JOBS ACT

August 10th, 2012

JOBS ACTThe American Jobs (Jumpstart Our Business Startups) Act, also known more simply as the Jobs Act was a series of bills that were formally proposed to a joint session of Congress to jumpstart the economy, presented in a televised speech that aired in 2011. The legislation, written by the Obama administration, was supported by many Democrats and Republican legislators. The Jobs Act recieved support from both the Senate and House of Representatives and was signed into law in April of 2012.

This bill, which totals in $447 billion in provisions, does many things in an attempt to boost the American economy. The Jobs Act will cut $245 billion in payroll taxes, boost spend of $62 billion to expand programs whose purpose is to put people back to work, continue to offer unemployment benefits for 6 million people who have been out of work for a long term period as well as providing an $8 billion dollar tax credit for those who fall into the long term unemployment category. In addition to these crucial items, the Jobs Act will pay $5 billion into the Pathways Back to Work Fund, $50 billion into infrastructure, $30 billion in job protection for teachers, police officers and other civic workers, $30 billion into school modernization, and $15 billion into hiring construction workers to refurbish foreclosed homes.

The National Infrastructure Bank

The Jobs Act, monetary goals aside, also looked to establish the National Infrastructure Bank, which serves the goal of funding infrastructure projects, the creation of an wireless network to expand high speed service, stricter regulations against businesses who discriminated against those who had been unemployed for the long term, and making it easiter for small businesses throughout the country to implement crowdfunding.

JOBS ACT and the SEC

The American Jobs Act is crucial for the economy, hit hard by the recession and the housing and financial collapse of 2008. The ability to crowdfund, making it easy for small businesses to go IPO and providing modernized more relevant rules for established private companies are just a few reasons why this piece of legislation is so important. From the date of signing, the American Jobs Act gave 90 days (or until July 4th) to implement changes that were made to the Securities Act Rule 506 and other advertising and security legislation, which was a deadline that was not met, but is a work in progress. The SEC, the Securities and Exchange Commission, is looking t0 release the first slew of rules that target solicitation of investors for small businesses, which is said to be completed in the middle of August of 2012.

The larger, more comprehensive set of rules on crowdfunding are the next big deadline markered in the legislation, and are due in January of next year. By all reports, the SEC has stated that they will be able to meet this larger deadline. Until the upcoming January 2013 deadline, no other major dates in the legislation are upcoming. One piece of the Jobs Act that will directly impact small businesses around the country, which will be finalized in 2013, is the cap on public investment and who is allowed to invest in startups. Prior to this Act being passed, it was very difficult for companies to seek investors. Now, more people who are considered accredited investors, or most of the general public, will be able to invest and provide funds to startups that need every investment that they can get.

JOBS ACT and Crowdfunding

As a business owner, one of the biggest benefits that this legislation will provide you, is the power to crowdfund. What is crowdfunding, you ask? Well, crowdfunding is when individuals, in this case startup business owners, tap into their resources and industry networks using social media and the web to raise funds for their business. Crowdfunding is used in many contemporary fundraising efforts, including disaster relief for Hurricane Katrina, political campaigns and even software development. With the small business owner in mind, legislators looked to create a list of Crowdfunding Rules, which will allow business owners to implement this method to generate much needed capital for their businesses.

SEC Approved Crowdfunding Platforms

Once finalized, small business owners will be able to use SEC-approved platforms to crowdfund, which allows money to be donated by anyone who believes in the business. Through crowdfunding, according to the bill, these business owners will have a cap of $1 million per year that can be raised via crowdfunding, will looking to minimize financial risk. To minimize this risk, the amount an individual donater can invest will be determined by their income. For investors in the income bracket of less than $100K will be able to donate up to 5% per year and for those who make more than $100K, they will be able to invest up to 10% per year. To further protections within this $1 million dollar cap, small businesses will be required to post consumer protection materials on their crowdfunding sites. In terms of company stock, the Act also eliminated the shareholder rule, which stated that only a company could only have 500 shareholders, before it registered with the SEC. Companies will now have the opportunity to sell up to $50 million in shares, and have more than 1,000 investors before going public with the SEC.

Intellectual Property

August 9th, 2012

Intellectual PropertyDo you have any intellectual property? And, if you do how much is it worth?  Most of us have ideas or at least thoughts about how we might do something either differently from how it’s done today or how we might do something totally new.  When you go through a formal process of describing what it is you have in mind, how to do what you are thinking, and write it all down, that final form of your idea can be considered intellectual property.  The idea behind intellectual property – especially as it relates to patent laws and processes – is to capture your ideas in a more formal property sense.  Patents are then designed to protect your rights to that intellectual property.

Comparable Intellectual Property Valuations

Another way to think about intellectual property is in relation to real or physical property. If you own a house or piece of land, you are a property owner. That ownership comes with certain rights and privileges according to current property law. You are free to lease, modify, sell, or otherwise use your own property as you see fit, and no one can take those rights away without due legal process.  The same applies to your intellectual property. You own it and have the right to lease, sell, modify or use it as you want. Once intellectual property is protected by patent, you also have the right to exclude others from making or creating something the same as or similar to what you have generated.

Type of Intellectual Property

Is your intellectual property creative or related to an invention? In other words, what type of intellectual property do you own?  One of the current distinctions in intellectual property law, according to the World Intellectual Property Organization (WIPO), is between industrial property and copyrights. Industrial intellectual property most often pertains to “inventions (patents), trademarks, industrial designs, and geographic indications of source” while copyrights apply to “literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs”.  For the most part, patents and patent law along with the implied protection of intellectual property rights that go with patents applies to industrial property. It’s difficult to imagine a patent being awarded for music, plays, films, or artistic works.  These creative and artistic properties are typically unique and individualistic. However, equipment, tools, and other things used by artists and musicians have received patents – for example, the Stratocaster electric guitar from Fender received a patent award in 1960.

What can you do with your intellectual property? Just like most other forms of property, you can rent it, sell it, keep it, or use it just about any way you like. Most intellectual property can be thought of as an asset, like most other forms of property.  Putting a value on that asset can sometimes be a challenge, but finance professionals can be engaged to help assess the true market value or worth of your intellectual property. Once you have the intellectual property documented and protected (or patented), you can begin to use it like any other asset. Banks will sometimes lend money based on the value of intellectual property.  Investors will often use intellectual property to evaluate alternative investments or stock purchases.  And, assuming you created the intellectual property in the first place because you had a good idea about how to do something, you can use it as a basis for new products, new companies, or new innovations.

Follow Proper Steps to Avoid Theft, Intrusion, and Misuse

Your ideas and creative thinking are the beginning of your intellectual property. Documenting and describing your ideas, how they work, and what you want to do, all need to be done to capture the idea in a usable form.  Building the intellectual property should be a formal and detailed process just like you would use if you were building a house. You wouldn’t use a poor foundation, cheap materials or leave the roof off of your house if you wanted to have value in the property you are building. The same applies to intellectual property – build it to the best of your ability and use the best materials or inputs you can find.  Once you are finished with the building and have your intellectual property defined, protection and valuations can be addressed. Valuations and the worth of your intellectual property can be properly assessed and estimated, just as if you had an inspector look at a house you built.  And, patents and the patent aware process are there to help protect your rights to the property you have created – protecting you from theft, intrusion and misuse.

How Much Is A Patent Worth?

August 9th, 2012

Patent WorthHow much is a patent worth? What is the value of the idea or invention covered by the patent? One way to think about the value of the patent is by considering the intrinsic or underlying value of the product or idea.  For example, before the company actually made one or sold one, how much was the Apple iPhone patent worth?  Putting a value on the patent has to recognize the value of the underlying product.  How much is the patent worth on the next new light bulb (several patents have been granted in the U.S. recently for new LED light bulbs)?  The intrinsic value of the bulb may be less than an iPhone, but if more light bulbs can be sold, perhaps the patent is worth more than other patents that have been awarded.  So market size plays a role in determining the value of a patent as well.  As an inventor or product creator you may believe that your patent is worth a lot of money, and it may well be, but there are several objective criteria used to establish how much your patent is worth.

How Important Is Your Idea or Invention?

How important is your idea or invention? The answer to this question can be a clue to how much your patent is worth. For example, a new patent on a new breakthrough cure for cancer may be more valuable than a patent on a new broom handle.  Typically, breakthrough patents or patents that explore whole new areas of technology are among the most valuable.  In addition, if a patent is awarded to an invention or idea that is the first to find an answer to a long-standing problem, then that patent has more value as well.  These types of patents may well be worth billions of dollars because they provide the owner with what amounts to monopoly power in a market, niche or segment.  By having the right to exclude others through patent protection, the inventor or patent owner can command higher prices and effectively increase the value of the patent. One good way to think about how much your patent is worth – especially if it’s a breakthrough – is to ask the question, “How much would my competitors pay to use my protected product or service?”

How Big Is Your Market?

How big is your market? This can be another clue to helping establish how much a patent is worth.  For example, there are about 30 million small businesses in the U.S.  About 21 million of those are single-owner or sole proprietorships that do not report payroll.  The remaining 8-9 million are and businesses with fewer than 10 employees.  If the new product or invention can be used by all 30 million, that is a relatively large market.  By comparison, there are about 300 million households in the United States.  If you have an invention that can be used by most of these households or used frequently by homeowners that is an even larger market than the business sector of the economy.  When you think about how much a patent is worth, consider how large the market is where the idea or invention will be used.

How New Is Your Patent?

How long has the patent been in effect?  Unlike wine, generally speaking, the newer a patent the more it will be worth.  As the protection term expires (typically 20 years) or as the patent reaches the end of its enforcement period, it is likely to be worth less.  One of the key functions of patents and patent law is to spur innovation and creativity.  Once a patent is granted, even though the inventor or creator has the right to exclude others from his or her intellectual property, others in the same field and the competitors of the original patent holder will begin to evaluate the patent and create products or services of their own.

Without violating any intellectual property rights, the publicly available information in the patent, including design and uniqueness, can provide a basis for even newer innovations and creations. These too may then be patented, but when they are the first patent no longer has as much value.  Over the 20 year life of a patent, there may be several competitors who become more innovative and create new products of their own. By doing so, they dilute the monopoly control of the first patent as well as limit how much the patent is worth.  When patents are new, the intellectual property owned by the patent holder may still provide enough market control over what’s produced and how it’s produced to create more value in the patent before competitors can react.

With many categories or types of patents, it may take years for competitors to come up with new ideas or inventions of their own to effectively compete with the new patent.  Along those same lines, if there are more patents granted within a particular type of product or category, a patent will be worth less than in markets where there are fewer patents. There are fewer patents for innovative medical devices than there are for computer technologies according to the latest statistics from WIPO, the World Intellectual Property Organization.  Patents in computer technologies may be worth less as a result, apart from the underlying value of the product or new idea, which also suggests that the significance of the idea being given a patent has something to do with the value of the patent as well.

Summary

How much is a patent worth?  There are objective markets for and legitimate ways to determine the dollar value of a patent.  These are best handled professionally, through patent attorneys or objective financial analysis firms.  Several factors go into determining how much a patent is worth. The underlying value or significance of the product or invention, the size of the target market, how competitive the market is and who competes with the patented idea, as well as the amount of time the patent has been in effect.  These all play a role in establishing the value of a patent. To determine how much a patent is worth, though, ultimately it comes down to how much someone will pay.

Famous Inventors

August 9th, 2012

Will you be the next famous inventor?  We know famous figures from America’s past like Thomas Edison, Alexander Graham Bell, Henry Ford, and others.  Thomas Edison, for example, was one of America’s most prolific inventors and he held close to 1,100 patents for his creations and inventions.  Alexander Graham Bell invented the landline telephone, but do you know who invented the first cell phone?  There is some discussion about who exactly it was, but a lot of the early development was sponsored by Bell Labs as that company grew and explored new communication inventions.  So you can be a famous inventor by yourself or as part of corporate innovation.

Among the most famous inventors of the 20th and 21st centuries, Steve Jobs is well-recognized.  He is listed first on the patent application for what became the Apple iPhone. (There are four other co-inventors on the application filed in September 2007.)  But, do you know the Hollywood actress who pioneered wireless communications in the 1940s?  Hedy Lamarr – a popular movie actress at the time – also invented wireless radio communications to help the USA during World War II.  The work she and her co-inventor George Antheil created was known as “field hopping, spread-spectrum” radio communications granted in 1947 as US Patent 2,292,387.  Her work was originally designed to help the US Navy jam signals of enemy torpedoes.  Practical use and implementation of the invention, though, did not occur until 1962 when the Navy used the technology during a blockade of Cuba.  Ms. Lamarr’s contributions to electronics and related communications were recognized in 1997 by the Electronic Frontier Foundation, about 50 years later. So you can be a famous inventor, but unless you find a way to market or use your idea, fame does not necessarily guarantee financial success.

Other famous inventors have created products that have changed the world and most of our lives, as well as business and financial success for their owners.  For example, the steam engine (James Watt), the printing press (Johannes Gutenberg), the modern light bulb (Thomas Edison), the airplane (Wright Brothers), and other products were created by people who had some measure of fame and success during their lifetimes. Other inventions have been created but were implemented by others.  The barcode was invented by Bernard Silver and one of his students at the Drexel Institute of Technology, granted in 1952.  But, commercialization of the barcode invention required separate creation of tracking and control systems known as UPC codes about 10 years later.

Likewise, many inventions and the people famous for them are cooperative efforts.  The invention of the Internet was a joint undertaking, even with Al Gore’s assistance.  The original design and transmission protocols were developed by Vinton Cerf in 1973 with backing from the U.S. Department of Defense.  Once the specifications were published, it took about 10 years to fully develop what we know today as the World Wide Web, giving us the “www” at the beginning of any website address or URL.  Many times, famous companies support employees who invent and create patented products.  The company in the US that holds the most patents is IBM.  According to recent totals, nearly 3,000 patents are registered to IBM, most in computer design, engineering and manufacture.  Companies and groups of individuals can be famous for their inventions too.  As with the individual inventor, though, for companies it is still true that collective efforts are often required to commercialize an invention by bringing it to market.

Do you have to be famous?  Or, do you have to work with a group of people to make your idea or invention a reality?  The inventor who holds the most U.S. Patents is Japanese inventor, Shunpei Yamakazi with 1,851. Most of his inventions are related to memory chips and LCDs (liquid crystal display).  These are used in famous or familiar TV brands like Samsung, Motorola, General Electric, LG and more.  Even though Yamakazi is not a household name, his inventions and the intellectual property he has created have an impact on millions of households around the world.    In the case of Steve Jobs, yes he’s famous.  And he was a prolific inventor.  Apple Inc., though, would not exist as a successful company without the support and efforts of all the people who work with him and help develop his ideas. To have a viable, marketable idea or invention, you don’t have to be famous or connected with others but it helps.

Patent Trolls

August 9th, 2012

Have you heard of patent trolls? No, it’s not a new animated movie character but rather a real class of businesses and individuals who use today’s patent laws and systems to aggressively acquire significant patents in software, computer and technology areas.  The process starts when a shell company – known as Non-Practicing or Non-Performing Entity or NPE – buys rights to patents or licenses. The NPEs are also called “patent trolls” because they exist only for one reason – to buy patent-protected designs and inventions.

To understand why patent trolls exist, we need to know more about patent law and recent awards.  According to recent U.S. patent office statistics, about 60% of all patents awarded in the last 20 years have been granted for computer software.  When added to other patents granted in computers and communications technology, the total rises to 75%.  So, the NPEs and patent trolls know that these areas are the most active when it comes to acquiring or buying patents or patent rights. These market segments are also made up of some very large companies and corporations – Microsoft, Google, Oracle, Apple, Dell and many others.  Because the market is large and continues to grow, acquiring or purchasing patent protected products and services in these segments can be profitable.

Most patent trolls – and there are close to 400 in the U.S. alone according to Patent Freedom – an organization that tracks these companies and their activities – expect that the patented products they acquire will be popular and useful enough to generate revenue.  Potential conflicts can arise, though, when an NPE purchases a patent or group of patents that the larger companies try to work around.  The NPEs typically will challenge the larger corporations and many times, these conflicts result in lawsuits.

Why would NPEs be successful and why are they called patent trolls? To begin with, software patents in particular, but also many computer-related patents have 3 issues which some observers believe open the door for NPEs.  Many times software patents can be written and approved in vague language.  By contrast, chemical, engineering or drug patents for example must be written with much more concise and defined terms.  Trying to buy a drug patent, and then challenging a major drug maker for patent infringement would be very difficult.  The NPEs have a much easier time of buying or licensing computer and software patents, then challenging large, publicly traded companies because of the vague language used.

Patent TrollsA second factor that contributes is application continuation rules.  According to current patent law, a company or inventor can file patent applications and keep them on file as applications rather than awarded patents. As technology or software changes, these applications can be modified and re-filed.  As an NPE changes its patent applications to adjust for technology changes, that can at times result in additional conflict with larger companies.

Finally, the cost of renewing patents is relatively small compared to their value or worth on the open market. Today a patent can be renewed for approximately $1,000.  To protect their interests, even if a patent troll pays a high amount initially to buy or license a patent, they can renew that patent for a relatively small amount.  Compared to many recent settlements of these patent infringement lawsuits – in the millions of dollars – the cost to renew a patent is trivial.

The patent trolls and NPEs have one advantage that keeps them going in today’s market.  When large companies like Microsoft, Google and many others acquire patents – and most of these large companies have tens of thousands – they know that infringement lawsuits against the other large companies will only be met with return lawsuits.  If Microsoft sues Google for a patent infraction, chances are Google will turn around and sue Microsoft for something similar. To avoid this kind of back and forth in the patent arena, stockpiles of patents are usually seen as a deterrent.  And, unfortunately, the software, computer and technology markets have seen increasing usage of patent stockpiles among most large companies.  For the smaller NPEs, though, who also provide revenue to small company inventors and individuals by purchasing their patents, when conflicts arise larger companies tend to settle rather than start reverse lawsuits. The NPEs typically have few resources and larger companies realize the futility or suing these companies.

Patent trolls do exist, yes. Most of the negativity surrounding the name comes from outside observers who believe that NPEs exist only to sue big corporations. However, like some of the movie trolls you’ve seen recently, there is a good side to these companies as well. They do provide revenue and payments to smaller companies and inventors who might not otherwise be able to realize financial gains from their patented products and services.

Types of Patents

December 28th, 2011

Types of PatentsThere were close to 800,000 patents granted last year around the world, according to the latest government agencies that track the statistics and information about these patents.  The top categories were computer technology, electrical machinery and equipment and telecommunications.  And, digital communications just barely fell out of the top 10 in the latest year, but has been higher in past years among all types of patents.  Medical technology and pharmaceuticals are also in the top 10 industries or market segments around the world with active patent applications and awards.  Historically, at least in the U.S. investments in medical research and pharmaceutical product development have always been at the forefront of patent awards. The latest data suggest that this trend continues.  Patents and inventions tend to follow the most popular business and economic trends. Or it may be the other way around. The inventions and innovations included in the patented products help to spur growth in these key areas.

What types of patents are included in these latest statistics?  If you have a new idea or invent something, what kind of patent should you apply for? The U.S. Patent and Trade Office (PTO) patent applications fall into three large categories or types.

Utility Patents

First, there is what’s known as a Utility Patent.  This type of patent is generally issued for the invention of a new and useful process, machine, manufacture, or composition of matter. Patent applications can also be files for a new and useful improvement on an existing process.  When granted, these types of patents permit its owners to exclude others from making, using, or selling the invention for a period of up to twenty years from the date of patent application filing.  Continued patent protection for that period is contingent upon payment of maintenance fees to the PTO.  Approximately 90% of the patent documents issued by the PTO in recent years have been utility patents, also referred to as “patents for invention.”

Design Patents

The second group is called Design Patents.  These are issued for a new, original, and ornamental design for an article of manufacture.  If you design a new way to put together an artificial Christmas tree, for example, you can apply for a patent on that design.  Similar to Utility Patents, the Design Patent permits its owner to exclude others from making, using, or selling the design.  But that protection on the design is for a period of fourteen years rather than the 20 years with a Utility Patent.  Another key difference is that Design patents are not subject to the payment of maintenance fees.

Plant Patents

The third large group is called Plant Patents.  These are issued for new and distinct, invented or discovered asexually reproduced plants including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state.  This patent permits its owner to exclude others from making, using, or selling the plant for a period of up to twenty years from the date of patent application filing.  And, like a Utility Patent, Plant Patents are not subject to the payment of maintenance fees.  Basically, the Plant Patents are the alternative used by growers, plant enthusiasts, and others instead of a Utility Patent. The concept is similar, but Plant Patents apply to unique and distinct plants rather than products or services.

Other Types of Patents

Outside of these three main types of patents, the PTO also issues or awards patents for a few other reasons, basically to correct errors or offer inventors more limited protections.  The Reissue Patent is issued to correct an error in an already issued utility, design, or plant patent.  Once awarded, it does not affect the period of protection offered by the original patent based on the original date of issue.  There is also what’s known as a Defensive Publication (DEF) or what is now known as a Statutory Invention Registration (SIR) issued by the PTO.  These – and the DEF has been phased out or replaced by the SIR – offer more limited protection as inventors and innovators discover or create new ideas and products. These last two are intended to be defensive in nature and provide a way for an inventor to prevent others from using or patenting the same idea, design or plant.

Provisional Patents

In addition to these key types of patents, and the market segments where they are most important, we are all familiar with the term “patent pending”.  The PTO grants patent pending status to an invention, design or new plant when a provisional application is filed.  Basically, the inventor or creator of the new product or idea submits an application to the PTO that temporarily prohibits someone else from using the idea.  Once the provisional application is submitted, the invention can legally be labeled as “patent pending”.  While this does not offer the same level of protection as an actual patent – only one person can be awarded a patent for an invention – the process does discourage others from trying to copy the idea.  Patent pending status is intended to protect inventors and their inventions while a more formal patent application process is being completed.

Summary

There are three main categorical types of patents. You will need to consult with a patent attorney to determine the best type of patent to file for your invention. Not only does it take time to create and invent and be innovative, but it takes time to file all the right patent documents as well – for all types of patents.

What Is A Patent?

December 27th, 2011

What is a PatentHow good are your ideas and inventions? Can someone else do the same thing? The principle behind a patent is to protect your rights to make, use or sell what you have created or invented. Without that protection or patent, your ideas and inventions could be copied by anyone. The formal definition of a patent is a form of intellectual property that confers on the owner the exclusive rights to manufacture, sell or use that property for a specified period of time. If your ideas and inventions are good enough and unique, then you can be granted a patent to protect them.

A Patent is Real Property

What is the intellectual property included in a patent and how do you know if you have any? One way to think about intellectual property is to consider what is meant by “real property”. In the case of physical assets or real estate, there is something tangible (you and I can see it, touch it or otherwise know that it exists) that someone owns. Property rights and the benefits of ownership are well-known and established through laws and courts. Your sole right to ownership and the ability to use that property is protected. You can’t take or use someone else’s physical property or real estate without their knowledge or without compensating them in some way.

The same principle applies to intellectual property. Your ideas and inventions can be thought of as property that you own and have the rights to use. It’s intellectual property as distinguished from physical property only because we can’t see it or touch it. Nevertheless, intellectual property does exist. Along the same lines as physical property then, once it’s protected you can’t take or use someone else’s intellectual property without their knowledge or without compensating them in some way. Patents are designed to identify and protect your intellectual property.

Patents Require Substantial Documentation

Patents, because they are used as a form of legal protection, require detail and supporting documentation. When you create a new product or invent a new way to do something, in order for a patent to be granted, you have to show what you have done. In order for the government authorities – who grant or award patents – to evaluate your case, there must be enough evidence to show that your idea or invention qualifies as intellectual property. Without the details and a description of design elements or how the invention works, patents are typically not awarded.

Patents Make Your Information Public

How comfortable would you be about publicly sharing all of the details about your new idea? Most of us would not want to provide that information without some guarantee that others would not be able to use the information. So, patents basically grant to the inventor or creator the right to “exclude others” from using or the same thing you have. Patents do not include rights to use the idea or invention, but rather are intended to protect your rights of ownership. Like any other property rights, patents may be sold, licensed, given away, transferred or simply abandoned – just like any physical piece of property. The patent grants the inventor these limited property rights for a specific term, usually 20 years from the date of the patent application or submission.

Patent Definition

November 21st, 2011

Patent Definition

What is a patent and what will one do for me? Patents have a long history and are designed to protect the rights of inventors, new product creators and innovators. Basically a patent can be defined as “a grant made by a government that confers upon the creator of an invention the sole right to make, use, and sell that invention for a set period of time”. Patents are granted by most governments around the world today in order to recognize the value of new inventions or creations and protect the ability of the inventor to profit from his or her work.

The 3 Types of Patents

There are 3 types of patents in the United States – utility patents, design patents and plant patents. Utility patents are awarded for new products, inventions and things of “material substance” that have been created. Design patents, on the other hand, are awarded for unique and newly creative designs, just as the name suggests. Finally plant patents – which are not issued as often as the other two types – are awarded for new plant breeds, creative new plant formats and other plant-based creations. All 3 types of patents have the same intent – protect the rights of the inventor, designer or plant breeder.

U.S. Patent Office

A patent is a government award that gives an inventor the right to exclude others from making the same thing. According to the U.S. Patent and Trade Office, a patent is a grant of a property right with a typical term of 20 years given to the inventor or creator of the new idea or product. Importantly, patents granted by the U.S. government are only enforceable in the United States, U.S. Territories, and U.S. Possessions. Outside of the U.S., an inventor would be required to apply for patents from foreign governments to protect their inventions outside the U.S.

The right conferred by the patent grant is, in the language of the statute and of the grant itself, “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. What is granted is not necessarily the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. Once a patent is issued, the patentee must enforce the patent without aid of the USPTO.

Does Not Guarantee Success

In other words, a patent is a protection but it does not guarantee marketplace success. Patents are designed to protect your interests and property rights, nothing more. They do give you the right to exclude others from making or selling the exact same thing you have invented. However, in order to protect your rights as well as to make, use, sell or import your invention, there are additional steps required. Basically the patent is like a certificate of ownership. If you own a home or piece of land and you hold the property deed, all that piece of paper says is that you are the owner. There are no other rights or privileges that go along with ownership. As the owner or patent holder, though, you do have the right to exclude others but enforcement requires legal representation and support outside of the patent application and award system.

How Long are they Good For?

Patents are typically granted for a 20 year period. From the date granted, the patent grants the inventor these same rights – to exclude others – for the next 20 years. In the pharmaceutical industry, many times a patent award results in a market monopoly on a specific drug formulation. The company is entitled to prevent other companies from making the same drug with the same ingredients unless they have permission or have negotiated an agreement to do so. Once the patent expires, generic equivalents typically enter the marketplace and many times the original patent holder will convert the patented formula to an over-the-counter offering where a prescription is not needed. The original patent protects the rights of the inventor or company-sponsored inventions during the first 20 years.

As mentioned, though, a patent does not automatically give the inventor the right to make or sell the new products. If your invention, for example, uses a patented product or component as part of your creation you would need to then have permission or rights to use that product. Without those agreements or rights, your invention would be subject to patent infringement investigations or lawsuits. Patents are granted to protect our rights as inventors, but the scope of that protection is limited to exclusionary rights, not necessarily monopoly market power.

Eric Corl is the founder of IdeaBuyer.com which helps inventors obtain, license, and sell patents.

Patent Infringement

March 9th, 2011

Patent Infringement

What is Patent Infringement?


Patent infringement is when a company or individual uses, manufactures, imports, sells, or offers a patent protected invention for sale without a license from the patent holder.  Patent infringement liability in the United States also extends to those who knowingly induce others to infringe.


Types of Patent Infringement:

1. Direct Patent Infringement

Direct patent infringement is when a company or individual produces, sells, or imports a product or technology that is protected by a patent. Direct patent infringement is often times accidental but carries high costs and damages.

2. Indirect Patent Infringement

Indirect patent infringement often involves a level of deception and involves either induced patent infringement or contributory infringement which we will describe next.  This type of infringement typically relates to companies or individuals that knowingly aid a third party in the infringement or sell components they know would only be used in the case of infringement.

3. Contributory Patent Infringement

Contributory patent infringement occurs when a company or individual knowingly sells components that are only reasonably used for a patented invention.

4.Induced Patent Infringement

Induced patent infringement occurs when a company or individual license a previously patented invention or sell instructions on how to construct a patented invention. This type of infringement often leads to direct infringement by the third party and is a case where the ‘inducer’ knowingly aided in the infringement without directly infringing on the patent themselves.


Patent Infringement Cost


Patent infringement can end up costing a patent holder a tremendous amount of money in lost opportunity in the marketplace and carries heavy penalties for infringers. Due to the complexity of patent infringement legal cases, the cost of going to court on patent infringement is often very costly to both parties in the short term.


How to Sue for Patent Infringement Damages


To sue for patent infringement damages, a patent holder must be able to prove patent infringement by a company or individual and be able to directly relate that infringement to damages they incurred. These damages can be calculated as lost investment, market opportunity, market growth, company growth, etc. Often, patent damages are calculated on a variety of factors including a factor of the money made by the infringing party.


Patent Infringement Examples


Every day there are patent infringement lawsuits that are filed and settled. Some of the best patent infringement examples are those that have been in the mainstream media over the past several months. Below, I have listed several examples of patent infringement.

  1. Microsoft infringement on i4i’s patented technology.

In 2010, the United States Court of Appeals for the Federal Circuit sided with i4i in its patent lawsuit against Microsoft for infringing on a patent in its versions of Microsoft 2003 and 2007. The court awarded i4i Ltd more than $290 million dollars in damages as well as an injunction against Microsoft preventing it from selling the versions of its infringing software. Microsoft was then forced to pay i4i royalties to continue sales of the software.

  1. Jonathan Benson infringement on Benchmade’s Patents and Trademark

In 2011, the United States District Court of Oregon issued a final judgment June 7th ruling that Benson had in fact infringed on their patents and trademark and enjoined the company to stop immediately. It is not clear as to the monetary damages Benchmade was awarded.


Patent Infringement Trolls

There are many patent infringement attorneys and groups that are referred to as trolls. These are companies that license, purchase, or represent patent holders specifically for the purpose of patent litigation against infringers. The practice has been noticeably profitable over the past decade in which most cases take place in the District Court of the Eastern District of Texas.

What to do if someone is infringing on my patent?

If an individual or company is infringing on your patent, it is important to seek patent attorney representation immediately. While patent infringement litigations costs are often high, do not let this deter you. Many attorneys will take patent infringement cases on ‘contingency’ due to their high payouts. This means that in many cases you can attain representation without funding the case yourself. If you are interested in speaking with a patent attorney with experience in patent litigation, you may call us at 832-683-1527 for a free consultation.

Sell an Invention

February 27th, 2011

Sell an Invention

How to Sell an Invention – 10 Steps


This article discusses how to sell an invention in ten steps.
1. Conduct Market Research
– Substitute Products
– Retail Price Spectrums
– Market Growth
– Realistic Distribution Channels
– Average Time to Market for Similar Products/Inventions
– Recent Success Stories in the Market
– Analyze the Potential Market Demand (Be Realistic)

2. Know Your Product
– The invention should be engineered.
– You should have a functioning prototype or proof of concept.
– You need to know how much it will cost to be manufactured (Wait for formal quotes until you are protected).
– You need to know what your anticipated margins are.

3. Get Feedback from Those You Trust – Not Your Family and Friends.
– Check out SBDC or SCORE.gov to find local mentors and coaches that the government pays for.
– Vet your idea out with mentors, fellow inventors, or trusted entrepreneurs.
– Do not get offended by critical comments or too flattered by positive comments. You can learn a lot more from critical comments than positive ones. These are often issues that customers may have and issues that friends and family might not tell you.
– It is very likely that the invention you end up selling will be much different than the one you originally conceived. This is OK.

4. Decide at this stage if it’s worth protecting. Some inventions will not be. If you find out it will be a dud, kill it early.
– Read our article on, “Kill Bad Ideas Quick”, here;http://www.ideabuyer.com/news/kill-bad-ideas-quick/

5. If you decide to continue, protect it with a patent attorney.
– We offer discount patent services to our members. If you would like to inquire, contact us via email at contactus@IdeaBuyer.com or by phone; 832-683-1527.

6. Put Together a Business Case
– How will your product idea benefit those who help you?
– How will it fit into their current product spread?
– How do you propose you will work together? What is your proposal for a working relationship?

7. Prepare Your Materials in a Professional Manner
– Color printed, bound.
– Professional Power Point
– Professional Website
– Deal Profile.
– Proposal Outline.

8. Know Your Audience
– Research the companies you feel would be interested.
– Identify specific contacts within those companies.
– Prepare for your calls.
– Be polite and considerate of others time.
– Keep your pitch short and ask if  you can send additional information.
– Accept feedback positively.

9. Be Prepared to Make or Accept an Offer
– Know what you are looking for in regards to a licensing %.
– Know what terms you would like in the agreement to protect yourself.
– Be prepared to accept or reject exclusivity.
– Don’t be greedy. Think about the BIG picture.

10. Repeat Steps 8 & 9 for Additional Companies.

Eric Corl is the founder and President of Idea Buyer LLC, an Ohio Limited Liability Company. Idea Buyer LLC runs and manages http://www.IdeaBuyer.com – The Online Marketplace for Intellectual Property. You can email Eric directly at EricCorl@IdeaBuyer.com. If you have questions about bringing your product to market, feel free to ask us.