Articles to Help Inventors Achieve Success

• A clear description of the idea
  
  
• The date
  
  
• Your signature
  
  
• The signatures of two people you trust who have "witnessed and understood" your invention and the dates they sign

• A written lab book or log, kept up to date as you work on your invention, that documents each day you did something, and describes the efforts you have made in taking your invention from idea to reality (including test results, experiments, modifications). Note: Have two witnesses sign and date your record book stating that they have "witnessed and understood" the work you have done to build and test your invention.
  
  
• Copies of all correspondence (including e-mails!) and any receipts relating to your invention.

• A suggested rule of thumb to determine whether your invention will sell well is that the total sales will be at least twenty times the cost of inventing and patenting it.
  
  
• Include in your cost calculation the cost of filing fees, hiring a lawyer to help with your patent filing, and the person who prepares the drawings of your creation.

• Is your invention novel?
  
  
• What is the prior art?
  
  
• If you are improving on something that has already been patented, is your invention a new physical feature, a combination of prior separate features, or a new use of a prior feature?
  
  
• If you are improving something that has already been patented, is your invention not obvious?
  
  
• Does your invention produce a new and unexpected result?
  
  
• Does your invention fall into one of the five classes of items that may be patentable? That is, is it a process, machine, an "article of manufacture," "compositions of matter," or a new use of any of those items?

One of the fall outs from implementing GATT (General Agreement on Tariffs and Trade) in the United States is the provisional patent application. While certain other jurisdictions have had provisional patent applications for years, this is a first for the United States. Provisional patent applications have been able to be filed since June 8, 1995, when certain GATT mandated patent law changes came into effect, including the new twenty year patent term measured from an application's effective filing date.

Does GATT dictate adoption of Provisional Patent Applications? Certainly not! Provisional Patent Applications are being provided out of a sense of fairness. Allow us to explain…

Purpose and Effect

As noted above and reported elsewhere in these pages, the lifetime of a U.S. Patent is now twenty years from its effective filing date. For foreigners that might well be 21 years from the filing date in their home country patent application if they wait until the end of the one year time period for filing an application in the United States claiming priority to their home country application under the Paris Convention. In order to give U.S. applicants basically the same privilege, the provisional patent application was created.

If a provisional patent application is filed first, then a regular U.S. patent application may be filed within one year claiming priority from the provisional application. The patent subsequently granted on that regular U.S. application will then also have a lifetime of 21 years from the filing date of the provisional application, provided the regular application is filed at the end of the one year time period. It is to be noted that the provisional patent application does not mature into a patent -- rather it expires after its one year lifetime. It simply gives a subsequently filed regular patent application the possibility of a 21 year lifetime measured from the filing date of the provisional application.

Although provisional patent applications were created to give U.S. applicants parity with foreign applicants, there is no requirement that the applicant be a U.S. National or Resident. Foreign applicants can also file provisional patent applications, they cannot, however, claim priority to another patent application in a provisional application. Nevertheless, foreign patent applicants may well want to file provisional patent applications in the United States. The reasons why foreign applicants may find it a good idea to do so are discussed below.

A provisional application differs from a regular application in a number of ways:

1. Provisional applications are not examined on their merits and cannot mature into issued patents - thus, once they serve their purpose, they expire.

2. The official filing fees are lower: $160 for large entities and $80 for small entities - but the usual filing fees must still be paid when the regular patent application is subsequently filed.

3. The paper work involved in filing a provisional application is less than for a regular patent application. Also, the provisional application does not need to include claims or acknowledge the prior art. However, it does require a full description of the invention.

4. Provisional applications cannot claim priority from other applications. But a regular patent application can claim the benefit of multiple provisional applications or the benefit of a combination of provisional and regular filings and/or a foreign application from which priority is claimed under the Paris Convention, so long as the regular patent application is filed within one year of such applications.

So far provisional patent applications sound pretty good. One might note that there are few disadvantages even if the provisional patent application is properly used. If it is improperly used, that is a different story, as we shall soon see.

As noted above, provisional patent applications may be filed by both U.S. and non-U.S. applicants. As is turns out, the advantages (and disadvantages) to a U.S. applicant differ from those of a non-U.S. applicant. As such, the benefits and drawbacks of utilizing provisional patent applications differ for such applicants and, therefore, these matters are treated separately below for U.S. and non-U.S. applicants.

Advantages for U.S. Applicants:

1. Provisional patent applications are relatively inexpensive to file.

2. The eventually filed regular application will then have a life which might be as long as 21 years from the filing date of the provisional application.

3. The regular application filed within one year does not have to be identical to the provisional application it replaces. Thus, the regular application can serve the function of a continuation-in-part application. A further advantage is that the patent issuing on that regular application has a twenty year life from its filing date and not the filing date of the provisional application. (If the provisional application had started out life instead as a regular application and the second application were a regular continuation-in-part application, the patent's lifetime would be based on the filing date of the first application, i.e., it would be up to one year shorter). However, if new matter is added to the regular patent application, the applicant must comply with the best mode requirements of U.S. Patent Law and also be aware that they do not have the benefit of a filing date for the new matter until such time as the regular patent application is actually filed.

1. Since provisional patent applications are easy to file, not to mention the fact that they carry the name 'provisional', a fair number of these applications may be hastily drafted. If regular patent applications with fuller disclosures are not filed until the one year time period for filing a regular application is nearly expired, other parties may file conflicting applications (with better disclosures) in the interim and the first-to-file party may well loose in a contest with the second-to-file party if the disclosure of its provisional application is deemed inadequate to support the claims of its subsequently filed regular application.

2. Even more trouble for the U.S. applicant will arise if the provisional patent application is deemed by the patent authorities of other countries not to support a claim to priority by a subsequently filed foreign patent application. If the applicant publicly disclosed the invention in the interim, the applicant may discover that the subsequently file foreign applications are barred by the applicant's actions in publicly disclosing the invention during the normal one year priority time period.

3. Another date must be remembered and entered to a docketing system. If you miss the one year date for filing the regular application, you cannot claim the benefits of the provisional application.

4. Under the original version of the Patent Law that added the possibility of filing provisional applications, it was not absolutely clear whether a provisional patent application could be used as the basis for making a priority claim for filing patent applications in other countries under the Paris Convention. This problem seems to have been overcome by more recent changes to the U.S. Patent Law.

1. Provisional patent applications are relatively inexpensive to file.

2. Provisional patent applications need not be filed in the English language. As such, they can be easily filed about the same time that the foreign applicant is filing their original application in their home country.

3. A U.S. patent, once granted, becomes prior art, against later filed U.S. patent applications, as of its filing date under 35 U.S.C. Section 102(e). If it is based on a provisional patent application, the resulting patent's 102(e) date is the date that the provisional patent application was filed. If based solely on a home country patent application to which priority is claimed, the 102(e) date is only the actual filing date of the regular U.S. patent application. Thus, foreign applicants can obtain earlier 102(e) prior art dates for their U.S. Patents if they base them on provisional applications instead of basing them solely upon home country applications.

4. Under 35 U.S.C. Section 102(b), a U.S. patent application must be filed within one year of the publication of an invention. The inventor can still obtain a valid U.S. Patent if the inventor can evidence the fact that the inventor made the invention before the publication occurred. Historically, foreign patent applicants have had difficulty in taking advantage of this aspect of U.S. Patent Law since the evidence had to show completion of the invention in the United States. With the GATT mandated changes to U.S. Patent Law and effective January 1, 1996, the invention will no longer have to have been completed in the United States. As such, provisional applications can then give foreign applicants an additional one year time period under 35 U.S.C. Section 102(b) if the provisional application is filed about the same time that the home country application is filed.

5. The regular application filed within one year does not have to be identical to the provisional application it replaces. Thus, the regular application can serve the function of a continuation-in-part application, but without having the down side of an earlier filing date (for the purpose of calculating the term of the resulting patent). However, if new matter is added to the regular patent application, the applicant must comply with the best mode requirements of U.S. Patent Law and also be aware that they do not have the benefit of a filing date for the new matter until such time as the regular patent application is actually filed.

6. An eventually filed regular application will have a life which might be as long as 21 years from the filing date of the provisional application, just like a regular application filed under the Paris Convention claiming priority to a home country application. This advantage is probably only of interest to applicants from non-Paris Convention countries.

1. Added cost (but not a great deal of added cost).

2. If a foreign applicant chooses to use this procedure, they should file the U.S. provisional application about the same time that they file their home country application. That means that they must be alert to file the provisional application right away and not rely on simply filing a Paris Convention application almost one year later.

3. If filed in a language other than English, an English-language translation must be filed in due course.

4. The expiry of the one-year life of a provisional patent application is different than the end of the one year grace period under the Paris Convention if the date falls on a holiday or weekend (i.e. any day the United States Patent and Trademark Office is closed).

There are certain strategies for combating these disadvantages. We suggest following up a hastily prepared provisional application with a better draft, which is then filed as a regular U.S. Patent Application, as soon as practicable and preferably within a month or two after filing the provisional application. We also suggest filing a regular U.S. Patent Application before any public disclosure of the invention occurs if the filing of foreign applications is of interest since, although most major foreign patent offices have indicated that they will respect priority claims under the Paris Convention based on an U.S. provisional application, this view has been challenged by some commentators and the issue is ultimately one for the courts to decide in many different countries.

Thus, do not use the provisional patent application to lull yourself into a false sense of security if the provisional application is anything less than a full disclosure of the invention or if foreign corresponding applications are of interest to you. Once a good, full description of the invention has been prepared, file a regular U.S. patent application. Do not wait for the one year time period nearly to expire, unless you are certain that the extra few months of patent protection makes the added risk in waiting worthwhile. Since many technical arts change quickly, the extra few months of patent protection near the end of the patent's twenty year lifetime may well be meaningless.



Should You License or Manufacture Your Invention?
By Jack Lander
www.nolo.com

Okay, you've got a great idea for a patent! Now, how will you make money from it?

Most inventors follow a typical pattern. They perfect their invention, determine its marketability, and take steps to protect it under patent laws. But, then comes a difficult decision. How will the inventor make money from it? Should the inventor license the invention to a third party, or should the inventor manufacture and market the invention? This decision will affect not only how you earn money, but also how much financing you need to proceed.

If you are a typical inventor, you will probably want to license your invention and collect royalties, or even sell it outright -- we'll call this typical person the "inventor-for-royalties." But if you are more motivated and have a competitive business streak -- we'll call this type of person the "entrepreneurial inventor" -- you may wish to start a small business to produce your invention and market it. In that case, you will need substantially more financing to develop, produce, and distribute your product.

To some extent, your decision is influenced by your invention. Certain innovations, because of their complexity, scope, or exorbitant cost of production, may lend themselves to licensing. Often, however, the decision should be based more on you than on your invention. You must objectively examine your inventing personality.

The Inventor-for-Royalties

Licensing or assigning rights to your invention for cash is a simpler, less-expensive route than manufacturing and selling your invention. Licensing or assigning your invention is often preferable for those inventors who want to make money but care primarily about innovating and spending time in their lab.

Licensing

A license is simply an agreement in which you let someone else commercially use or develop your invention for a period of time. In return, you receive money -- either a one-time payment or continuing payments called royalties. As owner of the invention, you will be the "licensor," and the party receiving the license for your invention is called the "licensee." What makes a license appealing is that the licensee assumes all of the business risks, from manufacturing to marketing to stopping those who infringe on the product's patents. The inventor/licensor sits by the mailbox and waits for the quarterly royalty checks.

When you seek a license, you'll need to take the following steps: find the right people to review your great idea, get the money necessary to develop and protect your invention, and present your invention to a licensee in a marketable fashion.

Assigning

An inventor-for-royalties can also permanently assign all rights to the invention for cash. An assignment is a permanent transfer of ownership rights. When you assign your invention, you are the assignor, and whoever purchases the rights is the assignee. An assignment is like the sale of a house, after which the seller no longer has any rights over the property. As the assignor, you may receive a lump sum payment or periodic royalty payments.

Even though they have different legal meanings, the terms assignment and license are sometimes used interchangeably. Sometimes these two types of agreements seem to have the exact same effect, as in the case of an unlimited exclusive license, in which a licensee obtains the sole right to market the invention for an unlimited period of time. For this reason, you or your attorney must examine the specific conditions and obligations of each agreement to determine whether it is an assignment or license rather than simply relying on terms such as assignment and license.

The Entrepreneurial Inventor

For those who place considerable weight on the entrepreneurial side of the scales, the financial reward of a license or assignment may seem unappealing -- royalties often range from 2% to 10% of the net revenues. An entrepreneur may think, "Why should I give up my control and take a slice of the pie when I could keep the whole thing?" For this reason, inventors with a strong entrepreneurial drive often choose to form a business and to manufacture and market the product, a course of action that requires considerably more financial assistance than licensing.

Also, the same study by Zimmer and Westrum (cited above) revealed that close to half of the inventors who decided to take control of producing and marketing their invention claimed to be successful. That may be because the inventor with a strong entrepreneurial drive is usually obsessed with growing the business and thrives on the challenges -- for example, how to manufacture the invention efficiently, how to acquire distribution, how to market to target audiences, and how to eke out a profit from retail sales. But while there are potentially much greater financial rewards than can be obtained from licensing, the price that is paid personally and financially can be disastrous.

Analyzing Your Personality

Your success in gaining financing depends on your intellectual honesty in analyzing your inventor personality. Unsure if you have a strong entrepreneurial drive? Answer the following questions:

• Are you a gifted salesperson? An entrepreneur must sell, sell, and sell to every person in the food chain, whether it is an investor, banker, distributor, or customer. Consider Ron Popeil as an example. His success as a salesperson launched many inventions including the Veg-O-Matic, Pocket Fisherman, Mr. Microphone, the Buttoneer, Food Dehydrator, and, of course, the GLH Formula 9 Hair System (also known as Hair-in-A-Can). Regardless of the quality or intellectual value of his innovations, Popeil embodies the key to the successful entrepreneur and the unstoppable skill at selling. If you lack this skill, you're probably not suited for entrepreneurial endeavors.

• Are you a talented manager? An entrepreneur must juggle many hats, and all of them require management skills. Consider the inventor of an ergonomic computer mouse who must travel abroad each year to supervise the manufacture of his device in a foreign factory, as well as work with various international distributors and resellers. In his "free" time, he must work with the designers of his advertising and websites. If you can't delegate tasks well or find it hard to organize your desk or keep track of complex tasks, do yourself a favor and avoid marketing and manufacturing.

• Are you a business innovator? You can't really call yourself a true entrepreneur unless your product or service involves innovation. Peter Drucker, America's foremost business sage, wrote in Innovation and Entrepreneurship, "Innovation is the specific tool of entrepreneurship, the means by which they exploit change as an opportunity for a different business or service." For example, Ron Popeil perfected an innovation -- the infomercial -- that changed the way products are sold on television. If you can invent only in the lab and not in the business world, then you may lack entrepreneurial skills and be better suited for licensing.

• Are you a risk taker? Some of us like to bungee jump from the Golden Gate Bridge, and some of us don't. Entrepreneurs are willing to risk the whole pot on one hand. Every entrepreneur, whether it's Donald Trump, Richard Branson, Ron Popeil, or Ray Kroc, is willing to face down creditors or bankruptcy for a chance to come back for another round. If you're not a risk taker, then pursuing manufacturing and marketing is a poor decision.

Differences in Financing

In terms of financing your invention, licensing usually requires much less capital than the alternative of manufacturing and marketing your invention yourself. What's usually required is money to create a prototype (or other suitable presentation to potential licensees), to market the invention, and, perhaps, to solicit and negotiate with potential licensees. On the positive side, a successful licensing deal will free up an inventor to pursue inventing while still profiting from the last great idea. On the negative side, a bad licensing deal may tie up an innovation or, worse, result in legal battles over royalties.

You will usually need far more financing if you start your own business and manufacture and market your invention. Money is required for producing a prototype, creating tooling or molds, mass producing the product, finding distribution, collecting payments, and enforcing patent rights. In addition, entrepreneurial inventors often become involved in more complex financing than an inventor-for-royalties -- for example, you made need to form a corporation and sell shares of stock (or other interests) in the business and the invention. On the positive side, the financial rewards are potentially much greater -- which is precisely why it appeals to more entrepreneurial inventors. On the negative side, manufacturing and marketing are incredibly risky and can cause tremendous anxiety and engulf your personal life.

Which Is Right for You?

If business is your real game, and creating an invention is just your means of acquiring something to sell, then marketing and manufacturing could be the right choice for you. Same goes if you live for the deal, you're not afraid of risks, you love to innovate in commerce, and you have the discipline to fight for market share. But if none of the above sound like you, licensing is probably the correct course for you.