Tuesday, August 30, 2005

The Ethics of Infringment

The Ethics of Infringement

Recently, I was visiting the blog of a law student/patent agent/soon to be attorney that Kurt and I know. He wrote an entry in response to a comment he received from one of his articles concerning a MythTV project of his (from what we could gather MythTV is somewhat similar DVR system to TiVo or Replay – details can be found at http://www.mythtv.org/ ). The comment asked whether he was concerned about whether or not he was concerned that he might be infringing any patents held by TiVo or any other companies concerning the technology. His response can be viewed

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Sunday, August 28, 2005

So you want to write your own patent application!

Can I prepare the patent application myself? This seems to be a very common question lately among prospective clients. I have addressed this issue in my FAQ page on the firm’s website, but I believe this question is deserving of additional consideration here.

First, let us start with a common misconception concerning patent applications: many people are under the false belief that a patent application is a form that is merely filled out and filed. Nothing could be further from the truth. There is no standard form that can be filled out with relative ease. Rather, a patent application is a multi-page written legal document that on average for a simple invention approaches or exceeds 5,000 words in length. The content of this document in whole or in part determines the scope of protection afforded the patentee, the strength of the patent, and consequently, its value in the marketplace.

Simply, a poorly written patent application, which issues into weak patent, will be easy for a competitor to circumvent without infringing while still taking advantage of the advancements and improvements described in your patent. And if the patent is easy to get around, then companies that make products or sell services related to the invention are not going to license it. Further, the patent may provide little or no deterrence effect to those who want to market products and services that will compete with your invention. To summarize: a weak patent resulting from a poorly drafted patent application is often no better than having no patent at all. In fact, it is often worse considering the time and money spent preparing the patent application and shepparding it through the patent office might have been better spent marketing and promoting the product or service.

So how does a poorly prepared patent application relate to an inventor drafting a patent application themselves? Well in my experience in all but a very few exceptions, an inventor drafted patent application and the subsequent patent issuing therefrom is usually poorly prepared and weak respectively. I would guess maybe 1 in 100 is halfway decent and that rare gem is most often prepared by an inventor that has had a significant amount of experience with the patent process. In other words, the inventor probably prepared a number of duds before he/she got it right.

Why are inventor prepared applications so poor? Sometimes the applicant is not a great writer but even very good to excellent writers have a difficult time of it. Why? Because patent applications are written differently from other types of writings. A good patent attorney always considers his/her knowledge and understanding of patent law with each and every word, sentence and paragraph he/she writes. As a good patent attorney becomes more and more experienced, the process becomes more natural and requires less and less of a conscience effort. But the inventor often does not have the knowledge or experience to apply to the effort and therefore will almost invariably make mistakes that effect the patent’s ultimate strength and desirability.

An aside: you notice I tend to use the phrase, “good patent attorney” and not “patent attorney”. This is on purpose. Stay tuned to this blog for future discussions and musings about good versus not-so-good patent attorneys. I wish I could say most are good, but the more and more stuff I see from other attorneys, especially those that deal with primarily with independent inventors and entrepreneurial companies, the more I realize there are a significant percentage of “poor patent attorneys” out there.

I guess an example or two is in order. On my web site I use the example of performing surgery on yourself rather than hiring a doctor. You could very well be more intelligent than your surgeon but I am betting no amount of reading and watching of surgery videos is going to prepare you for removing your own appendix. So you hire a qualified doctor. OK, this example is a bit extreme since surgery is a life and death situation and drafting a patent application generally only has monetary consequences. But if you are building a business around your invention or you are certain it is a million dollar idea that could be easily licensed to a major corporation, don’t you owe it to yourself to do it right? Incidentally, newbie patent attorneys have the same problems as an inventor in writing their first patent applications except perhaps they will have a bit better grounding in the law. Nevertheless, this is why patent attorneys fresh out of law school are closely monitored and their work is closely reviewed by their senior colleagues.

Ok, back to the question posed at the beginning of this now very long entry: can I prepare a patent application myself? You would think after reading this my answer would be a resounding NO! However, I cannot seem to say it. I merely tell a prospective client a shorted recitation of what is written here and send him/her on his/her way. This particular client could be the one in 100, and even if not, there is nothing legally preventing the prospective client from preparing and filing his/her own application. And who knows, maybe they will be back in the future with a new found respect for my craft.

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Friday, August 26, 2005

Control Protect & Leverage PART IV

Finally, the second to the last installment in the series!

And really this is perhaps the most important point of your Intellectual Property. What is the point of controlling it and protecting it if you do not intend to leverage it? Unfortunately, successfully leveraging your IP can be the most difficult of the three. After all, the whole point of IP is to give you or a company to which you have licensed your IP, a competitive advantage over the competition.

First trademarks: They are perhaps the easiest IP to leverage. Just use your marks in commerce to identify the goods and services offered by you or your company. As your products and services become recognizable based on your marks, the value of the marks will increase. While trademarks have the lowest initial intrinsic value among all types of IP, they have potentially the highest value over time. For instance, "Coca Cola" is worth trillions of dollars as a trademark and is often licensed to other companies to generate additional revenue for the company.

For most individuals and small companies, the goal is to make the trademarks identifying your products or services synonymous with quality and value within your market segments. Further, the hope is that eventually your marks will immediately come to mind when someone familiar with the market segments in which you operate thinks about the products or services you provide.

Some pointers to leveraging your marks: (i) always prominently mark your products; (ii) always refer to your product and services by their trademarked names in advertising and other company literature and marketing materials; (iii) always mark your registered marks with an encircled “R” symbol to let others know you have registered the mark federally; (iv) always mark your unregistered marks with a "TM" to let others know you consider the marks your property; (v) avoid using your marks as generic descriptors for your products and services; and (vi) be diligent about enforcing your marks letting those that are using marks that may be confusingly similar with yours that they should cease and desist.

If your mark(s) becomes especially well recognized, you may have other companies approach you about licensing the mark(s) for their products. This is great but you must maintain control of the manner in which the mark(s) are used by others. Typically, trademark licensing agreements will include clauses that give the Licensor the right to ensure that certain quality standards are met concerning any product or service using the licensed mark(s). Failure of the Licensor to maintain and control quality standards can lead to loss of the trademark(s).

Next up: leveraging you patents.

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Wednesday, August 17, 2005

Will My Invention Be Successful?

I am asked that question a lot. The fact of the matter is that I have no better idea than you whether your idea will be successful. If you want an evaluation concerning the market viability of your invention and the chances of success in the marketplace, see a marketing professional.

While those with skill in marketing are much better than your friendly patent attorney at determining you invention's chances of success, don't expect them to be infallible either.

The real difficulty at evaluating inventions and new product ideas was brought home to me on a recent family trip to the local Big Lots store. For those of you not familiar with Big Lots, it sells overstock and clearance merchandise from no name to brand name manufacturers. Much of the merchandise is stuff that never made to mainstream retailers. Many of the merchandise at Big Lots failed in test marketing and the remaining stock was then sold to Big Lots for liquidation.

In the most recent circular, Big Lots is advertising Jolly Rancher soda at a mere $0.37 for a 16oz bottle. Apparently, this idea failed miserably. But you have to realize that big time, high paid marketing and product development types at the Jolly Rancher company as well as their executive bosses must have thought the idea for Jolly Rancher soda pop was a great idea. And they must have thought they would make millions. Instead, the idea failed miserably with the remaining product is currently being liquidated for mere pennies at Big Lots. To be honest, I love Jolly Rancher candy, but the thought of Jolly Rancher soda pop kind of turns my stomach.

There are plenty of other examples at Big Lots. A trip to your local Big Lots might be an educational trip worth taking for the budding inventor and entrepreneur.

So what the moral of the story: success is never guaranteed; determining whether your invention is market worthy is as much a leap of faith as much as anything else; rely on your patent attorney to advise you on the patentability of your invention but not its marketability; the marketplace is a very complex thing and accordingly is very difficult if not impossible to figure out; and perhaps most importantly, you chances of success are fueled more by your belief in your invention and dedication to it then whatever advice your receive from others whether good or bad.

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Thursday, August 04, 2005

The Incestuous Love Triangle of Entity Names, Trade Names and Trade Marks - How to Avoid Being Caught With Your Pants Down (Part III)

In the first two installments of this three part series I introduced a scenario that I have seen time and time again. A client will come into my office holding a cease and desist letter from another company demanding that the potential client immediately cease using their company name in commerce or face a law suit. The potential client is most often upset and truly confused as to why they can’t use the name – after all the state of Colorado said it was OK. The unfortunate situation is due to the interaction of the rules regarding entity/trade names and trademark law. However, there are things you can do to protect yourself to make sure that you will be able to use your name in commerce and prevent others from using the same name.

If you have read the other installments of this article, you may have noted that I refer to trademark rights as a right that may “trump” your right to use a certain name in commerce. This is due to the fact that trademark rights not only authorize you to use the mark in commerce, but also they allow you to exclude others from using the mark as well. For a bit more detailed description of trademarks and the benefits of federal registration, please see our Control Protect & Leverage Part III posting from June 12. For our purposes, I am going to discuss certain aspects of trademark law that are pertinent to our discussion.

Trademark rights arise from an individual or company’s use of a mark to identify their goods and services in commerce. Most commonly, you can think of trademarks as brands, brand names, or product model names. However, company names in certain circumstances may also be trademarked. In trademark law it’s the companies use and the first date that they used the mark that is important. Additionally, you have to continue to use the mark to have rights in it. In general, a mark is most likely to be deemed abandoned if you haven’t used it in the last 3 years.

When we talk about trademarks we always discuss them in the context that they are used. For example, SPAM for processed meat. Incidentally, Hormel Foods, LLC, the maker of SPAM not only has a federally registered trademark for SPAM regarding processed meat, they also have federal registrations for SPAM covering poultry, deviled luncheon meat spread, retail gift shop services, educational and entertainment services, magnets, jewelry, playing cards, pens, pencils, note cubes, mugs/insulated beverage containers, tennis balls, golf balls, money banks, toys and entertainment services, namely participating in automobile races. So far Hormel has 6 separate federal registrations for the word SPAM.

In a broad sense you can lump trademarks into two different categories 1) registered marks and 2) unregistered marks, which are also referred to as common law marks.
Common law marks arise when the mark is associated with goods or services in commerce. A common law mark is identified by the superscript TM which appears after the mark. In general, the protection of a common law mark extends to the areas that it is actually used. Therefore if you are not selling or advertising in a certain area you do not have the right to exclude someone else from using the mark in that area.

Basically, there are two jurisdictions for registered marks: State Marks and Federal Marks. Since trademark rights arise from use and not registration, you do not have to register the marks to be valid – you could rely on common law rights. However, registered marks do receive some extra added benefits over common law marks. If you are selling goods or services in a particular state you may be eligible to register a mark in that state. State marks are governed by the law in that particular state, so each will be different. In general, a lot of state statutes grant protection on a state wide basis regardless of whether you are actually using it just in one city or town or throughout the whole state. If you are selling goods or services in interstate commerce (at a minimum you have to have sales between 2 states) you may be eligible for a federally registered trademark. Federally registered trademarks are nationwide in scope. Therefore your protection applies to the whole nation even if you are just selling goods or services between two states: Colorado and New Mexico for example.

Trademark infringement is judged on a standard that is called “likelihood of confusion”. There are many different factors to determine whether one mark infringes the other, but for ease of discussion it can be boiled down to: whether a reasonable person upon seeing both marks, would conclude that the products or services came from the same individual or company or that the products or services were somehow affiliated with each other. Therefore, the marks need not be exactly the same and they need not be used on the exact same products or services to create a likelihood of confusion. If it is deemed that your use of the mark infringes on another mark you could be forced to stop using the mark and in some cases you could be liable for damages to the other party.

Given the above discussion of trademarks, it should become apparent how another company could come in and prevent you from using your company name. If 1) they have trademark rights that extend to the geographic area that you are selling your goods or services in, and 2) their use predates your use, and 3) if the marks and goods/services are close enough to cause a likelihood of confusion, you could be infringing on their mark.

Given the potential risk to business owners could be very costly, most business owners appreciate some strategies they can take before hand to reduce the chance that someone will come down the road and allege trademark infringement. If you are looking a launching a product or service, seek out a trademark attorney to conduct a clearance search, even if you aren’t planning on registering you trademark immediately. This will help minimize the chance that you will be infringing on some other already existing product or service. Secondly, when forming a new corporation, LLC, partnership or when filing for a trade name, take a quick trip to the United States Patent and Trademark office web site www.uspto.gov to do a search of federally registered trademarks. While this isn’t a foolproof method, it will definitely alert you to clearly obvious situations where the mark might already be taken by someone with a nation wide scope of protection. Lastly, you can prevent others from coming into the market with a name or product name that causes a likelihood of confusion with your products or services by registering your mark either on the state or federal level. State and Federal registrations will pop up on clearance searches and can help in cutting down on infringers. Additionally, state and federal registration can be a good tool in getting infringers to comply with cease and desist letters before having to resort to litigation –as they can show independent 3rd party verification of your right to use the mark (however there are a small number of states where a state registration only indicates a parties “claim to ownership” and does not confer any substantive rights to the mark itself).

While, not everything can be fool proof, business owners can do a lot to help prevent a situation where they have the rug yanked out from underneath them and are forced to change a product, service, or company name years down the line after they have spent substantial time, money and effort establishing name recognition for their business or products. The best rule in business – never get caught with your pants down!

Monday, August 01, 2005

Design or Invention?

Innovation: that is the new name of the game in the corporate world. Old stoic companies, such as GE and Proctor and Gamble, have seen the light: cost cutting and efficiency, although important, will not win the day if the products and services a company offers do not resonate with their consumers. Managers are being given design training. Top MBA schools are rushing to offer design courses and in some cases starting design schools. At least these are the proclamations of the August 1, 2005 BusinessWeek "Get Creative" special report.

What I found most interesting about the series of articles was not what was written but what was not. I did not see a single mention of inventing, inventorship or inventors. Perhaps, this because these are dirty words in the corporate world that conjure up images of the absent minded genius toiling away in his garage or basement amid a bunch of what many of us would call junk. I hate to break it to these guys, but design is just a new fangled word for invention.

The articles emphasize creating and fostering a culture of creativity, but they fail to mention that there are thousands of good ideas available from independent inventors, or should I say independent designers, all across this great land. I wonder when companies are going to wake up and realize the wealth of great ideas and products available to them for mere pennies on the dollar through the independent inventor if they were just willing to take a look. Sadly, however, the age of the independent "designer" has not yet arrived. Many, if not most, larger companies will still not look at inventions developed outside their corporate walls until a patent has been filed. And even then, they rarely actively seek out such new product ideas.

Ponder this: who is likely to come up with the next great consumer product? The 100 or so highly educated designers who are on the payroll of company x or the tens of thousands consumers nationwide that regularly come up with meaningful improvements to products they regularly buy and use? Is a single salaried designer really better than a hundred consumers? You decide, but keep in mind many of those hundred consumers are also highly intelligent and highly creative whether or not they are highly educated as well. Will companies ever realize that their consumers are a great source of new product ideas?

Well, I believe the truth is companies have started to realize the value of the independent inventor. It is the Business Week special report that is a bit dated. GE and PG may be looking inwardly for design ideas just when their competition is beginning to realize the value of looking outwardly to you: the often maligned but resilient independent inventor. Case in point: I have been noticing more and more advertisements in Inventor's Digest Magazine of late from major corporations soliciting new product ideas. I don't recall this being the case only a couple of years ago. In the current issue, Kraco Enterprises, Inc. and Dial Corporation both have advertisements.

Maybe, the dawn of the golden age of the inventor is on the horizon, BUT just don't expect BusinessWeek to herald its coming anytime soon. Anyhow, take a look at the "Get Creative" issue and tell us what you think.

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