, usually between $30 million and $50 million that WARF brings in from the sale of Zemplar, and we give Hector Deluca a nice check. Hector Deluca and his co-inventors a nice check for 20% of what's come in that year. And the rest of it, we give to the university in the form of a broad grant to the graduate school. They use that to pay for fellowships, and facilities, and professorships, and all those kinds of things. Basically, what we've done is we've said, and this is how we work. All the commercial entities who want rights to inventions that come from the university, we say, you can have the rights. We want you to go out and bring it to the marketplace and make money. And as you make money, we're going to make money. And we're going to give that money back to the university, so that we can foster more research and more invention. It's worked really well. 

And in fact, many people will say that the University of Wisconsin is rated where it is in the world because it has this. This is a hugely powerful university from a very small state, a very small tax base in the Midwest. And people will say that advantage actually comes from getting these very large gifts every year from WARF, so the university can go out and bring in the best faculty and bring in the best students. So, Harry Steenbock's idea actually really does work. 
- So it's that big, tall building that's on the western end of campus, with an extraordinarily effective and efficient staff, some of the hardest working people on campus, one of them being Dr. Laura Heisler. Thank you for being with us. 
(applause)