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March 19, 2014 interview found on WWW.CNCKingdom.com
http://cnckingdom.com/anthony-santangelo-esq-mba-visionary-inventor-entrepreneur-patent-attorney-usa/
Hello John thank you very much for taking the time to interview me.
I really appreciate your interest in my background!
Q1- You have a rather diversified educational background, jumping from your MBA in Marketing to becoming an attorney focused on the fields of business, real estate, admiralty and taxes. What made you want to become a lawyer after studying marketing for so many years?
A. Well John I've always been a compulsive Inventor but I'm also an adult with ADD. I'm very restless intellectually. I need to learn something new every single day. I sort of perpetually am the square peg trying to fit in the round hole.
I like to base important decisions on thorough research and careful reasoning. I knew that I had picked the right career one day when I was working as an intern for a popular judge. During the trial he pointed at a witness and looked at me and said. “Anthony we need to know if that witness is qualified to be an expert here.”
The response to that question was a 46 page typed bench memo which encompassed the law of expert witnesses. It was also a careful review of the particulars of this witnesses education and abilities. Frankly he did not qualify as an expert.
This is the type of careful research, review, analysis and writing that I always wanted to do. I always detested the typical American business persons shoot from the hip attitude about important business decisions.
I would have stayed in business except that I was not good at doing what you need to get ahead. I always found that American business is exactly like the play "How to succeed in business without really trying." If you come from the same alma mater as your boss and you drink the same scotch as your boss and you play a good round of golf with your boss you will advance rapidly through the corporate ranks, otherwise your career might not be so satisfying.
I always attacked every job I ever had as if the business was mine I call this being an intrapreneur. Unfortunately being an intrapreneur in business does not necessarily get you ahead. Regardless of how many new sales or profits you gain for the corporation you might not get promoted.
I am generally not a big fan of the way business is typically conducted in American big businesses. One of the things that I like the least are long ceaseless boring meetings.
Most of the meetings I've been to are the painful, socially awkward type that you would usually see on a sitcom like ‘The office.
At one such meeting they began to discuss a topic that I was an expert in. The topic was generic injectable pharmaceuticals. My Director asked if we should cancel a particular line of products because it was not very profitable. Without an agenda or any background information at all my boss wanted to know if we should shut down one of our factories!
This product line represented about $40 million in sales from a 20,000 square-foot facility running for several shifts and impacted the jobs of hundreds of employees in a town that I had a personal affinity with.
To keep all those people employed and keep that piece of real estate occupied I would continue to run that business even if it was only at breakeven.
Of course that business even at breakeven would use a tremendous amount of ancillary services such as packaging shipping materials and supplies which would benefit other companies.
I personally would be in favor of keeping this piece of our countries productivity running even if it didn't throw off a profit.
I was thinking that if this product line was canceled all those people would lose their jobs the facility would be closed that space in that industrial park would be empty and it would have an negative impact on the town that I liked.
While I was thinking through the particulars of that decision some other wonk spoke up and said "Let's dump it it's a dog." And that's basically how the decision was made.
Afterwards my manager came up to me and said, “Anthony that was in the area of your expertise why didn't you contribute something during that meeting?” I told her that I was thinking through the ramifications of the plant closing before I could give an accurate answer and she told me that next time I should think faster.
Q2- What I find fascinating is that you've had your name attached to over 270 inventions in one form or another, with that wealth of experience, what are some commonalities you've seen with inventors who end-up being successful with their inventions?
A2.
The number one most interesting thing about successful inventors is that they all demonstrate a sometimes irrational belief in their own ability to succeed.
If you think about it for a minute you'll realize that this is exactly the thing that every Inventor must-have. In my experience every single person I speak to about a new invention says or demonstrates the opinion that it's the stupidest thing they ever heard.
Just like in the movie "Big" everybody you tell your idea to will just look at you with a blank face and say "I don't get it."
To get people to even understand what a new idea is you need to give them a good description show them a picture or accurate prototype and then relate to them the market conditions that will satisfy that products commercialization.
This is something that you can't achieve with an elevator pitch. That’s usually not enough to convince a layperson that working on this new thing is not really the mental equivalent of going off the reservation.
Q2 Part 2 Are there some common pitfalls that you've seen as well that could have been avoided?
A2 part 2
Inventors make a lot of mistakes. In fact they probably make more mistakes than they do get things right. The most common mistake that every Inventor makes is inaction. In the patent law there are times when a lack of diligence for just two weeks has lost the person their battle for some patent right.
If you believe that your idea has some benefit you should work on it diligently until it's fleshed out and on the market or where you decide that you no longer want to move forward with it because of financial considerations.
The other big problem in the marketplace are these Inventor marketing companies. It's estimated that inventors will spend between $200-$300 million with these companies and that up to 75% of that money is wasted.
One of the first things I always tell inventors is that, “If it's to be it's up to thee.” You're going have to be the person that has to flesh out your idea and convince other people to raise money, do research and development, bring it to market, whatever. If you delegate that to somebody else that money is probably going to be wasted.
For example why would you pay an invention promotion company let's say $200 or $300 an hour to do research that you could do at your local library on a database with a little help from your research librarian.
Inventors need to do two things to bring their product to market they certainly need to work diligently and they also need to be willing to learn some new things in order to satisfy the requirements of investors and licensees who may be interested in commercializing the product with them.
Q3- How did you feel when the American Patent Office recently changed their rules from first to invent to first to file?
A3.
I think that the system we had worked just fine. I was not in favor of changing patent regulations in such a wholesale manner because the effects cannot be known.
It's just like Obamacare, you're faced with 1000's of pages of legislation and nobody really knows with the final outcome is going to be.
Nowadays though when I speak to inventors I tell him that they have to see the patent system as if they were one of the great gold prospectors in the gold rush of 48. Just imagine two prospectors side-by-side digging in the ground in the mountains and they both pick up a little pebble that looks like it might be gold. What's going to happen next is they are going to have to make a run to the land office to stake a claim and the one that gets there first will get the claim and the other one gets nothing.
People now say that we have to change the patent laws because there are too many cases. This is like saying we should make auto theft a non-crime because we have too many car thieves on trial. If there are disputes between affluent patent holders that is just fine. If we don’t have enough courts and judges that’s a different point. Charge the players a fee to use the system if you want.
Q3 Part 2
Do you think patents are a worthy investment or is that money best used to get a provisional and marketing?
A3 Part 2
I like to get technical when giving business advice. In the financial world they will always form a decision by determining the net present value of the anticipated stream of future cash incomes.
All this really means is that whatever effort you make, you should maximize your monetary benefit. Perhaps it would be more profitable to work at McDonalds then promote the next kitchen widget.
Inventors have to realize that first and foremost they are in the business of monetizing their new thing. All of their decisions should be based on maximizing their personal income from the efforts that they make.
In bringing your product to the market you will swiftly learn what the requirements are for you to succeed. You have to completely satisfy your customer in order to be successful in this world. Unless you're going to self-finance your idea from beginning to end as an inventor your first primary customer is either going to be your investors and business partners or the companies that might license your invention. You have to get to the market before you encounter the public customer.
For example, you may have invented a new product and it's the type of product or industry where all your potential investors and licensees tell you that they won't consider you without a prototype and a issued patent. Your decision is going to be whether or not spend the money on the patent and the prototypes to move forward or to just stop at this point.
On the other hand if your idea is perfect for late-night television the as seen on TV people will consider idea submissions even if there's no intellectual property filed because they know the life of that product is going to be short. Some great ideas may not even be patentable.
Your decision-making has to be driven by business necessity. I don't think that a general response can cover this question.
This is another reason why the old first to invent system was good. If you invented something you could work on it for a while in secret to determine whether or not you should put any more effort or money into it before filing any paperwork.
If someone else invented the same thing later than you it didn't matter if you could still substantiate an earlier invention date.
Now for all intents and purposes a patent filing is an immediate necessity.
Q4- 4- The massive hole, that still exists in the patent system, is that the inventor has to defend and protect their own patent – which can easily cost hundreds of thousands of dollars – and if you don't have the resources, you are basically voiding it as you've allowed somebody to infringe on your patent and you did nothing about it. What are some solutions to this issue? I've had a friend go knee deep with their inventions with companies willing to spend large resources just to see if it will be defended.
A4.
Yes this is one of the glaring problems of our system. I'm hoping that these situations can be adequately solved by patent law firms taking cases of merit on contingency.
There are no perfect solutions however. Unfortunately in a capitalist republic such as we have some amount of cruelty and discomfort is built into the system. For example using eminent domain your town can condemn your house to build a highway or jug handle or new school and there's little you can do about it. If something like this happens to you it's probably best not to perseverate on it.
The answer seems to be something along the lines of get richer faster.
I think the problem is overblown though.
Right now in personal-injury cases nobody goes forward and finances their own case against somebody that injured them. Most plaintiffs use a personal injury attorney who will take a share of the recovery if there is any. This seems to me to be the most likely avenue to resolve these patent infringement claims.
The inventor of the NMR machine Raymond Damadian basically had this happen to him by General Electric. GE continued to develop its own NMR machines and violated his patents. The original inventor expended all of his resources trying to defend his patents. Finally I think it was an intrepid grandchild of his who took up the cause and found a Beltway patent firm who would take the case on a contingency.
The story famously goes that Jack Welsh himself smugly approached Dr. Damadian and handed him an $80 million check to settle the litigation for which he wanted complete rights to the inventor’s entire patent portfolio.
The Inventor tore up the check in his face which completely stunned everybody especially the attorneys.
They went on to win the case which returned them a judgment of just under $130 million and they did not have to give up the rights of their patents to anybody. Other infringing firms such as Siemens quickly settled.
If there's merit in a case it will probably be able to find a firm that's willing to gamble some of their effort against a big payday.
Q5- If you leave your ego at the door, what is the easiest way to avoid getting into increasingly messy legal fights with business partners? For instance, you may win a legal battle but unless the other party has some resources, still get no money out of a judgment and during the course of events; the business may falter due to all the distractions.
A5
The best way to follow to avoid problems with your partner is to consider what might go wrong and incorporate the resolution of that problem in an agreement between the partners. Before you get into partnership consider what will happen if one of the partners wants to be bought out. What happens if one of the partners no longer wants to participate actively in the business. What happens if one of the partners and you have such a falling out that you can no longer speak to each other civilly.
One approach is to pick a surrogate and a mediator for the agreement. For example if we get into a disagreement my side will be argued by my accountant and our mediator will be a retired judge and we will pick an office which is roughly between our two homes. You can agree that the mediator’s judgment is final.
The partners should previously have entered into long discussions about what they expect from each other in the deal moving forward.
The problem with lawsuits is that they engage the principals so they incur a huge lost opportunity costs. Instead of operating a business profitably all of that owner’s attention is turned to some legal proceeding.
Consider what's the worst that could happen and then make a contingency plan for it. Also a little research in this area will turn up at least the 10 most likely problems to be encountered in any partnership.
Q6- Entrepreneurship has many more valleys than peaks – many end-up just creating a job for themselves... hardly the high-life you see advertised in the news. When should an entrepreneur focus on getting Venture Capital and how do they avoid giving too much equity in return for funds?
A6
In my thinking you immediately need to secure capital sources if your idea has a large cost of development, such as a high tech or Internet idea.
Those inventors who come up with high-tech ideas need the most development before they have an actual product. For example just delivering an electronic product would require a website with e-commerce capability, a shopping cart, credit card etc. Developing the electronic outlet alone can cost quite a lot of money.
Otherwise you should delay or postpone equity investments as long as possible. For example you will do better if you start a business with money that's borrowed from friends and relatives instead of an angel investor. When the company is established you can get better terms from lending sources. You may not even need to give equity away to get loans if the business fundamentals are good. For example winning a big contract from the government will result in many lenders stepping up with loans.
There are of course many sources of loans, grants and loan guarantees. A quick search will turn up economic development companies with grants and loan programs you should explore before giving away much equity in your company.
Most garage type inventors may find that they need more money than they thought. They forget that the thing invented is going to have to be developed and designed to be appropriate, safe and appealing for the marketplace.
Additionally, if you are not good at something (And no one is good at everything) you’ll need to use experts. Some of the most common experts are designers and draftspersons, writers, people that negotiate licensing and of course people who are experienced with dealing with venture capital companies.
In general getting money from Angel and venture-capital people should be avoided as much as possible.
The most typical scenarios leave the innovator with only a small percentage of his company at the IPO stage and he has usually been eliminated from the company even before that stage.
Q6 Part 2
When things go south, are there some common legal problems with funded companies or is the industry mature enough where everybody just amicably walks away from the table?
A6 part 2
When you're winding down a business venture that has been unsuccessful this will be the time where you receive the benefit of the effort that you put into negotiating your working agreements and other instruments such as asset securitization.
All those agreements you wrote and all of the assets that are securitized should have been created with the mindset of what would happen if the business fails.
For example, if you gave your landlord too good a lease now is going to be the time but he tries to get you to pay for your entire lease term and forfeit your security.
If you guaranteed any loans personally now is the time when those people will attack your bank accounts and try to garnish your wages.
Whoever received a loan securitized by equipment is going to show up and get their security. If you gave someone a loan which wrapped over all of your business equipment and materials they can come take all of that as security. Obvious only now do you know that you should have only given guarantees with the minimum amount of collateral that it would take to make the loan.
If you were thoughtful enough to sell equipment or loan money and retain a lien on something now is the time to go out and either collect the payment or recover your security.
You can sell notes or liens at a discount to people who buy them and of course you can sell your accounts receivable to factoring companies.
You'll find that many people that wind up a business forget to recover their security deposits and to collect their accounts receivable at the end of the business.
People also pray on unfailing businesses by neglecting to return outstanding items and failing to pay invoices when due. I have heard of people taking loans out on failing or merging banks hopeful that their loans would be lost in the process.
There's usually not even a little bit of money left to wrap up loose ends like this.
Of course income tax returns still need to be filed. Sales tax returns still need to be filed and any other required reports need to be filed even if the company is defunct.
It would be nice if there was some money that has been prepaid perhaps to the accountant to cover some of the wind up expenses.
Since most people assume a business venture will be successful many people will end up going into personal bankruptcy and foreclosure on their personal homes in the event of a catastrophic business failures.
Another point is that most people are completely unprepared for business failure. It's hard to let people go, it's hard to tell your landlord that you have to be leaving and you have to negotiate the end of the lease. It's hard to get your security back. It's hard to get your utilities turned off. It's hard to sell equipment. Everything is hard.
I dealt with one business owner whose business failed after a tremendous amount of investment by her and her family. Of course she personally guaranteed all of the loans and all of the company’s debt.
Firstly she would've been much better off if she had designed her business with more consideration what would happen if it failed. Secondly when the business did fail she was completely emotionally unable to help herself on any level.
One way that I was able to help her was that I helped her negotiate the return of everything she purchased for the business to the suppliers that she had purchased them from.
Since she of course assumed her business would be successful she had purchased a huge amount of new business equipment tables packaging materials stationery and other items which in most instances could be returned in satisfaction of the claims that were owed on those things. It's an easy sell, “Do you want your equipment back or do you want nothing?”
One particular item was molded confection made out of chocolate. She even managed to return the molded chocolate items to the company she ordered them from who then were them able to remarket them.
The preprinted packaging materials she had created were also returned. The packaging company apparently could also remarket those for some uses.
Q7- You've worked hands-on with requirement contracts with pharmaceutical buyers, how do you go about getting the absolute best price while making sure everybody is happy with the deal?
A7
To be effective at completing RFQ's you need to be an expert in the market that you're dealing with. As an administrator- intrapreneur I pioneered the creation and maintenance of a competitive intelligence database which encompassed almost 1100 line items. As contracts were let out we would carefully review the pricing and terms in contracts that were let and add that information to our database. Any time a company released a pricelist we would enter that information in our database. Any time we heard a rumor or we were asked to make a price concession we would enter that information in our database.
We also carefully scanned industry information for news about our competitors. For example if our competitor was either sold out on a product or had a factory for certain product closed for compliance reasons we would know that the overall supply for that item was that much smaller and we could possibly raise prices accordingly.
When we prepared our RFQ's we would then have the market intelligence necessary to win Business profitably.
Of course happiness is not really part of the equation since the people we sold to would be perfectly happy if we sold everything at a huge loss and they got the lowest possible price.
Winning requirements contracts is of course a great way to make a ton of money if you’re an entrepreneur.
Q8- Anything else you'd like to add?
A8.
I'm very idealistic and very optimistic I believe that innovation, especially innovation which keeps in mind social issues and environmental issues can go on to make this world a much better place.
Of course innovation entrepreneurship and inventorship can all be learned and I certainly would like to help teach people how to do all these things
Thank You!
November 22nd, 2013 Presentation at Innovative X
introduction
Hello everybody I would like to introduce today Mr. Anthony Santangelo Esq.
Mr. Santangelo is a graduate of Rutgers law School-Camden. In law school he participated in The Hunter Moot Court Competition and wrote two student notes. He is a compassionate attorney and has volunteered his time to work in no-charge clinics for bankruptcy, domestic violence and tax preparation. He is a graduate of the prestigious school of business at NYU and has an MBA from Seton Hall.
Mr. Santangelo served as Law Clerk to Francis J. Orlando, Jr., Assignment Judge for Camden County and as an
Intern for Jack M. Sabatino, J.A.D. His experience includes work as a Litigation Associate for the firm
of Chierici, Chierici & Smith of Moorestown, New Jersey. He also has experience as a Commercial Litigation
Contract Attorney for Pepper Hamilton and Archer & Greiner and served as an Intern to the New Jersey Division
of Law, Employment Litigation and Counseling Section.
A registered Patent Attorney; Mr. Santangelo has a scientific and technical background. He has worked in
several laboratories developing new products for the refractory and adhesives industries. Mr. Santangelo has
over 270 inventions, improvements and suggestions to his credit. Some of his suggestions have been presented
to top corporations such as Dell and Lenovo.
Mr. Santangelo has substantial business experience having worked for a Fortune 50 pharmaceutical company for
eight years and in numerous personal and family businesses in food and coffee service and automotive
maintenance. He also has extensive training and experience in ecommerce, web page creation, business plans,
financing, taxes, marketing, sales and most other areas of business.
Specialties / Areas of Practice
INTELLECTUAL PROPERTY, PATENTS, BUSINESS ADVISEMENT & EXCELLENCE, ENTREPRENEURSHIP, TECHNOLOGY TRANSFER, VENTURE FUNDING, CONSUMER LAW & ADVOCACY, BANKRUPTCY, EDUCATION LAW, LEMON LAW, EMPLOYMENT LAW, REAL ESTATE, HEALTH EFFECTS LAW, PERSONAL INJURY, FOUNDATION LAW, APPELLATE LAW, PRO BONO WORK, ESTATE PLANNING.
Hello everybody and thank you very much for coming today my name is Anthony Santangelo but my friends call me Tony! I also want to thank Daryl Gibson and Innovative X for inviting me to come by here today and speak to you on some intellectual property matters. I am signed up as a service provider and I offered a free consultation to any Innovative X member.Daryl took the time to inform me that this audience would be bored by just an ordinary introductory lecture.
Since that's the case he asked me to deliver a presentation that covered both a little beginning material and then an advanced topic plus some insights. So I'm going to speak in three segments today. The first segment will be an introduction to intellectual-property. Our second segment will be an advanced topic which is, “Should you get a patent for your product or not” with a suggested approach and third will be some insights that I've picked up along the way as a top 10 list, a la Letterman! In the interest of time, please save your questions for last. Maybe you could make a note of them for later.
Our first topic is going to be an introduction to intellectual property. I apologize in advance for the more advanced practitioners in the audience.
As you know intellectual property consists of copyrights, patents, trademarks, service marks, trade dress and trade secrets and their related subjects and topics.
Myself and many practitioners usually have a similar experience meeting clients. An entrepreneur walks into our office after having gotten his business started and says to us, "Okay here's everything about my company. Our name our slogans our symbols our literature our letterhead our product. We want to go ahead and get all the intellectual property that protects us for all of these things."
So let's go through the various aspects of intellectual property, see what they cover and a couple of important points about each like and how long they last and we 'll finish up with Patents because that's the one we want to spend the most time on for this audience.
Now almost all intellectual property law authority comes from the same source ... Article I, Section 8, Clause 8 of the United States Constitution… Where it says, “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
All of our millions of words of federal legislation and rules come from these few words in the constitution. Of course states write their own legislation (which cannot conflict with the constitution) and there is a schema in place for practices that originated before laws were written which we 'll generally called the common-law.
In intellectual-property it's important to understand the fundamentals because it seems to me that in two party America every idea is diametrically opposed by a force of almost equal power. For example if you stand up and say you've invented something and you have the right to profit from it as a monopoly for 20 years; someone else will argue with you and say that everything that is invented by anybody should be dedicated to the public for the benefit of the people. Let's call this a capitalist versus academic argument. People in academia publish all of their discoveries and gain academic recognition by doing so. Capitalists manage their IP so that it results in the largest gains for them individually.
First let's mention one or two important things but intellectual property in general.
The first thing to know about intellectual property law in general is that it doesn't protect an idea it only protects specific embodiments of ideas. This is why you can have so many different works that seem very similar but don't infringe on each other For example, Star Wars is very similar to let's say Star Trek or Battlestar Galactica.
You can't protect the idea of movies involving epic battles between starships and planets or different people.
The next most important thing to know about IP law in general is that it doesn't really give you any positive rights. There's no such thing as the copyright police or the patent police. You have to take action if your rights are infringed.
Patents were originally a monopoly that a monarch granted to someone. For example the first person that wanted to bring colored glass into England in 1558 applied to the monarchy for a monopoly and was given a twenty year period during which he exclusively was able to manufacture and sell colored glass. This royal grant is exactly the converse of the system we have in place now, and may be the reason for the misunderstandings we have sometimes.
Many people in the general public are under the misconception that to have a patent or copyright you immediately start making money from just from owning that Ip. I'm sure everyone in this room knows that that isn't true! IP law can be used to keep someone from copying what you've created. It can prevent someone from being able to make or sell or distribute or import something that you have intellectual-property on. But It doesn't give you the right to market something or the ability to begin making money immediately. Our economic system abhors a monopoly and will only grudgingly encourage one for a limited time.
Ok let's talk a little bit about Copyrights. Copyright is the ability to keep somebody from copying something that you created and you fixed into some tangible medium. This differs significantly from the other IP schemes in a number of ways. First of all unlike patents you are never guaranteed that your copyrighted article is the only exclusive version. For example if you never read a single book in your life and you sat at your typewriter and you typed out a book that was exactly the same or similar to Leo Tolstoy’s "War and Peace" you would have a copyright on that creation even though another creation substantially similar already existed.
The key things to remember with Copyright is that you automatically have a copyright on anything that you create but it only applies to something that you have reduced to a fixed medium. A copyright filing helps you establish that a certain work is yours but is not necessary. The third thing to remember is that copyright term lasts for about two lifetimes. Generally this is the life of the author plus another 70 years depending on certain factors.
Let me give you an example I once had a client who was a Buddhist nun. She wrote many inspirational songs and chants in Vietnamese. Let’s see how she protected her works.
To protect her creations she wrote out the words to the songs and published those in a book of sonnets. She wrote the actual music in musical notation and she recorded the songs being sung. She also videotaped the songs being performed with their appropriate dances. As you can see she reduced all the aspects of her performances to a fixed medium which enabled her to protect the words to the songs, the musical notation, the actual sound of the songs and their performances and any dances that were choreographed for these songs.
If for example if she had choreographed special dances for the chants but never recorded them or fixed them into any sort of fixed medium, like maybe even sketches, those dances would not be protected by copyright.
Okay let's Move on and quickly talk about trademarks and service marks. Trademarks originated hundreds of years ago when craftsman wanted to identify their products by putting their name or Mark on their finished product.
It became generally accepted that one craftsman would not copy the marks of another. (Probably with a little bloodshed.) Similar product but without the Mark of a specific craftsman would be shown not be a creation of that craftsman.
This is exactly how trademarks are used now. The creator of the trademark applies his Mark to finished goods or to services that are in commerce. A trademark is obtained in a manner similar to Patents. The process of obtaining a trademark is also called a prosecution and is generally an adversarial process. Trademarks are reviewed by the government to make sure that they are unique and you pay a fee to be able to allow the creator to use this Mark exclusively. This mark can theoretically last forever if the goods stay in commerce and a certification and fee are filed every 9 years. (After the initial 5- year period.)
Now, any attorney can do trademark work but you usually find that attorneys that do trademarks usually do that exclusively. The reasons for that is many fold. Trademarks can get tricky and complicated very quickly.
For example you can trademark almost anything. You can trademark words, symbols, colors, videos and even smells. Searches are difficult.
Furthermore, Trademark law is a combination of federal trademark law, state trademark law and trademark common-law. Trademarks have existed at least since the guilds of the 12 and 1300s. So trademarks have been in existence for hundreds of years and are part of our common-law. Additionally many states have their own trademark scheme in addition to the federal trademark scheme.
The complications are easy to imagine. If you think of a client who would walk into your office and wanted to trademark symbol for example similar to the symbol that Prince changed his name to. Sort of like an ampersand plus a French horn. Most people would not have the vocabulary required to be able to search and describe such a symbol accurately.
Also specific colors can be trademarked and you know that your computer screen does not depict colors accurately.
Even smells can be trade marked . A practitioner would need to have the training and vocabulary to be able to describe smells exactly.
For example in perfumes I'm told that there was usually a major scent a minor scent and a finishing note combined to create the final perfume smell. How many attorneys have the vocabulary to describe the various smells which would include the entire panoply of woods, florals, musks , mints etc.
The most common misconception that I see is that many people who apply and obtain a trademark believes that it gives them the absolute exclusive right to use that trademark. This is not really the case. The trademark merely identifies goods or services. So for example if someone had trademarked the phrase "Dallas Cowboys Suck" to be used on printed goods, that trademarked phrase would only be The Mark that identifies that shirt as being a genuine creation of the trademark holder.
But some trademark holders complain if they hear their trademarked phrase spoken by someone or applied to a category of product that they did not put in their application.
We’ll speak briefly about trade dress which is the look and feel associated with your business and can cover your marketing materials, designs, products, services, stores or displays. Like Copyrights you are generally protected from someone copying your trade dress as soon as it is created. Like Copyright it enhances your position to register your trade dress with the government this will create a presumption that you are the creator of such IP in the event of infringement. Trade dress is also an area that can get very tricky.
If you've ever critiqued a photograph you know The types of things that come into discussion in a trade dress case. The lighting, the shading, the colors, the focus, the items in the picture and their arrangement. These are all things that come into discussion about trade dress.
If I said to you that the appearance of an Apple Store is an example trade dress item you would immediately understand the look and feel that Apple embodies in their stores but you would have to very carefully analyze and critique the layout in order for you to reduce it to English vocabulary.
Another very important form of IP is trade secret. Trade secret law is mostly as the name suggests. It's when you invent a particular process or composition of matter or way of doing things and you just keep it a secret .
The classic example for this is the formula for Coca-Cola. Coca-Cola never patented the formula for their soft drink. They just keep it a secret. Now in trade secret law one option that's available to your competition is to reverse engineer your product.
This is perfectly legal. In fact looking at Coca-Cola you can see that the major ingredients for the product are on every label. But you would have a hard time coming up with the exact flavor and taste of Coca-Cola.
Trade secret law mostly comes into effect when people betray relationships with people with whom they had a contractual or fiduciary relationship.
You will find cases where a sales person stole a list of company customers and then went off to form his own company or for example in our Coke example if the actual person who created Coke syrup left and went to another company and brought with him the recipe for making Coca-Cola.
Trade secret law arises when there is a dispute between people that were engaged in using the confidential information.
Will be speaking a little bit more on trade secrets later on when we discuss our advanced topic which is should you even get a patent on your invention.
Now let's talk a little bit about patents. Now a patent is a bundle of negative rights for a limited time that we obtain by applying to a government and showing them how to make and use some new thing which is then published for the world to see.
Looking at a patent as if it is a product available from the government; we can see that there is a non-provisional patent a provisional patent, a design patent and a plant patent.
To these types of patents we have to add a garbage one created by invention promotion companies which is essentially a utility patent written with so much specificity that it covers practically nothing but ends up issuing .
The main type of patent we will be discussing is called a non-provisional patent or a utility patent. Again you can see the theme of describing things in negative terms. This is the "best" patent available yet it is described in negative terms. This is a very common thing in intellectual property Law a lot of IP Law is described in negative vocabulary.
A provisional patent application is really a place saving application which proves to the world that you were the inventor of a certain thing.
it gives you the ability to say "patent pending." It gives you a filing date and a patent application number and it gives you the ability to discuss your idea openly and frankly for an entire year.
A provisional patent application expires in one year and is not examined. In order to make use of it you file a non-provisional patent application and rely on the provisional patents original filing date.
Now in order to get a patent on something it has to fit within the categories given by the patent office; a process, machine, manufacture or composition of matter. It also has to be new, useful and non-obvious.
So what is it that can't be patented. Well this list is very long and includes anything that already exists in nature and anything thats already alive. For example, You couldn't get a patent on oil even if you were the first person to discover it.
You can't patent a machine such as a perpetual motion machine because it does is not have any useful purpose. You can't patent any plant that already exist in nature or is the result of sexual reproduction. You can't patent any theorems or equations that represent any physical process. Like e equals mc squared. You can't patent any mathematical equations like c squared equals a square plus b squared for right triangles You can't patent any thing whose sole purpose is criminal. And in America you can't get a patent on a nuclear weapon.
Novelty
To get a patent, whatever it is that you want to be patented has to be new, really, really, new. It can't exist anywhere else in the world. It can't have been in use or described or published or patented anywhere in the world in any language! (Or ahead of you in the USPTO and henceforth secret.)
Usefulness
To get a patent your newly created item must be useful for something. And as we've seen, some things that are useful can't be patented anyway. No nuclear bombs, devices for cracking safes or perpetual motion machines need apply. (I always thought perpetual motion machines had usefulness. They are often beautiful and fascinating.)
Non-obviousness
One major obstacle to getting a patent is the concept of non-obviousness. This concept is that a person having ordinary skill in the art (PHOSITA) would not think that your idea was obvious.
This "Phosita" as practitioners like to call him is someone who knows everything about your field of endeavor right up to the point where you create something new.
So you have to make your case to the patent department that the thing that you thought of would not be obvious to this imaginary person. This is one reason you can invent your own words in patents. Additionally you can sum up almost any process already known in the world in a simple phrase such as: "As known to one skilled in the art." For example to explain any things attached to another. You don't need to say attached with glue or nails or screws or rivets etc. etc.
Non-obviousness is a tremendous stumbling block and the area where A tremendous amount of an inventors money is spent during the prosecution process.
Often a patent examiner will reject a new application for obviousness and you need to go back-and-forth with the patent examiner showing him why this idea had not been thought of by anyone before. Frankly after someone has shown you how to make and use a brand new thing and referenced all the other similar patents your idea might seem "Obvious" but hey, they didn't think of it!
Well in the interest of time we're going to have to leave beginning topics there and move on to a more advanced topic at this juncture.
The handout for this meeting and the recordings based on it may have more information available then I was able to present during my 30 minute segment here.
Advanced topic, “Should you get a patent at all ?”
Daryl suggested that I discuss the topic of whether a patent should be gotten at all.
There is a lot of discussion on this topic.
This of course is a very advanced topic and also very peculiar to your particular invention.
What I will do is introduce the topic, present an example and suggest an approach.
The problem as I see it is that we need to make business decisions based on data and probabilities and outcomes. Unfortunately for inventors a lot of times the only sources of information on a particular topic ends up being urban legend.
For example as an attorney I have read many cases where someone stole an invention. However rare these events are they have a powerful effect on an inventor’s mentality. No one wants to put all that effort in to something and then have it stolen. General Motors and the Federal government are just two organizations that have stolen inventions. Getting recompense is a long expensive process.
Also famous quotes are given more credence than they should. For example Henry Ford scoffingly said once that he would never pay any inventor a royalty. Suggesting that he had invented everything of use regarding the automobile. This has been used to explain why it’s often said for example; “It's fruitless to try to sell a new invention to Detroit.”
Whenever a patent attorney consults an Inventor he should describe for him the various forms of intellectual property like our introduction. He should then ask the inventor to consider whether like Coca-Cola he should just keep his invention a secret. If the inventor should go ahead and patent the invention this will for all intents and purposes describe to the entire world how to make and use his invention.
This discussion brings up one of the conflicts of interest that every patent attorney has. Which is if he was asked to predict an inventors chances of success he would end up turning away 97%+ plus of his business.
For myself I usually will not even venture an opinion as to whether any invention is a good one or a bad one, or will or will not be a success. I am not an expert in every field of endeavor of every inventor I come in contact with . Plus I find that, like in poker that most of the time a good hand wins out but very often a poor hand can be a winner too depending on how the game is played.
The quick answer is that whether or not you should patent an invention is a personal decision that's peculiar to you and your invention. You should collect the data necessary and develop the probabilities so that you understand what your chances of success are.
Perhaps utilizing a pert or gannt chart could be useful in laying out the decision points probabilities data and chances of success that you need in a decision as complicated as evaluating a new product for introduction to market. Oh, and theres an app for that! There's also some pert network and gantt chart examples on Google for new product introductions.
Sequenom a case study
OK let’s look at a recent care on point in this area.
A perfect case example came to my attention On October 30 of this year. A company called Sequenom had portions of its patent invalidated in District Court in California.
Let's take a look at this case to see if perhaps Sequenom would have been better off merely keeping their method a trade secret.
Sequenon had developed a test for evaluating whether an unborn child had Down syndrome. As you know the incidence of having a child with Down syndrome increases with woman's age. For example at age 20 her risk is one in 1600. At 25 years of age the risk is one in 1300 . By 30 it's one in the thousand. Just five years later at 35 however it's just one out of 365. At 40 years old it is one of 90. By 45 it's one out of 30.
By the time a woman reaches 35 years of age it becomes routine for the doctors to suggest a test for down syndrome.
The clinical tests consist of an amniocentesis with chorionic villi sampling. This test itself has some risks and will result in the loss of one fetus every 300 tests. At age 35 this is roughly the same chances as actually having a child with Down syndrome.
What Sequenom did was to exploit the fact that some of the fetus’s genetic material is floating around in the mothers bloodstream.
This most prevalent form of Down syndrome is also called trisomy 21. It is correlated with the genetic abnormality of having three number number 21 chromosomes. As you know we have 46 chromosomes arranged in 23 pairs. If you took a sample of the mother’s blood you could find the pieces of the babies genetic material put them in sequence and find out if chromosome 21 was going to have three sets of chromosomes.
The clinical test for down syndrome costs approximately $1900. When Sequenom marketed their test they also marketed it at about this rate.
Mothers with good health insurance typically had to pay $253 of the test with the balance being paid for by insurance. As with the clinical test mom's with no insurance have to pay full price or apply for charity care or subsidies if available...
The providers were angry that the cost of the test was so high but since the test did not carry either a) the risk of loss of the fetus or b) a surgical procedure followed by a test most people would choose the test from Sequenom.
The Sequenom decision followed a Supreme Court decision In mid June 2013. The nations Supreme Court had acted in a case involving Myriad Genetics where they ruled that merely identifying a DNA fragment or Gene could not be the basis for a patent since it already existed in nature. Justice Thomas wrote "Groundbreaking, innovative or even brilliant discovery does not by itself satisfy the criteria for patent eligibility." Sequenom's tests were similar in that they basically examined the babies DNA material for an extra gene.
Myriads tests for the BRCA1 and BRCA2 Gene and were being administered at a rate of around $3000 a test. Angelina Jolie famously received this test before having her surgery.
Let's assume in our discussion that these tests would've been ordered by physicians even if the physicians have not been able to read the actual patent on the test. This gives us a good example of where the patent versus non-patent discussion can be used.
Let's take a moment to discuss the situation by looking at the six basic classifications that are allowed to be patented.
To the four classifications for utility patent; a process, a manufacture, a composition, or machine I've added two others from the several other types of patents namely a plant created by asexual reproduction and original designs.
Our example is an in-house test run by the inventors company. This is probably a process. Like Coca-Cola you could keep it to yourself and not show it to the general public. It seems to me that this course of action may be applicable to any process or manufacture. Any composition or machine patent could also be treated like a trade secret if it was going to be used exclusively by the inventor or perhaps a limited number of licensees . Even a machine patent could be kept confidential under some circumstances. For example imagine if the Cotton gin were invented and used exclusively by a cotton company owned by Eli Whitney. . His cotton company would have a distinct advantage over all the other cotton producers. Although keeping it to himself what deny this energy saving device to the rest of the world.
He also could have developed his business like a miller of flour. He might have commercialized it by having cotton producers bring him their cotton for processing. All they would know is that raw cotton went into his factory and combed seedless cotton bales came out the other end.
As a capitalist however the decision should be based on which choice made him the most money, processing cotton and keeping his machinery a trade secret or by making his knowledge of the cotton gin known to all the world.
Both the Sequenom and Myriad situations were also similar in the fact that the lawsuits were brought by opposition companies who wished to invalidate the patent so they could perform the same test. (Without having to do any of the original research.) These tests have only been available since 2010 and 2011. So these companies have only been able to commercialize their discoveries for a short time.
The court opinions also stated that the competitive companies were ready willing and able to perform the exact same test at a markedly reduced cost. Probably hoping to sway the court’s decision in the favor of less costly tests available to more people if they invalidated the original patent.
So what approach can we suggest with this state of affairs.
The funny thing about the patent system in general is that it was created to encourage innovation. Innovation is usually stifled when an Inventor does not get to reap the fruits of his investment. In these two cases the companies had only perhaps 2 1/2 to 3 1/2 years of marketability for their discovery and then lost it after protracted and expensive litigation. I think we can make the educated guess that neither one of these companies would've ventured the R&D expense if they knew that losing them in a patent battle was going to be the result.
Recall that the amniocenteses resulted in a loss every 300 procedures. These new tests saved a lot of babies livies..Of course their filed patents readily teach everyone else how to make and use their discovery. They can’t retract this information once it has been released.
After you've decided to make and sell a patentable invention to other people however you have a lot more exposure to those other people either copying or reverse engineering your invention. Practitioners call it "Design around" when you create a product that does the same thing but doesn't infringe the IP of another.
If for example your invention is a new type of golf tee or some other consumer product it's going to be impossible not to show it to other people, probably very early on in its development.
Additionally some types of inventions are relatively easy to copy and others much more difficult. If you invented a new manufacture say plastic sheeting of some sort and your company or a licensed company sold finished plastic sheeting it would be very difficult to reverse engineer the process for the plastic. So the classification of "manufacture" seems like it would be able to resist competitors a little better.
But consider an invention that is a composition of matter such as asphalt road material or various fluxes. Some of these products would seem to be easy to replicate. I doubt it would take much time to reverse engineer a road material given a sample. A patent seems like a good idea for this category.
Copying a machine would depend on the ease or difficulty of the design and construction of the machine. Also whether you had an option of keeping the machine hidden from the public like we mentioned for the Cotton Gin. (Or the miller for that matter.) For example an industrial timer could be copied readily but a highly intricate and sophisticated chronometer may be impossible to duplicate. A fake Rolex looks like a Rolex but has the guts of a cheap watch. A counterfeiter would be hard pressed to duplicate the actual movement of a Rolex.
It seems that the category of processes are the types of inventions that most easily could be kept from public view as a secret and exploited without providing complete details on how to make and use the process to others.
For example Amazon famously was awarded a patent on a one click process of ordering. Did this one click process have higher value in being sold or licensed to other retailers or was amazon better off only using it on products purchased at their own online sites. Keeping in mind that having a patent on it would mean that Amazon could prevent every other online retailer from duplicating that process.
Well I think by this point you can see that all I've managed to do in 15 minutes is generate enough confusion that the answer to whether a product should be patented or not is as attorneys say "it depends"
But I think we can come up with a couple of useful rules of thumb.
Consider using the trade secret method of intellectual property if your invention is difficult to reverse engineer by only examining the finished product or result.
This more readily apply to processes, manufacturers and asexually produced plants.
If a patent is a requirement in your industry to getting funding or a manufacturer you probably have to pursue one.
Compositions of matter like a road material seem harder to keep a trade secret unless you were going to use them exclusively in your business perhaps in some intermediary manufacturing process and not sell them to other people as they are.
Be wary of the patent statutes. If your invention could be argued to be no more than a naturally occurring substance, consider keeping it a secret.
If there is a strong public interest in invalidating your patent consider how to manage this also perhaps by keeping it secret. (Or very competitively priced.)
Machines seem like a less likely category to keep secret Perhaps they could be kept a secret if you were going to use the machine itself and only sell the finished product created by the machine (Like processed cotton.) or perhaps if the machine was extremely difficult to reverse engineer. (Like a Rolex.)
A quick plant story here. What kinds of plants can you get a patent on? Asexually produced!
Did you ever wonder where a seedless orange came from?
Well one day a farmer was checking the fruit in his orchard and he found that a particular branch from one of his trees created oranges that had no seeds. Could he patent that? No because this was naturally occurring. He had to take cuttings from the tree, graft them to other trees and see if those grafts produced fruit that had no seeds. Then he could get a patent on asexually reproduced seedless orange producing cuttings.
I don't have any more time in this seminar to discuss PERTT networks or GANTT charts but take a look at them on Google and consider whether a chart like this would help you put your mind to rest about whether to patent your invention or not.
Insights
Well I think I used up all of my time already so we'll quickly go through a top 10 list of insights that I've discovered in regard to inventors and inventions.
10. Sun Tsu said, “Know your enemy and know yourself and you'll be victorious in 100 battles.” The number two reason for a person not meeting his goals (after the fear of failure.) is the fear of success. Meditate on this and find out if you’re afraid of being successful, as we all are (being successful changes your entire world) and you'll have an easier time moving forward.
9. Don't ever believe averages in this industry for example Facebook alone made $260 billion for its investors. If you average this number into the number of projects undertaken they seem much more lucrative.
8. Keep your priorities in order.
Keep in mind while you're struggling to bring your product to market 24/7 how important it is for you to worship your god; to keep yourself healthy, well fed and exercised and to maintain your relationships with your family. You reap what you sow. If you spend two hours of your time helping other inventors you would probably receive at least four hours of help in return
7. Don't forget to keep your moral compass wound. It may do more for this world if you taught an underprivileged person how to paint a room so that he could go from earning nothing to earning a couple hundred bucks a week then it would to develop the next "white doodad." ( That’s a bazillion % return well actually infinity)
6. Write any 35 USC 102 barring events on a calendar. As you know you cannot get a patent on an invention if you sold it, tried to sell it or described it in any publication if you apply more than a year after the exposure.
5. Protect yourself as much as possible but don't be afraid to talk up your invention to every possible investor. as someone I saw on the Internet once said don't worry about people stealing your idea if you have a great idea you have to beat people over the head with it in order to convince them that it's a good one.
4. Develop a two-minute elevator pitch that you can use on anybody that asks you what you're doing and what you're working on.
3. Be cynical and skeptical whenever you're presented with data statistics or opinions.
The patent office proudly exclaims that 1 million patents a year are issued and 2 million or applied for. This would lead you to think that they clear half of their workload every year. Of course this is not the case. There is a huge backlog in the patent office and even inventions applied for by attorneys have only about a 40% chance of ever issuing as a patent grant.
2. Avoid lottery fever. I get the impression that in the venture-capital world most people are saying I'm not getting out of bed unless there's nine figures in it for me. Please remember that out of all of the deals ever done by venture-capital people very few ever break the billion-dollar mark for their founder. I've heard the number 38 bandied about in total.
And lastly NUMBER 1
If it's to be its up to thee.
It's estimated that invention promotion companies earn $200 - 300 million a year from approximately 25,000 inventors. Perhaps 2/3 of this is fraud.
Don't assume that you can pay somebody to do anything you can do.
You might not even be able to pay some to do some honest research.
Thank you very much for having me today!
HI!! My Law Practice and This Web Log Are Open For Business!!!
I am an attorney in NJ, Pa and DC. I am a registered Patent Attorney and also do Business and International Law. I am a prolific Inventor with over 270 inventions and improvements to my credit.
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