Patent Claim - Learn about patents

Patent Claims 101 – What is a Patent Claim?

What are Patent Claims?

Patent claims are for intellectual property what a property deed is for physical property. A property deed defines the physical boundaries of your real properly (real estate). Similarly, a Patent claim defines the ownership boundaries of your Intellectual Property.

Claims Determine If There Is Infringement

When a person crosses over your physical property line and enters onto your real property without your permission, they are trespassing and you can file a legal trespass action in the appropriate State court.

Likewise, when someone (who does not have your permission) attempts to use your patented Intellectual Property, you can file an infringement suit in the appropriate US District Court.

Are Patent Claims Complicated?

Because a Patent claim is a single sentence, the claim can be complex. Here are some Patent claim facts for you:

The Anatomy of a Patent Claim:

  • Since 1790, the US Patent Office has required that any Patent claim must be a single sentence
  • An independent claim is a Patent claim that does not reference or refer to another claim of the Patent
  • A dependent claim refers to another claim number in the preamble of the dependent claim
  • The words of the claim preceding “comprising” or “consisting” are the preamble
  • The words that follow “comprising” or “consisting” in a claim are the body of the claim

In Addition:

  • The body of the claim is used to determine patentability or infringement
  • A dependent claim can reference (depend on) an independent claim or another dependent claim
  • Dependent claims include all the structures/limitations of the claim (or claims) from which they depend

How Patent Claims Work

Below are examples of an independent Patent claim and three related dependent Patent claims. The parts of the independent claim (preamble and body) are labeled:

Independent Claim (#1)

[the preamble]         A transportation vehicle comprising:

[the body]                  a)  a frame supporting a surface area adapted to transport matter;

b) an axle attached to the frame; and

c) at least two wheels.

NOTE: A Patent Examiner could construe Independent Claim #1 to include: a bicycle, cart, motorcycle, wagon, trailer, automobile, truck, airplane, etc.

Dependent Claim (#2)

The transportation vehicle of  Independent Claim #1 further comprising a motor.

NOTE: A Patent Examiner could construe claim 2 to include: a motorcycle, automobile, truck, airplane, etc.

Dependent Claim (#3)

The transportation vehicle of Dependent Claim #2, wherein the surface area is adapted to carry at least 25 metric tons.

NOTE: A Patent Examiner could construe claim 3 to include a truck or an airplane.

Dependent Claim (#4)

The transportation vehicle of Dependent Claim #3 further comprising wings.

NOTE: A Patent Examiner could construe claim 4 to include an airplane.

Need Help With Your Patent or Patent Application?

If you need legal assistance preparing or managing Patent Applications, please contact Business Patent Law, PLLC.

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

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.

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.

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.

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

Legal cease and desist letter on patent infringement

Cease and Desist Letters

I have received a cease and desist letter

The letter claims that my company is infringing a US Patent.  Can you (and your company) ignore the letter? I wouldn’t recommend ignoring a letter. If your company ignores the cease and desist letter, your company could regret not responding to that letter.

How do I know if the cease and desist letter is valid?

An experienced patent attorney can assist you in determining if the claim of infringement has merit. Among other things, your patent counsel will review the United States Patent and Trademark Office (USPTO) record regarding the Patent. Additionally, your attorney will compare your company’s allegedly infringing goods and/or services against the USPTO record.

It is also wise to have your legal counsel prepare an opinion regarding whether or not your company’s goods or services are infringing the potential plaintiff’s Patent.

What are my company’s options?

When responding to an allegation of patent infringement, use experienced counsel. Your patent attorney may recommend any of the following options and/or actions. For example, you (or your company) could:

  • Secure an agreement with the Patent holder stating that your company’s goods and/or services do not infringe the Patent holder’s Patent
  • Enter into a license agreement with the Patent holder
  • Establish a cross-license agreement with the Patent holder
  • Phase-out and cease the use of your company’s allegedly infringing goods and/or services
  • Your company and the Patent holder may agree to mediation or arbitration
  • Join with other third parties receiving a similar cease and desist letter from the Patent holder and collectively litigate against the validity of the Patent holder’s Patent
  • Institute a USPTO Post Grant Procedure against the patentability and/or validity of the Patent holder’s Patent
  • In a federal district court, institute a Declaratory Action Judgment action against the Patent holder
  • After the Patent holder has instituted an infringement action against your company’s goods and/or services in a federal district court, counter-claim that the Patent holder’s Patent is invalid
  • After litigation is commenced in the federal court system, settle the matter

Costs to the company

As a general rule, costs for a USPTO Post Grant procedure are much less than the costs of litigating in the federal court system.  The costs associated with USPTO Post Grant procedures and mediation or arbitration can be similar.

If you have received a cease and desist letter and need legal assistance, please contact Business Patent Law, PLLC. Likewise, if your company believes another company has infringed your Patent and you need to send a cease and desist letter, please contact Business Patent Law, PLLC and we will discuss possibilities for your business.

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

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.

US Patents Held By Foreign Companies

Foreign Companies and US Patents

Can Companies Outside the United States Obtain US Patents?

Yes. The United States has the largest Gross Domestic Product on earth. Foreign Companies that do not have a physical presence in the United States can sell their goods or services in the United States.

For most foreign companies, sales in the US market improve earnings for the foreign businesses.

Advantages of US Patents for Foreign Businesses

  • The United States has a long history of enforcing domestic or foreign Patentees’ rights
  • Granting a US Patent gives the Patentee the right to file a legal action to stop third parties from making, using or selling their patented invention
  • Under Title 35 of the United States Code, a foreign Patentee can sue an alleged infringer in a United States District court and win damages

Options for Foreign Companies

Foreign Companies filing a US Patent Application in the United States Patent and Trademark Office (USPTO) may:

  • Initially file the US Patent Application in the USPTO
  • File a Patent Application in their company’s jurisdictional Patent Office followed by the subsequent filing of the US Patent Application (prior to the expiration of the treaty deadline)
  • Initially file a Patent Cooperation Treaty (PCT) Application in the USPTO followed by the subsequent filing of the US National Stage Application (prior to the expiration of the PCT Treaty deadline)
  • File a Patent Application in your company’s jurisdictional Patent Office followed by the subsequent filing of a PCT Application claiming priority to the initially filed jurisdictional Patent Application
  • Prior to the PCT Treaty deadline, file a US National Stage Application in the USPTO which claims priority to the PCT Application filed by your company that claimed priority to the initial Patent Application filed by your company in its jurisdictional Patent Office

Basic Requirements for Foreign Company Patent Filings

  • English language translation/transliteration of the jurisdictional Patent Application or PCT Application – if the language of the as-filed jurisdictional Patent Application or PCT Application was not English
  • Pay USPTO Processing Fees
  • Submit Specifications and Drawings
  • Claims – usually presented in an “Americanized” preliminary amendment format to increase clarity and minimize USPTO Processing Fees
  • Provide Inventor(s) Declaration(s)

If all this sounds a bit complex, we can help. Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.

If you have questions about filing your company’s US Patent Application, 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 business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

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.

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.

Patent Ownership Determination

Who Owns Patents – It Depends

Ownership – Patents

Article 1, Section 8, Clause 8 of the United States Constitution reads: [The Congress shall have power] “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The Constitution does not, however, address who owns the Patent or Copyright.

When an inventor invents a novel and non-obvious composition, device or method, who owns the Patent?

That depends.

Patent Rights Are Federal, But Patent Ownership Rights…

Under the United States Constitution and Title 35 of the United States Code, the granting and enforcement of Patents are exclusively matters of federal jurisdiction. However, unless owned by a federal entity, the ownership of Patents is a matter of State Law. Intellectual property ownership rights flow from Patents and who owns property rights is usually a matter determined by State Law,

Who Owns The Patent?

The following examples show how different situations impact or can impact the determination of Patent ownership:

Illustration 1

The Inventor is self-employed, invents the invention and is domiciled in State A.

The Inventor owns the entire interest in the Patent’s Intellectual Property Rights.

Illustration 2

The Inventor is an employee of Company B. The Inventor invents the invention while at work on the premises of Company B. Both Company B and Inventor are domiciled in State A.

In most jurisdictions, Company B owns the entire interest in the Patent’s Intellectual Property Rights.

Illustration 3

The Inventor is an employee of Company B and Company B is domiciled in State A. In the Inventor’s garage located in State Z, the Inventor invents the item related to the products sold by Company B.

Some courts would hold that Company B owns the Patent’s Intellectual Property Rights while other courts would hold that the Inventor owns the Patent’s Intellectual Property Rights.

Illustration 4

The Inventor is an employee of Company B that is located in State A. In the Inventor’s garage located in State Z. The Inventor invents an item not related to the anything manufactured or distributed by Company B.

Most courts would hold that the Inventor owns the Patent’s Intellectual Property Rights.

Illustration 5

The Inventor is an Independent Contractor who has worked onsite, on and off, at Company B’s plant located in State P for more than a year. Company B’s headquarters are located in State A. The Independent Contractor invented an improvement to Company B’s patented product in State J.

Some courts would hold that Company B owns the Patent’s Intellectual Property Rights. Other courts would hold that the Independent Contractor owns the Patent’s Intellectual Property Rights. Some States would not have any case law corresponding to this scenario.

Illustration 6

Company B is domiciled in State A and displays its patented product line at a trade show in State N. The chief engineer of Competitor X takes photographs/videos of Company B’s patented product line at the tradeshow. The chief engineer returns to Competitor X’s headquarters with the photos/videos. At the headquarters, located in State Q, Competitor X’s engineering staff invents several improvements to Company’s B patented product line which ultimately results in Improvement-Type Patents for Competitor X.

Courts would hold that Competitor X owns the Improvement-Type Patents – However, a federal court could also determine that Competitor X’s Improvement-Type Patents infringed Company B’s patented product line.

How to Control Ownership of Patents

What can a business do to limit its Intellectual Property from flying out in many different directions?  Next month’s blog will address some of these issues.

If you have questions about your company’s ownership of its Intellectual Properties, 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.

Rental Property and Intellectual Rights

Real Estate Rental, Tangible Property and Intellectual Property Rights

Relationship Between Commercial Rental Property and Inventories

Landlords own the real property rented by tenants (rental property). Tenants have an interest in the use of that real property. A commercial landlord rents square footage to the tenant and grants the tenant permission to operate a business from the rented space. Under most commercial leases, inventory remains the personal property of the tenant. Landowners may also operate their own businesses from commercial real properties.

Real Property Cases: Traditionally Matters for State Courts, However…

For centuries, disputes involving real property and rental property contracts have fallen under the law of the jurisdiction where the real estate is located. Each State has its own version of its real property laws. However, in today’s world, federal laws can influence a State’s real property laws.

Intangible Patented Inventions as Tangible Personal Property

A Patentee can sell tangible widgets that include intangible patent rights for the circuitry, processor, and memory that cause the tangible widgets to operate differently from unpatented widgets. Patent infringement of the patented widget can result when someone who did not purchase the patented widget from the Patentee makes, uses, sells or offers to sell the patented widget without the permission of the Patentee.

Under United States law, Patent infringement cases have exclusive jurisdiction and venue in federal district courts.

When Patented Widgets are Offered for Sale on Consignment

Possible interactions between the real estate owner or the commercial tenant (hereinafter Commercial) and the Patented Widgets Owner (hereinafter PWO):

  • As long as Commercial and PWO meet the terms of the consignment agreement, both parties are probably happy.
  • When Commercial refuses to pay PWO according to the consignment agreement, the PWO could sue the Commercial for breach of contract in a State court.
  • When Commercial refuses to honor the consignment agreement and subsequently gives the patented widgets to a third party who thereafter uses the patented widgets in the third party’s plant. Under the Supreme Court’s Impression Products, Inc. v. Lexmark International, Inc., 581 US 1523 (2017) case, because there was no sale of the patented widgets by the Patentee, PWO can sue both the thirty party and Commercial in a federal district court for patent infringement. Any case by PWO for breach of contract by Commercial would likely be joined with the patent infringement case in federal court.

The commercial tenant (hereinafter Tenant) and the PWO:

  • When Tenant sublets a space for a booth to PWO and PWO fails to pay rent to Tenant, the Tenant can sue PWO in State court for collection of unpaid rent.
  • In a State that provides for commercial landlord lockouts and seizures of personal property, Tenant fails to pay rent and the landlord locks out and seizes all inventory including PWO’s patented widgets. Under the lease, Tenant did not have a right to sublet space to PWO and the landlord is unaware that PWO’s patented widgets are not part of Tenant’s inventory. After seizing PWO’s patented widgets, the landlord sells PWO’s patented widgets to a third party who resales the patented widgets to a fourth party who destroys the patented widgets and sells the junked parts to a recycler. Under Impression Products, Inc. v. Lexmark International, Inc., 581 US 1523 (2017), because there was no sale of the patented widgets by the Patentee, PWO could sue the commercial landlord, the third party and the fourth party for patent infringement in federal court. For the landlord, the third party and the fourth party, reliance solely on real estate law is insufficient to prevent a patent infringement lawsuit in federal court.

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