LEGAL ISSUES, PATENTS, LICENSING & MARKETING

by Chuck Umeda 9905

Bill (William L.) Clemmens, attorney at law, provides legal help on patents to members after said members pay the appropriate fee to the IAA.  Bill everyone’s attention immediately by saying, “you are inventors, because you have an active mind.”  Inventors like to do things their own way, he noted.  But this can lead to trouble, because they think they can do it themselves.  This is a presentation on philosophy about:  1) things you hope to experience; 2) things you hope to avoid; 3) things you don’t know about.

Bill describes himself as an “engineer first.”  He worked as a member of the Research Staff at Boeing where he learned that there is nothing like an impossible job.  Applying this lesson to inventors’ ideas, he says, friends and family will say it’s too hard, drop it.  But others have made millions on their inventions.  So you persist.  Bill quit engineering and attended law school at ASU.  (We, in Tucson, do graciously forgive him for that.  Are Phoenix members cheering?)  After finishing, he went to work for a patent attorney, where he learned that one can patent anything.  Along the way, Bill was one of the founders of a high-tech company, which made a new type of carriers for semi-conductor wafers.  

Very few inventors are marketing people.  Some are so secretive about their inventions that they die with their idea.  Others talk too much and learn to their dismay that their idea was stolen.  When one applies for a patent, their idea is secret, but once the patent is issued, it is public, known to the whole world. 

Why apply for a patent?  It really doesn’t do a whole lot for you.  It defines your product.  There are two types of patents (design and utility) plus the provisional.  A design patent protects a specific product design. (Writer’s note:  the Coca-Cola bottle is a well-known example of a design patent.)  A utility patent is for the function of a product.  The provisional patent puts the P.T.O. (Patent & Trademark Office) on notice that you are submitting a preliminary patent and that you will file for a patent within one year.  It establishes a filing date.  The downside is that if the product or idea changes from the preliminary version, the filing date is lost and a new provisional patent or patent must be filed.

Patent search.  The IBM web site for patents is very useful.  But for the do-it-yourself patent search, there is a real possibility that your idea could infringe a patent on a totally unrelated device. Ask yourself, do I really want a patent?  Ask why?  It can be a nice piece of decoration to hang on a wall or it can be truly useful. 

Bill urges inventors to have a notebook where you record your activities on almost a daily basis.  It is very important documentation for legal purposes. 

Non-disclosure Forms.  The best rule is to tell no one your idea, but this is impractical.  A non-disclosure form provides protection.  It should be signed by anyone you talked to about your idea.  When dealing with larger companies, a more refined version is often necessary.  You need to know with whom you’re dealing.  What happens if someone ignores what they signed?  It’s a civil law suit.  Keep a log showing how many were handed out and signed.  Conversely, watch the agreements you sign. 

A Non-competition Agreement prevents sub-contractors from making a product, which is a slight variation of your idea.  Also good for your employees to sign.

Don’t quit your day job!  Don’t depend on your new idea.  Don’t take your product to market before the bugs in the design are worked out or if you can’t deliver.  People will remember your product if it is unsatisfactory. 

The next step is producing and marketing your product.   But since most inventors don’t have much cash, they have to find financing or license their product.  If you go to an investor, they will want to see your product, and see the market potential.  If you license, they will want to know your product in detail.   The inventor also is faced with, what is your idea/product worth?  The value of a patent is determined by the marketplace.  The investors take the risks and put up the money.  The inventor can end up getting very little for their product.

Legal help.  In choosing a lawyer, be able to communicate with them.  If you have problems with your lawyer, pay him/her off and move on.  Remember, they have to understand your business to be effective.  Seek legal help when things get serious with an investor, licensee or forming partnerships.  Also, they can help with filing and completing a patent.  An attorney is bound not to disclose your idea; they can lose their license.  For accountants, get them to sign a non-disclosure.

Patent vs. Trade Secret.  Most of the well-known products were maintained as trade secrets. 

Take a long look at your invention if you signed a technology agreement.  What if someone steals your idea?  Are you protected where it is being sold?  Foreign patents are expensive.  If you are established in the business, competitors are less likely to jump in.  If you’re doing nothing with your idea, a large marketing business can jump in.