Adam, I’m so excited to have you on the Brand Lab Series, as we’re into our fifth season, we’ve had a range of guests on over the years from big brand executives to emerging entrepreneurs. We’ve had people with degrees from MIT. But you are our first attorney, so we’re thrilled to have you on. But most importantly, because as we were talking before the show, there are so many issues facing big corporations today in an era of digital transformation, there are so many challenges in the entrepreneurial startup community as well, where they need to think a little bit more about some of the risk, how to mitigate, how to think about intellectual property? And I thought, “Who better to have on than Adam Kelly,” so we really appreciate it that you could join us here today. So thanks for coming and welcome to the Brand Lab Series.

ADAM

Well, thank you for having me on. Over the last four years, I’m, as they say, a long time listener, a first time guest. You’ve had an impressive number of subject matter experts, and so, I can say that I’m truly appreciative that you reached out and I’m also happy to be the first attorney, and hopefully with my expertise in intellectual property, I can help some of the listeners with dealing with some of their business issues.

BRIAN

Yeah, well, it’s funny, something you probably don’t realize is, we were sitting in your office about four plus years ago, and I came to you with some questions around intellectual property, ironically, because we were looking to start the Brand Lab Series, and one of the things that you did which still kinda stuck out to me today is, you gave me this great analogy about the sword and the shield, as it relates to trademarks and intellectual property. And it was just a great way to break down legal conversation in a way that a simple guy like me could understand. So I don’t know if you even remember that conversation, but I just remember the sword and shield and it really stuck out at me, it’s just a great example of how to explain that. So, talk a little bit about that.

ADAM

Sure, and I do remember that conversation, and I remember being very excited about the idea of starting this series, so. But getting to the analogy of the sword and shield of the four traditional forms of intellectual property, copyrights, trade secrets, trademarks, and patents. Their use could be analogized to a sword or a shield. For a sword, you can attack someone, you can go after them for some form of behavior that you as the intellectual property owner would like to stop. As a shield, you can withstand an attack from someone else due to some activity that you are performing that arguably or allegedly interferes with someone else’s intellectual property. So, take for example a trademark, a trademark is a mark that’s used in commerce, that enables a consumer to associate the quality of goods and services with the mark. There are many famous marks that we could use as an example, but there are two forms of trademarks, there’s a Federally registered trademark and then there will be common law trademark rights. A Federally registered trademark gives you the ability to go to Federal court and sue under the Lanham Act for violating your trademark. That’s a sword, because you can go after someone.

However, if you’re just simply using your mark in commerce, for example, here in Chicago, or in the State of Illinois, you will begin to educate consumers of the quality of that mark and you will begin to acquire common law trademark rights, such that if someone from California were to send you a cease and desist letter and tell you to stop using your mark in Illinois, you arguably would have a shield to defend yourself and to continue using that mark in Illinois in the Chicago area, because you would have accumulated common law trademark rights. So that’s one example of the sword and the shield. You know, with a patent for example, that’s… I would say that’s a sword, because the patent rights conferred to an owner are the right to stop someone from performing some form of behavior, either practicing a patent to process or selling, making, using, exporting, importing a patented product. So by having that patent, which is a sword you could then go to Federal court and sue someone for patent infringement. So that’s sort of the example for those two analogies of trademark and patents.

BRIAN

So, just kinda building on intellectual property, one of the things I think is interesting about AE Marketing Group and many, many businesses is… You know, our job is to provide our clients with advice and our clients with ideas. But sometimes that creates a little bit of greyness around ownership or sometimes you share ideas and they’re not implemented in some of those other nuances to just generating ideas. And I think a lot of times that presents some questions about the intellectual property. So you have deep experience there, obviously. So what are some ways that businesses can better kind of… Again, kinda building off what you just said, really kinda protect some of their intellectual properties that comes to generating and sharing ideas?

ADAM

Well, I think the beginning step is to have a plan. If you were an undergraduate student taking your introduction to business class at a university, you’d show up in class on day one and the instructor would say, in any business, you must have a plan. The same applies to intellectual property protection. If you know that you’re gonna collaborate with another entity or a contractor, or there’s some collaboration on the creation of something, it could be the creation of digital media, it could be the creation of some innovation that’s arguably patentable, it could be the creation of an advertising campaign, whatever it is, you need to have a plan in place before that activity even occurs where you address the issue of ownership.

One simple way to do that is to have a joint development agreement where that joint development agreement would lay out exactly what the ownership rights would be in whatever is created. There are other types of agreements, which are called “Work for Hire,” where Brian, I would hire you to create something for me, however, even though you created, whatever rights you would have accumulated or acquired in the creation of that project, they would fully be assigned to me, so that I would be the rightful owner. So, step one, have a plan, figuring out how are you gonna address the ownership issues? The second part of that plan is to figure out how you’re gonna protect what’s created? Perhaps what you’ve created is something you would like to keep secret. It does have commercial value, but the value is in keeping it secret. In such case, then you’d know in your plan that you are going to ensure that you have the safeguards for adequate trade secret protection. If you think that you’ll be innovating something that arguably will be patentable, then you need to address, “Alright, who’s gonna be in charge of the patent prosecution?”

Which we were talking about before we came on the air about certain words in the legal world that have different meanings. When I would watch LA Law or Ally McBeal, I would think prosecution meant, when you’re going after a bad guy for doing something wrong in a criminal context. Well, in the patent world, prosecution means dealing with the Patent and Trademark Office on behalf of the inventor for the purpose of hopefully securing patent rights from the patent. So having a plan for who’s gonna be leading the charge on the patent protection? And is it only patent protection in the United States, is it in North America? Are you gonna plan to be doing business in Europe, in Asia? So you need to have a plan for how you’re gonna seek patent protection in those areas of the world. Although it may be a little premature, it’s also worth thinking about what you’re going to do with these patents once you have them? Are you gonna put them in a business unit, and package it and sell it? And so, the portfolio will be part of the driving value of the sale or keeping the patents and then asserting them against your competition in order to generate revenue or marketshare. Or is it part of the business unit to then go out and license that technology?

Perhaps you’re business that isn’t capitalized to a degree where you can actually create commercial embodiments from the patented technology. So you would need licensees who are perhaps a manufacturing outfit that you would partner with, and license them to practice the technology, so then it could be commercialized. But these are all parts of the plan. And I guess, the final part of that plan would be, if you do wanna go out and enforce it, how are you gonna do that and how can you do that in a cost-effective way that makes business sense? When it comes to enforcement, any client who comes to me and says, “Alright, we’ve identified this infringer and we wanna go after them. We’re super mad about this.” My first question is, “Provide me the business case for why we’re gonna do this.” And usually I get a blank stare, ’cause they haven’t thought it through. Patent litigation, any litigation of an intellectual property violation is expensive. It’s emotional, it’s time consuming, it’s disruptive to the company who’s suing, and it’s disruptive to who you sue. So you have to take all of that into account in your business case before you actually go out and start enforcing it. So that’s sort of my long-winded way of summing up to say, “You gotta have a plan.” That’s the short answer.

BRIAN

I think that’s great advice in terms of the plan, and I know we’ve talked a little bit about how that’s important in almost every aspect of entrepreneurship or any business for that matter. But you said something in that answer that I thought was funny and dates the two of us a little bit. You mentioned LA Law, [chuckle] and you mentioned Ally McBeal, but the one thing that I also… That jumped out at me is you used the term prosecution, which even in your own industry can potentially mean more than one thing. We see that with a lot of our customers in insurance and healthcare and technology, where for whatever reason, it’s just a little bit more complex and brands struggle a little bit with how they communicate with their end consumer, as well as with other businesses. What’s some advice you would have for industries that by nature are somewhat complex, to be able to communicate in a way that the average person could understand?

ADAM

A couple of things you could do is be… For the lawyer or the business person, be more of a progressive writer. And what I mean by that is, don’t use legalese. There are phrases that you could use that have a plain meaning that you could just use that, so that anyone could read that. Use shorter sentences. You don’t need long run-on sentences that are littered with commas. And then lastly, use plain English. If you’re going to say something like… And use the word argue, then you don’t need to use the word of aver, for example, ’cause not everyone knows what the word aver means, but everyone knows what the word argue means.

BRIAN

I didn’t know what that word meant.

ADAM

Yeah, so those are three things, eliminate legally, shorten your sentences and use plain English.

BRIAN

Good advice. Well, I know we talked a little bit earlier also, just about the general context of IP, which is a big part of our conversation. We talked about it more through the lens of maybe protection at the business side, but what I think is also interesting in this digital age today is that smartphones have made anybody a critic, an author, a journalist, a photographer. But in many ways, the digital device in our pockets and social media also open up individuals when it comes to some IP issues, as well. Talk about how, like, IP just in general is really transforming right along with the digital transformation itself?

ADAM

In some respects, the intellectual property laws don’t necessarily track the innovation of technology. And so, in some areas, the laws are playing catch up and obviously our laws are passed by our legislative bodies, either Congress or a State Law here in Illinois, and we need to wait for those legislations to pass. But with respect to just saying the smartphone, for example, one common issue that’s come up is when a photo is taken on a phone, who’s the creator of the photo? There was a very famous example of where someone had handed the smartphone to a monkey and the monkey took a selfie of himself. And then the question was, who’s the owner of the copyright of the photo? ‘Cause it was actually a pretty well-done photograph. So the issue was, is the monkey a person such that that the monkey would have copyrights to that, what became a famously viral photo?

So I think there’s a lot of copyright issues when it comes to the creation of works using the phones. But, you know, the laws of intellectual property are continuing to change. There is legislation in Congress to change, certain areas of intellectual property. We are in this golden age of intellectual property of the United States Supreme Court. You’ve to consider the US Supreme Court takes between 75 and 80 cases or so a year, and in the last seven to eight years, they’ve taken six to nine cases a year, which is easily the most active area of law that the Supreme Court has been in. So the laws are changing with respect to intellectual property, it’s complex as to how the intellectual property laws are meeting the change of innovation, especially in using the smartphone example.

BRIAN

Well, kinda following up on IP in general, is there such a thing as Quasi-IP and if so, how does that relate to advertising?

ADAM

I think there’s something called Quasi-IP, ’cause again, the four traditional forms of intellectual property, patents, copyrights, trademarks, trade secrets, yet in this digital economy that we’re in, there are other areas of law that touch on aspects of intellectual property. For example, privacy law, or data protection, and also advertising. For example, if you’re a company that has an advertising campaign, you are gonna wanna protect whatever slogan or motto or whatever images are associated with that campaign, you’re gonna collect a significant amount of consumer data that needs to be protected and you wanna make sure that not only is it protected, but in the event that you choose to license or share that data with some other party for some marketing purpose, that it’s adequately protected by the receiving party. And then in the event of a breach of that data, you wanna make sure that you have procedures in place that would remediate the breach as soon as possible. So, when I hear Quasi-IP, I think of these other areas that frankly, we weren’t thinking about 30 years ago, but with the advent of the Internet, and big data and AI learning and blockchain technologies, there needs to be, and I would say in the future, we will see, I believe, more changes to intellectual property law to further strengthen the protection in these other areas.

BRIAN

You just touched on another big emerging topic which is blockchain. Back in Season 4, Episode 75, we had Melanie Cutlan on, who leads Accenture’s blockchain operations group. Obviously, blockchain is changing so much in the digital landscape as well. How do you see that actually affecting the patent side of things?

ADAM

We’ve seen more patent filings that touch on some aspect of blockchain technology. Usually it’s in the area of applications of the blockchain technology. You know, there haven’t been a whole a lot of patents yet that have issued on that, but certainly there are companies that are pursuing patent protection that implicates blockchain technology. Even my own law firm, we created a blockchain group, where if there is… It’s not only the protection of the blockchain, but it’s also looking at the business unit itself, ’cause there’s a variety of transactions that can occur that need to be protected if you’re gonna be partnering with some other company, there’s certain aspects of the blockchain technology that are unique to that partnership. And as a firm, being progressive and creation of a specialized group to only deal with companies in the blockchain space.

BRIAN

You also talked a couple of minutes ago, when we were kind of chatting about Quasi-IP, some of the different nuances that relate to that and obviously data and security is another one, and a number of our C-level executive customers and I know a lot of the people listen to the show are often very concerned about data and privacy and breaches and some of those other issues, especially as they start to build out digital properties. We saw a lot of headlines last year around GDPR, a lot of US-based companies were kind of scrambling to figure out like, “Do we need to respond to this, what do we need to do, should we change our cookies policy, what does this mean?” You’re trying to see that more domestically with the implementation of the California regulations that will go into effect next year. What’s some of your advice as it relates to brands that are looking to build digital properties that are very concerned about security and data?

ADAM

My one piece of advice I think is important, which is, you need to engage an attorney who has a specialization in either GDPR or the CCPA. This is not… I mean, this area is complex, it’s important, even for me with my decades of experience, if a client called me up, I would still point them to someone who… This is all they focus on every day, are these issues and you need to partner with somebody who you trust, and that can help you develop a business strategy for how to deal with these issues.

BRIAN

Another thing that we see a lot across digital and in many cases, social media, even AE Marketing Group isn’t immune to this, is the occasional social media troll. In your world though, there’s even a worse kind of troll and that’s a patent troll. I know we’ve seen some high profile cases, including some with Apple and others that are very costly, very long. Talk a little bit about patent trolls, and how do you see that kind of evolving?

ADAM

Well, starting with the term patent troll, I’m gonna use the term patent assertion entity, which is a little more neutral, because in fairness, just being objective, the rise in the companies who own patents, which are seeking licensing fees and if they aren’t able to achieve a license, then to pursue options in Federal court, you have to sorta step back 30 years in time and appreciate what a patent was at that point. There were a lot of companies who used patents as a way to incentivize their innovators to innovate. So, if you are an engineer or a researcher, and you have a patent, it was a badge of honor to have a patent. Many companies would provide a monetary incentive at the end of the year for inventors of these companies. I think around, in the late ’80s, early ’90s, there were several business people who asked the very easy question, why do we have these patents and what are we doing with them?

Are we obtaining licensing fees from them? Are we enforcing them? What are we doing to use this protection to increase our market share and revenue? And I think the view of patents changed and what we saw was a rise in patent litigation, where companies would go out and actually enforce these patent rights, regardless of which side you fall out on it. It was definitely more folks doing that. There were also local patent rules that were created in various district courts across the United States, which streamlined the process of a patent infringement action. And there were certain jurisdictions where the juries were more plaintiff-friendly. So the chances of having a patent infringing verdict, which was quite high, you can make the business case, that if you spent a certain amount of money your return would be X-fold if you were able to go to a jury. Even today, we now have litigation funding institutions who will fund a patent infringement lawsuit and then take a piece of whatever damage award that would come out of that, and that’s actually become a very common business entity.

There’s lots of ways that a lot of these patents are being asserted in the United States. However, I do see a trend of less patent litigation, and I think part of that is because the Supreme Court issued an opinion which addressed the issue of where a company could be sued for patent infringement, and it’s “where the company resides,” which could be where they’re incorporated. And so, for a lot of companies, that’s Delaware. So we’ve seen a lot of shift in patent litigation, if any, to the State of Delaware, but we’ve also seen a significant decrease in the number of patent assertion entities actually suing companies.

BRIAN

We’ve talked a lot about IP today, obviously which is important whether you’re at a big brand or whether you’re a rising entrepreneur. I know it can still be a little intimidating, but it’s an important conversation as you said earlier, a plan is necessary as well. I think one thing that’s also interesting is how the economy is really shifting to become more global perspective. Last fall I was in Tokyo for ad: Tech with most of the agents, top marketers. There was a lot of conversation around China. I think when it comes to intellectual property, I think one can’t ignore China as well. What’s your thoughts on that?

ADAM

You know, I’ve traveled to China a dozen times over the last decade, specifically for the purpose of providing lectures to practicing intellectual property attorneys and judges in China about US law. So I have more of a first-hand perspective on addressing intellectual property protection in China. I think to consider China, you have to think about intellectual property historically. China did not have intellectual property laws on the books until the early 1980s. It was only about, I would say, eight to 10 years ago, that China created specialized intellectual property courts. The State intellectual property Office of China has more patent examiners than any other patent office in the world. This is a country that has made significant progress over the last several years to improve intellectual property protection, to improve the examination process for awarding intellectual property protection.

And I would say looking out through the future, it’s only gonna get better. There have been several instances, public instances which may run contrary to what I just said, but I’m a big proponent of seeking intellectual property protection in China. I would tell any client if they would say, “Well, why should I pursue intellectual property protection in China, if I’m… You know, the chances of me getting knocked off would be high? And I’d say, “Well, that may be the case 10 years ago, but where will China be 10 years from now? And if you don’t have intellectual property protection in place, then you don’t stand a chance.” I definitely think that for a global business, having a plan for protection in China, and I would also say South Korea, Japan, Taiwan, whichever Asian market, Singapore, that you intend to do business and you have to have a plan for protection.

BRIAN

Adam, I knew when I invited you on we’d have a great conversation around IP. That’s an important conversation for brands to have, to think about in the changing digital transformation, the global economy. Very insightful and in some cases, a little serious in tone. So as we start to wind down, I thought we’d make it a little fun. I didn’t prepare you at all for this, but one of the things we’d like to do is just a quick little fun speed round.

ADAM

Okay.

BRIAN

Simple answers, you don’t even need to think about it. If you weren’t an IP attorney, what’s the job you’d love to have?

ADAM

I don’t know, I really enjoy being an intellectual property attorney. I mean, all kidding aside, I deal with really smart creative people who’re at the forefront of their industry and I’m dealing with an area of law that is extremely important to the United States, and it’s super nerdy. And if you know me, I love nerdy stuff, so I enjoy what I do.

BRIAN

Okay. Like me, you’re a big Sox fan, is it possible to root for the Cubs?

ADAM

I think… Look, I have lots of close friends who are Cubs fans. I think it’s great for Major League Baseball in the City of Chicago when the Cubs are good, but when it comes to watching the standings, I’m watching the White Sox. I think what Rick Hahn and his colleagues have done with the rebuild is on schedule. They blasted the Orioles last night. I see really good things in the future for the White Sox, as long as they’re gonna stay healthy.

BRIAN

Yeah, well, I hope you’re right about that one. What’s a piece of technology that you can’t live without?

ADAM

Probably my phone. You know, having the ability to send emails, communicate via text, take pictures, engage in social media, that enables me to do a whole lot of [chuckle] personal things, as well as address professional things just from my hands, you know?

BRIAN

So we talked a little bit about advertising as it relates to law, obviously today, why is it that every personal injury attorney has the same style of billboard?

ADAM

That’s a good question. You know, they’re all tough, they seek results. You think they’re the best attorney on the planet. I don’t know, I will freely admit that’s an area of law that I’ve… I don’t practice and that I don’t know.

BRIAN

I may have stumped you, that was a good political response protecting some of your own in the industry. Final question, it might be a tough one for you, actually, favorite golf course you’ve ever played on?

ADAM

Royal Dornoch.

BRIAN

Huh?

ADAM

So, in the Northern Highlands of Scotland is a small town called Dornoch, and Royal Dornoch, that golf course is not only beautiful, but it’s challenging and notable to American golf. Donald Ross was born and raised in Dornoch. That’s where he learned to play golf, so you fast forward when that young Scotsman comes to Massachusetts at the dawn of golf spreading throughout the United States and he began golf course design, he took the lessons that he learned from Dornoch and it strongly influenced the development of golf courses in the United States. So, if you ever have a chance to play Royal Dornoch, they have some of the best holes in the world.

BRIAN

That was your easiest question of the day. [laughter] So besides intellectual property, obviously golf is a passion of yours. Adam, again, thank you so much for being on. I knew it would be a great conversation, a much needed conversation for our audience. Excited to have you here, great wisdom and great advice for our audience, thanks.

ADAM

Well, thank you for having me. And if any of the listeners have any questions about intellectual property or any of the Quasi-IP areas that we talked about, feel free to reach out to me at [email protected], L-O-E-B.

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