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The sweet spot: When to file for your patent

Things have changed recently

By Kurt Leyendecker

Over the years, I have written a significant amount concerning patent strategy and patent procedure aimed at entrepreneurial companies and individuals, and most of the information was available on my firm’s website.  The firm recently unveiled a new modern and streamlined website.   Much of the old content was removed with the intention of updating it and making it available as PDF white papers on our new site.  What struck me most during the updating process is how dramatically my advice has changed in light of the changes to patent law, most of which went into effect a little over two years ago as part of the America Invents Act (AIA).  Some of the procedural considerations are worth noting here.

Prior to March of 2013, the person first to invent a new invention was first in line to receive patent protection, even if another person who invented a substantially similar invention filed for patent protection first. Accordingly, I advised many of my clients to keep copious notes and fully develop the invention before filing a patent application, reducing the chance that the client would have to file a second or third application at significant additional expense because of changes made during development. Under the current first to file rules, however, whomever files first on an invention is the inventor who will receive a patent even over another later-filing inventor who came up with the idea first.  Now, I recommend an inventor get an application on file as soon as reasonably possible, even if significant and potentially substantial changes may occur during subsequent development. The failure to file quickly could be the difference between receiving a patent or not.

I used to recommend against the use of provisional patent applications.  For those who are unaware, provisional patent applications are less formal and less expensive applications that have a limited pendencyof one year, are never examined by the patent office and consequently never issue as a patent. Essentially, a provisional patent application provides a filer up to one year to decide whether to file a more formal more expensive regular patent application.   Under the old rules, however, the need for a placeholder was less critical since the first inventor would be awarded the patent whether or not he/she was the first to file an application.  Being less formal, the provisional application, especially if prepared based on a still evolving product, runs the risk of not satisfying one or more statutory criteria.  Further, since provisional applications are not docketed for examination, the issuance of a patent is delayed by up to a year.  Add to all this the additional cost of filing both a provisional and a non-provisional a year later and the drawback significantly outweighed the benefits.

Things changed with the advent of the first-to-file paradigm.  While provisional applications still suffer from the risks mentioned above, to ensure that he/she is not beaten to the punch, an inventor is advised to file a provisional application as soon as possible after conception to secure his/her priority rights even if changes may occur to the invention in the coming year.  Changes, if they occur, can usually be incorporated into the regular patent application when it is filed. Unlike before, timing has become critical and takes precedence over other considerations.

Traditionally, patent lawyers have as a matter of course fought to obtain for their clients as broad of patent protection as is possible.  With broad protection, however, there is a risk that if litigated, a court will invalidate the patent as being obvious or anticipated by prior art that was not previously considered by a Patent Office patent examiner.  This risk was balanced by a presumption of the patent’s validity and the substantial cost of seeing litigation through to its conclusion on the hope of obtaining a favorable invalidity verdict instead of an unfavorable infringement verdict.  Cost and uncertainty pushed most cases to settle.

The AIA instituted a new review procedure that permits a party to challenge a patent’s validity on limited grounds and, most significantly, obtain a ruling within a little over of a year.  This process replaced re-examination which could be dragged out for years.  The difference in timing is significant.  Under the previous procedure, a patent holder suing an alleged infringer could hold out in re-examination until the patent case concluded and hopefully a judgment of infringement was entered; whereas, under the review procedure, a validity determination is made long before the court case concludes, giving the alleged infringer a bit of a timing advantage.

The point of the foregoing is simple: Patent claims are more likely to be adjudicated and broad claims are more likely to be found invalid than ever before.  Narrower, carefully tailored claims are more likely to survive a challenge.  Unlike in the past, I am more likely to advise a client to take allowed patent claims that are narrower than I might have in the past.  The consideration as to whether a claim is not only reasonably broad but also able to withstand challenge must now be more seriously considered.

For the entrepreneur and business owner, the upshot of all this is simple: When you have an idea or invention you believe has potential value, see a patent attorney as soon as possible to discuss what steps are necessary to maximize your potential protection and value. Waiting is more dangerous than ever.

By | October 18th, 2015|BLOGGING|Comments Off on The sweet spot: When to file for your patent

Pay attention to the dancing baby

What businesses need to know before sending takedown notices

By Peter Lemire

A while back, the 9th U.S. Circuit Court of Appeals issued a decision in what has come to be known as the “Dancing Baby Case”. Every business needs to know about it before sending Digital Millennium Copyright Act (DMCA) takedown notices to Web hosts and other companies that host third-party content such as Facebook, YouTube, Amazon and eBay.

Although the biggest users of the DMCA are media companies and content producers, pretty much any business could find itself dealing with DMCA issues. A frequent issue in our office is competitors’ unauthorized utilization of product photographs, product videos, or logos that are protected by copyright.

The DMCA has been a powerful tool for businesses to fight copyright infringement, but it is somewhat of a double-edged sword that can land companies in a host of trouble that they never expected.  While it is important to police one’s intellectual property, the dancing baby case is a good example of how knee-jerk reactions and overly aggressive enforcement can land a company in a whole host of legal trouble that it never anticipated.

The DMCA was passed in 1998 to implement two treaties of the World Intellectual Property Organization.  The two treaties dealt with digital rights management and providing a safe harbor for companies that host third-party content.  The latter created a procedure that is commonly referred to as “notice and takedown.”   The notice and takedown procedures were established to provide third-party hosts a shield from secondary copyright infringement liability.

If a host complies with certain procedures, promptly removing or denying access to infringing content upon receiving a takedown, it will be shielded from copyright infringement liability.  The notice and takedown procedures also provide a host with a liability shield from its own customers in the event that it removes or denies access to allegedly infringing content.  This can be very handy in the situation where you are dealing with an uncooperative or foreign infringer, as hosts are generally willing to comply with a conforming takedown notice.

Because this procedure works so well and is so effective, businesses and their attorneys will sometimes fire off notices without considering all the factors.  The DMCA requires that the notice be sent with a “good faith belief that the use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.”  Generally speaking, it’s the “the law” portion that trips people up.  Additionally, the DMCA has provisions that are aimed at deterring abuse of the system by authorizing damages to be awarded if a person “knowingly materially misrepresents … that the material or activity is infringing.”  When you add in the often-confusing doctrine of fair use, that’s when things start to get interesting and we end up talking about dancing babies.

The heart of the dancing baby case (formally named Lenz v. Universal Music Corp. et al.) revolves around a 29-second video of Stephanie Lenz’s 13-month-old son dancing to Prince’s song “Let’s Go Crazy” that was posted to YouTube in 2007.  The song was playing on a stereo in the background as Lenz’s son danced around the kitchen.

Universal Music, which was responsible for enforcing Prince’s rights at the time, had paid employees that searched YouTube on a daily basis.  They would look for videos that used Prince’s compositions in which the song was recognizable, was in a significant portion of the video or was the focus of the video.  If the video met those criteria, then a takedown notice would be sent.  The analysis did not consider fair use.

Universal Music sent a notice and takedown letter to YouTube and YouTube removed the video. Lenz then sued Universal seeking damages alleging that Universal had misrepresented the infringement in violation of the DMCA because the appearance of “Let’s Go Crazy” in the video was protected by fair use.

The issue on appeal was whether Universal had to consider fair use aspects when determining whether there was a good faith belief of infringement It now goes back to the trial court to see if Universal really had a good faith belief of infringement.  Since the music was in the background, was distorted, not high quality, and was only incidental to the main focus of the non-commercial video (the dancing toddler), things don’t look good for Universal.

The main lesson for businesses is that it is really important to fight the immediate urge to fire off a DMCA takedown letter every time a potential copyright violation is found on the Internet.  Doing so without a thoughtful consideration of the elements of copyright infringement and exceptions to copyright infringement such as fair use may not only result in the content to continue to be accessible, but it could very well subject your business to a very large judgment against it for abuse of the DMCA.

By | September 18th, 2015|BLOGGING|Comments Off on Pay attention to the dancing baby

The rise and fall of the labradoodle

June 22, 2015

How a trademark would have made all the difference

Peter Lemire

Leyendecker & Lemire speaks to trademark issues often – with clients and within this column. In the world of intellectual property, this might seem strange. After all, patents are usually the ones in the spotlight, soaking up all of the adoration and discussion in intellectual circles. Even some intellectual property attorneys will give short shrift to trademarks and almost treat them as an afterthought – an add-on to the patent, if you will.

However, there’s good reason we spend so much time talking about trademarks: They are universal. Most businesses have them, and oftentimes they account for the vast majority of business value represented by a company’s intangible assets. Trademarks are eternal, whereas patents and copyrights have a fixed term that will eventually expire. At the end of the day, once your technology is not necessarily the newest thing, your trademark is what will differentiate your company. Additionally, trademarks can be used to great effect and commercial gain in situations where other forms of intellectual property are not available.

I recently came across an article in Psychology Today that shows not only the power of branding, but also the risks that are associated with not adequately protecting and policing your mark. The seemingly unlikely focus of this analysis is, well, a dog; specifically, a pseudo-breed that everyone knows – the labradoodle. The focus of the article is actually on the regret of Wally Conron, the creator of the labradoodle, in introducing these dogs to the world.

Labradoodles, despite what a lot of people think, are not actually a breed of dog. They are a crossbreed, or what is more commonly referred to as a mutt. So if the labradoodle is really just a mutt, then how has it earned such high stature in society, where people are willing to shell out thousands of dollars for one? One word: branding.

As the article recounts, the labradoodle came about when Conron was the puppy-breeding manager for the Royal Guide Dog Association (RGDA) of Australia. A request came in from a woman seeking a seeing-eye dog that did not shed, since her husband was allergic to dog hair. Conron originally thought it would be easy – just train a standard poodle to be a seeing-eye dog as standard poodles were traditional working dogs and they don’t shed much.

The problem was that apparently standard poodles don’t make good seeing-eye dogs. So over the span of three years, Conron tried to train 33 dogs and they all failed. Eventually, he had an idea of cross-breeding a Labrador retriever (which make very good guide dogs) with the standard poodle (which don’t shed). The result was three puppies. However, Conron had a new challenge: He needed foster homes for the pups to live in until they were ready to start training. To his surprise, he couldn’t place the dogs because everybody wanted a purebred dog.

So Conron had the association’s PR team announce that they invented a new dog – the labradoodle. The response to the rebranding was astounding; not only did they immediately place the pups, but the organization was inundated with interest from people all over the world.

While the concept of crossing a Labrador with a poodle is not protectable under patent law or any other theory in intellectual property, the term labradoodle when it was first introduced was certainly trademarkable. Trademarking the term, combined with proper enforcement, could have prevented a lot of the subsequent ills that Conron regrets such as unethical breeding practices and false claims that “doodles” are hypo-allergenic.

While anyone could have crossed Labradors with poodles, they would not have been able to market them under the labradoodle name. Enforcing the trademark would have allowed RGDA to determine which breeders could use the trademark and establish guidelines, quality rules and dog placement guidelines for breeders wishing to sell their crossbreeds as labradoodles.

The lack of such structure and enforcement of the brand has led to serious issues regarding the health of many dogs and potential safety concerns regarding the temperament of dogs bred by unscrupulous breeders.

Additionally, the requirement that breeders be licensed to sell their dogs as labradoodles or face a lawsuit would have dissuaded a lot of the unscrupulous breeders from getting into the market for this lucrative pseudo-breed. Instead, anybody and everybody started breeding labradoodles, often because they could charge exorbitant prices. The use of the term labradoodle is now so widespread that it is a generic term and not entitled to legal protection.

The labradoodle is a wonderful example of the power of trademarks to create amazing commercial value for a product for which exclusivity is not protectable under other areas of law. However, it also shows the downside when a business fails to protect and enforce those trademarks.

By | June 23rd, 2015|BLOGGING|Comments Off on The rise and fall of the labradoodle

It’s all in a name (or not)

Where would Amazon be if it had been called “An Online Bookstore”?

By Kurt Leyendecker

Driving into the office recently, I heard a commercial for a local small business broadcast over the radio.  A well-known local radio personality and pitchman explained the business was changing its name to one that better reflected the fact that the business offered its services for a flat fee.  I had heard this commercial probably a couple of dozen times over the previous months.  Clearly, this business was spending a lot of money on its radio campaign.

Presumably, the business sought to associate itself with the descriptive content in its new name so that potential clients and customers looking for this particular attribute would more easily find it.  I yelled at the radio, “No, bad idea!” No one heard me. Descriptive names and trademarks might boost exposure and even revenues in the short term, but in the long term, the business risks anonymity as others adopt similar names or, more likely, use a similar phrase to describe their similar services.

An example is in order, and I will use my firm as the example, rather than identify the shortsighted business.  “Leyendecker & Lemire” has been my Firm’s name since inception.  Our name, which also serves as our trademark, does not reveal anything about the services we provide.  Let’s say I convince my business partner, Pete, that we should change the name to “Colorado Flat Fee Patent and Trademark Legal Services.” To promote our new name and the fact that we provide flat fee legal services, we embark on an extensive and expensive marketing campaign.

Initially, the increased revenues in the first few months after the change almost equal the additional expense of the name change marketing campaign.  We project that these higher revenues will continue even as we wind down the campaign. Pete and I discuss hiring new associates to handle the increased workload. The future looks so bright, I buy some shades.

Seeing our success with the flat-fee pricing model, a couple of our competitors change their websites to proclaim that they offer flat fee intellectual property legal services as well. They also starting running Google ads with headlines like “Patent drafting for a flat fee” or “Flat Fee Trademark Application Filing.”  Potential clients who heard our radio ad and type our new name into Google to find our contact information are presented with several law firms all professing to offer similar flat fee services. Some of our competitors are even using headlines very similar to our name and confuse our potential clients.  We begin to lose business to our competitors.  The marketing campaign has been wildly successful, just not in driving clients to us but rather in promoting the availability of flat free intellectual property legal services generally.

We consider suing our competitors for trademark infringement. There is no question that their headlines and services descriptions are causing confusion with our name to our detriment.  However, as astute trademark attorneys, we realize we are likely to lose any lawsuit we file.  We know descriptive trademarks do not possess broad rights and we wonder if a court would recognize our name as a valid trademark.  We also know we cannot use trademark law to prevent competitors from using certain generic and necessary terms and phrases to advertise their services, such as “flat fee.”

In the end, we are forced to shutter the firm as the liabilities associated with the advertising contracts far exceeded our revenues. It isn’t all bad, however, as I finally get the opportunity to pursue my long held dream of chucking it all and becoming a dive instructor (albeit an aging one) on Key West.

What should we and the local small business have done? Companies should pick names that are more fanciful or arbitrary instead of descriptive when compared with the services offered by the business. The purpose of a marketing campaign is to associate the type of services you provide with the unique name so that when a potential customer or client seeks to find a flat fee provider, your trademark name pops into their heads, so that when the potential client performs a Google search to get your contact information, she types your name into the box and not a descriptor of what you do.  If a competitor tries to trade off of your unique name, you send it a cease and desist letter, and if that does not work, you sue it for trademark infringement and damages.

Still not sure?  Ponder these parting questions: Where would Amazon be today if it was named “An Online Bookstore” at its beginning?  Would Google have become the wildly successful company it is today if it began life as “A Search Engine”?

By | June 2nd, 2015|BLOGGING|Comments Off on It’s all in a name (or not)

SupCo trademark game-changer

Take care around trials and appeals

By Peter Lemire

A recent decision by the Supreme Court will have attorneys and business paying more attention to what are known as “adversary proceedings” before the United States Patent and Trademark Trial and Appeals Board (TTAB).

Adversary proceedings are basically mini administrative trials that are conducted when one party believes that it will be harmed by the USPTO allowing the registration of a trademark to a third party. There are two forms of adversary proceedings: oppositions and cancellations. An opposition is when a third party objects to the registration of a mark prior to the granting of the registration.

A cancellation action is identical to an opposition, but it occurs after a registration has already been issued and the third party is seeking to cancel the registration. While these proceedings have for the most part been taken seriously, the Supreme Court decision in B&B Hardware, Inc. v. Hargis Industries, Inc. has exponentially raised the stakes due to the fact that the court ruled that a TTAB decision regarding whether there exists a likelihood of confusion between two trademarks can in some cases have a preclusive effect (meaning that the TTAB decision would be binding in the later infringement action) in a subsequent trademark infringement litigation.

This is a big deal.

To illustrate what a potential game-changer this decision is, some background is probably in order. Historically, there has been somewhat of a divide between the world of registration at the USPTO and the world of infringement that is battled over in the federal courts.

This is due to the fact that the trademark system is somewhat of a dual system of common law (unregistered marks) and federally registered trademarks. Contrary to what many people believe, the federal registration does not create trademark rights. Trademark rights are actually created by an individual’s or company’s use of the mark to identify its goods or services. It’s the use that actually creates the rights, known as common law rights.

By federally registering these rights through the USPTO, an individual or business gains certain extra advantages. In today’s world, most businesses – especially small- and medium-sized businesses and startups – greatly benefit from federal registration; however, it is not a necessity.

The Lanham Act (the federal trademark statute) sets out the rules and process for federal trademark registration. One of these rules is that a registration can’t issue if it causes a likelihood of confusion with another registration.

Additionally, owners of federal registrations and common law users who believe that they will be harmed by a registration can contest the registration through an opposition or cancellation proceeding. These proceedings are quasi judicial proceedings wherein limited discovery is generally conducted and the “trial” generally amounts to written testimony and arguments submitted to the TTAB.

Historically, these proceedings had fairly low consequences, due to the fact that an adversary proceeding only deals with the issue of whether a mark is registerable with the USPTO, and not whether it infringes on another mark. The only downside to a party defending an adversary proceeding was that the mark may be prohibited from registration or an existing registration was cancelled.

No damages, attorney’s fees or injunctions can be awarded in an adversary proceeding. If a mark holder lost an adversary proceeding, they could always just rely on their previously established common law rights. Furthermore, if an infringement action was subsequently filed, the mark holder would essentially have a second bite at the apple if they wished to defend the litigation, since the likelihood of confusion standard, with some differences, is also the test for infringement.

With the Supreme Court’s decision, how the adversary proceeding is prosecuted and argued can now have a profound effect on a subsequent infringement action. A mark holder whose mark is found to cause a likelihood of confusion at the TTAB leve, can also now have that determination applied against them in an infringement case, where they would be liable for damages and attorney’s fees, and could face an injunction preventing them from using their mark. Therefore, these actions should now be fought just as aggressively as one would in an infringement case.

The takeaway from all of this is that for businesses facing adversary proceedings at the TTAB, the stakes now just got higher. Businesses will need to be more strategic with their arguments in front of the TTAB, and probably conduct significantly more discovery than was done in the past. Interestingly, this may also encourage more settlement at the adversary proceeding stage.

If both parties are wary of potential preclusive effect of a TTAB decision, this may lead them to engage in more serious settlement talks in order to avoid the risky proposition of having an adverse TTAB decision bind them in future proceedings. Time will tell.

By | April 7th, 2015|INTELLECTUAL PROPERTY, PATENTS, TRADEMARKS|Comments Off on SupCo trademark game-changer

Trademarks + marketing = power

Take Ford, for example

By Kurt Leyendecker

Anyone who has watched even a small amount of television over the past year or so is probably familiar with the Ford commercials featuring Mike Rowe of Dirty Jobs fame pitching cars with engines that utilize EcoBoost® technology.

EcoBoost engines are those that offer power comparable with that of their larger counterparts but do so at about a 20 percent improvement in fuel efficiency. The two most prominent examples of EcoBoost technology are the 4-cylinder engine in the new Ford Mustang that produces over 300 hp and the V6 engine in the F-150 that produces 365 hp as well as oodles of torque for hauling and towing. Both engines offer significant improvements in rated MPG over larger available engines not incorporating the technology.

The EcoBoost engines have been tremendously successful for Ford and are now being rolled out in more sizes and being made available for more cars in the manufacturer’s lineup. Ford’s skillful marketing and education campaign has been able to convince even skeptical truck buyers that the old adage “there is no replacement for displacement” may no longer be true. Ford has even been able to charge more for smaller displacement EcoBoost engines than its larger counterparts, thus turning a legacy of more than 50 years of automotive sales tradition on its head.

The truth is, however, that EcoBoost technology isn’t revolutionary or even particularly unique. Simply, the term describes engines that are both turbocharged and direct injected. Turbocharging has been available on cars sold in the United States since at least the early sixties, back when a turbocharger was an option on the Chevrolet Corvair, the car with suspect handling that helped to launch Ralph Nadar’s career.

Direct injection is a newer technology but numerous car companies offer engines that incorporate it. “EcoBoost” is, therefore, really nothing more than trademarked name for a couple of technologies that are already fairly well known.

While trademarks are most commonly used to identify brands and product names, they can also be used to identify features that are incorporated or utilized in a particular product or in relation to a particular service. But why obfuscate the actual underlying technology in some made-up name?

Ford could have easily spent millions advertising its line of direct injected turbocharged engines, rather than using the same amount to promote a line of engines incorporating “new” EcoBoost technology, with roughly the same level of success.

Not everyone (and probably very few automotive consumers) knows or even cares what the underlying technologies incorporated in an EcoBoost engine are. To many of us, EcoBoost technology is engineering magic that somehow, in some way completely unbeknownst to us, increases the fuel efficiency of our cars.

And magic, with all of its glamour and seduction, sells far better than a straightforward list of already well-known techniques that are now being incorporated in an engine – even if the truth behind the words is exactly the same. This is not lost on me.

Even though I know exactly what makes an engine an EcoBoost engine, I still have an underlying, subconscious belief that an engine boasting the “EcoBoost” designation is somehow something special and unique. This is testament that a good trademark backed by a great advertising and PR campaign is very powerful stuff, indeed.

What’s more, to Ford’s credit, the brand probably understood from the start that marketing the actual technologies behind EcoBoost engines rather than the shiny, new, branded product would inadvertently also market similar engines produced by other manufacturers – and they didn’t want that.

They didn’t want to simply educate consumers about existing technologies but also create and perpetuate the idea that their proprietary blend of these technologies was somehow better than the rest. If they had done it another way, other manufacturers who produce turbocharged and/or direct injected engines could have benefited from Ford’s hard-earned (and handsomely paid for) marketing efforts. By creating and marketing a specific name, however, the company was able to simultaneously educate the consuming public and elevate the Ford name.

Because Ford chose to market a combination of technologies under the EcoBoost banner, the best a competitor (such as, say, Chevrolet) could do would be to run an advertisement or air a commercial describing how its engines incorporate the same technologies as Ford’s EcoBoost – thus repeating the Ford name, and extending the reach of the company’s original marketing campaign even further.

Of course, no self-respecting marketing department (Chevrolet’s or otherwise) would think to run such an ad or commercial, at the risk of helping their competitor out – but also at the risk of (depending upon the actual use of Ford’s trademark) finding themselves on the wrong side of a trademark infringement suit.

It’s an ingenious strategy, and one that would probably be effective even without the help of a celebrity endorsement. Well played, Ford.

By | February 20th, 2015|BLOGGING, TRADEMARKS|Comments Off on Trademarks + marketing = power

Kick-starting the new year

Crowdfunding might be just what your business needs

By Peter Lemire

When meeting with clients, we often explain to them that securing intellectual property rights of inventions or products is an important step of the process, but it is just the start and sometimes is the easiest part of bringing a product to market or starting a new business venture. Millions of great ideas are conceived every day; however, just because something is a great idea does not guarantee success.

Business owners face major obstacles, including the practical realities of bringing the product to market and generating sufficient consumer awareness to sustain the business. Previously, this could be a monumental task that dooms many business ventures. However, the advent of crowdfunding sources may make the process of exposing a product to the market and making that initial purchase of inventory easier.

Crowdfunding websites such as www.kickstarter.com have existed for a few years, but I never seriously considered participating in a Kickstarter project. In the early days many of the projects revolved around funding the arts – projects included independent films, musicians seeking to fund albums, and projects to launch or revive TV shows. In exchange, benefactors generally would receive tickets to the premier, copies of the film or CD or other associated swag.

At the time I saw Kickstarter as an interesting and effective way for the artist community to fund projects. As time has gone on, Kickstarter has shown to be wildly successful for these sorts of projects. Most notably for Colorado is the successful funding of the documentary Touch The Wall, which documents Missy Franklin and Kara Lynn Joyce in the years leading up to and during the 2012 London games. When looking at the number of projects successfully funded through Kickstarter in 2014, these sorts of projects still dominate.

It wasn’t until last fall that I was able to see the potential benefit of a website like Kickstarter for entrepreneurs and small businesses. When browsing Facebook, I saw an ad for a pole to be used with a GoPro that contained a battery inside the handle that could power a camera for eight-plus hours.

As an avid skier and GoPro enthusiast, the ability to have enough battery power to last a whole day of skiing was interesting. I clicked the link and, to my surprise, was taken to a Kickstarter page. I watched the video and checked out the company’s website. What struck me was that this was not a call to fund a concept or some “pie in the sky” idea. It was an actual product that the company had spent time developing – they had already acquired production-ready molding, tooling and packaging. They just lacked the operating capital to purchase the first large order of product.

I felt I would actually get the product, so backed the product. The pole arrived, it works great, and the overall experience was great. I even bought a few PolarPro filters.
It then occurred to me that Kickstarter could be a way for clients to obtain the capital needed for a product launch, as well as gain exposure and marketing for their product.

A look at Kickstarter’s 2014 data indicates that artistic endeavors dominate the number of 2014 funded projects, but technology and designs dominate the amount of money raised. Funding, however, is not automatic. Here are tips to enhance crowdfunding success:

1) Project professionalism. Kickstarter’s terms and conditions state that accountability lies solely with the creator of the project. Backers are encouraged to do their own research. The more established and reliable of a company you are, the better chance to get funded.
2) Crowdfunding can catapult you over the last hill. Funders want product, not concept. Products put through the R&D process and tooling are ready to manufacture. Funders are not eager to fund design and development. With Touch the Wall, all of the footage had already been shot. The money raised by the Kickstarter campaign went to editing, post production, distribution, etc.
3) Be able to show a production-ready prototype. This ties in to No. 2, but consumers want to see the product and to see people using it. They want to see that it is real and that it works. SolidWorks drawings and computer animated images do not instill confidence that the project is at a point that invites participation.
4) Lower price points make it easier for backers to take that leap of faith. More people will take a calculated risk to back campaigns at amounts of $100 or less versus something that costs several hundred dollars or more. I was willing to risk $100 on the power pole and if nothing ever materialized, I may have been annoyed but it wouldn’t have been catastrophic. If it had cost much more than that, I don’t know that I would have participated. The takeaway here is that your ultra-cool GPS-enabled widget may be a really neat product, but you may not find many backers if your starting price is $1,500.00.
5) A history is a plus. If you have a worth highlighting. And say upfront why you need the money. If it is because your first production run will cost $50,000 and you simply don’t have that sort of cash lying around, say so.

If you are a business owner and you haven’t thought about using crowdfunding as an arrow in your to get the capital and marketing exposure your company needs when launching a new product.

Who knows – it might just be the kick start your business needs in 2015.

By | January 16th, 2015|BLOGGING, INTELLECTUAL PROPERTY|Comments Off on Kick-starting the new year

Trademarks on wheels

Caveat emptor

By Kurt Leyendecker

For as long as I can remember, I have loved bicycles. In 1981, two high school buddies and I biked around Lake Ontario. The next year, two of us cycled across New England. On both these trips I rode a Motobecane, which was the premier French bicycle brand back in late 70’s and early 80’s.

My obsession with bicycles and a desire to make them stronger and lighter inspired me to get a degree in materials engineering, which I applied to building satellite components as an engineer with a major aerospace company. In the early 90’s, before becoming a lawyer, I started a company that made mountain bike components of my design. Sadly, I don’t ride as much anymore, preferring now to simply strap on a pair of running shoes. Nevertheless, I still enjoy bicycles and maintain a small stable in my garage.

A little while back, I got the desire to obtain a track bike – or “fixie,” as they are commonly known. They have been all the rage the past five years or so, as some people have eschewed multi-speed bicycles for the inherent simplicity of the fixie.

I hopped online to investigate and find a suitable fixie, and ended up at a website that sold several brands I was very familiar with from back in my high school days – including my old favorite, Motobecane. I also noticed several other brands from my youth: Dawes, a once well-known English manufacturer of touring bicycles; Mercier, another high-end French bicycle manufacturer from the 70’s; and Windsor, an early 80’s brand that produced high-quality but low-cost bicycles in Mexico. Interestingly, despite knowing that all these brands had either gone bankrupt or stopped importing to the United States many years ago, I found myself still favorably disposed to these new versions.

I did some research. The current trademarks for all these brands are owned by the same Florida company that appears to import bikes from China, and sell them for relatively low prices directly over the Internet. The current brands have absolutely no connection to the old brands. Rather, when the original trademark owners failed and the marks went abandoned, they were re-registered by the current owner, who is now benefiting from the warm feelings that people like me still have towards the old brands. In essence, the new owner is benefiting from the goodwill created by the long failed company, finding it easier to sell a budget bike as a Motobecane instead of under a new name that has no name recognition.

The whole purpose of a trademark is to designate quality and the source of a good or service. You know when you by a Coke that it is going to taste substantially the same as any other Coke you have recently consumed, and that it was produced by the Coca-Cola Company. Trademark law prevents competitors from using the mark of another or using a mark that is confusingly similar to another’s mark. For example, Coca-Cola could stop a company from selling cola under the name Koke, as the mark might confuse some consumers into thinking the Koke cola is made by Coca-Cola or that the product possesses the same taste and quality that has been established over the years by Coca-Cola. In essence, the purpose of trademarks is to protect consumers so that they know what they are buying.

However, when a company fails and its marks go abandoned, anyone can pick them up and register them as their own – and then sell products under the old venerable brand. Even though I know the new Motobecane has no relationship to the old company, I still am inclined to trust the brand more than a no name brand by the same manufacturer. Other consumers not in the know may be even more inclined. Accordingly, the new owner may be able to sell a Motobecane branded bike for a little bit more than it could if it was identified by an unknown brand. The consumer is fooled into thinking he or she is buying a bike from a French company, not an importer based in Florida.

Perhaps the best example of this is another two-wheeled cycle brand, Indian Motorcycle. The trademark is currently owned by Polaris Industries, a snowmobile manufacturer. The company in its advertising invokes the Indian tradition of 60-70 years ago, when Harley-Davison and Indian competed for dominance in the world of American-made motorcycles. U.S.-based Indian failed in the early 50’s but another company acquired the trademark rights and sold slightly modified English motorcycles under the Indian brand until 1960, when the mark was sold to another company that soon went out of business.

In 1962, Floyd Clymer Imports started using the Indian name. Clymer had no relationship with the previous owners. The lineage of the mark back to 1898 was broken. Over the years the mark has traded hands many times until coming to rest with its current owner. Polaris Indian Motorcycles owe their lineage to a 50cc Italian minibike sold by Clymer, not the post-WWII chiefs of legend and lore that they would have us believe.

So, when you see an old venerable brands suddenly reappear: caveat emptor.

By | December 10th, 2014|BLOGGING, TRADEMARKS|Comments Off on Trademarks on wheels

Maximize your business’ value

The law once said that to file an application for a United States federal trademark registration, an individual or a business had to actually be using the mark in interstate commerce. That individual or business must have actually sold the goods or services to someone in another state, or their sale of the goods or services had to have had an effect on interstate commerce. There was no way to “reserve” a name prior to actual usage.

In 1989, however, the Trademark Act was amended to allow for an “intent to use” application (ITU) to be filed with the United States Patent and Trademark Office (USPTO). While actual use in interstate commerce is required to issue a registration, the ITU application allows an individual or business with the bona fide, good faith intent to use a certain mark to file an application in advance with the USPTO.

The ITU carries some substantial benefits, including what we trademark attorneys call a constructive use date as of the date of the application. Put simply, under the law you will now be treated as though you had actually started using the mark in interstate commerce as of the date the application was filed, even if the actual use comes much later down the line. Therefore, once your registration issues, you will be considered the senior user and can prevent others from adopting the same or similar mark for the same or similar goods if that user adopted the mark after the date of the ITU filing, even if their date was before you had actual use.

The constructive use date of the ITU application can be a big advantage for businesses. It allows a company to pick a name (or several possible names) for a new product or service offering, conduct clearance searches to make sure no one else has a better right to the name, and then immediately file an ITU. This can be of special importance in cases wherein a name has been identified but there will be a delay in the rollout of the goods or services. By filing the ITU, the company is assured that it is protected against someone else beating them to the punch and launching first.

While such benefits can be great for a business, an ITU application does come with a few down sides. First, they require more filings with the USPTO so are more expensive. Secondly, ITU applications can only be assigned in very specific circumstances and these restrictions can impact certain business sale transactions depending on how they are structured.

Additionally, certain types of rejections by the USPTO are harder to overcome with ITU applications, as these applications do not have the opportunity to move onto what is called the Supplemental Registry. The Supplemental Registry is a holding place for in-use applications whose marks have been deemed descriptive; with time and continued use they may be moved over to the Principal Registry.

Supplemental Registry registrations receive a registration number, they have access to federal courts, and they can be cited by trademark examiners against subsequently filed applications. They are not afforded certain legal presumptions (such as ownership and validity) and they do not confer nationwide rights. However, if it comes down to having a registration on the Supplemental Registry or no registration at all, the Supplemental Registry is definitely preferred. If an application receives a final rejection, the applicant must then make the decision whether to appeal (which is a time consuming and expensive process) or abandon the application altogether.

The biggest piece of advice I have for clients filing ITU applications is to always keep their eye on the ultimate goal, which is to achieve sales as soon as possible. Keep in mind that a registration will not issue until you have had sales. Additionally, having sales and filing a notice of use will switch an ITU application to an in-use application. This may come in handy in the event that the application receives a merely descriptive or geographically descriptive rejection, which then opens up the possibility of the Supplemental Registry.

One thing you want to avoid is waiting to launch your product or service until you receive your notice of allowance from the USPTO. While it may be tempting to do so, it really isn’t the best strategy and it only serves to delay the ultimate issuance of any registration. In the worst case scenario, it could lead to a circumstance in which the application has to be abandoned because use cannot be achieved before a rejection is deemed and the USPTO declares the application abandoned.   As long as the clearance search has not identified any previous users that might cause a likelihood of confusion rejection, an applicant’s best bet is to always be diligently working toward use.

Bear in mind, however: Trademark rights are created by your use of those terms to identify your goods or services and are not created by the piece of paper issued by the government.

By | October 31st, 2014|PATENTS|0 Comments

My take on Tesla

What’s really behind Musk’s blog post?

Kurt Leyendecker

Tesla Motors and its CEO Elon Musk made news in the patent and intellectual property world a few months ago with a company blog post entitled “All Our Patent Are Belong To You” (the error in the title is Musk’s, not mine). The post was most simply an indictment of the patent system.

The blog post waxes poetic about how the global threat from the internal combustion engine was far greater than any exclusionary benefit the electricity-powered Tesla might derive from its patents. Of patents he wrote, “Too often these days, they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors.” Boldly, he declared, “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

But wait! Let’s dissect this a bit. Musk is one of the shrewdest businessmen alive today.  He doesn’t do anything without considering how the move benefits his companies. Just recently, Musk convinced Nevada lawmakers to pony up about $1.3 billion in tax breaks to help build his battery plant. Is Nevada getting a significant equity position in Tesla for their investment? The answer is no!

Have we all forgotten the battery swap promise? About a year and a half ago at a stockholder presentation with Musk presiding, a Model S was driven onto the stage and magically, its depleted battery was replaced with a fresh one in about a minute. The actual swap, however, occurred underneath the stage away from the prying eyes of the press and audience. Where are the promised battery swap stations? Well, California changed its laws concerning electric vehicles and the battery swap capability was no longer necessary for Tesla to receive desired tax credits, so it quietly disappeared.

Ultimately, the great Tesla patent giveaway is for Tesla’s benefit. It boosts the company’s image among core supporters, and it might even give other auto manufacturers and suppliers pause before suing Tesla for infringement of their patents. Think of the PR nightmare, especially among the electric car faithful, of suing the company that magnanimously made all its patents available to everyone.

Of course, the patents themselves aren’t important to Tesla as they once were or might have been if someone else entered their space earlier and as aggressively. Tesla is now the 900-pound gorilla with knowhow, economies of scale, easy access to dollars, and market clout. Musk indicates in his blog the original reason Tesla pursued patents was to dissuade large entrenched competitors from entering Tesla’s space, but that this belief “couldn’t have been more wrong” because the competitors didn’t. Perhaps the converse is true: The patents helped dissuade competitors from entering the electric car market in the first place.

What is good for Tesla isn’t necessarily good for everyone else. Do patents really stifle innovation and award attorneys to the detriment of inventors as Musk contends? There are no doubt dozens if not hundreds of small – even tiny – companies across the country trying to develop new motor and battery technologies often funded by angels and venture capital. Do you think the founders and employees of these companies would toil to create the proverbial better mouse trap or that the angels would invest millions if the companies couldn’t prevent the resulting inventions from being used by the major industry players, including Tesla, without reasonable compensation? The ability for small players to protect their innovation spurs development, not the opposite.

Then there is the real question: Did Tesla actually free its patents to be used by all?  Musk’s statement was carefully worded. He didn’t say that Tesla would not sue someone who uses its technology, but that it would not sue someone who wants to use it in good faith. What does “good faith” mean? Does the fact that Musk wrote “wants to use” instead of just “uses” mean a company must get Tesla’s blessing before using Tesla’s patents? What isn’t said is whether Tesla will require a license before they let someone use their patents or whether it will require the user to pay Tesla a royalty. Making Tesla’s patents available for licensing isn’t all that unique: Many companies make their patents available for licensing.

Would you be surprised to learn that since Musk declared patents a hindrance to innovation on June 12, the company has had at least 13 patents issued, and that the issue fees were paid to the U.S. Patent office AFTER the blog post and Tesla’s monumental policy change?

I think the one thing we can reasonably conclude from Musk’s post is that the patent plaques that adorned the lobby at the company’s headquarters have been taken down.  Perhaps the blog post should be rewritten with a new title, “We Remodelled Our Lobby.” For some reason, I think such a post would not have received much attention.

By | September 22nd, 2014|PATENTS|0 Comments