Patent law, popcorn dispenser and anticipated patents

Anticipated Patent Claims – 35 U.S.C. 102

When Your Patent is “Anticipated by a Prior Reference”

The Patent Examiner argues that one or more claims of my Patent Application are anticipated by a prior reference. What does this mean?

In short, it means that the Examiner argues that someone else invented your invention before you did.

Let’s expand on that:

35 United States Code (U.S.C.) 102, in part reads: “A person shall be entitled to a patent unless – the claimed invention was patented, described in a printed publication…before the effective filing of the claimed invention…” 35 U.S.C. §102 requires that the prior reference must have existed before your Patent Application was filed. When the Patent Application’s claim is rejected under 35 U.S.C. §102, the Examiner argues that the rejected claim is “anticipated.”

When a Patent Examiner argues that one or more of your Patent Application’s claims defining your invention are anticipated, the Examiner is saying that a single prior reference discloses all of the structures of your invention.

The Patent Appellate court[i] has held, “For a prior art reference to anticipate in terms of 35 U.S.C. §102, every element [structure] of the claimed invention must be identically shown in a single reference…These elements [structures] must be arranged as in the claim under review.”

How Can I Counter the Rejection?

One way to counter the Patent Examiner’s anticipation rejection is to amend the claim.

Therefore, you can amend the anticipated claim by deleting structure or adding structure to your invention. Additionally, you should add the changes to the wording of the Patent Application’s claims. For instance, if the alleged anticipated claim required a piece of furniture with four legs, you could exclude one of the legs from the claim to create a table with three legs. Similarly, you could add a back support to the claim to create a chair.

In addition, you can argue that the Examiner’s prior reference fails disclose every structure of your invention as claimed in the Patent Application.

How Similar in Structure and Use Does the Anticipated Claim Have to Be?

For instance, can the Patent Examiner use a prior reference that is unrelated to my invention’s use to successfully argue that my claim is anticipated? Can you give me an example?

Sure! Let’s take the question “Can an Oil Can’s Nozzle Anticipate a Popcorn Dispenser?” which was the basis of an actual case!

Yes. An oil can’s nozzle does anticipate a popcorn dispenser. Here’s how it was argued:

In the case of In Re Schreiber, 128 F. 3d 1473 (Fed. Cir. 1997), the Patent Examiner argued that Swiss Patent No. 172,689-Harz  disclosed a “spout for nozzle-ready canisters” that anticipated Schreiber’s claim for a popcorn dispenser.

On Page 1447 of Schreiber, the Court of Appeals for the Federal Circuit wrote:

    • Schreiber argues…that Harz [Swiss Patent No. 172,689] does not disclose that such a structure can be used to dispense popcorn from an open-ended popcorn container.
    • Although Schreiber is correct that Harz does not address the use of the disclosed structure to dispense popcorn, the absence of a disclosure relating to function does not defeat anticipation.
    • It is well settled that the recitation of a new intended use for an old product does not make a claim to that old product patentable.

In conclusion, according to Schreiber, the function of the invention is irrelevant to the Patent Application’s claims in the United States. So an existing patent on an oil can did, in fact, prevent the patent of a popcorn dispenser with a similar shape, despite the completely different function.

Patent Law Can Be Confusing

If you need legal assistance with responding to a USPTO Office Action, please contact Business Patent Law, PLLCBusiness Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.

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[i] In Re Bond, 910 F.2 831, 832 (Fed. Cir. 1990).

foreign nations and US LLCs and tax law

Foreign Owner – US Limited Companies

Can United States Limited Liability Companies be Owned by Foreign Members?

Yes. The United States allows citizens of foreign countries to own a US Limited Liability Company (LLC). A foreign owner can own an equity ownership interest of one hundred percent or a fractional interest.

Is it Advantageous for a Citizen of Foreign Nation to Own a US LLC?

Yes. Ownership of a US Limited Liability Company (LLC) allows a foreign citizen to participate in the largest single economy on earth.

For the purposes of this post, what is referred to as a US LLC is, in fact, a LLC created under the laws of one of the Fifty States or the District of Columbia. Some States allow the formation of a Professional Limited Liability Company (PLLC). A PLLC is a specific type of LLC.

Taxation of US LLCs

Business Patent Law, PLLC does not provide specific tax counsel for its clients. However, we can offer some general principles regarding foreign ownership of US LLCs:

  • Most nations tax the income of their citizens, regardless of jurisdiction where the income was generated.
  • Under US federal tax law, LLCs are considered “pass-through entities” for tax purposes.  This means that profits and losses are passed through to the owners of the LLC.
  • As a general rule, most LLCs are required to pay some type of taxes and/or fees in the State of the LLC’s organization and any other State in which the LLC does business.
  • State law taxes and fees vary from state to state and are usually less than US federal taxes.

Does the US Participate in Tax Treaties with Other Nations?

  • Yes.
  • Before purchasing ownership in a US LLC, a potential foreign owner should seek legal and tax counsel in both the owner’s home nation and the United States.
  • The United States has enacted tax treaties with different nations.
  • Different tax treaties produce different tax consequences for the foreign owner of a US LLC.
  • Among other things, the tax treaties can control what is taxed or is not taxed and payment of taxes in the United States and the foreign owner’s home nation.

Does a Foreign Owner of a US LLC need to register with the IRS?

It depends on the Tax Treaty between the foreign owner’s home Nation and the United States.

As a general rule, a foreign owner owning 25% or more of the US LLC will need to register with the US Internal Revenue Service (IRS). When the foreign owner is required to register with the IRS, the foreign owner must secure a Foreign Taxpayer Identification Number (FTIN). It can take several months for the IRS to issue the FTIN.

Under some tax treaties, an owner of less than a 25% equity interest in the US LLC may not be required to register with the US IRS.

Under some tax treaties, an owner of less than a 25% equity interest in the US LLC may not be taxed on the owner’s profits from the US LLC. However, the foreign owner will likely be taxed on the LLC’s profits in the foreign owner’s home Nation.

If the US LLC should file certain documents related to foreign ownership and does not file the documents with the IRS, the IRS will financially penalize the US LLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.

If you have questions about equity ownership of a US LLC, please contact Business Patent Law, PLLC and we will discuss possibilities for your business.

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Types of Confidentiality Agreements for Business

Confidentiality Agreements

Should Your Business Use Confidentiality Agreements?  

Should your company use confidentiality agreements?  If your business has information it needs (or wants) to keep out of the public domain, then yes. Information of this type may include:

  • Certain types of intellectual properties
  • Company information disclosed to potential investors and investors identities
  • Customer lists
  • Employee salaries
  • Independent contractor identities
  • Research and development assets
  • Suppliers identities
  • Tax returns
  • Trade secrets, etc.

As a general rule, once information enters the public domain, you can’t make it private. You have to be proactive.

Three Types of Confidentiality Agreements 

1)        Confidentiality Agreement

This agreement can be used when the involved Parties agree to hold the information disclosed in “strict confidence.” When the Parties become adverse or one of the Parties is seeking to avoid the terms of the Confidentiality Agreement, the Parties may argue over:

  • What was the information disclosed in “strict confidence?” (It is helpful to specifically identify the information covered in the Confidentiality Agreement itself)
  • What the Party receiving the disclosed information must do with the information
  • Which State’s law controls the provisions of the Agreement
  • Where the venue and personal jurisdiction will be, should litigation become necessary

2)        Confidentiality and Evaluation (CE) Agreement

Potential Patent rights (or Patent rights) can be the subject of a CE Agreement. A CE Agreement specifies that the subject matter disclosed is to be held in “strict confidence” and that the information is provided solely for the purpose of evaluation.  In the event one Party is dissatisfied with the CE Agreement, the same issues as identified in the above (Confidentiality Agreement) section will apply here. Additionally, this type of agreement will need to specify:

  • Is audible disclosure a disclosure to be held in “strict confidence?”
  • Is visual disclosure a disclosure to be held in “strict confidence?”
  • What happens when the Party receiving the disclosure evaluates the audible or verbal disclosure outside the jurisdiction where the Parties are domiciled?

This matters because any public disclosure related to potential Patent rights (prior to the filing of the Patent Application) can bar any future Patent related to the disclosed information

3)        Confidentiality, Evaluation and Noncompetition (CEN) Agreement

As with the two agreement types above, almost anything that one Party wants to be kept in “strict confidence” can be the subject matter of a CEN Agreement. Along with Confidentiality and Evaluation, a CEN Agreement also includes a Noncompetition (anywhere in the world) provision for the Party receiving the information. Whenever possible, Business Patent Law, PLLC recommends its clients use a CEN Agreement.

In the event one Party is dissatisfied with the CE Agreement, the same issues as identified in Sections 1) and 2) above, may also be grounds for argument between the Parties.

An example of when a CEN Agreement might be used: Private/nonpublic companies often have corporate bylaws that require shareholders to execute CEN Agreements before shareholders can be issued stock.

If a Business Fails to Use Confidentiality-Type Agreements 

Unless some type of Agreement between the Parties is executed, the disclosing Party has minimal legal recourse against the receiving Party repeating publically the disclosed information or using the disclosed information for another reason.

Here are a few ways such disclosures could become a problem:

  • Public disclosure of the company’s private information will likely temporarily disrupt the company’s operations
  • What would happen if all the company’s employees were aware of each employee’s salary?
  • What would happen if the company’s competitors were aware of the company’s research and development information?
  • A trade secret disclosed publicly is no longer secret and the secret is lost forever

What You Need To Know About Confidentiality Agreements

  • Confidentiality Agreements between trustworthy Parties can improve profits for both companies
  • The bargaining power of the Parties tends to influence the type of Confidentiality Agreement executed  (A publicly traded company will likely have a Confidentiality-type Agreement that is more favorable to the publicly traded company when contracting with a business having annual sales of $2M)
  • Bad actors tend to exploit the other Party to a contract (Character of the Parties matters)
  • Agreements executed between Parties who were not represented by legal counsel may be unenforceable
  • Confidentiality Agreements that were drafted for a first purpose may not be acceptable for a second (but similar) purpose
  • Without the advice of legal counsel, parties my draft contracts for almost anything they feel is important at the time the contract was allegedly executed (Some of these contracts may be enforceable, some may not)
  • If the alleged contract is only partially in writing, there may be issues when memories fade ten years later  (Get it in writing)
  • Perspective matters (Three different eyewitnesses can witness the same event and three distinct testimonies may be offered into evidence)
  • Written, properly executed agreements can minimize business disruptions

If you have questions about intellectual properties or agreements, please contact Business Patent Law, PLLC. We are here to help you grow your business and protect your intellectual properties.

If you would like to stay up-to-date with news that impacts your intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Representing Yourself for Trademarks and Patents

Representing Yourself for Patents & Trademarks: Going “Pro Se”

Pro Se USPTO Representation

Pro se” is a Latin phrase meaning “for himself.” Under United States law, an Applicant can represent himself/herself/itself before the United States Patent & Trademark Office (USPTO).

Can a pro se Applicant achieve favorable results from a USPTO Examiner? Maybe. Maybe not. Success may depend on the legal skill of the Applicant.

What is a “Favorable Result” for a Pro Se Applicant?

Favorable results include attributes such as:

  • Defensibility against an allegation of unpatentability
  • The durability of the patent or trademark
  • Enforceability
  • The scope of rights granted by the USPTO to the Applicant

Three Primary Types of USPTO Representations 

An Applicant can be a large company, a small company, a partnership, a trust, an individual, or another entity.

Large Businesses

Many large companies have “in-house” intellectual property attorneys who represent the large companies before the USPTO. If an “in-house” attorney fails to meet management’s objectives, the large company usually will hire another attorney who will meet the large company’s objectives.

For legal matters before the courts or other tribunals, large companies usually hire one or more “outside counsels” to represent the company. Sometimes, these intellectual property cases can have more than a billion dollars in potential damages.

Small Businesses with Resources

Small companies with sufficient revenues usually retain smaller intellectual property law firms to represent their company before the USPTO and the courts or other tribunals. The USPTO defines a small business as a legal entity with 500 or fewer employees.

Small Businesses, Start-ups or Individuals on a Tight Budget

Sometimes, small companies, start-ups or individuals opt for pro se representation before the USPTO, based solely on their budget limitations. Pro se representation by a non-lawyer may achieve favorable results for the Applicant. According to the USPTO database, it appears that favorable results tend to be more closely associated with Trademark Applications than with Patent Applications.

Be aware: if the pro se Applicant’s results are not favorable, the expense of hiring an intellectual property attorney in an attempt to achieve better results will likely be much more costly than it would have been to retain an attorney at the beginning of the process. Unfortunately for the Applicant, sometimes the facts associated with the Application are so unfavorable that issues with the Application cannot be corrected.

What if the USPTO Says No?

What can a pro se Applicant do when an Examiner refuses to approve the Applicant’s Mark for registration? What does the pro se Applicant (and now owner of a federal Registration) do when a USPTO Opposition or Cancellation Proceeding is initiated against the owner’s Federal Registration?

Business Patent Law’s Recommendation:  seek the advice of an intellectual property attorney who has experience practicing before the US Trademark Office. The experienced professional may be able to correct or resolve the Trademark Application issues and preserve the Applicant’s procedural and substantive rights.

What if an Examiner makes your Patent Application Rejection Final? 

The Patent Applicant’s options can include filing one of the following:

  • An Appeal
  • A Request for Continued Examination
  • A Continuation Application
  • A Divisional Application

An Applicant may also allow the Application to go abandoned.

Business Patent Law’s Recommendation: seek the advice of a patent attorney who has experience practicing before the US Patent Office. There is no substitute for a seasoned patent attorney representing the Applicant before the US Patent Office.

Meeting USPTO deadlines       

When seeking an intellectual property attorney to commence representation of a previous pro se Applicant, it is essential that an attorney be contacted with adequate time remaining before the USPTO deadline.  A well-seasoned intellectual property attorney will likely refuse to take on a previous pro se matter when notified only days before the deadline.

If you have questions about intellectual properties and representation before the United States Patent & Trademark Office, please contact Business Patent Law, PLLC and we will discuss possibilities for your business and intellectual properties.

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Warranties as Effective Marketing Tools

Warranties: An Effective Marketing Tool

Warranties May Be Automatic

When a business sells goods, under the various State versions of the Uniform Commercial Code (UCC), implied warranties attach to the goods sold – unless the UCC’s implied warranties are specifically disclaimed in writing. If your company sells goods to customers in various States and some defective goods were discovered subsequent to the sale, one or more State’s version of the UCC’s implied warranties will apply. In the event of litigation, attorneys for each party will argue for the most favorable jurisdiction and venue. You, as the seller, could be forced to defend a legal action in the buyer’s home venue.

As a general rule, warranties are not applied to services supplied by the company supplying the service. For instance, no warranty is implied by law for a business that assists customers with the purchase of insurance policies, unless that business makes a warranty to the customer.

The Legal Aspects of Implied Warranties

Merchantability

The UCC’s Implied Warranty of Merchantability, in part, reads: “(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section, the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale…”

Fitness for a Particular Purpose

The UCC’s Implied Warranty of Fitness for a Particular Purpose reads: “Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.”

Warranty of Title and Against Infringement

The UCC’s Warranty of Title and Against Infringement reads, “(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that (a) the title conveyed shall be good, and its transfer rightful; and (b) the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.  (2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.  (3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.”

How to Eliminate Implied Warranties

In the majority of instances, the only way to eliminate the application of the various States’ versions of the Uniform Commercial Code to the sale of your company’s goods is to specifically disclaim the UCC’s implied warranties in writing.

Warranty Use as a Marketing Tool

Patented Product vs. Generic Product

As CEO of your company, you believe that invention is the lifeblood of the company and you have budgeted ten percent of annual sales for development, improvement and Patent procurement for the company’s new products. The company’s engineers have developed the third-generation widget which is patented and has also just received FDA approval. The company’s second-generation widget’s Patent expired years earlier and is currently manufactured by generic company competitors. Users of the second generation widget love the operation of the second generation widget manufactured by your generic competitors. Those users also like the price that is several thousand dollars less than what your company sold the second generation widget for before the Patent expired. Other than the UCC’s implied warranties and any other warranty required by law, the generic manufacturers offer no other warranties.

Competing with Generics

Your company’s patented third-generation widget includes radio frequency capabilities, memory, processing means, sensors, etc. not included in your second generation widget. FDA testing revealed that over a span of years, the patented third-generation widget is more durable than the second generation widget. The third generation widget performs healthcare functions impossible for the second generation widget to perform. Costs of the patented third-generation widget to the user are thousands of dollars more than the generic second-generation widget. Your company struggles to have its patented third-generation widget regain and improve its former market share previously achieved with its second generation widget.

Improving Market Share With Warranties

To improve the company’s market share of its patented third-generation widget, the CEO took instruction from the motor vehicle industry. The CEO opted to provide a ten year “bumper to bumper” warranty and commenced advertising that the patented third-generation widget was sold under warranty. The advertisement touted a limited ten-year warranty and superior performance compared to other widgets. Over the years, the marketplace has revealed that for high “price point” goods, generous warranties can improve sales.

Limited Warranties in Lieu of UCC Warranties

A business can offer a limited “bumper to bumper” warranty for its new product while expressly disclaiming the States’ Uniform Commercial Code’s implied warranties and other conditions. Depending on the type of goods and other facts, it is also possible for a business to expressly place limits on liability.

If you have questions about intellectual properties, warranties, and disclaimers, please contact Business Patent Law, PLLC and we will discuss possibilities for your business and intellectual properties.

If you would like to stay up-to-date with news that impacts your intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

 

Physician Sunshine Laws and Your Business

Physician Sunshine Laws And Your Business

Physician Sunshine Laws and Small Businesses

Does 42 U.S.C. 1320a-7h, known commonly as the “Physician Sunshine Laws-Open Payments” apply to a small business?  Maybe. If Physician Sunshine Laws (Open Payments Laws) are applicable to your business, you may also be surprised how these laws can be applied to your company.

Some States have their own version of physician sunshine laws. In some cases, the State version may apply when the federal version does not.

Many Business Patent Law, PLLC’s clients are involved with the provision of medical devices, supplies, etc. For most Business Patent Law clients, the Physician Sunshine Laws apply to an “applicable manufacturer” that “provides payment or other transfer of value” to a “covered recipient.”

Who Administers Physician Sunshine Laws?

CMS.gov (Centers for Medicare & Medicaid Services) is the Federal Agency that Administers Physician Sunshine Laws (Open Payments). 42 U.S.C. 1320a-7h (b) sets forth penalties for failing to file a required report to CMS.gov.

Who Needs to Report to Under Physician Sunshine Laws?

Subchapter S Company Examples

Does a Subchapter S Company that Manufactures Surgical Sponges for Use in Operating Rooms and Gives Samples of the Surgical Sponges to Medical, Surgical and Dental Practices Need to Report to CMS.gov?

Yes, according to 42 U.S.C. 1320a-7h (e) which reads:

(2) Applicable manufacturer

The term “applicable manufacturer” means a manufacturer of a covered drug, device, biological, or medical supply which is operating in the United States, or in a territory, possession, or commonwealth of the United States.

(4) Covered device

The term “covered device” means any device for which payment is available under subchapter XVIII [Medicare] or a State plan under subchapter XIX or XXI [federal or state plans for medical assistance] (or a waiver of such a plan).

(6) Covered recipient

(A) In general…“covered recipient” means the following: (i) A physician [is a doctor of medicine or osteopathy, a dentist, a doctor of podiatric medicine, a doctor of optometry or a chiropractor – as defined by 42 U.S.C. 1395x (r).] or

(ii) A teaching hospital.

LLC Examples

Does a Limited Liability Company (LLC) Manufacturing and Selling Scalpels Need to Report to CMS.gov?

  1. If the LLC makes quid pro quo sales to dentists, physicians and hospitals? No. (There is no transfer of value or gift.)
  2. If the LLC supplies lunches for the surgical office and the employees? Yes. (The lunches were a transfer of value.)

Does an LLC (having one or more covered recipients holding a minority equity ownership interest) that manufactures radio frequency devices for treatment of the human body need to report equity ownership Interests to CMS.gov? 

It depends.

  1. If a dentist owns 5% equity in the LLC? Yes.
  2. When the wife of a surgeon owns 10% equity in the LLC? Yes. ***
  3. If a pharmacist owns 5% equity in the LLC? No.
  4. When a physician’s assistant owns 5% equity in the LLC? No.

***42 U.S.C. 1320a-7h (a) reads:

(2) Physician ownership

In addition to the requirement under paragraph (1)(A), on March 31, 2013, and on the 90th day of each calendar year beginning thereafter, any applicable manufacturer or applicable group purchasing organization shall submit to the Secretary, in such electronic form as the Secretary shall require, the following information regarding any ownership or investment interest (other than an ownership or investment interest in a publicly traded security and mutual fund, as described in section 1395nn (c) of this title) held by a physician (or an immediate family member of such physician ([immediate family member] as defined for purposes of section 1395nn (a) of this title)) in the applicable manufacturer or applicable group purchasing organization during the preceding year:…

Determining what you need to do in these situations, and what you are legally required to do, can be difficult. If you have questions about your whether your company needs to file reports with CMS.gov, please contact Business Patent Law, PLLC and we will discuss possibilities for your business and intellectual properties.

If you would like to stay up-to-date with news that impacts your intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Retain Control of Patent Assets

Control Patent Assets

Who controls a Patent? Inventor? Company?

35 United States Code (U.S.C.) 101 reads as follows:

“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore . . . ” and this is the starting point for determining ownership of Patent Assets.

Last month’s blog included illustrations of how a company can lose control of its Patent Assets. This month we will explore steps you can take to retain control of your company’s patents.

Control of Patent Assets

Whenever possible, companies should limit the possibility that statutes and case law will determine the ownership of Patent Assets and other Intellectual Properties. To blindly believe that because the company paid someone to do something for the company, the company owns what was created is not always effective. It’s similar to people assuming that when they die without any estate planning, State law will distribute their property according to their wishes. It seldom works that way.

How to Better Control Company Patent Assets

Use contracts with employees, agents, and independent contractors to ensure the company’s ownership of the invention’s Intellectual Property rights. Some  conditions for control of Intellectual Property rights can include:

1. As a condition of employment, the employee agrees, in writing, that the company is the owner of:

  • all inventions invented by the employee; or
  • the inventions invented by the employee at any workplace provided by the company or with devices, tools, programs, etc. supplied by the company; or
  • the inventions invented by the employee that are associated with the company’s goods or services or the company’s pipeline of goods or services.

2. As a condition of employment, the employee gives the right of first refusal (in writing) to the company as to whether the company will own the invention.

3. Prior to hiring an agent or independent contractor, the company requires that agent/independent contractor to sign a written agreement stating that:

  • all the inventions invented by the agent/independent contractor at any workplace provided by the company or with devices, tools, programs, etc. supplied by the company are owned by the company; and/or
  • all inventions invented by the agent/independent contractor associated with the company’s goods or services or the company’s pipeline of goods or services belong to the company.

Control Your Company’s Patent Assets or Someone Else Will

An assignment document is used to transfer ownership of the invention’s intellectual property rights to the company.

If the employee will not agree to assign Patent Assets to the company as a condition of employment, hire someone who will.

The same approach should be applied to agents and/or independent contractors.

If you have questions about your company’s ownership of Patent assets, please contact Business Patent Law, PLLC and we will discuss possibilities for your business and intellectual properties.

If you would like to stay up-to-date with news that impacts your intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Entrepreneurs Small Business Startup Advice

Advice for Entrepreneurs and Small Businesses

Entrepreneurs and Small Businesses

In the United States there are approximately 29,000,000 small businesses. Most of these small businesses are founded by one or more entrepreneurs. One US Small Business Administration (SBA) measure for defining a small business is: a small business has 500 or fewer employees. According to the SBA, of these 29 million small businesses, approximately 23,000,000 small businesses do not have any employees.

In the United States, approximately one-half of all jobs are supplied by small businesses, so there is a correlation between more small businesses and increased availability of jobs.

Entrepreneurs Create Small Businesses

First, the entrepreneur conceives the invention/product/service and/or business model. Then that entrepreneur will develop a method to commercialize the invention/product/service. According to the SBA, each year more small businesses “are birthed than die.” Over the years, BPL has witnessed entrepreneurs who fail to realistically approach the problem of anti-commercialization forces that result in the death of small businesses. At the same time, those entrepreneurs who do persist can create small businesses that have 100 or more employees with annual sales of 200 million dollars or more.

The owners of a $200MM small business usually have a group of trusted advisors in place, but what about startups?

Entrepreneur Advice and Startup Considerations

If you are one of the 23 million small business owners, entrepreneurs or start-ups, you should:

  • Think and rethink the invention/product/service
  • Discover competitors and discern how your invention/product/service is different – your market niche is likely narrower than you originally thought
  • Determine how to make a profit in your niche market
  • Seek and listen to the advice of other successful small business owners
  • File Intellectual Property Applications – if your market and price point(s) justify the filings
  • Patents owned by startups provide the owners a limited monopoly to prevent others from making, using, offering for sale or selling their patented invention
  • Investors appear to like small businesses with Intellectual Property portfolios
  • Prepare a business plan
  • Commence assembling your team of trusted advisors – mentors first – then accountants, attorneys, engineers, insurance professionals, investors, lenders, and scientists, etc.

Many small business owners reap large financial rewards when the small businesses are sold to a third party.

Get Help With Your Small Business Venture

Business Patent Law, PLLC would like to assist you with your small business or Intellectual Property needs.  Please contact Business Patent Law, PLLC and we will discuss possibilities for your business.

If you would like to stay up-to-date with news that impacts your Intellectual Property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Personal Property Assets and Real Property Assets

Assets – Real – Personal

Personal Property Assets versus Real Property Assets

Most companies have both personal property and real property assets. As general rule, real property includes the land, building(s) attached to the land and fixtures attached to the building(s). A personal property asset is any asset other than real property.

The Relationship Between Real Property and Personal Property

Buildings, Structures and Fixtures are Tangible Real Property

By way of illustration, your plant’s building and its fixtures (such as cooling fans, ductwork and pipes) are generally considered tangible real property. Real property assets are tangible and can become tangible personal property assets. When an old cooling fan is replaced with a newer more efficient cooling fan, the new cooling fan becomes a tangible fixture and the old fan becomes tangible personal property.

Real Property Boundaries

A deed sets forth the boundary lines of the real property. Without permission of the land owner, anyone who crosses over the boundary lines of the real property may be charged with trespassing.

Patents are Usually Intangible Personal Property Assets

The claims of a Patent “stake out” the legal boundaries of the Patent. An analogy is the 1849 California Gold Rush where miners staked out their “gold fever” claims in the Sierra Nevada Mountains.

When the Patent claim remains valid, anyone who invades the space claimed by the Patentee without permission may become a defendant in an infringement suit. Staking your Patent infringement claims can be a “rough and tumble” adventure for both the plaintiff and the defendant. Under some select circumstances, that legal tousle may result in the defendant paying treble damages.

  • A few US Patents have been issued for real properties (e.g., building components attached to land), but most Patents are valuable intangible personal property assets.

Goods Covered by Patent Claims are Tangible Personal Property Assets

As noted above, Patents are generally intangible personal property assets. However, the widgets manufactured by your company that are covered by one or more claims of your Patent(s) are tangible personal properties which could also fall under the parameters of the Several States Uniform Commercial Codes. And if your widgets are medical devices, FDA approvals of the tangible personal properties are required before the widgets can be sold for medical use in patients.

Simultaneous Multiple Property Types

What happens when a situation arises where there are simultaneous real property, personal property and intellectual property issues? This will be addressed in a future post, so stay tuned!

If you have questions about intellectual property, tangible or intangible assets, please contact Business Patent Law, PLLC and we will discuss possibilities for your business and intellectual properties.

If you would like to stay up-to-date with news that impacts your intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Bylaws and Operating agreements for LLCs

Operating Agreements

Operating Agreements And Bylaws

Operating agreements for LLCs, or bylaws for C-corporations, are essential for successful companies. CEOs know the combination of market and governmental forces influence their company’s “up-and-down” cycles. Highly qualified directors for a corporation or members of an LLC can provide helpful advice for management. However, such advice is weighed under the purview of the company’s operating agreement or bylaws.

Operating Agreements Assist In Navigating Business Cycles

Frequently, an LLC is organized by the joint inventors of a widget. The articles of organization are filed with a Secretary of State, but the joint inventors failed to have an operating agreement in place prior to selling widgets. Sometimes the widgets (that may begin as an experiment in someone’s garage) become a multi-billion dollar international company.

Since human memories are faulty, particularly under the stress of managing a new startup, operating agreements help keep the members focused on the company’s business and profitability. Without an operating agreement, the transition from an LLC startup to an international company can be painful for the joint inventors/owners.

Key Provisions

The founders of the LLC may consider an Operating Agreement that addresses some of the following:

  • Goals for sales and profitability
  • Declaration of each member’s ownership interests in the Intellectual Properties
  • Maximum quantity and type(s) of equity units
  • Type of equity units issued for a member’s capital contributions to the LLC (e.g., licensed/leased, sweat equity, transfer of title, working capital, etc.)
  • Qualifications for membership and maximum number of shareholders (Note: membership may be limited to certain classifications of investors as defined by the federal securities acts and regulations)
  • Vesting of members rights and privileges
  • Day-to-day management of the LLC–by members or nonmembers–and restraints to management’s authority
  • Annual and/or special meetings–quorums, majority, supermajority
  • Milestones for ceasing operations or selling the LLC–asset purchase agreement, bankruptcy, equity sale, merger, re-branding the company, etc.
  • Requirements for a withdrawing member or the estate of a deceased member
  • Conditions for forced withdrawal of a member from the LLC

The success of your business and its Intellectual Properties are directly related to sales, profitability and current/future market value. A well drafted operating agreement (bylaws) can make the road to achieving your goals less bumpy.

If you have questions about Intellectual Property matters, an operating agreement or the organization of a Limited Liability Company, please contact Business Patent Law, PLLC . We welcome the opportunity to discuss possibilities for your business and intellectual properties.

If you would like to stay up-to-date with news that impacts your Intellectual Property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.