Create, Consult, Control
News & commentary on intellectual property issues.
Aug082011 | Steve O'Donnell
My ex-employee is using my customer list and materials!
What, if anything, can you do if an employee takes more than some pens when he leaves and starts calling your customers and using your advertising materials?
Ideally, you’ve thought this through and already have something in your employment contract that addresses these things.
What? You don’t have trade secret language in your contract? You don’t have any intellectual property language in your contract? You don’t have any contract? That’s really not that surprising, such things are usually not considered until a business gets burned. It’s like the saying goes: fool me once, shame on you; fool me twice, shame on me.
First, call your lawyer. If an ex-employee is using your client list, you have to move quickly. If it’s a trade secret (generally something of economic value that isn’t known by the public and that you’ve taken some actions to keep secret) you might be able to get an injunction.
If an ex-employee has taken your advertising materials and designs, and is using them for a competing business, you might have a couple options. It is possible that doing something like this is punishable as an unfair business practice, at least it sounds unfair. A clearer claim might be made for copyright infringement, but copyright is one of the more annoying areas of law to start kicking around in, especially if there isn’t clear ownership of the copyrights and a copyright registration in place. Chances are, if you’ve come across this post, you don’t have either.
What every employer should do if have an employment agreement in place when someone is hired that addresses these things before they happen. Ideally, contracts are also put in place between the employer and whoever designs their marketing materials, so that, if needed, a copyright claim can be more easily made against someone that misappropriates the advertising materials. Many of these issues are state-specific, so you should talk to someone licensed in whatever state you’re in.
This, like pretty much everything, is a “ounce of prevention v. pound of cure” issue. It might not be attractive to hire someone to draft these documents if your business’ greatest goal is making payroll next month, but taking care of these fairly simple things can help you continue to make payroll long after someone leaves.
Sep062010 | Steve O'Donnell
Turning an invention into money
Although there are some people that want patents just to fill up their résumé, most want their invention to become a money making machine, many inventions don’t. How does someone turn an invention into money?
First things first, if you don’t have some sort of protection for your invention or you’re just asking to be ripped off. Patents would be the most obvious route to protect an invention, but copyright, trademark, and trade secrets might also be relevant. This is the time to contact an intellectual property attorney and get an opinion on structuring a protection scheme.
When people call me, one of the first things I ask is what they’re going to do with a patent. Patent’s aren’t cheap or easy to get, and before someone starts throwing money at me I want to have at least some indication that they’re planning ahead and have a shot at recouping their investment. I lose more clients that way than I can care to think about.
First, many people seem to think that once they have a patent that companies will find it and search them out with a briefcase full of cash. I guess that could happen, but it sure doesn’t happen often.
There are basically three or four ways of turning an invention into money. Each has their strengths and weaknesses and which is the best will depend on the specific facts of the invention and the inventor: do it all yourself, license or sell the invention, or troll.
Most first time inventors want to do it all themselves. In other words, they want to start cranking out their widget in their basement, or pay a manufacturer to make it for them, and promote/sell it themselves. There are huge benefits to that. Obviously, all the profit goes to the inventor. However, if the inventor does not have the background or bankroll to commercialize a new product, the chances of success aren’t the best.
Another route is to either assign or license the inventor to an established company. The advantage are that the other company already has the infrastructure to commercialize the invention; on the downside, the inventor will likely only get a small fraction of profits.
If those fail to excite you, trolling has become popular. In a nutshell, what you do is get a patent and sit on it while waiting for someone to infringe it. If that happens, you wait until their product has taken off and then you sue them. It’s not a particularly popular option, and there are grumblings about how Congress might make that a less attractive option economically, but it is still an option.
What makes the most sense for a particular invention and a particular inventor is going to depend on a lot of factors, and it’s never too early in the process to think about these issues.
Call or email me for an individualized analysis of your intellectual property and your options.
Jul072010 | Steve O'Donnell
What happens to patents when a company closes.
A couple days ago someone found this blog by searching for “what happens to a patent when a company goes out of business,” which is surprising, because I don’t recall posting on that. At least it’s less disturbing than the time this blog was found by someone searching for “how to seduce a swan” (I hope they were looking for this.
So, what happens to a business’ patents when the business closes? The answer is pretty close to what you’d hear if you asked “what happens to a business’ copy machine when the business closes?” Patents are property, intellectual property, and even though they differ from physical property in certain ways, in many ways they’re the same.
A closing business can do any number of things with a patent. It could assign or license it to someone, the patent could be part of the company’s assets in a bankruptcy reorganization or liquidation; it could auction it off or dedicate it to the public; the patent could also be left to expire on its own.
The “expiration” is probably what people mean when they ask what happens to patents when the owner goes out of business or dies. For a patent to remain in force, periodic maintenance fees need to be paid to the government. Whether this is for a laudable reason, such as prompting the early public dedication of unused patents or if it’s just another way that the government can extract money from people is a question you can mull over later.
Currently these fees are due at 3.5 years, 7.5 years, and 11.5 years after the patent issues. The cost of these fees increases with each payment. The first maintenance fee is $980, the second is $2480 and the third is $4110 for a large entity and half that for a small entity. I’ve never thought of it before, but those are some strange amounts. If anyone can explain them to me, please leave a comment.
If those fees aren’t paid, the patent expires prematurely. If they are paid, a utility patent will normally expire 20 years after its filing date.
So I guess the answer to the question is closer to that for “what happens to a business’ car when it closes?” Not unlike a car, a patent can be sold, transferred, etc. Also, if a patent is left to languish and isn’t maintained it can be irretrievably lost.
If you’re concerned about a patent, the best thing to do is to have a patent attorney research the patent’s file and determine the best course of action.
Apr202010 | Steve O'Donnell
What I learned at the 2010 Launch Music Conference
It’s been a long time since the last music conference I attended (when I was on the other side of the fence). It’s interesting to see how little has changed over the last 20 or so years, but what can we do to change the things that should change?
I had a table at the 2010 Launch Music Conference last weekend and met a nice group of musicians and promotional professionals (and handed out a lot of brochures). It’s oddly comforting that some things have remained the same over the years, and probably will forever--musicians still wear genital-crushingly tight jeans and spend a disproportionate amount of time on their hair, they still get tattooed and still wear boots. Unfortunately, musicians still get screwed over. I’m not going to convince anyone to spend less time on their hair (and I’d never try) but hopefully I can convince someone that with a little planning, and a little legal help, they can avoid some of the most common headaches they’re likely to run into.
First off, a poor-man’s copyright isn’t worth the postage. Just don’t bother. Copyright registration is relatively inexpensive and quick. Copyright is also one of the few things that can benefit from an economy of scale, i.e., the more tracks you register at once, the less your attorney is probably going to charge you for each registration.
Secondly, about your band’s name, someone’s already using it. Ok, maybe that’s not the case, but you should assume it is, at least until you do some research and make sure that it’s not. Also, even it it’s all yours today, what happens when someone across the country comes up with the same name? What if they get picked up by a label before you, and register the name as their trademark? Do you then have to change your name? The best thing to do is to register a trademark for you band’s name. Maybe it doesn’t make sense right now to spend $1000 or so right now on a federal registration, but a state registration is a good first step, and probably a lot cheaper.
Thirdly, homemade contracts aren’t necessarily better than no contract, and might be worse. On one hand, I guess it shows to that punk isn’t dead, the DIY attitude is still thriving, but the business side of things should be left to the business people. No episode of Behind the Music contains the line "I'm sure glad we never hired a lawyer."
The biggest problem I heard was bands just not getting paid. Whether your agreement is for a flat payment or for a percentage of the gate, a lot of venues don’t like to pay musicians. The best way to avoid this is to have a contract upfront, if possible. It seems a lot of (especially smaller) venues shy away from contracts and think you should just trust them, maybe so they feel better about not paying. If that fails, the natural inclination is to resort to a little violent self-help. Generally, that’s not the best way of doing things and can lead to some other problems, such as not getting booked anywhere but the police station. Something that’s usually pretty simple and straight forward is a District Justice (Small Claims) lawsuit. These suits can be handled for a pretty small filing fee and without a lawyer, although it’s always a good idea to hire a lawyer if you can--some may take your case for a cut of what you win. Small Claims is limited (in PA) to claims under $8000 so if your agreed fee was more than that, you’ll need to file somewhere else.
Lastly, I also learned that some people like to dress as members of the Imperial Fleet and walk around the convention center.
Jun162009 | Steve O'Donnell
Patenting illusions
Remember that “Masked Magician” that showed how a number of illusions were done during a series of specials on Fox a few years ago? He upset a lot of magicians by doing that. Could patenting illusions stop such exposure? Can illusions be patented?
When I was in grade school I had a Marshall Brodine magic kit that I studied tirelessly but eventually lost interest in. Years later, I picked up the magic habit again, and again put it down to chase all the other things that teenage boys chase. Then in graduate school I picked it up again. It was around this time that the Masked Magician made his debut. Fast forward a few years and the time constraints of the practice of law and having two kids has made me put down the hobby again although I do pull out the odd Tenkai palm or card force once in a while.
That aside, are patents a good way of protecting illusions? That depends. A few years ago I probably would have said no for most, but I think that has changed and more magicians should seriously consider patenting their original illusions.
The obvious argument against patenting illusions is that patents are public. That's the deal, you teach the public how to do something and in exchange, you get a temporary monopoly on it. Generally, magicians don't want to share their knowledge with the public at large (at least not until someone buys their instructional DVD). Patent applications are published 18 months after they are filed, so by that time, the cat would be out of the bag. In an attempt to avoid large scale exposure, many simply try to live by or enforce the “Magician's Code,” whereby one doesn't get to freely give away secrets and still be part of the fraternity. Of course, that only works if everyone agrees not to share the information they've obtained from someone else.
The Magician's Code worked fairly well for hundreds of years. Even having books at the public library that freely gave away secrets did not erode the public's general ignorance of how illusions are performed. If anything, it encouraged interested people to join the fraternity and support innovators by buying instructional materials and gaffs.
The internet has changed the game for many industries including the business of magic. Instructional books and DVDs can be found on P2P sites or by downloading a torrent file. This itself is one problem, but a bigger problem might be that it's too easy to find a secret these days. If you can describe a trick, you can probably find an explanation online. If not, one of your Facebook friends or twitter followers will probably tell you how it's done.
A patent won't change that, but the disclosure required to get a patent doesn't matter anymore since the information is going to be available online shortly after the trick is first sold if not earlier.
How would patent protection work? That's for tomorrow.
Jun042009 | Steve O'Donnell
The value of a patent application itself
In an earlier post I noted that there is a competitive advantage in the application itself, even if a patent never issues or if the final patent is so narrow that it can be easily designed around. What is this advantage and how can it be used to benefit your business?
The first advantage is somewhat tangential to the application. An application or narrow patent will count towards your business' intangible assets (assets that aren't. . . ahem. . . tangible, things that can't be touched). Increasing a business' assets will make it more attractive to lenders or investors, which in turn can mean increased capital available to take on the competition.
The other advantage is that is puts the competition on notice that copying the invention may be foolish. After an application is filed, the patentee has the right, under 35 U.S.C. § 292 to mark a product as “patent pending” or similar. This by itself alerts potential infringers that the product might be later patented, and they could face an infringement lawsuit if they copy the product. Also, because applications are held in confidence for the first 18 months after they are filed, the competitor has no way of finding out what the subject matter of the application is.
Consider you invent a gadget and, after consulting with your patent attorney, decide to pursue a patent on one small aspect of it, after filing, you can use mark it as “patent pending.” A competitor wants to copy it, but has no way of finding out what the application covers or its likelihood of issuing. Now, the decision to copy becomes more complicated because of the uncertainty and the possibility of being hit with an infringement lawsuit.
This same type of “persuasive protection” comes up again when the application is published 18 months after filing. Here, as was the case with the “square appliances” application, possible infringers have a better idea what the patentee is trying to protect, but still no idea if the patent will eventually issue or exactly what it might cover. Additionally, the possible infringer should also realize that there might be other related patent applications haven't been published yet (as can happen with a continuation application).
In the case where a patent has to be very narrow in order to get past the examiner, this still has value beyond the legal monopoly it grants the patentee. Possible infringers probably don't have the patent background to analyze the patent and discern what it covers, so they'll need to have their lawyers work on it and draft an infringement opinion. Depending on the complexity of the patent, even if it is rather narrow, these opinions can quickly turn into tens of thousands of dollars. That might be enough to either dissuade the possible infringer or bring them to the table for a possible license.
May132009 | Steve O'Donnell
Are square appliances patentable?
Would you like a square toaster that was the same height as your square tv? Sure, we all would. That is the American Dream after all. James Dyson (the vacuum cleaner designer) wants to patent that. What is maybe more interesting to note is that even if the patent doesn't issue, the application itself gives some competitive advantage to the applicant.
US Patent application 20090095729, “Domestic Equipment Grouping” was filed in September of 2008 and recently published 18 months after filing as required by the American Inventors Protection Act of 1999 (Public Law 106-113; Manual of Patent Examination Procedure § 1120). Since the patent is still pending, we can't be sure that it will issue in the form that we can see now, or really, if it will issue at all. That question isn't so important for the purposes of this post. Rather, I want to point out again how ideas that most people wouldn't think of as inventions may still be patentable. For a related post, see this.
The abstract of the patent describes a group of domestic appliances that all have roughly the same dimensions and are generally cuboid. The useful advantage to this system is that the user can put the appliances together in a way that minimizes wasted space.
Is that patentable? I don't know. We'll have to wait to see what the examiner thinks. Is it a good idea? I think it is. I can see a practical and aesthetic advantage to having appliances of substantially the same dimensions lined on the counter. It isn't a terribly complicated idea and would be extremely easy for someone else to infringe. In fact, I would bet that if it sells at all, that there will be other companies more than willing to make their own appliance blocks.
By filing an patent application, Dyson Technology has done two things that will keep competitors out of the business of appliance blocks. The first is obvious, the patent might issue and if it does they'll have a legal right to keep infringers out of the marketplace. The second is a little more subtle: a patent might issue, and competitors know that.
I realize that doesn't sound very different, but with this publication, Dyson's competitors know that there is a patent pending and what it might cover. Dyson is therefore able to manufacture and sell their appliance blocks and those that might copy the subject matter know they could be left holding the bag if a patent issues. Under 35 U.S.C. § 154, infringers can be made to pay royalties for articles sold between the publication of an application and issuance of a patent. Also, if the patent issues, any infringing stock on hand when the patent issues would likely be worthless since Dyson could prevent it from being sold. If someone is tempted to infringe, they likely won't because of the risk that the patent will issue.
I hope you see that there are really two related competitive advantages to patents, one coming from having the patent actually issue, and another coming from the threat of possible issue. More on the advantage inherent in the application itself later.
*UPDATED* My post on The value of a patent application itself is here.
May082009 | Steve O'Donnell
Choosing a trademark
A business' identity is likely its most important asset. It embodies all of the business' accumulated goodwill and assures purchasers that new products are of the same high quality as other products sold by the business. Unfortunately, if you don't plan accordingly, you might not be able to protect your brand, or worse yet, lose money over a bad decision.
A common life of a brand name begins when the business owner first thinks of it. Sometimes it's clever, often it is <ahem> less clever. The owner then starts using the name on everything, often marking it with a trademark symbol, next comes a business bank account and an accountant. The accountant, maybe working with a business lawyer, maybe not, files the appropriate paperwork with the department of state to register the business. Any required licensing is obtained and there is a grand opening. After the initial rush of things that most obviously have to be done, comes the consideration of other things, like brand identity, that often get put off until too late.
One situation you don't want to face with your business is finding out that someone already has a trademark on the name you're using and that the money you've spend on logo/web design, business cards, stationary, signage and advertising would have been better spent building a nice, warm fire. If that's not bad enough, if you're using a name that someone else has registered, you might find yourself on the receiving end of an infringement lawsuit. Neither is good for a new business' bottom line and can fairly easily be avoided for a fraction of what it will cost to clean up a mess.
When I'm working with entrepreneurs on their startup companies I recommend that they select creative trademarks, I prefer to see marks that have no relation to the products or services that are being protected. The rationale for that is simple, if the mark has no obvious connection to the product then the chances of someone else already using it is slim. I also like to see marks that are nonsense. That further increases the chance of the mark being unique and it also helps with the chance of getting a good domain name as well as a few variations on the domain. Also, the more abstract a trademark is (as opposed to it being more descriptive of the goods), the stronger the trademark will be.
One of the first thing I suggest to people is that they find out if the domain they would like is available. If it is, great, register it. If it isn't, then the question is if the business will be adequately served with some strained variant of the desired URL. If “[business name]” isn't available will “[business name][state]” or “[business name]'online'” be adequate? The answer to that depends, to some extent, on what the plans are for the business and how much internet marketing the business requires.
I prefer to get the domain name first because there are a number of businesses in the business of grabbing domains and reselling them to someone that will actually use them. For that reason, type the URL you want into your browser's URL bar and DON'T use a registrar's search to find if it is available. Also, since the internet is such a pervasive marketing tool, if the proposed mark hasn't found its way into a URL, the chances of it being successfully cleared are probably pretty good.
Once the URL is purchased then comes the actual trademark search. What steps your attorney needs to do differs on whether you need a state or federal trademark as well as on other considerations. If you have no plans of doing any business across state lines, then a state search might be all you need. If you plan to offer your wares across the country, then a federal registration is more useful. The internet has enabled just about everyone to operate in national and international commerce, so federal registrations are becoming more prevalent then the were a decade or two ago.
Once the trademark search is done, and your name is “cleared,” get a trademark application on file and start using it as soon as you can. If things go well, you'll have clear ownership of your trademark all across the country and your brand's reputation will be secure.
The best way to ensure that your brand is really yours is to engage a trademark attorney as soon in your business planning as feasible.
Of course, things don't always go according to plan, and sometime. . . too often, a business will invest in branding itself and start operations without considering that they might be stepping on someone else's toes. Also, there is a possibility that a search will miss something, after all it is impossible to prove a negative. Thankfully, that doesn't necessarily mean that all is lost, but ways of working through that will have to wait for a another post on another day.
May012009 | Steve O'Donnell
Apple seeking to patent volume controls for browser windows
A recent publication from the patent office gives some insight into what might be coming in Safari and again demonstrates Apple's aggressive patenting scheme.
In November 2007, Apple filed a patent application entitled Web Browser Audio Controls. That application claims priority to a provisional application filed the month before. The application is still pending, but it was published 18 months after filing as required by the American Inventors Protection Act of 1999 (Public Law 106-113; Manual of Patent Examination Procedure § 1120). Since the patent is still pending, we can't be sure that it will issue in the form that we can see now, or really, if it will issue a tall. That question isn't so important for the purposes of this post. Rather, I want to point out again how savvy Apple is about protecting their intellectual properties.
As I mentioned earlier, the definition of patentable invention encompasses more than what most people realize. In the case of Apple's browser volume control publication 20090106657, Apple is seeking a patent covering volume controls embedded in individual browser windows and volume preferences for individual sites. The underlying idea is to be able to set volume for each window and to save preferences. For example, you could set your browser so that new sites opened at a very low volume, but your favorite streaming audio site could always open at a high volume. Also, interestingly, the volume controls aren't necessarily wedded to Safari so the eventual implementation might be something like a multi-browser plug-in or part of the OS.
Of note, again, is that there is no code in the patent application. Actually making and using the subject matter is left to a programmer.
It is a good idea. I wish I had thought of it. If you had this idea, would you have realized what you have, that it could be patented and possibly turned into a revenue stream? What have you thought of but disregarded because you weren't sure how to build a prototype? Don't let that stand in your way.
Apr292009 | Steve O'Donnell
What does it cost to get a patent?
That is the first question most first time inventors ask and the answer depends on a number of factors.
In trying to budget for a patent prosecution, the inventor and the prosecuting attorney need to estimate the fees that the patent office will require and what legal fees the attorney will require. The patent office fees can be found on the PTO's site here (effective May 1, 2009). The patent office is, of course, a governmental body and, like all other government bodies, feeds itself off of fees. Over the course of a utility patent's life, between the filing fee, examination fee, search fee, issue fee and maintenance fees, one can expect to pay over $10,000 to the patent office. For “small entities,” essentially independent inventors and small businesses, those fees, for the most part, are halved. Those fees also don't all have to be paid up front. The issue fee isn't due until the patent is ready to issue and maintenance fees are due at 3.5, 7.5 and 11.5 years after issuance. For a qualifying “small entity,” the upfront fees can be under $500.
Other than that, there are the legal fees that your attorney will require. Those can vary greatly depending on the subject matter of the patent. Those can range from a few thousand for a simple invention to well over $20,000 for a very complex invention.
The legal fees will also vary depending on the attorney you hire. A solo practitioner or small firm will have less overhead than a large firm paying a number of employees and maintaining an office occupying a few floors of prime real estate.
The effective cost of obtaining a patent will also depend on your tax situation.
Another thing to consider is the cost of not obtaining a patent. Without a patent, your invention could be poached by another to make money off of your hard work.
Consulting a patent attorney about protecting your inventions, as early as possible, is the best way of protecting yourself.
Recent Posts
- Does a twitter follow have a value? What does this mean for RT contests?
- XXX Domains. Should you care?
- Steve Jobs, 1955-2011
- Who doesn’t like free porn?
- My ex-employee is using my customer list and materials!
- Can I get sued for this?
- A painless trademark dispute
- DC vs Batmobile custom car seller
- The Days of Turkey Roll
- Steveodonnell.com, now with fewer penises
Comments
Post has no comments.