Tag: business strategy

Patent Applications Unlock Innovation

Patent Applications Unlock Innovation

💡 Patent Applications Unlock Innovation

Patent applications unlock innovation and are one of the most crucial steps an innovator can take to protect an invention and secure its commercial future. It’s more than just paperwork; it’s a strategic business asset that offers significant advantages to individuals and companies alike.

🛡️ Patent Applications Unlock Future Exclusionary Rights

The primary and most powerful benefit of a patent is the exclusive right it grants to the inventor/owner for a limited time. In the United States, that time is 20 years from the first nonprovisional patent application.

  • Preventing Infringement: A granted patent allows you to stop others from making, using, selling, offering for sale, or importing the invention without your permission. This legal monopoly is the bedrock for successful commercialization.
  • Controlling the Market: You gain the power to set prices and control the supply of your patented product or process in the marketplace, which can lead to substantial financial returns.

💰 Patent Applications Unlock Potential Value

A patent transforms an idea into a tangible, valuable business asset that can be leveraged for growth. Some patent applications are exceptional and have value before the patent is granted. Multiple patent applications can unlock the next generation of assets.

  • Licensing and Royalties: You can license the patent to others, generating a steady stream of royalty income without having to manufacture or market the product yourself.
  • Attracting Investment: Patents signal to investors and venture capitalists that your technology is novel and legally protected, making your company a safer and more attractive investment opportunity.
  • Standalone Sale: The owner of the patent can sell to patent to the highest bidder.
  • Increased Company Valuation: For startups and established firms, a robust patent portfolio increases the company’s net worth and provides a stronger position during mergers and acquisitions (M&A).

🚀 Strategic and Competitive Edge

Beyond immediate financial gain, a patent provides a vital competitive advantage in the business landscape.

  • Competitive Deterrent: The existence of the patent can deter competitors from entering your market space, saving costs and headaches of future litigation.
  • Defensive Protection: Patents can also be used defensively. If a competitor sues for infringement, your company’s patents can be used as counter-leverage in negotiations.
  • Public Recognition: The patent document provides public recognition of inventorship, enhancing your company’s reputation as a leader in innovation and technology.

The Takeaway

Don’t leave valuable innovation exposed! Filing a patent application is an essential investment that secures enforceable rights, enhances financial prospects, and a businesses potential for long-term success.  And exceptional patent applications unlock royalty streams before the patent issues.

Ask Us Anything…about Intellectual Property!

If you or your business are in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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

What is a sensory trademark

Exploring the World of Sensory Marks

What are Sensory Marks?

When you think of a brand, what comes to mind? Likely a name, a logo, or perhaps a catchy slogan. These are the traditional trademarks we encounter every day. But in our increasingly immersive world, brands are engaging our senses in entirely new ways, leading to the rise of Sensory Marks.

Sensory Marks are a fascinating category of non-traditional trademarks that appeal to our senses beyond just sight. While challenging to register, they offer powerful ways to distinguish your brand.

Sensory Sound Marks 🎶

This is perhaps the most recognized category of sensory marks. A sound mark is a distinct sound that identifies the source of goods or services. Think of iconic audio cues like the Netflix “Tudum,” the MGM lion’s roar, or the Intel Inside jingle. These sounds aren’t just background noise; they instantly connect you to a brand.

  • Key Challenge: The sound must be inherently distinctive or have acquired distinctiveness through extensive use. Common sounds (like a standard phone ring) are generally not registrable.

Sensory Scent Marks 👃

Imagine walking into a store and recognizing the brand solely by its unique fragrance. A scent mark uses a specific smell to identify goods or services. These are extremely difficult to register due to the subjective nature of smell and the challenge of consistently reproducing a scent. However, successful examples exist, such as the smell of Play-Doh for “modeling compound.”

  • Key Challenge: Describing the scent accurately and demonstrating its non-functional, source-identifying nature is crucial.

Sensory Taste Marks 👅

While incredibly rare, a taste mark would involve a specific, non-functional taste that serves as a brand identifier. The hurdle here is immense: taste is intimately linked with the product itself (e.g., you can’t trademark the taste of an orange for oranges). For a taste to function as a mark, it would likely need to be a unique and arbitrary taste for a product that doesn’t inherently have that taste.

  • Key Challenge: Proving distinctiveness and non-functionality, especially given the inherent functionality of taste in food and beverages.

Motion Marks 🎬

While not strictly a “Sensory Mark” in the same vein as sound or scent (as it relies on visual perception), motion marks are often discussed alongside them as non-traditional marks. These are short animations or sequences of movements that act as a brand identifier. Think of the distinct opening animation of a movie studio’s logo or a specific digital animation that signals a brand.

  • Key Challenge: Clearly defining the sequence of movements and demonstrating its use as a source identifier.

Color Marks (as applied to an entire product) 🎨

Again, strictly visual but often grouped with non-traditional marks due to their unique nature. While a logo containing a color is traditional, a color mark protects a specific color as applied to an entire product or its packaging, acting as a source identifier. Iconic examples include Tiffany Blue for jewelry boxes or UPS Brown for delivery services.

  • Key Challenge: Proving that consumers associate the color alone with the brand, not just as an aesthetic choice. This usually requires significant evidence of acquired distinctiveness.

The Future of Sensory Branding

As technology advances and consumer experiences become more sophisticated, we anticipate even more innovative ways brands will seek to connect with audiences through sensory engagement. Protecting these unique brand assets requires a nuanced understanding of intellectual property law.

If your business is creating a distinctive sensory experience, reach out to Business Patent Law, PLLC. We can help you explore whether your unique brand elements qualify for trademark protection and guide you through the complexities of non-traditional mark registration.

Ask Us Anything…about Intellectual Property!

If you or your business are in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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

The 66 Claims - A Patent Infringement Case

66 Claims: A Tale of Patent Infringement

The 66 Claims

This is a tale of what happened to the 66 claims.

A, B and C were officers and engineers for ABC company located in Cincinnati. In 2022, A, B and C assigned their interests in their joint invention to ABC company. In 2022, ABC company filed the Patent Application in the United States Patent and Trademark Office (USPTO). The original ABC Patent Application had 66 claims.

What Happened With the 66 Claims

In 2024, A and B were playing a best ball golf tournament in Louisville. The other twosome happened to be X and Z, who were officers of XYZ company located in Indianapolis. Before starting the back nine, all players took a break at the clubhouse. By the thirteenth hole, A and B were talking about their joint invention.  X and Z listened closely.

In early 2025, ABC company became aware that XYZ company was selling an XYZ invention that appeared to be identical to the ABC company’s invention. ABC had yet to receive regulatory approval for use of its invention. Somehow, XYZ received regulatory approval and made it to market before ABC.

The 66 Claims of the ABC Company’s Application

In the summer of 2025, ABC received the First Office Action from the Examiner regarding the 66 claims. In the Office Action, the Examiner rejected the first 60 claims of the 66 claims but indicated that the last six claims were allowable if some of the language of those six claims was tweaked. Since A, B and C were engineers and not patent attorneys, A, B and C opted to seek legal assistance.

What Did the Law Firm Do With ABC’s Patent Application?

  • First – the firm determined what product XYZ sold.
  • Second – the firm tweaked the last six claims to make them allowable while at the same time ensuring that those six claims read on XYZ product.
  • Third – the firm filed a Response to the Office Action cancelling the first 60 claims and requesting the Examiner allow the last six claims to mature into a Patent.
  • Fourth – the firm prepared another five Patent Applications claiming priority/benefit to the first ABC Application. Each of those five Patent Applications contained 20 claims.  Three of the Applications were Continuations, and one of those included less structures to achieve the same result. Two of the Applications were Continuation-In-Part Applications that included additional structures that ABC had invented since the filing of the first ABC Company Application.

35 U.S.C. § 120 allows an Applicant to claim the benefit of an earlier Patent Application if the earlier Patent Application is still pending.

What Was the Outcome of the 66 Claims?

  • Before the first ABC Company Application was abandoned, the original first 60 claims morphed into five additional Patent Applications having a total of 100 claims.
  • Original claims 61-66 were the basis for the first Patent. ABC sued XYZ for infringement.
  • Before going to trial and because of the distinct possibility of intentional infringement and treble damages, XYZ agreed to allow ABC to select the infringement damages calculation, e.g., ABC’s losses, such as lost profits or a reasonable royalty, or an accounting of the infringer’s profits.
  • XYZ ceases to use, offer for sale, sale, or make ABC’s patented invention.

Ask Us Anything… about Intellectual Property!

If you or your business are in the greater Cincinnati Indianapolis, Lexington or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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

Micro business requirements by USPTO

Micro Entity and the US Patent Office

What is the Benefit of Being Certified as a Micro Entity?

The United States Patent Office’s (USPTO) fees’ structures are segregated into micro entity, small entity and large entity categories. Government fees for small entities are generally less than other entities’ fees.

USPTO fees periodically change, and it is advisable to check the USPTO website for current rates.

How does an Entity Qualify for Micro Entity Status?

37 Code of Federal Regulations Section 1.29 defines what entities qualify for micro entity status. In part, 37 C.F.R. 1.29 reads as follows:

(a) To establish micro entity status under this paragraph, the applicant must certify that:

(1) The applicant qualifies as a small entity as defined in § 1.27 without relying on a government use license exception under § 1.27(a)(4);

(2) Neither the applicant nor the inventor nor a joint inventor has been named as the inventor or a joint inventor on more than four previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications for which the basic national fee under 35 U.S.C. 41(a) was not paid;

(3) Neither the applicant nor the inventor nor a joint inventor, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and

(4) Neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed, nor is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.

(b) An applicant, inventor, or joint inventor is not considered to be named on a previously filed application for purposes of paragraph (a)(2) of this section if the applicant, inventor, or joint inventor has assigned, or is under an obligation by contract or law to assign, all ownership rights in the application as the result of the applicant’s, inventor’s, or joint inventor’s previous employment.

(c) If an applicant’s, inventor’s, joint inventor’s, or entity’s gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used to determine whether the applicant’s, inventor’s, joint inventor’s, or entity’s gross income exceeds the threshold specified in paragraph (a)(3) or (4) of this section.

(d) To establish micro entity status under this paragraph, the applicant must certify that:

(1) The applicant qualifies as a small entity as defined in § 1.27 without relying on a government use license exception under § 1.27(a)(4);

(2)

(i) The applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or

(ii) The applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education.

(e) Micro entity status is established in an application by filing a micro entity certification in writing complying with the requirements of either paragraph (a) or (d) of this section and signed either in compliance with § 1.33(b), in an international application filed in a Receiving Office other than the United States Receiving Office by a person authorized to represent the applicant under § 1.455, or in an international design application by a person authorized to represent the applicant under § 1.1041 before the International Bureau where the micro entity certification is filed with the International Bureau. Status as a micro entity must be specifically established in each related, continuing and reissue application in which status is appropriate and desired. Status as a micro entity in one application or patent does not affect the status of any other application or patent, regardless of the relationship of the applications or patents. The refiling of an application under § 1.53 as a continuation, divisional, or continuation-in-part application (including a continued prosecution application under § 1.53(d)), or the filing of a reissue application, requires a new certification of entitlement to micro entity status for the continuing or reissue application

What is the Maximum Income that Will Qualify Special USPTO Consideration?

As of September 2024 and according to the USPTO, the maximum qualifying gross income for paying the reduced micro entity rate is $241,830. This maximum income limit usually changes in September of each calendar year.

Ask Us Anything…about Intellectual Property!

If you or your business are in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact us.

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

USPTO National Stage Application - US Patent Lawyer

US National Stage – Revisited

US National Stage

In the November 6, 2017 post, it was written, “By using this procedure, it is possible for your company to receive the grant of the US Patent before parallel Application filed in other jurisdictions are examined.” Since that date, the USPTO has somewhat altered the time line associated with US National Stage Applications.

Regarding the US National Stage, in the November 6, 2017 post, Business Patent Law, PLLC wrote:

  • Regardless of the nationality of the Patent Applicant, file a Patent Application in the USPTO
  • It best for your company to originally file a Provisional, Nonprovisional or PCT Application in the USPTO — however, if the Provisional, Nonprovisional or PCT Application was first filed in another jurisdiction, a US Nonprovisional Application can be filed in the USPTO until the US statutory deadline has passed
  • If a PCT Application is not the first Application filed, a PCT Application claiming priority to a Provisional or Nonprovisional Application is filed in a PCT Receiving Office (preferably, the USPTO Receiving Office)
  • File a US Nonprovisional Patent Application shortly after the PCT Application was filed, rather than waiting until near the deadline allowed by the PCT
  • By using this procedure, it is possible for your company to receive the grant of the US Patent before parallel Applications filed in other jurisdictions are examined
  • As previously indicated, the grant of a US Patent can expedite the grant of parallel Patents in many foreign jurisdictions

Current Timing for a US National Stage

After the National Stage Application is filed in the USPTO, the length of time before receiving the USPTO “Notice of Acceptance of Application Under 35 U.S.C. 371 and 37 CFR 1.495” is variable. Because of this uncertainty, it is unlikely that the National Stage Application will be granted before parallel applications must be filed in foreign jurisdictions.

If the National Stage Applicant has not received the USPTO “Notice of Acceptance of Application Under 35 U.S.C. 371 and 37 CFT 1.495” after the passage of a reasonable amount of time, contact the USPTO Help Desk to assist with the determination that the US National Stage Application has been properly filed in the USPTO.

Business Patent Law, PLLC’s Observation

Although US law allows the National Stage Applicant to file amended claims with the initial filing of the US National Stage Application, Business Patent Law, PLLC has concluded that it is better to first receive the “Notice of Acceptance of Application Under 35 U.S.C. 371 and 37 CFT 1.495,” and thereafter file the set of amended claims before the first USPTO Office Action.

If you or your company needs assistance with US national, foreign or international Patent Applications, please contact Business Patent Law, PLLC.

Ask Us Anything…about Intellectual Property!

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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

Trademark Examiner's Amendment

Should You Accept a Trademark Examiner’s Amendment?

Trademark Examiner’s Amendment of Application

A Trademark Examiner’s amendment is sometimes suggested and/or required during examination a US Trademark Application*.

Some Examiner’s amendments will alter the scope of rights associated with a future Trademark Registration. Other Trademark Examiner’s amendments will not modify the scope of rights associated with a future Trademark Registration.

Whether or not to accept the Trademark Examiner’s amendment is a business decision.

Potential Consequences of an Amendment

Applicant’s acceptance of the Trademark Examiner’s amendment generally results in Trademark Registration for the Applicant.

Failure to agree to the Examiner’s amendment can result in:

  • Legal arguments that the Examiner’s suggested amendment is inappropriate
  • A refusal to register the Trademark and the loss of long-term federal rights associated with a US Registration
  • An appeal to the Trademark Trial and Appeal Board where the Applicant can lose the appeal
  • Filing a new Application to register the Trademark, where the new Application is modified from the previously filed Trademark Application

About Section 707 – TMEP – Examiner’s Amendment*

Examples of Section 707 relevant procedures for Trademark Examiners include:

  • An Examiner’s amendment should be used whenever appropriate to expedite prosecution of an Application
  • An Examiner’s amendment is a communication to the Applicant in which the examining attorney states that the Application has been amended in a specified way
  • Except in the situations listed in TMEP §707.02, the amendment must be specifically authorized by the individual Applicant, someone with legal authority to bind a juristic Applicant 700-20 October 2010 (e.g., an officer of a corporation or general partner of a partnership), or the applicant’s qualified practitioner
  • Except in the situations set forth in TMEP §707.02 in which an examiner’s amendment is permitted without prior authorization by the Applicant, an examining attorney may amend an application by examiner’s amendment only after securing approval of the amendment from the individual Applicant, someone with legal authority to bind a juristic Applicant, or the Applicant’s qualified practitioner by telephone, e-mail, or in person during an interview. Cf. 37 C.F.R. §§2.62(b) and 2.74(b)
  • If the Applicant has a qualified practitioner, the examining attorney must speak directly with the practitioner
  • If the Applicant is pro se, the examining attorney must speak directly with the individual Applicant or with someone with legal authority to bind a juristic Applicant (e.g., a corporate officer or general partner of a partnership)
  • For joint Applicants who are not represented by a qualified practitioner, each joint Applicant must authorize the examiner’s amendment

*Along with Trademarks, the USPTO Trademark Manual of Examining Procedure (TME) also applies to Service Mark Applications.

If your company needs assistance with its Trademarks/Service Marks, please contact Business Patent Law.

Ask Us Anything… about Intellectual Property!

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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

Trade Secrets - What are they and how do you protect them

What Are Trade Secrets?

Trade Secrets

Trade Secrets are a type of intellectual property that can be of great value to the owner over a period of years. For something to be a Trade Secret, it must be kept secret. Public disclosure of a Trade Secret destroys the value of the Trade Secret.

Depending on the circumstances associated with the Trade Secret, federal (18 U.S.C 1831-1839), State or common law may determine the rights of the owner of the Trade Secret. 18 U.S.C 1831-1839, for instance, has both criminal and civil provisions.

Forty-eight of the 50 States have adopted the Uniform Trade Secrets Act (UTSA) which became the law of those States.

Definitions of Trade Secrets

U.S.C. 1939 (3) reads:

“…(3) the term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—

          (A)    the owner thereof has taken reasonable measures to keep such information secret; and

          (B)    the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information;…”

The UTSA defines “trade secret” as:

“”Trade secret” means information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that:

  1. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
  2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

What is misappropriation?

 18 U.S.C. 1939 (5 & 6) read:

 “(5)   the term “misappropriation” means—

          (A)    acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

          (B)    disclosure or use of a trade secret of another without express or implied consent by a person who—

                    (i)     used improper means to acquire knowledge of the trade secret;

                    (ii)    at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was—

                              (I)     derived from or through a person who had used improper means to acquire the trade secret;

                              (II)   acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or

                              (III)  derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or

                    (iii)   before a material change of the position of the person, knew or had reason to know that—

                              (I)     the trade secret was a trade secret; and

                              (II)   knowledge of the trade secret had been acquired by accident or mistake;

What are Improper Means?

 (6)    the term “improper means”—

          (A)    includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and

          (B)    does not include reverse engineering, independent derivation, or any other lawful means of acquisition;…”

The UTSA Defines “Improper Means” and “Misappropriation”

(1)     “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means;

(2)     “Misappropriation” means:

(a)     Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(b)     Disclosure or use of a trade secret of another without express or implied consent by a person who:

    1. Used improper means to acquire knowledge of the trade secret; or
    2. At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was:
    3. Derived from or through a person who had utilized improper means to acquire it;
    4. Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
    5. Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
    6. Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

If your company needs assistance protecting its Trade Secrets, please contact Business Patent Law, PLLC.

Ask Us Anything… about Intellectual Property!

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies. If you need assistance, please contact Business Patent Law, PLLC.

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

Restriction Requirement for Patents

Restriction Requirement

What Our Company Did

We are a start-up existing on a shoe string budget.

An inventor not associated with our company invented a product.  Because our company expected the product would improve our bottom line, we opted to take a license from the inventor to make and sell the product.

Apparently, to save legal fees, the inventor opted to represent himself before the USPTO. Unfortunately, about two years after filing the Patent Application, the inventor received a Restriction Requirement from the USPTO.

What do we do now?

What is a Restriction Requirement?

Title 35 United States Code 121 – Restriction Requirement

35 U.S.C. 121 reads:

“If two or more independent and distinct inventions are claimed in one application, the Director may require the application to be restricted to one of the inventions. If the other invention is made the subject of a divisional application which complies with the requirements of section 120 it shall be entitled to the benefit of the filing date of the original application. A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if the divisional application is filed before the issuance of the patent on the other application. The validity of a patent shall not be questioned for failure of the Director to require the application to be restricted to one invention.”

35 U.S.C. 121 prevents a tribunal from using the first Application and/or first Patent from which the second Application was divided from being used to reject the claims of the second Application and/or subsequent second Patent.

Restriction Requirement – How The Inventor Can Respond

In the Restriction Requirement, the Examiner will argue something like, “The species are independent or distinct because as disclosed the different species have mutually exclusive characteristics for each identified species.  In addition, these species are not obvious variants of each other based on the current record.”  Generally, the Examiner will suggest groupings of claims from which the Applicant can select a single group of claims for first examination.

An Applicant has an opportunity to argue against the Restriction Requirement by stating that the species are patentably indistinct.  However, this can be a risky strategy.  Such an admission can be used to reject the second species of claims as obvious in view of the first species of claims and other prior art.  In other words, the claims can be rejected as obvious pursuant to 35 U.S.C. 103.

The Better Strategy When Responding to a Restriction Requirement

When the Examiner argues for a Restriction Requirement, the Applicant can elect an invention for first prosecution.

In most instances, the better strategy for the Applicant is to elect one of the Examiner’s groupings claims for first prosecution. During prosecution, the scope of the claims can be expanded by amendment. Frequently, after the examination of the first grouping of claims, Applicant’s will file a Divisional Application including additional claims related to the invention.

Responding to a Restriction Requirement can be tricky. If you need assistance responding to a Restriction Requirement, please contact Business Patent Law, PLLC.

Ask Us Anything… about Intellectual Property!

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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

International Intent to Use Application

Intent to Use Application – Multiclass

What is an Intent to Use Application?

When the goods or services are yet to be used in commerce, clients may opt to file Intent to Use Applications.  The Intent to Use Trademark/Service Mark Application establishes a “constructive” date of first use with the grant of the Registration. Having this date formally established and recorded can benefit the Applicant/Owner of the Mark in situations where there are conflicts between competing Applications for Registration.

Filing a Multi-International Class Intent to Use Application

There are forty-five (45) International Classifications of goods and services. The USPTO requires a filing fee for each International class in which the Applicant intends to use the goods or services. International Classes 1-34 apply to goods and International Classes 35-45 apply to services. Applicants can file a Trademark/Service Mark Application for the same – MARK – in one or more International Classes.

The Scenario: A Case Study

Our company filed a multiclass Application for our – MARK – in International Classes 1 (chemicals), 6 (pharmaceuticals), 10 (medical apparatus), 29 (staple foods) and 44 (medical services).

In due course, the Examiner issued a Notice of Allowance for International Classes 1 (chemicals), 6 (pharmaceuticals), 10 (medical apparatus), 29 (staple foods) and 44 (medical services).

Within six months after the Notice of Allowance, the Applicant must file a Statement of Use for the – MARK – for each International Class before the Registration for that International Class will be granted.

Past The Six-Month Deadline?

For an International Class, if the Applicant has not used the – MARK – in interstate/international commerce before the expiration of the sixth month period, the Applicant can file a Request for an Extension of Time in Which to File a Statement of Use. The Request for an Extension of Time in Which to File a Statement of Use grants the Applicant an additional six-month period to file a Statement of Use for an International Class.

How Many Extensions?

Under Title 15 of the United States Code, an Applicant may file a maximum of five Requests for an Extension of Time in Which to File a Statement of Use.  If a Statement of Use is not filed for an International Class within the maximum statutory time limit, the Application for Registration will go abandoned for that International Class and the Applicant must file a new Application for Registration of the – MARK –.

NOTE: Some International Classes of goods/services require government agency approval before those goods and services can be used in interstate/international commerce.

For the company’s – MARK –, we were able to establish interstate/international use:

  • For International Class 29 (staple foods), the company filed a Statement of Use during the first Request for an Extension of Time to file a Statement of Use and received a Registration.
  • For International Class 44 (medical services), the company filed a Statement of use during the second Request for an Extension of Time and received a Registration.
  • For International Class 1 (chemicals), the company filed a Statement of use during the third Request for an Extension of Time and received a Registration.
  • Due to lack of FDA approval, the company could not establish intrastate/international use of the – MARK – for International Classes 6 (pharmaceuticals) and 10 (medical apparatus) and the Application went abandoned for International Classes 6 and 10.

BPL’s Observations

Although a multiclass Application can be divided after filing, it is usually more cost-efficient for a company to file an Application for each International Class 1 (chemicals), 6 (pharmaceuticals), 10 (medical apparatus), 29 (staple foods) and 44 (medical services), i.e., file five Applications for Registration rather than a single multi-class Application.

The time of filing an Intent to Use Application is critical for most businesses.

Trademark/Service Mark situations can become complicated. If your company needs cost-efficient assistance with filing for Trademarks/Service Marks, please contact BPL.

If you or your business are located in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, we are here to assist you.

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capital gains on patents

Capital Gains – Intellectual Properties  

Capital Gains May Be Available For The Transfer Of Intellectual Property Rights

A capital gains tax rate for the transfer of Intellectual Property is available if the transfer of Intellectual Property rights is carefully planned.

Patent Rights are not Accorded Capital Gains Status – Unless…

26 I.R.C. 1221 – Capital Asset, in part, reads:

(a)    In General

For purposes of this subtitle, the term “capital asset” means property held by the taxpayer (whether or not connected with his trade or business), but does not include –

…(3) a patent, invention, model or design (whether or not patented), a secret formula or process, a copyright, a literary, a musical/artistic composition, a letter or memorandum, or similar property, held by—

                    (A)    a taxpayer whose personal efforts created such property,

                    (B)    in the case of a letter, memorandum, or similar property, a taxpayer for whom such property was prepared or produced, or

                    (C)    a taxpayer in whose hands the basis of such property is determined, for purposes of determining gain from a sale or exchange, in whole or part by reference to the basis of such property in the hands of a taxpayer described in subparagraph (A) or (B)

Situation 1 – Patent Capital Asset

Joe was the founder of his company JoeCo. Over the years, Joe was the inventor of several Patents for the products sold by JoeCo. After 40 years in business, Joe was seeking buyers for JoeCo. AcquireCo purchased JoeCo and all assets and liabilities.

Joe can treat this transfer of Patent rights as a capital asset because the U.S. Internal Revenue code also includes 26 I.R.C. 1235. When specific facts exist, the inventor’s Patents are capital assets taxed as capital gains.

26 I.R.C. 1235 – Sale or Exchange of Patent, in part, reads:

(a)    General    A transfer (other than by gift, inheritance, or devise) of property consisting of all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights, by any holder shall be considered the sale or exchange of a capital asset held for more than 1 year, regardless of whether or not payments in consideration of such transfer are—

                     (1)     payable periodically over a period generally coterminous with the transferee’s use of the patent, or

                     (2)    contingent on the productivity, use, or disposition of the property transferred.

(b)    “Holder” defined For purposes of this section, the term “holder” means—

                    (1)     any individual whose efforts created such property, or

                    (2)    any other individual who has acquired his interest in such property in exchange for consideration in money or money’s worth paid to such creator prior to actual reduction to practice of the invention covered by the patent, if such individual is neither—

                    (A)    the employer of such creator, nor

                    (B)    related to such creator (within the meaning of subsection (c)).

Situation 2 – Intellectual Property Gains

Jill was a seamstress with talent for making and selling clothing designs that generated a comfortable living for her family. Jill was a sole proprietor and over the years received two Trademark Registrations for Jill’sThings®. After 40 years, Jill sold her business to AcquiringJack, LLC with a knack for scaling small businesses. 26 I.R.C. 1221 does not prevent Jill’sThings® from being classified as capital assets. Therefore, the sale of Jill’sThings® would be treated as capital gains.

Situation 3 – Patent Capital Asset

AcquiringJack, LLC purchased all rights associated with two JoeCo Patents previously sold to a third party. AcquiringJack LLC held the JoeCo Patents for 18 months and sold the JoeCo Patents to LastMinuteCharlie, Inc. AcquiringJack, LLC’s sale of the JoeCo Patents will be treated as capital gains.

Situation 4 – No Capital Gains

Second Fiddle was an individual who was a skilled guitarist and sufficiently talented to write original music. Over the years, Second Fiddle had received Copyright Registrations for some of his musical compositions. While on a regional tour with his band, the Fiddlers, a vice president of Big Break Inc. made Second Fiddle an offer he could not turn down for his Copyright Registrations.  Second Fiddle sold his Copyright Registrations to Big Break Inc. According to 26 I.R.C. 1221, a Copyright or musical score held by the creator is not a capital asset. Second Fiddle’s sale was taxed as ordinary income.

Situation 5 – Intellectual Property Capital Gains

Philharmonic Violin was an individual who played third violin with the orchestra. Although not as musically skilled as some other violinists in the orchestra, Philharmonic Violin wrote a few concertos and was granted some Copyrights for her efforts. Philharmonic Violin assigned her Copyrights to her company, Concertos LLC. On her lucky day, Philharmonic Violin arrived early for practice and was playing some of the supporting violin portions of her concertos. Big Director, the CEO of his production company, heard the portions of Philharmonic Violin’s concertos and told Philharmonic Violin that they were perfect for the score of one of his films. On that day, Big Director wrote a check payable to Concertos LLC. Because Concertos LLC rather than Philharmonic Violin received the payment, the payment will be taxed as a capital asset.

Business Patent Law, PLLC does not provide tax counsel. The above situations are only illustrative. Changes in the facts of a taxable situation can generate different applications of Title 26 Internal Revenue Code. Advance planning for taxable situations can reduce the amount of taxes paid. For tax advice, please contact your tax advisor.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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