PATENT & TAX ADVANTAGE

Intellectual Property Survival Secrets

By Curt Harrington (updated 11-09-2012)


PATENTS

(1)  Make certain that you have absolutely completed your design to the maximum manufacturing advantage. This insures that (1) your design is set to be manufactured at the lowest possible cost to yield the maximum profit, which, will give you, with an allowed patent the best combinational competitive advantage; (2) that no changes will be made to the design after the patent is filed (because after all, if your patent protects a sub-optimal version that is located at a less than optimal profitable area, and if the claims allowed are not broad enough to clearly encompass the optimum, you effectively have no patent protection AND a copy of your product as an infringing product which "brushes" the outer limits of your patent (because your patent is not centered on your product) is more likely to invite an infringer to chance litigation when a copy of your product doesn't lie directly under your patent. If you are not technically skilled enough to finish your product to this stage, I can provide you with a complete non-disclosure agreement to enable you to approach a reputable engineering house to complete the design. Remember that one who helps on the invention becomes an inventor, so the non-disclosure agreement will also include a clause which states that ownership of the aspects invented by the engineering firm are yours. With engineering firms which also manufacture, make certain you have included the "you will never do business even relating to the invention with anyone else but me" clause. When a manufacturing firm whips out their non-disclosure agreement, don't even think about signing it!, the vast majority are waivers which set a short timer on the waiver of your rights. Remember YOU are paying THEM to WORK FOR YOU.
 
(2) Hire a patent attorney that will match the technology of your patent practitioner with the technology content of your invention, as well as your other needs, such a licensing.   Keep in mind who you are and match that with the practitioner preparing your application. Large law firms are for litigating and charging companies fees of significant magnitude. Choose a practitioner with a technical background which is not mismatched with your technology. If you have a chemical case, go to a practitioner with a background in chemistry and chemical engineering. If you have an electrical case, go to a practitioner with a background in electrical engineering. Most practitioners will suffice for a simple mechanical case. I acquired a master's degree in both electrical and chemical engineering so that I would be enabled for the most technical of understanding for the vast majority of the time. However, I know my limitations too-- if someone came to me with a complex gene splicing patent, I would send them to someone with a Ph.D. in Biochemistry, and there are more than a few of those type practitioners around.

(3)  Apply for patent as fully as possible, with as many embodiments as possible, with as many claims as can be supported and with as many range equivalents as can be articulated.  Remember that the U.S. will switch to "FIRST-TO-FILE" starting in March 2013.

(4)  Consider both offensive and defensive infringement / infringement defense insurance immediately after filing.

(5)  Immediately after you file, start selling and advertising (unless the invention is such that you need to keep it a trade secret until later). If you are going to  manufacture, pump out as many press releases to newspapers, radio, morning tv, cable, magazines, etc. as you can. 1000 pounds of press releases cannot be too many.Just before and right after you file, your operating plan should be so detailed that you don't care whether you manufacture or license since both paths will have an abundant amount of net present value.

 (6)  If you do license, make certain you use the tax principles above to create a sale and lessen your tax to the lowest capital gains tax rate.  If not, arrange your business so that the IRS would rule a "no sale" had occurred until you do actually sell it.  Use the rule in the Associated Patentees case to avoid capitalization. I worked for and received an LL.M. in taxation primarily so that I could provide additional guidance to my patent clients who are just starting on their first project. By insuring that the correct steps are taken at the beginning, money can be saved later on, especially tax dollars.

(7) Within one year, apply to all foreign countries where you might have a chance to establish a market, or apply to all non-Patent Cooperation Treaty countries where you might establish a market in conjunction with the filing of a PCT application.

(8) When the patent issues, mark the patent number IMMEDIATELY on all articles directly relating to the patent.

(9) As you make patentable improvements, and typically at intervals of not more than one year, typically from the anniversary date of your patent application filing date, file updated continuation-in-part patent applications. If so filed just before your 1-year anniversary date, use the continuation-in-part as your foreign application to insure that your foreign filing has your most up to date inventive improvements. If all of your claims are allowed in the U.S., consider parallel prosecution in which you allow the claims initially found to be patentable, and file a continuation case to pursue and argue over broader claims not made in the first filing.

 

TRADEMARKS

(1)  Choose a name for your product or service which is:
                Not Descriptive (tells you nothing about goods or services)
                Not Suggestive  (a stranger couldn't guess the products & services)
                Not a Geographic or Place name
                Not a government symbol, flag, coat of arms
                Not like any other mark (look alike, sound alike, spell alike IS ALIKE)

(2)  Keep in mind that the PRIMARY object of the game is not to be "cute", "catchy" or "sexy", but that you are choosing a vessel to hold your goodwill, so you can make a lot of extra money (especially at the prevailing capital gains rate. The goodwill is virtually always assigned to the trademark, so if you have a weak or unprotectable mark, no buyer is going to pay you full value for your business, products, or services. This is about PUTTING MONEY IN YOUR POCKET AT THE END OF YOUR WORK LIFE, not about seeing how much money you can spend arguing with and litigating against other holders of cheesy trademark names.

(3)  Ideally apply for the name by itself, the logo by itself and where possible, separate the name from the logo. Name logo combinations are very weak, and it is better to use a regular trademark to fully protect the name (sequence of alphabetic letters) and a second mark to protect the logo by itself, even if another name or no name is used in conjunction with it.

(4)  Don't create a mark with differential capitalization, it weakens the mark, and where combinations of words or parts of words are used it "telegraphs" the pronunciation and meaning. Example TreeExam is the same as TREE EXAM, and would be descriptive for a tree surgeon's services. However, it is unclear whether the word TREEEXAM is "tree exam" or "treeex am", or simply "treeexam".

(5)  Beware of letting Marketing and Ad companies choose your mark. Although they may provide good marketing and ad copy for what you pay them, it has been my experience that they are adept at finding obscure marks owned by other people. In one case, on the recommendation of a marketing company we did 3 full searches, and every one turned up an obscure record which would have cost the adopter thousands and more to litigate.The terms "Litigate" and "Trademarks" are never good things for a new adopter of a mark to hear or say, since everyone else in the world has greater or more rights than you do.

(6) In trademarks, you are creating a vessel to hold goodwill dollars. At the end of the day, when you cash out, no one cares what color or shape or "how cute" was the bank which held your goodwill dollars. Also, the mark is NOT where you identify the product. The box or brochure has plenty of open space for that. I spend the bulk of my trademark time urging potential new registrants not to make the above mistakes. Often the telephone questioner will be held in the death grip of an obsession about someone else's mark or a descriptive mark.Remember, when you are starting out, YOU are the little guy and you have to carve a high quality niche for yourself. The product + quality you put in it drives the good will. Even goofy name will eventually take on the mantle of quality you instill in the product or service. But even the catchiest, most inviting and most singularly unique name in the world can't save a lousy or poorly maintained product.  


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