A Small-Business Guide to Intellectual Property

[neverfastenough]

http://www.nytimes.com/2009/08/06/business/smallbusiness/06guide.html?_r=1&8dpc

The two most precious resources for any small-business owner are time and money. That’s why when the subject of intellectual property comes up, many owners run in the other direction. They see images of expensive lawyers and use that as an excuse to ignore the topic, reasoning that it is a problem for big companies to worry about.

The trouble is, with the rise of competition through the Internet and on the global market, understanding intellectual property is more critical than ever for small-business owners. Let’s explore some of the common fallacies:

1. For small-business owners, it’s not worth the time or effort to secure intellectual property rights.

Daniel Lubetzky, chief executive of New York City-based Kind Snacks, had high hopes when he and his company attended the Natural Products Expo West in Anaheim, Calif., in March. And who could blame him, since his Kind Plus bars had been named the best new product at the Natural Products Expo East last October?

But it didn’t take long before Mr. Lubetzky knew something had gone wrong: He kept hearing how one of his competitors had copied the packaging, look and feel of his bars.

Fortunately for Mr. Lubetzky, he had secured crucial components of intellectual property like trademarks, trade dress (the look and feel of a product) and Web addresses after founding his company. Unlike a patent, which can cost up to $25,000 to secure, trademarks and Web addresses can be obtained relatively cheaply and without the aid of a lawyer.

With the legal documentation to back up his intellectual property rights, Mr. Lubetzky sent the offending company a cease-and-desist letter, which achieved the desired result. “Too many entrepreneurs forget there is more to I.P. than just patents,†said Mr. Lubetzky, who happens to be a lawyer.

2. Once I get a trademark, my brand is safe.

It may be. But consider what happened to Tracey Deschaine, who runs a restaurant called Dixie Picnic in Ocean City, N.J.

When Ms. Deschaine opened her business in 2006, she secured trademarks on her business name and logo and on the name of her signature item, “upcakes,†which are upside-down frosted cupcakes. The problem, she says, was that even though she had obtained the trademarks, someone monitoring the activity on the United States Patent and Trademark Office’s Web site had spotted her application and secured upcakes.com as the Web address, or U.R.L., before she could.

“I had no idea that even though I have a trademark, someone else could just go register the U.R.L.,†she said. “I wish I had planned ahead and bought the site before I did that.â€

3. Having a patent gives me the right to produce something.

This is a very fundamental misunderstanding. Actually, what a patent does is give you the right to prevent someone else from producing what your patent covers. “Having a strong I.P. position helps ensure that other people pay you for your innovation like they would a toll on a road,†Mr. Kocher said.

But even if you do have a patent, there’s no guarantee that someone won’t try to get around it. There’s also no guarantee that you will win if you fight that person. But if you have your I.P. ducks in a row and a commitment to do whatever you can to defend those rights, you do have a fighting chance — even in a fight against a much larger company.

Consider the example of Cryptography Research, a 20-employee technology firm in San Francisco that specializes in data security. Beginning in 2004, the company made the decision to pursue litigation against the credit card giant Visa, which Cryptography asserted was infringing on its patents covering smart cards. To pursue the case against Visa, however, Cryptography’s founder, Paul Kocher, knew he needed a serious war chest in addition to his patent portfolio.

That’s why he decided to sell off another piece of his business, patents covering technology that protects Blu-ray discs from piracy, to Macrovision, which is now known as Rovi, in 2007 for $45 million. “All of a sudden we became a formidable opponent for someone who thought we couldn’t fight,†Mr. Kocher said. In the end, the gamble paid off, as the two companies settled out of court, with Visa’s agreeing to license the technology from Cryptography.

4. If I have a patent or trademark in the United States, I don’t need to worry about the rest of the world.

It depends on your business model. Intellectual property rights, which also include country-specific U.R.L.’s, need to be obtained country by country, some of which protect them better than others. The cost can vary, too.

In Japan, for example, it is notoriously expensive to acquire patents. In addition, the annual fees required to maintain the patents there are often prohibitively expensive for small businesses, said Gary Johnson, chief executive of Blue Spark Technologies, a manufacturer based in West Lake, Ohio, that makes small, flexible batteries used in things like radio frequency identification tags.

“What we have done is to develop a strategy to go after I.P. protection in a limited number of countries that we think we are most likely to sell or manufacture in, like the U.S. and China,†he said. “A lot of the choice comes down to what your business plan tells you.†To decide what your international I.P. strategy should be, consult a lawyer and conduct some cost-benefit analysis to see if expanding your I.P. rights makes sense.

5. People who collect patents but don’t actually make anything are “patent trolls,†parasites who can make money only by filing lawsuits against real businesses.

The term “patent troll†was coined in the wake of the epic lawsuit fought between NTP, a small holding company, and Research in Motion, which makes the hugely popular BlackBerry. The focal point of the dispute was a patent for wireless e-mail delivery held by NTP — something that R.I.M. eventually would pay millions of dollars to license. But what most people remember about the story is the lawsuits and the notion that NTP was somehow in the wrong for trying to enforce its patent, mostly because it didn’t make any products itself.

But consider that many inventors never set out to build a company, only to partner with someone who would bring their products to life. Thomas Edison, for instance, received more than 1,000 patents — many of which he licensed to other companies. “He created what we might consider the first innovation factory,†says Mark Blaxill a co-founder of 3LP Advisors, an intellectual property consulting company based in Boston.

A more recent example is Trident Design, a company founded by an inventor, Chris Hawker, which patented and then licensed the design for the PowerSquid. Like Edison, Mr. Hawker’s company invents products, builds an intellectual-property wall around them and then licenses them to other companies.

The PowerSquid is now manufactured by a division of Phillips Electroics and sold by a spinoff of Trident called Flexity. “Our entire business model is leveraging our I.P.,†Mr. Hawker said.

 

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[fanocks2003]

IP protection is good, but as the article said: If you don't have business sense, that protection is worth very little.

 

[Jople]

Hi fanocks2003,

I see that you are from Sweden, that's interesting because,
It is my understanding that People in Sweden, like most European
countries, . . you have different Patent Laws for example,
first to file.

I would like to ask of you a question.

To the best of my knowledge, . .

Here in America, if the description of an invention has been published,

whether it is patented or not, another American can not make an application
for the same invention, . . .

If this publication were read by someone in Sweden, or otherwise known and
it was an invention not applied for in Sweden, . . then can someone file to apply

for a patent of that invention ?

 

[Jople]

Quote From Intellectual Property Forum
JimIvey Forum Moderator
Lead Member

" Well, there's no such thing as a provisional patent. At most, you have a provisional application. It only preserves your patent rights to the extent it meets the same legal requirements of a real patent application.


Assuming your application does meet those legal requirements and that your application was filed less than a year ago, you can safely disclose your invention to anyone without endangering your patent rights in most of the industrialized world. However, to further pursue those rights, you'll need more applications."

 

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[HenkHolland]

Hi fanocks2003,

Jople, as you can see in the Status box, Fanocks was banned from this forum.

Any publication anywhere in the world that describes the core of the invention for which you want to file a patent application in Sweden will be considered prior art and will eliminate novelty (and hence patentability) of your invention.

 

[danielhenry31]

If your application does not meet legal requirements and that your application has been filed less than a year ago, you can safely reveal your invention to anyone without endangering your patent rights in most industrialized countries. But to pursue these rights, you need several applications.

 

[Jople]

Jople, as you can see in the Status box, Fanocks was banned from this forum.

Any publication anywhere in the world that describes the core of the invention for which you want to file a patent application in Sweden will be considered prior art and will eliminate novelty (and hence patentability) of your invention.

That may be true, but I don't think so, . . if it is your publication.

 

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[HenkHolland]

That may be true, but I don't think so, . . if it is your publication.

It does not matter whether it is your publication.
Once it has been published you cannot file a patent application anymore in Europe, unless you have priority rights based on a patent application somewhere else and you're still within the priority year of that application.

 

[Jople]

It does not matter whether it is your publication.
Once it has been published you cannot file a patent application anymore in Europe, unless you have priority rights based on a patent application somewhere else and you're still within the priority year of that application.

Let me get another view point before answering that, I'm not saying that you
are wrong, but I can say, it is not exactly clear to me, . . .

I am thinking, . .

a public disclosure in the U.S. allows an American to still have the valid right
to file a Provisional Patent, which is a document have a bearing on the filing
date, and therefore holding a precedent over other applications for a period
of one year, after it has been filed and up to a year after the publication,
. . etc.

It seems that you are saying that under, Swedish or European Law, after a
public disclosure anywhere in the world, . .no patent can be applied for by,
. . anyone? or no patent can be applied for by the inventor ?

 

[GoldenEggs]

I used to work as an IP/trademark paralegal. In the US it is first to file the patent. In Europe, it is first publication or presentation. However the attorney I worked for always recommended to his US clients to file a provisional application the day before the presentation or publication.

 

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[Jople]

OK, but concerning HenkHollands Post

It does not matter whether it is your publication.
Once it has been published you cannot file a patent application anymore in Europe, unless you have priority rights based on a patent application somewhere else and you're still within the priority year of that application.

I am thinking this is in controversy,

It would appear that an American Inventor who wants to avoid the cost of foreign patents, need only to publicize his invention, within the 12 month period of allowance,
where he would need to have filed or will file before the lapse of this period.

I am waiting for a reply from Intellectual Law Forum, so I will post later.

Thanks

 

[Jople]

For what it's worth, . . this seems to be in agreement with your reply, Thank you much, . .

International Publication and Application

" In all countries except for the US any publication of an invention will have the effect that a claim to that invention in a later filed application will not be patentable because of lack of novelty. This is called the absolute novelty system: any publication in the world, regardless of the language and the audience, will be deemed to be prior art if it has been publicly available.

It thus does not mean that you can no longer file an application; you may, and it will be published, but it will never lead to a valid claim on that invention. Moreover (and now may be confusing you): in countries that have a so-called registration system (like France, Belgium, the Netherlands) you will get your application stamped and sealed as a patent; but if challenged the courts will deem it invalid for lack of novelty. This is because in those countries no examination system exists: determination of the validity is left to the courts.

I will leave the exact definition when a published document will form prior art in the US to one of the US patent agents and attorneys on this forum."

 

[HenkHolland]

Sorry for not responding.
I have been travelling for almost two weeks. I see you found a reference regarding the European situation with respect to the effect of publication on novelty and hence patentability.

 

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[shane.hood]

I have one. It is called "A field guide to airplanes". Written by M.R. Montgomery and Gerald Foster. It covers aircraft both military and civil and helicopters. It is almost pocket size. I received it as a gift so I have no idea what it would cost.

 

[Jople]

shane.hood, I'm not exactly sure how that relates to the publicity laws and I.P. rights, am I missing your point ?