Patent problems, innovation, and indemnification clauses

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There is an article in this week’s Innovation & Design section of Business Week online that got my notice. It discusses the fact that the Patent Office, and current trademark laws, may be stifling innovation. The article mentions two issues, the incredible cost of litigation and the backlog of the office itself. As the article points out  ‘The U.S. Patent & Trademark Office is drowning in applications. If new filings were to stop today, it would take the agency’s 9,500 employees two years to clear the backlog.”

Because package design firms are in the business of creating unique, and protectable, intellectual property for our clients, this backlog concerns me. Here is why it should concern you too.

In the last decade design firms have been asked to sign contracts with increasingly complex indemnification clauses. Here is an example.

“Consultant shall indemnify, defend and hold harmless Client, its officers, directors, shareholders, employees and agents and their respective successors and assigns, from and against any and all claims, demands, liabilities, losses, expenses, costs, obligations, recoveries or damages of any nature whatsoever, whether accrued, absolute, contingent or otherwise, including without limitation court costs and attorneys’ fees (whether or not suit is brought), arising out of or resulting from or relating to any breach by Consultant of any of Consultant’s agreements or covenants contained in this Agreement, or by any acts or omissions of Consultant.  This indemnification obligation shall survive any termination of this Agreement.”

The only thing they have forgotten are the rights to my first born child. Would you sign that? Probably not, and many reasons may seem obvious. 

One of the less obvious reasons has to do with the patent and trademark application process itself. Naturally if you were being asked to guarantee that all work you develop is unique, and protectable, you would certainly need to know about all work already granted a trademark. But you would also need to know the appearance of the work that is in the application process, at the trademark office, but not yet granted. The problem is that this work of course is kept secret during the application process and is therefore unknowable. You can’t protect your firm, let alone your client, against something that is unknown.

The longer the application process extends the greater the risk to everyone. Apparently one solution getting bipartisan support in Congress is the recently introduced Patent Reform Act of 2009. Let’s hope it gets some support.

Acknowledgements

The image in this post is from the Business Week Online, Innovation & Design page

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About Richard Shear

designer, husband, teacher, blogger, father, athlete, author, historian Richard has over 25 years of brand identity and package design experience, with a wide range of clients such as Ahold, Coca-Cola, Hasbro, IBM, Johnson & Johnson, Pernod Ricard and Procter & Gamble. He began his career working with the legendary advertising art director, and AIGA Medalist, George Lois and the British design manager Clive Chajet. In his next design management position at Lippincott & Margulies, he worked with Walter Margulies learning the complex skills of global corporate identity. He then became Creative Director and Partner at Peterson & Blyth, one of the premier brand identity and package design firms of the time. He is a founding faculty member of the Masters in Branding Program at New York’s School of Visual Arts. He publishes the blog The Package Unseen, and has been a guest lecturer at colleges including FIT, Trinity College and Tyler School of Art. He is a graduate of the Tyler School of Art at Temple University. Richard is a Board member of the AIGA MetroNorth Chapter, past President of AIGA‘s Brand Design Association, President of the Package Design Council and a member of its Board of Directors. He is a member of USA Cycling and US Rowing, a nationally ranked masters bicycle racer, and a member of The Saugatuck Rowing Club, the 2010 Masters Club National Champion.
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