New ideas prove patently protectable

David Mirchin: Patent registration could be an important part of a company's income.

David Mirchin 88 224 (photo credit: Courtesy)
David Mirchin 88 224
(photo credit: Courtesy)
Israeli companies are known for their bright ideas, but what many budding corporations do not know is how to protect their ideas from infringement by patent predators. "Israeli companies that target markets in North America, Europe and Asia have to have a strategy for dealing with intellectual property issues," said David Mirchin, ahead of an international conference this Wednesday in Tel Aviv on IP (intellectual property). Mirchin is a lawyer for the MLG&LB law firm, which is presenting the conference together with the American Katten Muchin Rosenman LLP firm. Mirchin said patent registration was not only important for companies to maintain their rights and avoid being copied, but they could be an important part of the company's income. For some companies, licensing was one of the biggest sources of income, he said, but a requirement for any effective licensing scheme was to have a threat with which to back it up. That means that from the start, the intellectual property has to be properly registered as a trademark, patent or copyright in such a way as to avoid any loopholes. It also means that a company should have an aggressive legal team ready to take on any potential violators. But what about smaller players, such as companies who are merely start-ups looking for a break? Mirchin said those should also make sure to have an air-tight registration for their property, for two reasons: Defensive - A company can make use of their registration to make sure they are invulnerable to attacks from other companies. Offensive - The registration can be used in legal action, which might seem far-off for a small start-up, but could be much more realistic if the company is acquired by a large corporation with extensive legal resources. Mirchin said the threat of legal action was only real for companies, not private violators. Since the days of Napster, and even since it was disbanded in 2002 because of copyright issues, individuals have downloaded millions of songs, with hardly any prosecution. He said the economics of suing individual users make it highly unlikely any company will vigorously pursue them: They often do not have enough money to pay, the litigation can antagonize customers and targeting the actual violator was difficult - a suit was once brought against the innocent grandmother of a copyright infringer. But for an individual inventor or creative artist, it does make sense to register with the appropriate office, said Robert Brasblat, who will be coming from Washington, D.C., to speak at the conference. While the cost of pursuing violators can be prohibitive, he said, suits can often be pursued based on a "contingency fee" - where the lawyer receives payment only as part of the final settlement. For that reason, it is important to take precautions to avoid the major traps so that the litigation can be pursued effectively. "Sometime you can take all the precautions and still get sued," said Brasblat, giving as an example the case of Xerox, which he represented in a patent law case that transpired despite the company's best efforts to avoid any such problems. One of the major focuses of IP law is the patents issued in the pharmaceutical industry, and the production of generic drugs by companies competing with the original inventors. Israel's Teva Pharmaceutical Industries Ltd has built a $10 billion empire primarily from the production of such drugs. Brasblat said generic drugs can only be produced after a drug's patent expires or if the patent has been ruled invalid by a court, or if the drug was never patented (such as penicillin). The Hatch-Waxman exemption allows generic drug producers the right to conduct research on creating generic drugs before the patent expires, which allows the generic drug to come to market the moment it is legally possible to do so. Because the public gains from the competition involved in generic drugs, the US legislature acted to expand the capability of generic drug makers to tackle patented medication.