The Patent Zone

So you’ve got a product or an idea for a product. You are sure there is a market and there is a well-founded concern someone will steal the idea and run with it if it is not protected legally. You have just entered the patent zone. Well, maybe not just yet….

A patent is essentially a form of protection under the law to ensure that no one else can make, use or sell a product without the permission of the patent owner.

Having an idea about exactly what it is you want to patent is obviously a necessary first step. But what if someone else already had the same idea—and it has already been patented?

Round 1

This is the time to conduct a patent search to make sure someone else has not already come up with “your” unique idea. Part of doing the homework involves thinking critically about what separates your idea from similar inventions, if any are known to exist. If it passes that test, and if your idea is truly different, it will be necessary to complete an application with the U .S. Patent and Trademark Office.

Round 2

Outside of a trusted advisor and/or confidant, a patent examiner at the U .S. Patent and Trademark Office will likely be the first person you contact about your idea during a review process. As the title suggests, a patent examiner evaluates the specifications of a product to determine whether they do or do not overlap with patents granted to previous inventions, or if the idea is indeed unique enough to be patentable in the first place. The examiner will likely send an applicant a list of items in the application that should be clarified or, in some instances, changed. At this point, it is possible to either argue the point(s) or modify the application to address the examiner’s concerns.

Assuming everything checks out with the review process, the product may be granted a patent. In the United States, the lifespan of a patent may range from 14 to 20 years, depending on type.

It’s not uncommon even for an inventor who has been through the process already to hire a patent agent or attorney to help guide him or her through the process and to argue for them on point(s) contained on a rejection list. If you have made it through Round 1 and you are looking to making it through Round 2, it is a good idea to know the ropes or consider the advice of someone who does.

Provisional vs. Non-provisional Patents: The Difference

For someone who is looking to protect an invention for up to a year at minimal cost in order to test the commercial waters, it may be worth looking into a provisional patent application.

For example, an inventor may well want to seek out prospective manufacturers for an invention to license for royalties before investing in a non-provisional patent, which can be much more costly.

Non-provisional Patents

A non-provisional patent application is what most people think of when they think of the “patent” concept. Such a patent can be of either a “design” or a “utility” type. Before going further, it is important to note that a provisional patent application is not valid with “design”-type materials; a provisional patent application can only be filed for inventions of the “utility” type. In broad terms, a “utility patent” protects the way an article is used and works, while a “design patent” protects the way an article appears.

Applying for a non-provisional patent establishes a filing date and it initiates the review process by the United States Patent and Trademark Office (USPTO).

Provisional Patents

A provisional patent application provides temporary protection for up to year from the date of filing. It also establishes a filing date, but it does not initiate the review process by the USPTO—an important distinction to keep in mind should the inventor wish later to file a non-provisional patent application.

Patent Pending

As mentioned above, a provisional patent is less expensive than a non-provisional patent and it allows the inventor a year’s time in which to market and/or develop an invention using the familiar term “patent pending”. In addition, a provisional patent application does not require the patent claims, a major component of a non-provisional patent application.

As can be presumed from the lack of a review by the USPTO, a provisional application does not automatically become a regular patent 12 months after the date it was filed. In order to obtain a non-provisional patent, an inventor is required to submit the appropriate application within one year of the date a provisional patent application was filed in order to use that same filing date.

A provisional patent application is typically less involved than a non-provisional application, and may include as little as a cover sheet, the name of the inventor and some bibliographic information, a description of the invention (here, invention claims are not necessary),  a drawing if it is necessary to understand the invention, and a filing fee.

A provisional patent application can be useful when a fairly quick and inexpensive form of legal protection is desired.  Compared to a non-provisional patent application, a provisional patent application can be put together and submitted with less effort and expense, while effectively buying an inventor more time in which to develop the product and determine how it might be marketed.

Enter the “Patent Troll”

With all the innovation the Internet promises, perhaps it should come as no surprise that some of the very concepts and slang used by techies and self-proclaimed “hackers” should find their way to the business of invention and patent protection.

The Obama administration recently has made headlines with a list of legislative priorities and executive actions in response to what has increasingly been viewed as a source of frivolous lawsuits, extortionate settlements and license fees, and a general roadblock to innovation—the non-practicing entity (NPE), also known more colloquially as the patent troll. Such companies buy up patents, sometimes whole portfolios of them, with no intent to manufacture or use the patented invention, per se. Instead, the purpose is to bring suits against any companies that might appear to be infringing on the patents the NPE owns.

Since 2011, when the Leahy-Smith America Invents Act (AIA) was passed, the number of patent applications has gone up. Among other innovations, the AIA changed the system of patent award from a “first to invent” to a “first inventor to file” model.  Another change made by the AIA is the courts play the main role in determining damages. And, since the AIA passed, there has been a marked increase in the number of NPEs established.  Sheer coincidence seems unlikely.

For its part, the U.S. Justice Department is beginning to look seriously at whether NPEs are disrupting competition in a number of industries, hi-tech perhaps having the highest profile.  Not surprisingly, other industries have been brought into the fray, too, from manufacturing to retail, making the issue one to be watched closely in the months ahead.

Franchise vs. Your Own Business: Which One is the Best for You?

Buying a franchise and owning your own business each have their own merits and each carry their own associated risks. The question of which one is best for you is a highly individual process, one that should meet with a highly individual answer.


A main attraction of a buying a franchise is the brand recognition and the use of trademarks, recipes, etc., and the often built-in customer base that comes with it.  Another is the ongoing training and support from the franchisor.

In exchange for these rights, a franchisee is typically required to pay both an initial license fee and ongoing royalties. It is typical practice for these royalties to be paid based upon sales, not profits. So even if a franchise is not profitable, the franchisee is still required to pay a royalty to the franchisor.  Franchisees are also expected to conform to all the franchisor’s rules. That might mean restrictions on when or where one can conduct business, the appearance or design of an establishment, and the types of products or services that may be sold.

It is also important to understand that franchise rights are for a limited time: they may or may not be renewed. In addition, terms from the original franchise agreement may be changed by the franchisor, and it is possible to lose the right to a franchise due to breach of contract.

Owning Your Own Business

For many entrepreneurs, the concept of owning one’s own business seems ideal:  You can be your own boss, set your own hours, etc. Depending on the nature of the product or services, a start-up company typically has more freedom than a franchisee when it comes to making decisions about location, advertising, hours, etc.

The reality is that the hours sometimes dictate themselves and there are often complexities that may not reveal themselves until after someone has operated the business for a while. Compared to a franchise, establishing a new brand and competing for share of a particular market often requires a greater amount of resources.  Although there may be training and advice available from small business associations, it can be more difficult to negotiate necessities such as financing for a start-up company with little to no track record.  However, because the business is solely owned by an individual, so too are the profits.

There is no one-size-fits-all business model, and if anything, that simple fact stands as a testament to the viability of a free market economy. Similarly, there is no substitute for asking detailed questions of a number of entrepreneurs who are either involved in a franchise or who own their business. The time you invest in researching your options may be the best investment you can make toward ensuring the success of your business.

Vendor Contracts – Protect Yourself with These Tips

Working with vendors is a fact of life for many businesses. Even though it might seem routine, entering into contracts with vendors isn’t something to be taken lightly. With that in mind, there are several common mistakes to avoid when entering into a business relationship with any vendor.

Not Being Sufficiently Specific About Vendor Responsibilities

Not being sufficiently specific about vendor responsibilities is a broad category and for this reason, it is often one area where it is important to be precise. Ultimately, if a vendor does not to meet its contractual responsibilities, it is important that an organization has the legal protection to be able to severe a business relationship.

Some features to include in any vendor contract are:

Deadlines and penalties. When contracting for services it is critical that you include specific timelines for completion of the work. For example, a statement of deliverables along with a timetable should also include any penalties.

Clearly Defined Terminology. Do not make the assumption that everyone who will read the contract will understand every term or provision. Make sure to look at every area of a contract that is ambiguous or has the possibility of being misunderstood and make sure that each item is clearly defined.

Consistency within the Contract. Look for inconsistencies within the contract that hold the possibility of being defined or interpreted differently in the event of arbitration.

Language Covering Unforeseen Circumstances. When it comes to being able to meet deadlines and provide deliverables, no one likes surprises. Unforeseen circumstances are a part of life. However, if your business, or that of your vendor, is affected by fluctuating external factors such as the weather or the economy, then it is important that the contract address unforeseen and unpreventable delays that could result. This might include language related to how long a price will be valid in the event of an unforeseen delay, and/or whether it will need to be re-negotiated.

One way of making sure a vendor contract addresses these issues is to have the benefit of a third party review. That way, both you and a vendor will have a better idea of where you both stand in terms of being both productive and protected.

Are You in Compliance with COPPA? Part 2

In an earlier blog, we discussed the requirements for what is known as the Children’s Online Privacy Protection Act (COPPA). [will provide hyperlink to the blog] In April 2013, the FTC issued several updates aimed at addressing the revised rule implementing the act, which will go into effect on July 1, 2013. These updates are aimed at assisting compliance with the four new categories of information added to the rule’s definition of “Personal Information”. These include:

  • Geolocational Information: The rule now provides that all geolocational information must have parental consent, whether obtained before or after the implementation date.
  • Photos or videos or audio files containing images or audio of children: If collected prior to the date of the amended rule, consent is not required, but it is strongly suggested by the FTC.
  • Screen or User Names: If collected prior to the date of implementation, consent is not required unless the user associates new identifying information with the user name after the date of implementation.
  • Persistent Identifiers: If collected prior to the date of implementation, consent is not required unless the site obtains new information after the date of implementation that allows tracking of a user over time or across websites. There is a technical exception for information collected solely for internal operations of a website.

These additions alone make it worthwhile to learn how COPPA applies to any website your organization operates now or plans to operate in the future.

Are You In Compliance with COPPA? Part 1

The Internet can be a great resource for education and entertainment for children, but it can also expose them to exploitation based upon the nature of the personal identifying information (PII) they might provide while participating in discussion groups, chats, surveys, contests, and online gaming. Because data collection features are often designed to be entertaining, younger children in particular might not be aware of just how much of their personal information they share over the Internet. With that in mind, Congress in 1998 enacted the Children’s Online Privacy Protection Act (COPPA).

COPPA made it necessary for the Federal Trade Commission (FTC) to make and enforce regulations regarding children’s online privacy. If you own and/or operate a website and/or online service for commercial purposes that are either directed toward children under 13, or have actual knowledge that children under 13 are providing information online, COPPA applies to you.

Operators to whom the rule applies are required to:

1. Post a clear and comprehensive online privacy policy describing their information practices for personal information collected online from children;

2. Provide direct notice to parents and obtain verifiable parental consent, with limited exceptions, before collecting personal information online from children;

3. Give parents the choice of consenting to the operator’s collection and internal use of a child’s information, but prohibiting the operator from disclosing that information to third parties (unless disclosure is integral to the site or service, in which case, this must be made clear to parents);

4. Provide parents access to their child’s personal information to review and/or have the information deleted;

5. Give parents the opportunity to prevent further use or online collection of a child’s personal information;

6. Maintain the confidentiality, security, and integrity of information they collect from children, including by taking reasonable steps to release such information only to parties capable of maintaining its confidentiality and security; and

7. Retain personal information collected online from a child for only as long as is necessary to fulfill the purpose for which it was collected and delete the information using reasonable measures to protect against its unauthorized access or use.

The rule also prohibits operators from conditioning a child’s participation in an online activity on the child providing more information than is reasonably necessary to participate in that activity.

The FTC’s original COPPA Rule became effective on April 21, 2000. However, an amended Rule was issued December 19, 2012.